BuddeBlog

In 2005 BuddeComm started to test-drive satellite broadband at their office in Bucketty. However, we were not convinced that satellite would be a solution – we tried it two years earlier, using the Telstra BigPond satellite service, and it didn’t work out.

A further reason we didn’t believe that satellite would work for us is that we use an MASP model over a Citrix connection. All of our applications are hosted in Newcastle, 150km from the office, and the latency issue would make it very difficult for us to type this article, for example, with every stroke of the keyboard having to travel to the satellite and back.

After the installation and the switchover from Integrated Services Digital Network (ISDN) to satellite there was a bit of pandemonium in the office, as the latency issue was indeed making it very difficult for everybody to work on their computers. We were asked to give it a go for a few days while they fine-tuned the installation, and surprise surprise, the people from NewSat did exactly that. There was sufficient improvement to keep us on the satellite. Nevertheless it is important to always realise that there are physical limitations to a signal that has to travel 36,000km.

The service was perhaps only just not as good as the ISDN service but it came very close, and the fact that we used the service for half a year indicates that we were able to cope with the small difference involved.

A key issue is the price – our 512Kb/s synchronous satellite service was double the price of our previous 128Kb/s synchronous ISDN service, and at that stage ten times more expensive than our current Asymmetrical Digital Subscriber Line (ADSL) solution. In other words satellite broadband remains a last resort solution. Obviously if there is no alternative, customers would be delighted to have such a good quality broadband services available to them.

We were certainly impressed by the satellite service, and amazed at the progress this technology has made. We have so often heard that ‘next year will be the year of the satellite’, but we do believe the technology has now reached a stage where it is an excellent alternative to fixed broadband for small businesses such as ours – not just for Internet access but, as in our case, as a virtual private network.

Those living outside metropolitan broadband areas are certainly no longer disadvantaged when it comes to broadband access, and this is a major step forward for people in rural and regional areas.

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The SIM (subscriber identity module) – the tiny, removable computer chip that the world’s 1½ billion GSM phones use to store user and account information is taking on new importance as the mobile phone becomes more versatile. With the Z-SIM the mobile phone essentially becomes a smartcard with a contactless chip, which needs only to be waved near a machine to be read. Contactless chips, with as little as 16kb of memory, are used in passports and have become common replacements for tickets on urban transport systems around the world.

In South Korea and Japan carriers are putting advanced payment functions on the SIM. In Europe, Orange is testing a SIM with 128 megabytes of memory 1000 times as much as the 128 kilobyte cards in use to hold music and other digital files. Telecom Italia has developed a SIM card for secure payment that can also remotely control television set-top boxes and other electronic devices. The card is expected to be in use by the end of 2006.

Nokia released a phone that has a slot for a second card that can make payments, including at vending machines. Besides payments there are three main areas in which work is being done to increase the utility of the SIM card, making the SIM hold the phone’s digital media files and applications, allowing the card to store large amounts of contact information so that information can be moved easily from one phone to another and using the SIM to help carriers create the same look and feel of their network regardless of the brand of phone.

All three areas require more memory and adding memory raises the price of a SIM card, which costs between US$1.20 and US$4.80 ($1.60 and $6.50) each, depending on the memory, applications and security.

See also: Global – Mobile Data

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Filmed entertainment spending in Australia is expected to increase by 3.3 per cent compound annual rate to 2006, lower than expected growth of 4.7 per cent in the Asia Pacific region and also lower than the global rate of 5.7 per cent, according to PricewaterhouseCoopers Australian Entertainment & Media Outlook 2002-2006.

Australia’s rate of growth reflects the growing number of countries competing for ‘footloose’ productions and the United States’ renewed efforts to combat them; Australia’s highly developed cinema market with limited scope for additional growth; and the growing impact of piracy on home video and DVD.

Nevertheless, Australia’s world-renowned filmmakers, production facilities and locations, competitive costs and package of Government support continues to make Australia an appealing location, allowing us to attract approximately seven per cent of US productions undertaken outside the US.

The Federal Government’s recent package of support to Australia’s production industry and the introduction of the 12.5 per cent refundable tax offset could not have come at a more crucial time. The Government’s support will allow Australians to continue to watch stories about themselves and will offer overseas producers the certainty they need when determining where to shoot their productions.

