Archive for March, 2005

FOCUS ON ECOMTEL – JANURAY 2005

Thursday, March 31st, 2005

Ecomtel has been operating since July 1997 and is the longest surviving user of Telstra’s eBill wholesale platform. They were also one of the first to offer mobile services buying wholesale airtime off Telstra MobileNet. The company also provides dial-up and Broadband at very competitive pricing.

Their strength has been in the software systems programmed in Linux. These systems provide highly automated provisioning and customer care allowing the company to provide excellent services at a low staffing level resulting in a healthy business. Based on this success other companies/carriers including AAPT became interested in Ecomtel’s software system. This made them decide to split off the software arm of the company which was subsequently separated off into a new company called Lintel International Communications Systems, known as Lintelsys. They offer full provisioning, billing and CRM systems to other telcos.

Ecomtel also offers a prepaid service whereby people can log in over the internet, pay say $20, and then make prepaid calls. The essence of this is that the call rating is immediately shown on the web so that the customer can see what he has been charged and that it is correct and as expected. This is an attempt to make a totally honest and transparent system. For more information see www.ecomtel.com.au

See also:
Australia – Carriers and Service Providers – Industry Overview
Australia – Industry – Retail Market
Australia – Industry – Wholesale Services

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MEDIA JOCKEYING FOR $50 BILLION MARKET

Tuesday, March 29th, 2005

The biggest moneyfest for 2005 will take place in the media market. The $50 billion+ market of media, entertainment and telecoms is going to see changes it has dreamed of for nearly 20 years.

Like the privatisation of Telstra, there is nothing wrong, in principle, with a good media shake-out. After all, a lot is happening in these markets and industry structures should reflect these changes.

However, two important components make up the media and telecoms markets.

Firstly, there is the shareholder issue (maximising profits). And, looking at the barons these industries produce, it would seem that there is nothing to complain about there.

But the national interest is also at stake. The media provides a crucial channel for free speech; it allows access to information; it facilitates the development of independent thought; and it is an outlet for critical comment on political, social and economic issues. Also, in the case of telecoms the infrastructure is an important national asset.

Unfortunately, the commercial and national interests are often diametrically opposed. The best thing for shareholders would be to have a few semi-monopolies, and the best thing for a democratic society is wide diversity and lots of competition.

While the government more often backs those with the vested interests, it is good to see that government organisations such as the ACCC, National Competition Council and Productivity Council support the people. This seems an odd situation, as one would expect the government to be more aligned with its people. But in Australia that doesn’t seem to apply.

This means that those with strong views on these issues need to work a bit harder.

To clarify what is at stake here, it might help to list the position of a few of the interested parties, which could be significant during the reform of the media market.

Telstra wants to buy TV stations and newspapers
News Limited wants to have a TV channel
Nine is interested in the outcome of any wheeling and dealing
Seven needs money to get out of its downward business spiral, and be open to welcome new shareholders to the company
Ten will want to move into any other media markets which are of interest to its target group of 30-40 year olds (most probably radio)
John Fairfax will struggle to survive and needs a great deal of assistance to maintain its independent position.

My major concern relates to Telstra moving into the media, since a combined media/telecoms dominance would certainly be counter to the national interest. Telstra has made a good move in separating Sensis, but I would prefer a total disengagement, through a separate float. In this way we would get an extra media player, which would be a very positive outcome.

There are several options in relation to Foxtel.

It makes sense for Telstra to get out of it, since its broadband activities create a conflict of interest with its other partners as it moves further into broadband TV developments. It already has a DVD rental service and full-blown broadband TV is just around the corner, which would mean head-on competition with Foxtel.

My analysis is that News Corp would take a majority shareholding here by buying Packer out and obtaining a portion of Telstra’s shareholding – and I still believe that this would be the preferred option. The Foxtel model is also used by News Corp to model its DirecTV service in the USA. However, other analysts have suggested Packer might buy the News Corp share, but this doesn’t make sense to me, as his company has little experience in the interactive TV entertainment market.

Paul Budde

See also:
Australia – Analysis – From telecom to media monopoly
Australia – Free-to-Air TV – Regulatory – Content Overview and Analysis
Australia – Free-to-Air TV – Regulatory – Content Overview and Analysis

The topic will also be discussed at our first Roundtable of the year on February 2nd in Sydney:
Planning the year ahead – 2005

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BUCKETTY BROADBAND MEETING WITH TELSTRA

Thursday, March 24th, 2005

As promised, two weeks ago, after my meeting with Telstra in Sydney, the company came back with its answer on the broadbanding of the Wollombi-Laguna-Bucketty-Kulnura area.

