Archive for April, 2005


Tuesday, April 19th, 2005

At the very successful ‘Planning the year ahead’ Roundtable last week, we spent most of the time discussing the new converging market – triple-play models and other business-related opportunities that are now beginning to appear on the industry’s radars.

I was surprised that other companies are moving well ahead in this sector and are already scoring interesting results. The participation of some of these early pioneers in this market generated a very different discussion to the ones we have had in the past. It was less technology-oriented and there was very little talk of mobile – the two areas that have dominated the events of the past few years. There was also considerably less discussion of regulations and government policies.

On the day before the Roundtable I had an interesting update from Microsoft on their developments in IP-based broadband TV and media centres.

After ten years of hard work, many false starts and billions of dollars, Microsoft’s persistence seems to have placed it in a position to play a key role in these developments. These developments, as well as our discussions at the Roundtable, concentrate more on the consumer market; however Nick Duval from systems integrator, Allied Telesyn, updated the delegates on the advances they have made with the triple-play model in the retail market.

According to them, it is a lot easier to deploy those services in a controlled environment, utilising a company’s WAN, and, by doing so, enjoy true commercial benefits by achieving some very interesting triple-play business objectives.

Hotels and hospitals can use their internal networks to deliver a range of entertainment and communication services to customers and patients, offering these service providers both interesting new revenue and good customer service opportunities.

The discussion proceeded from there, and delegates representing FttH developers added their ideas about the interesting opportunities that triple play offers them to turn these green-field networks into more commercially viable entities. This, linked to a breakthrough in FttH deployment, significantly reduces the roll-out costs (something I predicted when the US telcos first launched their FttH plans some two years ago).

This has given the FttH industry the boost needed to come up with better solutions, bringing the FttH roll-out cost to under $1500 per home passed.

High-rise residential buildings were seen as another early target for the new model, as it is far easier to bring true broadband services to these buildings than it is to connect individual houses to the infrastructure.

These topics will be revisited at the web conference on Wednesday (February 9), when an international audience will join in the discussion.

It appears that this new form of maintaining interactive contact with you is working, and I am now feeling sufficiently confident to begin planning more web conferences.

It is not too late to register for this event – click here.

At the Roundtable I also asked for suggestions for next month’s Roundtable – Telecoms Industry Consolidation.

I am going to try a slightly different formula this time – inviting merger and acquisition (M&A) experts to participate in this event – not only to provide advice and to discuss the options with us, but also to play a facilitating and networking role. So if you know of experts that I should include in this Roundtable, please don’t hesitate to contact me.

Have a good week

Paul Budde

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Tuesday, April 19th, 2005

Japan and South Korea remain ahead of the FttH game and run a bit contrary to the somewhat more subdued markets in Europe. Japan more so than Korea is diving into services.

Japan and Korea are in ways more the exception than the rule when it comes to chalk it up to a mix of factors: market readiness, consumption craziness, tech savviness, huge amounts of money, government intervention, and broadband and telecom service providers willing to make the jump into the market to be more competitive even if the cost per home passed doesn’t work out to be a sound economic model over the short term.

It’s not that these companies are being flippant about costs. The entrants into the arena do care about cost, but they prioritize beating the competition above worrying about cost it is seen as an inevitable next step in Japan and Korea, so the broadband providers are scrambling to stake their claim of the market share.

Hot-copper VSAT seems to be giving a run for its money as the next big broadband service in South Korea, though the government is pushing strongly for fibre uptake.

FttH is emerging organically in Japan and Korea. It’s sort of the logical next step…and the market is hungry for the next step. So it’s not so much that there’s a niche market need for or new developments by specialized telcos that are prompting the move to .; it’s just that the market is savvy, ready and hungry for the next big thing. Even if people aren’t necessarily in need of greater bandwidth given their Internet and data use patterns, the Japanese and Koreans need the ‘next big thing’.

As in other parts of the world copper is going to be around in Japan for a long time but maybe not in Korea. Korea will do just about anything to be leader of the pack, and it wouldn’t surprise me to see the government declaring that all copper will have to make way for within an aggressive timeline. Even in Japan where Softbank (Yahoo! BB) is the leading provider of copper-based ADSL, it argues that ADSL is just a stepping stone and that it wants to transition this network to fibre.

The impetus for Japan and Korea won’t necessarily come from businesses screaming for better infrastructure. As mentioned above, is seen as simply inevitable and is viewed as the hot new gotta-have thing.

Though NTT obviously would prefer it if their existing copper lines would suffice for many years to come, the telco is one of the first big players in the Japanese scene. Like other telcos around the globe NTT is actually taking a ‘non-leadership’ reactive role, even though NTT’s reactive role has the outward appearance of being innovative.

We have just published a revised and updated report on FttH developments see:
Global – Analysis – The FTTH market in 2005

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Tuesday, April 12th, 2005

I am just back from a trip through central west NSW, very enjoyable with highlights such as the Dish in Parkes and the Zoofari in Dubbo. Talking to many people in this area I decided to write this ‘Up to scratch’ article.

What a useful phrase for a politician. It means absolutely nothing, so what we are hearing is John Howard, Helen Coonan and John Anderson promising absolutely nothing.

Telecommunications services need to be “up to scratch” before the rest of Telstra will be privatised.

What an incredible cop-out!

If our politicians were serious they should do what their colleagues in other countries have been doing – setting targets.

