BuddeBlog

The following predictions are provided by our team of senior analysts and researchers.

Global Mobile
For the foreseeable future the mobile industry will still very much revolve around voice services, although revenues from mobile data services are rising slightly at around 11% per year.

On average, call charges around the world are also dropping by around 15%-20% per annum; and as would be expected the markets with stronger competition have seen a considerable drop in mobile call charges. The mobile phone is by far the preferred telephone choice for most consumers, and if the price is right the mobile industry has a good chance of capturing more voice services away from the fixed networks.

However while mobile is becoming the preferred voice carrier in many countries, it is not well suited to data services, and this has as much to do with the current business models from the operators (aimed at protecting their lucrative voice income) as it has to do with technology.
Kylie Wansink

See also:- Global Mobile Communications

Global Broadband
Broadband growth varies slightly per region and per quarter, but on average growth rates continue at just under 40%. With over 260 million broadband users worldwide, the majority of new subscribers are choosing DSL; and the largest markets in terms of subscribers are the US, China and Japan.

The underlying technology on which the information superhighway will be built will ultimately be fibre optic cable. In the meantime however ISDN, DSL over copper cable networks, compression technologies and cable modems linked to coaxial cable provide enough bandwidth in the short term.

Other (wireless) technologies (WiFi, WiMAX?) are also coming to the fore. What needs to be changed quickly however is the opening up of the networks to content and service providers. Only these organisations will be able to make sure that new revenue stream starts flowing in. Without open broadband networks it will not be possible to develop economically viable business models for broadband services.
Kylie Wansink

See also:- Global Broadband

Western Europe
Access to the local loop is paramount for the continuing development of the broadband market in Europe in 2007. The competitive advantage of incumbent operators owning the ‘last mile’ to end users has been tempered by regulatory measures and EU directives, only recently brought to the forefront of European policy.

The willingness of alternative operators such as France’s Free to make their new networks open-access has placed added focus on LLU as a key to providing greater broadband competition, lower consumer prices, and more widespread availability of high-bandwidth applications. LLU has been a considerable success in many markets, while progress in a number of member states promises further improvement during the year.

The continuing downward trend in prices for both full unbundled and shared access lines will lead to the number of unbundled loops in Western Europe mushrooming in coming years, from about 11 million in mid-2006 to between 23 and 24 million by the end of by 2010, or up to 15% of all copper lines. A brake to the growth of LLU may thereafter come from incumbents promoting cheaper wholesale offers, but LLU will be the key method for broadband expansion as consumers respond to the advantages which competition offers.
Henry Lancaster

See also:- European Overviews

Eastern Europe
Convergence and broadband will continue to grow in importance during 2007 as intensifying competition in the fixed-line voice sector forces incumbent operators to look to convergence services as a source of new revenue. This is particularly the case in the liberalised EU countries, all of which have or are in the process of completing market competitiveness studies and implementing remedies to ensure a level playing field for all competitors. The focus on convergence will naturally drive uptake of broadband services, the enabling platform for offering convergence services.
Paul Kwon

See also:- European Overviews

Asia
The long-awaited issuing of 3G licences in China should happen in the first half of the year. (There will be a collective sigh of relief across the industry when this finally happens!) We will also see China stepping up its telco business activities throughout the Asian market in 2007.

Growth in the Asian broadband Internet market will run at around 25%, with DSL and cable modem both strong. There will also be a growing focus in developing countries across Asia on broadband Internet access, boosted by falling equipment prices.

Wireless broadband networks will be increasingly popular in these developing markets. Asia’s mobile market will continue its strong growth in terms of subscribers, with India, China and Pakistan leading the way; having passed one billion mobile subscriber mark in the second half of 2006, we can expect Asia to chalk up an annual expansion of its mobile subscriber base approaching 30% this year.

2007 will also see a bundle of new submarine cable projects across the Asia-Pacific region, as this segment of the market starts to bounce back after going through a flat period.
Peter Evans

See also:- Asian Overviews

Middle East
Recently introduced deregulation and (slowly) increasing market competition will reduce the current high prices for broadband access in the developed markets of the Gulf states, causing penetration rates to rise.