It is a bit of a mixed bag.

As we know, the problem with our community is that houses are spread over a large area, with very few concentrations. The telephone-based DSL broadband technology requires dwellings to be within a 2-5Km radius of the three telephone exchanges in our area.

Kulnura nearly ready to go
The expressions of interest (EOIs) from Kulnura and Bucketty have been better than those from Laguna and Wollombi. Kulnura is in a very good position. It only needs ten more EOIs, and it looks as though these will be forthcoming over the next few months, which will automatically kick-start the exchange upgrade there.

Laguna-Bucketty broadband aim: July 2005
The Laguna-Bucketty area needs another 40 EOIs before the upgrading can take place. More community effort needs to be made in Laguna in particular, in order to get people to register their names. We really will have to put more work into this area – there are 230 telephone connections within acceptable distance from the Laguna exchange and the Murray Run sub-exchange (RIM), so we should be able to get more people to add their name to the list.

Wollombi still has a long way to go
Telstra’s aim is to get the Laguna exchange and the Murrays Run RIM upgraded by July 2005. It has promised to assist with extra publicity and marketing to get the required number of EOIs.

Activities are planned for early February, and Telstra is open to ideas from the community on what would be the best way of marketing the service (door-knocking, presentation at Wine Bar, etc). Only when this has been done will Telstra be prepared to put more effort into Wollombi, as this community still has a long way to go to get its EOI numbers up. This certainly is something that the local Chamber of Commerce and Progress Association could become involved in.

Satellite alternative
Those who can’t wait for Telstra’s DSL service should consider the satellite alternative. There are already a few users in the area and the feedback, in general, is positive. We at BuddeComm will shortly also start testing a business-grade satellite service. There is currently a subsidy available for residential satellite-based broadband, known as HiBis, and there are seven satellite providers operating within this scheme.

Mobile coverage
The area between Kulnura and Wollombi is the largest mobile black spot so close to Sydney. Telstra is looking at upgrading the facilities at Kulnura and Wollombi to extend the mobile signal, but there are no firm plans in place yet.

Paul Budde

See also:
Australia – Broadbanding Regional Australia
Australia – Broadbanding Local Communities
Australia – Regional Projects – Bucketty

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MUNICIPALITY BROADBAND

Friday, March 18th, 2005

Councils around the world are steaming ahead with broadband
In 2001 I launched a campaign aimed at creating local community awareness around Australia regarding broadband. At that time I travelled around the country and spoke to most state governments and most of the metro councils.

On many occasions I have used the examples of cities such as Stockholm, Amsterdam. Copenhagen, San Diego, Chicago and many others. The city of Stockholm started its own dark fibre network in 1990 and now has close to 40 facilities-based telcos operating over this shared infrastructure. The network is based on a structural separation, between ownership of fibre cable and ownership of individual strands of fibre. The key benefits of such an approach are:

Facilities-based competition between owners of individual strands
New business models are able to evolve, such as user owned networks

Since the arrival of broadband more than 1,000 local government bodies around the world have established their own fibre network for the benefit of their citizens. Most of these cities have ‘naturally’ embraced structural separation. There was no debate needed, as everyone involved saw this as the obvious thing to do – with no discussion or fuss.

One of the most popular scenarios is known as Condominium Fibre or Conduit Network, which uses the city’s right-of-way to lay fibre and conduit facilities – all facilitated by local governments. These networks nearly always begin by linking government facilities, schools, hospitals and other public facilities to the one fibre network.

As I have argued on many occasions, councils should not become involved in actual service provision, and so far most, if not all, have adhered to that formula. They are partnering with organisations in the private sector to build condominium fibre networks to all public sector buildings. Key benefits here are:

Government achieves social goal of affordable bandwidth to all public sector buildings
Condominium fibre allows many competitors to own strands of fibre into the neighbourhood
Cost of construction is shared amongst all participants

Bill St Arnaud from the Canarie network in Canada recently presented a case study of the Montreal Model.

Montreal has gained the reputation across the telecoms carrier industry of ‘getting it right’ in its approach to municipal fibre. All carriers that operate over the city network praise the ease of access and the low cost of duct rental.

Montreal was able to build on a management structure that was created back in 1907, when an agency was established, called the Commission des Services Electriques de la ville de Montreal (CSEVM) – focusing on urban design and adapting to the changing technological requirements as the city grew. It also greatly contributed to the beautification of the city’s streets and public places.