The Australian box office rebounded strongly following a downturn in 2000. 2001 was a record year at the box office and the Outlook forecasts box office in 2002 to be 8 per cent higher than last year. Nevertheless, cinema will only achieve a 4.5 per cent compound annual growth rate to 2006, with almost all of that growth coming from increased ticket prices, not through greater admissions.

See also:
Australia – Film Market.

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The first thing you notice on arrival is that this South Pacific island is more French than France itself.

The other surprise was that the earth (red) and the vegetation is very Australian, unlike that of other South Pacific islands, demonstrating the close Gondwanaland relationship between these two countries.

Another major feature of this island is the hospitality and warm smiles that are the trademark of the South Pacific.

And, last but not least, like Australia, New Caledonia also has a convict history – an era that began around the time that Australia’s was coming to an end.

The French people, supported by the French government, are determined to maintain the French character of Nouvelle Calédonie. Over US$1billion is poured into the territory every year by the mother country – New Caledonia and French Polynesia have by far the highest trade deficit in the Pacific, making them all the more dependent on France.

The French government is trying to recoup some of these subsidies through high import and export duties, which makes life in New Caledonia very expensive, as most consumer goods are imported from France.

The country is the world’s third largest producer of nickel, and during our travels we drove through some of these working mines. They are so large that they simply absorb the existing road system.

The mines do, however, leave deep scars in the environment and we saw the damage this does to the coastal reef system. Slowly but surely, however, more ecological requirements are being placed on the mining industry, especially now that this market is slowly being opened up for overseas (Canadian) investments.

Officially a new independency referendum is due between 2012 and 2020, but with 2,500 Frenchmen being added to the population on an annual basis this referendum could easily end up in the same place as all the previous arrangements – on the scrap heap. Currently 44% of the population is Kanak and 34% European, with a mixture of other South Pacific people, North African and Asians making up the rest.

Outside the capital, Nouméa, where over 70% of the 230,000 New Caledonians live, the situation is completely reversed. This is where Kanaky (what the indigenous people, the Kanaks, call their land) begins. There are only a few larger towns – maximum 5,000 people, 95% of which are indigenous. It is very strange to see French military police patrolling the street, as we saw in La Foa. This is a clear indication that France has no interest whatsoever in any independence movement. In the past they have not shied away from using brute force to impose their rule over the Kanaks.

Since 1998, in order to make independence less of an issue, the French government, under the so-called Nouméa Accord, has been pouring large sums of money into the development of the country, and we saw evidence of this during our travels, with big social and cultural centres in Kanak territory.

Nevertheless, the national 20% rate of unemployment is concentrated almost entirely around the indigenous people, and they earn only a third of the income earned by the French citizens of the country.

On the other hand, medical care and education are among the best in the Pacific. Infrastructure is another great gift from the French, as we experienced during our trip. There are not many South Pacific Islands where you can drive around the countryside with ease, which of course provides a great opportunity to make contact with the land and its culture.

Modern telecommunication services
In Nouméa I met with Olivier Verdier and Johnny Lasiman from OPT and they provided me with an update on the latest telecoms developments in their country.

While telecommunications was not a part of the Nouméa Accord, government policies have resulted in excellent communications services. OPT is able to cross-subsidise its services between post and telecoms, as well as between metro (=Nouméa) and the villages. Over the last few years both mobile and broadband communications have enjoyed a continuing boom.

Telco incumbent – OPT
The market is dominated by the state monopoly OPT; the market is simply too small to warrant infrastructure-based competition. There is limited competition in the Internet arena, with some five players. OPT also operates in this market through Offratel, a 50% joint venture with France Câble & Radio. Other players are MLS, Kanel, Edge and RENATER (university). Some consolidation is expected in the not too distant future.

Internet and broadband
Internet penetration is low, with only 20,000 subscribers, half of them on broadband. Prices are also relatively high, first in relation to equipment such as PCs (because of the high import duties), but also the subscription rates are relatively high, starting at US$30 per month for dial-up and $70 a month for entry level 128Kb/s broadband. The 128Kb/s service was introduced after the original higher speed/higher cost services generated a limited uptake only.