The market in Jordan will also show increased benefit from its deregulation. Other countries will begin to catch up to the UAE’s broadband penetration rates of around 25% of households. Fixed-line and mobile markets in many of the Gulf countries are already at saturation point, with mobile penetration rates far over 100%.

Incumbent telcos and investors are seeking growth by using their deep pockets to buy operators and licences in Asia and Africa and will continue to seize every opportunity.

Locally, all attention is on the third mobile licence and second fixed-line licence being offered in Saudi Arabia, which still has considerable untapped market potential and will grow quickly with more competition.

In the developed market of Israel mergers and the opportunities given by convergence to less traditional players will create more competition for incumbent Bezeq, causing it further pain.

In other Arab countries outside the Gulf area and Jordan, politics and economics have a bigger bearing on development than industry moves but mobile penetration will continue its fast growth in those countries where it is not actively subdued by government policy.
Tine Lewis

See also:- The Middle East

Africa
In Africa, the mobile networks will continue to dominate the telecommunications sector in 2007 with an average subscriber growth across the continent of around 50% and well in excess of 100% in a number of markets. While the continent’s leading markets with penetration rates around 70% are approaching saturation levels, the average mobile penetration across Africa is still low at around 20%, leaving ample room for further growth. Mobile network operators offering 3G services are also emerging as the leading broadband access providers, due to the typically limited reach and reliability of Africa’s fixed-line networks.

The fixed-line incumbents are aggressively rolling out ADSL, and a large number of them are trialing or have launched WiMAX wireless broadband services – an area where they are meeting the competition from a number of alternative service providers. Several new submarine fibre optic cables planned to launch in the coming two years will multiply the bandwidth available to Africa and help to bring down prices.
Peter Lange

See also:- Africa

USA
Following the December 2006 FCC approval of the AT&T-BellSouth merger, 2007 will bear witness to the start of an AT&T-Verizon duopoly in US fixed-line telephony markets. Cingular Wireless, likely to be rebranded with the AT&T moniker, is expected to improve its lead in the US mobile market. The merger will also propel AT&T ahead of Comcast into the broadband market lead.

Indeed, DSL generally will overtake cable broadband by early 2008. In the mobile market, subscriber growth rates will fall to around 10% as penetration rates edge towards 85%. Mobile ARPU will remain flat for 2007 due to downward pressure on call tariffs, although decreasing voice revenues will be largely offset by increased use of SMS and new data applications.

VoIP will constitute the main driver of competition, with forecast growth rates of 60-80% in 2007, although pure-play VoIP providers such as Vonage will continue to lose ground to telco and cable VoIP.

Verizon and AT&T will continue to deploy fibre deep into their networks, although actual uptake of IPTV will remain slow as technological glitches and regulatory hurdles are overcome. Perhaps the most far-reaching development could be the passage of net neutrality regulation, which recently received fresh hope after the Democrats wrested control of the Senate from the Republicans.
Lawrence Baker

See also:- USA

Canada
Total Canadian fixed line revenues are expected to decrease approximately 5% in 2007, largely due to declining long distance revenues and competition from mobile and VoIP services.

In contrast, mobile revenues will continue to grow as subscriber numbers increase and data use increases. Canada’s mobile subscribers will reach close to 20 million by early 2008, though penetration rates will still remain low by OECD standards. Thus mobile revenues are likely to overtake fixed line revenues in 2008.

As the market moves towards a triple-play model, the cable TV companies are expected to be the early winners capturing around 15% of residential phone lines by end-2007. The major telcos, on the other hand, are predicted to acquire less than 5% of the TV market by end-2007.
Lawrence Baker

See also:- Canada

Latin America
Broadband could hit a serious bottleneck in Latin America due to the low number of fixed lines and fixed infrastructure – that is, unless a wireless broadband technology such as WiMAX is successfully adopted. Brazil is the regional leader in DSL technology.