The CSEVM has the mandate to operate the whole underground space in the city. It builds, manages and operates the system of underground conduits. Since that beginning the City now has 19.2 million metres of linear conduits, covering 623 of the city’s 2,123 kilometres of streets. It provides direct access to 38,500 private and public buildings through more than 18,000 access facilities.

The City operates in the role of standardising construction, but is also consolidates demand from various sources and is building additional space for the City to rent out to others.

The City shares the capital cost with all the participants, but in the process also engineers additional capacity for resell. The City is also very active on retrofitting duct banks that are filled by adding additional internal ducts. The primary advantage to the building partners is in cost reduction of duct construction.

The end result is that the carriers have only the highest praise for Montreal as a territory in which they operate, and the costs of duct rental are $3.65 per metre.

See also:
Global – Broadband – Infrastructure – Broadbanding Local Communities
Global – Analysis – The FTTH market in 2005
Global – Analysis – Market – Broadband in 2004
Canada – Broadband Market Overview & Statistics

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TELECOMS HIGHLIGHTS IN NEW ZEALAND

Tuesday, March 8th, 2005

At the moment I am in New Zealand launching the 8th edition of the 2005 Telecoms, Mobile and Broadband in New Zealand.

Key Highlights of the Report
The telecoms market is expected to grow by 5% from $8.1 billion in 2004 to $8.5 billion in 2005.
Telecom clearly dominates the market with a 65% market share of all revenues followed by Vodafone with a 14% market share and TelstraClear with 9%;
Telecom holds a virtual monopoly over the local access market, with an untouchable market share of 95%;
Without any serious facilities based or resale competition and with 4% penetration, New Zealand remains at the bottom of the broadband penetration list;
Now Telecom has finally lowered its broadband prices, growth is underway. However, without competition it will take 3 to 4 years to catch up with the rest of the world;
There is pent-up broadband demand of around 1 million customers, ready to be connected under the right conditions;
Competitors have less than 1% market share in the retail DSL market (in Australia 55%);
Wholesale facilities in New Zealand are truly appalling. Telecom obviously doesn’t want to offer any serious wholesale service which could even remotely compete with its own services. Without a break up of the company competition appears to be doomed;
Structural separation of the incumbent telco is currently under discussion in Europe and Australia.
At a minimum a strict separation between retail and wholesale with enforceable regularly powers are needed to reign in Telecom, the Commerce Commission currently is not more than a paper tiger; under funded and under powered;
New regulatory plans launched in the UK might also be a guideline for the Regulatory Review in New Zealand;
While I subscribe to Telecom’s vision for its Next Generation Network, without regulatory intervention this project will soon turn into another gigantic Telecom monopoly;
Telecom has already started some Fibre-to-the-home trial in Auckland;
Business plans for wireless broadband remain shaky. Wireless will play a role in delivering broadband, particularly with mobile and rural applications. But beyond these niche markets it will be much more difficult;
Growth in Internet usage beyond 2005 is expected to taper off as adoption levels now reflect a wider adoption amongst the general community;
An urgent review of Project Probe is needed, uptake remains very low and Telecom now controls 12 of the 15 projects. The project has turned into a state subsidy for Telecom;
A growing number of wireless broadband players, including Woosh Wireless, Wired Country and Reach Wireless are also making some inroads into the market and this trend is likely to continue into 2005, they are one of the only bright spot in competition ;
Other niche market facilities based competition might come from broadband delivered over powerlines by electricity utilities;
With mobile subscribers of 3.1 million users and a penetration level around 75%, the New Zealand market still has a few years to go before saturation is reached;
Mobile data is not going to make any significant inroads; the key issue is mobile voice. Capped mobile prices will lead to mobile substitution of Telecom’s fixed lines. At least 10-15% of telephones lines (200,000) will disappear in ‘mobile only’ households;
While Telecom has indicated it will use its CDMA network to move towards 3G, TelstraClear’s direction remains unclear, as to whether they are looking at sharing with Vodafone, threatening with their own 3G network or pursuing wireless broadband options;
3G will be totally dominated by the cannibalisation of 2G;
Mobile user charges are amongst the highest in the world. Mobile termination rates remain high and both Telstra and Vodafone will have to bite the bullet and replace their handset subsidies by lower call charges;
Fixed-to-mobile charges are up to 70cts in New Zealand, 40cts in Australia, international benchmark is below 20cts;
The same now applies for New Zealand’s fixed call charges, these could be reduced from $40 to $25 per month to reflect current trends and developments;
VoIP is boycotted by Telecom in a similar way it technically boycotts unbundled bitstream; which is needed for broadband competition.

For more info see: 2005 Telecoms, Mobile and Broadband in New Zealand

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