But progress remains a key issue as well, and in 2006 ADSL2+ will be introduced in the country, commencing, of course, in the capital Nouméa.

Optical cables
Nevertheless the government is determined to promote broadband and currently 50% of the local communities are connected to the broadband network. As a consequence, extensive fibre upgrades have already taken place in Nouméa and OPT is now also planning to link the west coast optical fibre cable to the east coast, from Koné to Poindimié. Currently Hienghène, a stronghold of the independence movement, is the only town on the east coast that has broadband access, linked with the west coast by microwave.

Talking about cables, Olivier also confirmed that an RFP was issued in December for a fibre optic submarine cable from Nouméa and Sydney, it is expected that a start will be made later on this year.

In the harbour of Nouméa we saw the big submarine cable maintenance ship from Alcatel, Ile de Rene. According to Olivier the ship is always in the harbour, indicating the high level of quality of the submarine cables in the Pacific; the ship doesn’t need to get out for cable maintenance work.

Mobile communications
Mobile communication is still a rapidly growing service; there are now 130,000 subscribers, of which 80% are on prepaid. And indeed, in all the villages we visited on our travels I noticed that there was mobile coverage. This is not the case in the areas between these towns, which is further complicated by the ruggedness of the country and, of course, the low population distribution outside the capital.

Competition
OPT has pledged that it will not become involved in the content market and seven companies are active in this field, of which six are local companies offering ringtones and other content services via the incumbent’s mobile network.

Revenues are shared on a 60/40 basis in favour of the content providers. VoIP as a voice service remains a state monopoly and it will be interesting to see how technological developments in broadband are going to test the boundaries between basic services and content services.

Since 2003, to compensate for the lack of competition, 50% of the Board of OPT is made up of representatives from the 43 local communities. I questioned whether people power could influence, for example, the roll-out of broadband and Olivier told me about one of the board members, the mayor of La Foa, who is playing an active role for his community. I was not surprised by this, having visited La Foa and having experienced the pride and energy that is apparent in this community.

While we were in New Caledonia the government announced a relaxation of government legislative requirements in relation to OTP’s procurement requirements, this will open up opportunities for other suppliers to compete for the business of the carrier, and at the same time OPT will be able to negotiate more competitive contracts.

Paul Budde

See also: South Pacific Islands telecommunications market overview.

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Basic telecom services were officially liberalised in December 2005, bringing full liberalisation to the telecom market in Honduras.

Already before full liberalisation, the government had opened value-added services, mobile telephony, Internet, and broadcasting services to competition.

In April 2005, a bill was submitted to parliament outlining a new Telecom Law, which would replace the 1995 one and prepare for market liberalisation. In August 2005, Honduran telecom associations Asetel urged the government to speed up the introduction of this new legislation. In December 2005, however, the government suspended talks on the telecom bill, following political opposition driven by fears that the new rules could undermine the state-owned incumbent Empresa Hondureña de Telecomunicaciones (Hondutel).

Modernisation of infrastructure and increased competition are expected to benefit the entire industry and herald lower tariffs. Shortly after the start of liberalisation, mobile operator Tigo launched long-distance services, cutting the price of calls to the USA from US$0.83/minute to US$0.38/minute. Tigo’s mobile competitor, Aló, announced rate cuts of 18%-32% for calls to the USA, Mexico and Central America.

One of the poorest countries in the Latin America and with an extremely unequal distribution of income, Honduras is struggling to break the long cycle of poverty and inequality. Around 62% of Hondurans live in poverty and close to half are extremely poor. The country has one of the least developed telecom infrastructures and the fourth lowest teledensity in the region, after Haiti, Nicaragua and Paraguay. A large percentage of the population, principally in rural areas, still lacks access to basic fixed-line telephone services and electricity.

Unsatisfied demand for basic telephony has driven a veritable boom in the mobile market, with annual growth rates of over 80%. Mobile telephony received a boost in 2004, following the November 2003 launch of a second mobile provider, Aló, and the arrival of América Móvil on the scene, when it acquired Aló in June 2004.

See also: Honduras – Telecoms Market Overview & Statistics.

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It will be a tough call, but Telstra’s refusal to participate in the $1 billion Connect Australia government funding to deliver wholesale services could lead to new business opportunities for others. However, this would require a high level of strategic action from the government.