In July 2006, local analysts were predicting that broadband growth would reach around 40% per annum for the next four years. Despite reductions in price, however, broadband access is still beyond the reach of the majority of the population, in a country where highly unequal income distribution remains a serious problem. Provided the country’s economy continues to improve, Brazil’s broadband household penetration could increase from the current figure of 8.5% to almost 30% by 2015.
Lucia Bibolini

See also:- Latin America

New Zealand
The New Zealand market is now approaching saturation and mobile subscriber growth will taper off significantly in 2007 and 2008. During 2006 the trend of ISP consolidation slowed; however, moving forward into 2007 and 2008, commoditisation of products is likely to see the speed of ISP consolidation pick up once again.

The long-awaited government policy that will pave the way for Local Loop Unbundling (LLU) was finally passed by the New Zealand parliament in December 2006. This delayed introduction has meant that ADSL2 and ADSL2+ adoption has been very slow. Both LLU and an upsized UBS service should, but will not necessarily, allow triple play services. While upsized UBS went live in 2006, LLU and Naked DSL are still waiting for introduction perhaps in late 2007 or possibly even as late as 2008.

The progressive introduction of ADSL2+ broadband will however enable the delivery of new services on top of Telecom’s broadband infrastructure. Services delivered over its NGN in 2007 and 2008 will include VoIP, video calling, converged fixed/mobile offerings, Interactive television and VoD.
Phil Harpur

See also:- New Zealand

Australia
The ongoing war between the regulator and the incumbent, Telstra, is going to dominate 2007, and this will slow down many of the telecoms developments that are taking place elsewhere.

ISPs will drive the innovations and ULL, with line-sharing supplying the main thrust. The regulatory body will stick to its guns, and this will continue to favour the ISPs.

I expect Telstra to ambush the market with an ADSL2+ product, based on FttN, and the regulator will be forced to sort out the mess that will inevitably follow. However, because of Australia’s self-regulatory system, this could still give Telstra a head-start of a few years.

The first ‘new’ service on broadband will be VoIP. Over the next two years I expect one million VoIP users. It will be a slow but steady trend, and it will speed up during the year. More fireworks are expected towards the end of the year, and into 2008.
Paul Budde

See also:- Australia – Telecommunications Industry Statistics and Forecasts

I hope you can join me at the Roundtable on 1 February.
Theme:Planning the Year Ahead

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Australia’s first certified WiMAX operator, Queensland telecommunications carrier Buzz Broadband launched initial services over a network planned to eventually provide coverage across 30,000 square kilometres in the east of the state. The area is home to 55,000 people and by April 2007 a quarter of these people had taken up the services, driven by the cheap VoIP service. However in March 2008 the network was closed due to what the operator described as technology shortcomings.

Buzz was deploying Airspan Networks AS MAX equipment across its service area of Bundaberg, Maryborough, Hervey Bay and Childers. They use the company’s proprietary WipLL equipment for their 22 base stations and backhaul links across the region and is deploying 802.16d WiMAX as an access solution. Buzz is expected to evaluate a move to the 802.16e Mobile WiMAX standard when Airspan’s upgrade systems become available. The company focused on developing a carrier-grade service based on current 802.16d equipment. The company supplies a range of residential and commercial data and VPN solutions across its networks. Its basic Internet service is a synchronous 2Mb/s/2Mb/s product with monthly data allowances starting from 1,000MB. Business grade services can be ordered at speeds up to 22Mb/s across the network or 10Mb/s to the Internet.

Buzz launched its BuzzPhone VoIP telephone service in late 2006. Owning both the access network and the voice product Buzz is able to offer an alternative to the incumbent copper-based carrier and its price and network constraints. Voice customers were able to port existing telephone numbers and disconnect their traditional telephone line while being able to enjoy the flexibility of an IP-based voice solution that allows, for instance, customers to retain an existing Sydney or Melbourne telephone number when moving to the service area. Buzz offered its 2Mb/s/2Mb/s data service from $29.90 per month, and voice calls for 10c flat rate are untimed, nationwide and without flagfalls, call caps or other charges.

The company planned to extend the service to 11 other centres in Queensland, covering an area of 8,000 square kilometres.

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m.Net Corporation mobilised Seven’s content assets, such as Home and Away and The Great Outdoors, through to Girlfriend, New Idea, k-zone and Better Homes & Gardens magazines. (Now all part of the new Yahoo7 service.

m.Net already counts Austereo, Australia’s largest commercial radio broadcaster, as one of its major media clients.