My own ‘survey’ in central west NSW comes to exactly the same conclusion as the one recently stated by the National Farmers Federation. They clearly indicated that services are ‘woefully inadequate’ and broadband in regional Australia is ‘very limited’. It will be very interesting to see how our political leaders spin this to make it look as though those services are up to scratch. Believe me, they will find a way!

Since the government isn’t providing measurable outcomes, I will give you mine:

By 2006 every Australian household/business should have access to a minimum of 2Mb/s broadband at a price under $50 per month. By 2010 this should be a minimum of 10Mb/s for the same price, and by 2015 a minimum of 45 Mb/s, again for that price.

Bi-annual reviews should check the validity of these targets and prices, and make adjustments if required. We could also set separate targets – for example, a price of under $40 for metro services and $50 for regional services.

Don’t be fooled by the incredibly expensive and complex quarterly calculations the ACA has to do to gauge the performance of the telcos’ old-world services (telephone calls and access). It is futile to continue to measure this – these are the kind of statistics that are needed to evaluate telephone services in developing countries. Australia should have moved on – our ‘up to scratch’ measurement should reflect our economic and social position in the global marketplace.

That is not to say that we should not keep an eye on the overall quality of the infrastructure, but it should be tested against the performance of new-world services, not against the quality of the old-world services.

Paul Budde

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Tuesday, April 12th, 2005

Customers often ask me questions relating to my forecasts. Everybody likes to know what’s going to happen in the future. I don’t want to sound arrogant, and I certainly don’t consider myself infallible, but forecasting is actually not all that difficult for me.

The secret lies in the fact that history is a great predictor and, as I have been involved in this work for over 25 years, I have gained sufficient inside knowledge to be able to assess what is likely to happen next.

And I am quite proud of the fact that, to date, my predictions have been pretty accurate. Sometimes my estimates of the precise timeframes are not quite right, but, in general, I believe the content of my forecasts is fairly correct.

And when the timing is out the cause is often related to ‘unexpected’ circumstances.

I will give you a few examples.

Data centres, ASP models, outsourcing
Back in the late 1990s I predicted booms in data centres, ASP models, outsourcing and other IT-related developments in our industry. However, because of the telco crisis this growth was delayed by five years and only now is it beginning to re-emerge as a major trend, due, in the main, to the more widespread deployment of broadband.

Because of the difficulty involved in predicting time-based developments I began to formulate my broadband penetration statistics in a slightly different way.

Back in the late 1990s there was a pent-up demand of 2.5 million broadband users in Australia. However, to meet this demand it was necessary for Telstra to offer the services at an affordable price. So I predicted that the 2.5 million would be reached one-and-a-half to two years after Telstra became serious about promoting this. This happened in early 2004 and we are now well and truly on the way to reaching that figure within the predicted timeframe.

Pay TV
Back in 1994 I disagreed with Foxtel’s predictions that pay TV penetration would reach 75% by the year 2000. I also based my predictions on the existence of certain conditions.

Instead of the Foxtel figures, I indicated that, at a price of $50 per month for a basic package, less than 20% penetration would be achieved. At $25 per month for a basic package, I predicted pay TV could reach levels between 25% and 35%.

But, with prices remaining around $50 mark, penetration in 2005 stands at approximately 23%.

Paul Budde

Join me at my Roundtable on February 2nd: Planning the year ahead – 2005

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Friday, April 1st, 2005

ILID (pronounced ‘eyelid’) uses existing store lighting to broadcast price information to the shelf labels which allows pricing to be quickly changed from a central location, ensuring accurate and efficient shelf prices. As well as displaying price information, ILID electronic labels can alert shoppers to promotions and other special in-store events. ILID InfoFlash streamlines the process of placing shelf talkers, saving the retailer as much as 75% of associated labour costs.

Store staff can also use a remote control device to access store management information held within the electronic labels. Each label uses a dedicated microprocessor to process and store information.

ILID is the only system in the world that uses the existing store lighting system within the stores as its power source, an Australian invention that is patented in 23 countries. This also makes ILID the simplest and most cost effective solution on the market. Other systems use more complicated and costly radio frequency, infra-red or hard wired approaches.

ILID labels have a 10 year battery life, regardless of use, and are very robust and moisture-resistant to allow installation in refrigerators, freezers and other harsh environments.

ILID is a business unit of UXC Limited. They are a listed Australian business solutions company that has grown its market capitalisation from some $7 million in 1998 to over $125 million today. The group employs more than 1,400 employees.
They achieved a world’s first in the development of their ESL, securing in April 2005 a contract with Ritchies IGA to implement the ILID solution in all future stores nationwide. This contract puts the company in the coveted position of being the only ESL company in the world to have moved a significant retailer beyond pilot phase or limited rollout. The retailer’s decision to extend the solution to all future stores followed a highly successful pilot program.

Thier supermarkets have been using the ILID technology in four stores since 2004. This extended contract will see a further 10 stores roll out the technology over the next two years with a commitment to implementing it in every store in the longer term, both existing and new.

The contract was negotiated jointly with Fujitsu Australia, which is acting as a non-exclusive distributor for ILID. Ritchies has received positive feedback from both staff and customers following its pilot and as a result the management team agreed unanimously to roll out the technology to all stores Australia wide.

Developed in Australia, ILID technology is used by retail companies around the world including Kmart Australia, Co-Op Supermarkets UK and Wellcome (DFI) Hong Kong. ILID’s Kmart contract includes two installations of over 40,000 labels each, ranking them amongst the world’s largest electronic shelf labelling installations. For more info:

See also:
Broadband Utilities (BPL, PLC)
Global – Services (Residential, Business, e-Commerce)

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