Despite the enormous difficulties involved in building alternative networks, companies keep coming back with ideas and initiatives.

Increasingly vendors are seeing the roll-out of networks as a potential business opportunity, and companies such as Ericsson already have dozens of projects under their control, with leasing, outsourcing or management contracts.

I have foreshadowed this development for close to a decade. I didn’t foresee it would take such a long time to eventuate, and even now progress is slow…but it is steady.

I remain convinced that in another ten years perhaps as much as 50% of the national and regional networks will be under the control of the vendors.

Also, slowly but surely, utilities are building out their networks. Others are looking at wireless systems.

The government’s Connect Australia Fund could be the catalyst that will bring all these parties together to work towards an alternative network – initially in regional Australia, but, if Telstra continues to boycott competition, such networks could eventually also reach into metro Australia.

Driven by the Nationals’ initiative in relation to regional infrastructure the Homestead project was born, a $7 billion infrastructure plan for regional Australia. At first glance, this is too expensive to make it a commercial proposition, but a combined approach, incorporating alternative networks that are already in place or under instruction, could prove successful. Give government support, this is a doable plan, and I am keen to assist wherever I can to get such a collaborative plan underway.

Paul Budde

See also:
Australia – Analysis – Competition moving into 2006
Australia – Wholesale Access Network – Industry Cooperation)

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People Telecom Limited has reached an agreement with Nextep Broadband (a division of NEC Australia) to become Australia’s first Broadband Virtual Network Operator (BVNO). From February, People Telecom will provide nationwide capacity on Nextep’s network of Next Generation DSLAMS.

People Telecom will progressively start to offer services on its new platform to service new and existing customers, many of which have already shown interest in higher speeds than are currently possible through their existing connections.

Under this long term agreement, People Telecom has instantly established a significant network across Australia with the ability to offer not only business grade broadband connectivity to its SME/SOHO customers but also next generation ADSL2+ services to both its existing and future customer base. They now have access to close to 100 DSLAMs nationally with no capital expenditure. The company will also launch higher margin business VoIP services along with high speed ADSL Broadband, realizing access speeds of up to 24,000 Mbps.

See also;
Broadband Australia
People Telecom Ltd

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Companies who understand the importance of the Internet economy include some of the leading ISPs in the country, such as ihug, Call Plus, Orcon and Maxnet.

These companies are trying to get out the ‘box’ they are squeezed into at the moment – which contains, on the one hand, a regulatory regime that doesn’t allow them to participate in the Internet economy and, on the other, the 800-pound gorilla that wants to grab this market for itself.

If New Zealand wishes to participate in some of the exciting developments that are currently taking place in the rest of the world it will have to facilitate new developments such as triple play, IPTV and VoIP.

There is no incentive for Telecom to move at any great speed in these new directions as it is going to mean cannibalising its traditional services, something it will only do if it’s forced to, either through (preferable) competition or regulations.

The key to these developments is, once again, LLU. Only when wholesale players have the opportunity to develop their own new and innovative products will they be able to build these new models.

As long as they are required to resell Telecom services through UBS or even ‘naked DSL’ they won’t be able to move in this direction. Look at the current Telecom-sponsored ads from the second-tier players. Their products are all built on the one-size-fits-all Telecom UBS products – all their advertisements promote exactly the same vanilla products, no innovation.

ihug’s speed-independent broadband service is certainly different, and this is creating a shockwave though the industry, but, there again, ihug has little room to manoeuvre. Like everybody else it is unable to build VoIP or IPTV products into its broadband offerings.

In order to maintain its current momentum ihug desperately needs more sustainable wholesale margins. If this does not happen there will be a mass exodus of ISPs from the market, which would be yet another blow to competition.

The current half-baked bundled products these second-tier players are now able to deliver are nothing like the new products and services we are seeing elsewhere in the world – not because the New Zealand ISPs don’t know any better – no, because Telecom, with the support of the government, is preventing them from moving into these new markets.

But these developments are unstoppable and they will eventually arrive in New Zealand. Once that happens we will see new companies entering the market and others becoming more prominent, especially the ones mentioned above. But, at the same time, this will also lead to further consolidation.