Seven’s approach is different from other Free-to-Air (FTA) networks, which have aligned themselves. It doesn’t consider an alignment with a single carrier to be the best outcome for consumers. The network believes that its content should be widely available to consumers, regardless of which carrier they are with, or which device they use. 

It believes that mobile content isn’t just about watching TV or reading magazines on your mobile – it believes it’s about delivering a richer experience to the audience and offering them a deeper interaction with their favourite brands. This could take the form of Wireless Application Protocol (WAP) sites, SMS promotions, mobisodes, ringback tones, games or music.

m.Net has an international reputation for mobile services innovation, having partnered with Korea’s most successful mobile services company, WiderThan Co, and Buongiorno Vitaminic, Europe’s largest mobile content company, to bring overseas mobile content and services to the Australian market. It is also offering Seven local Australian services and content, including SMS reverse auctions, games, cartoons and short films.

m.Net Corporation was founded in 2001 by a consortium of international and local companies spanning the mobile services value chain. The company built and operated the first 3G network in the Southern Hemisphere as a test bed for 3G applications. In 2006 they were in the process of selling these assets.

m.Net was established through the Commonwealth Government’s Advanced Network Program and significant investment from consortium partners, which include multinational companies Alcatel, Motorola and Cisco, Telstra and regional telecommunications carriers, three universities, and a number of innovative Australian technology companies.

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It set up Mobile Virtual Network Operator (MVNO) B-Digital, which it sold in December 2004; it also looked into cell broadcasting, providing, for instance, traffic information on a type of location-based technology. And now it is back in this market – but perhaps a bit closer to its core business, mobile content.

In July 2004 the broadcaster announced its partnership with the mobile solutions enabler m.Net Corporation, to provide mobile content services for Seven and the magazine brands of its wholly-owned subsidiary, Pacific Magazines.

This would enable Seven to extend its brands into mobiles – from SMS interactivity through to 2.5G and 3G downloadable content, across all Australian telecommunications carriers.

Consumers will now have the opportunity to access full content in a magazine or on TV, as well as value-added content on the mobile phone or on the web.

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Amsterdam is one of Europe’s principal cities for arts and entertainment. At least for those who cannot attend performances at the Paradiso and Melkweg clubs, there is an option provided by Fabchannel, which streams the acts on its website and thus makes performances available to all. Currently there are about more than 300 archived performances to enjoy, dating back to 2000. In addition there are occasional live webcasts.

Experimenting with a new business model based on the popular ‘mashup’ concept, Fabchannel has also launched a new service which enables music fans to create their own, custom made concert videos and then share them with others through their blogs and websites. The model can be considered a video extension of the bespoke CDs which Virgin Records first began to sell in its UK stores a few years ago, when it realised that there was money to be made in providing CD-burning facilities for customers who wanted to create their own, legal, music disk, containing the music they wanted rather than full records which may hold just a few songs which interested them.

There are currently several hundred videos available from the Fabchannel website, each of which can be customized with tags, images and descriptions. To get Fabchannel to work for you, just create a user ID from the Fabchannel website and create a custom playlist. Fabchannel prepares the html code to embed the resulting concert footage into the desired web application, and so allow it to be available across the globe, but the code can also be grabbed from any widget to be post it to personal page, and so eliminating the need to use the Fabchannel site.

Fabchannel’s potential growth lies beyond its own website, in the innumerable blogs, websites, for a, MySpace pages and other applications that appeal to niche groups, all using the Fabplayer service. The technology is also ahead of its potential competitors such as Youtube and Google players, which can only play one video at a time in moderate quality. This development in ‘music for all’ is one of only thousands which will emerge in the near future, heightening the demand for broadband take-up and thus encouraging further investment in network upgrades to cope with bandwidth demand.

Fabchannel is on the agenda of the Australian Broadband Mission to The Netherlands. One of my Dutch colleagues is very close to this development. Interested? See Australian Study and Trade Mission to the Netherlands 11-15 March 2007.