Those focussed on their customers will become the most successful players. Good niche market players in New Zealand will be able to build up interesting businesses for themselves. Maxnet is a good example here.

Another company worthy of special mention is Orcon, the most successful UBS wholesaler in the country, conveniently filling the position left vacant by TelstraClear. It is very likely that the smaller ISPs will have to buy from wholesale companies such as Orcon in order to remain viable.

Companies like Orcon could also become key VoIP and new media wholesalers once the environment in New Zealand becomes more attractive for such services. However, I am a bit puzzled by their current foray into the highly competitive residential end-user market. I sense the possibility that they might lose the focus on their successful wholesale operation.

This will help other players who are also going to move into this wholesale space. The first Australian companies have already moved into this market, but, due to failed government policies, New Zealand companies have been unable to build up expertise in these markets at home. They now find themselves on the back foot, in competition with companies from countries that have more forward-looking policies.

TelstraClear has been a significant loser in this market in 2005; because of its repositioning it has been operating in limbo for quite some time. During this period they have seen their Internet dial-up market eroded by competing second-tier players, who used the opportunity to convert TelstraClear dial-up Internet customers to their own new broadband services.

An interesting side effect of Telecom’s high end user charges is that some ISPs are able to fund expensive fibre and wireless network roll-outs that wouldn’t happen in other countries. Even if they undercut Telecom on monthly charges and subsidise CPE and installation, they still get good returns within six months.

However, this is a very risky strategy, as New Zealand prices will soon have to fall in line with international charges and those building new infrastructure need to be very much aware of this. In the past we have seen Woosh complaining when broadband prices were lowered by Telecom.

Paul Budde

See also:;
New Zealand – Internet and ISP – Statistical Overview;
New Zealand telecommunications market overview;
New Zealand company profiles.

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It is fascinating to watch how the two mobile operators in The Gambia, a small country on the west coast of Africa, compete for customers with innovative marketing ideas, specially adapted to local needs. One of them, Africell, has come out with a very special offer: "Buy a SIM card and get 5kg of rice free!" – and the promo has actually been very successful, especially around the holy month in this predominantly Muslim country when everybody needs to get lots of food together for the end-of-Ramadan celebrations. The ad shows a happy customer – a smiling woman in traditional Muslim dress.

The Gambia (the ‘The’ is indeed a part of the country’s name) is a 300km long, narrow strip of land with a population of only 1.5 million, straddling the Gambia River to the Atlantic Ocean coast in the west, bordered on all other sides by just one other country, Senegal. It is an English-speaking enclave in the otherwise mainly francophone West African region. The economy relies mainly on agriculture, fishing and some small-scale manufacturing, but the country has also developed a tourism industry, based on its natural beauty, peace and stability.

While mobile market penetration in The Gambia is slightly above the African average, fixed-line and Internet penetration are still relatively low at only around 3%. This is expected to change with the new high-capacity CDMA fixed-wireless system that the incumbent telco, Gamtel, has just launched. The recent award of the country’s second international licence to Africell is expected to lead to increased competition and lower prices in the mobile market as well.

See also: Gambia – Telecoms Market Overview & Statistics.

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The Serbian government has launched an investigation against Serbian mobile operator Mobtel. Its licence has been cancelled as the government claims the operator sold its rights to operate in the Kosovo province to Kosovo mobile operator Mobikos without receiving the required approval from the Serbian cabinet. In addition the government claims Mobtel was to receive 30% of net profits made in Kosovo, but it did not receive its share. Telekom Srbija has been appointed to manage Mobtel for the duration of the investigation.

The Serbian government holds a significant stake in Mobtel, the size of which is also in dispute. Mobtel was established as a joint venture between government-owned PTT Holdings (with 49%) and BK Trade (with 51%), part of BK Group, a powerful local industrial consortium controlled by the Karic family. The dispute is over the size of Karic’s stake as the government claimed Karic’s company never invested in Mobtel to the extent stipulated by its ownership contract. The dispute is currently under examination at the International Arbitration Court in Zurich, Switzerland. The ownership issue has become further complicated as the BK Group sold its stake in May 2005 to a consortium of Austrian investors.

See also: Serbia and Montenegro – Telecoms Market Overview & Statistics.

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