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What worked:
Hong Kong: Great venue choice; intrinsically exciting place. Transport was efficient and effective.
Theme: The theme of ‘Living the Digital World’ certainly seemed to strike a cord. Its big impact was the strong thread it provided through the various forums.
Forums: These were undeniably one of the big successes of the expo, with a very impressive line up of talented people on the panels. The ITU did well to get the CEOs, government ministers and others along and participating in the event. This certainly helps lift the profile of the issues under discussion.
Youth Forum: To see the huge international group of young telecom people was indeed an impressive sight.
Special mention: Sealing of the relationship between the ITU and Nobel Laureate Professor Muhammad Yunus (of Grameen Bank Bangladesh micro-credit fame) with an announcement of the launch of the ‘ITC Empowerment Network’ to which Connect the World partner, Cisco Systems, announced a US$1 million contribution and other companies such as Qualcomm pledged support.

What didn’t work:
Participants (1): Where were some of the key (mostly non-Asian) industry players? Conspicuous by their absence, for example, was Nokia. China, through Hong Kong, had put a big effort into showcasing its telecom industry through this event. You wouldn’t blame them if they felt snubbed.
Participants (2): Participation was noticeably lopsided in terms of exhibitors (and therefore in terms of atmosphere); very Asia-centric. This was not the fault of the Asians. It lies squarely with the ITU to make sure there is broad and balanced participation.
China and 3G: As I noted in my previous report, this was a missed opportunity for China. An announcement on 3G would have been timely in more ways than one.
Networking: This was my first time attending an ITU Telecom World. So I am relying on others for a comparison with past events. Some people I spoke to remarked that this time round there was not the same feel about the event. That the usual networking was simply not happening.

It will be back to Geneva (and therefore to Europe) again for Telecom World 2009. Interestingly, the venue was a choice between Paris, Geneva, Dubai and Birmingham. The 2009 event is scheduled for 5-9 October if you want to put it in your diary!

A personal memory: It is often the case when you travel that the most memorable happenings turn out to be simple and unexpected. This time in Hong Kong I took the Star Ferry across Hong Kong harbour just after 9pm one evening. That short trip across the water to Kowloon on an old ferry called ‘Celestial Star’ was a delight. The quietly chugging boat moved across the ever so gentle swell of the harbour surrounded by the magical lighting of the city’s skyscrapers. The timing was great with the lights presenting a spectacular celebration of Christmas all reflecting in the dark waters of the harbour. A beautiful few minutes on the most beautiful of nights. All for the cost of just HK$2.2 (about 30 cents)!

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It hardly gets a mention elsewhere in the world, but an important standards war is raging in the USA.

The CES show is serving to bring the combatants out into the open, but there is no sign of a compromise – nor is there any indication of a clear winner in yet another Beta vs VHS battle.

The two standards contenders are HD-DVD and Blu-ray.

HD-DVD supporters revealed at CES that they anticipate selling nearly 2 million HD-DVD players in 2007. Not to be outdone, Blu-ray backers are promising the release of even more movie titles and the sale of even more players. Moreover, two CE manufacturers have unveiled a plan to alleviate consumer concerns about picking the wrong high-def DVD format by providing a product that is compatible with both.

But at CES it also became very clear that, despite the enormous hype, the uptake of HDTV in the USA is exceedingly slow, and this makes it impossible to pick a winner at this stage.

It seems that we will have to wait until CES 2008 – maybe there will be more clarity on the issue by then.

See also:
Global Digital Media
USA – Convergence – Digital TV and Interactive TV

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Woosh Wireless (Woosh) posted a loss of NZ$24 million for the year ending 30 June 2006, following losses of $21.8m in 2005, and $18.9m in 2004. Operating revenues for the 2005/2006 year were down 8.7% to $NZ10.4 million, from $11.4 million a year prior.

Woosh is dependant on raising additional venture capital to fund its negative cashflow, but maintains it can break-even in 2006/07. In 2006 it raised $59.2 million, mainly from existing major shareholders which included Kuwait Finance House, United States-based Clarity Partners, Todd Capital and Stephen Tindail.

A significant proportion of its customers have swapped over to its fixed line DSL plans due partly from a wireless network that has been plagued by network performance issues. Despite this, Woosh remains committed to its IPWireless UMTS network technology for the time being but may adopt WiMAX nationwide instead, depending on the success of its proposed Hamilton WiMAX network.

In 2006 the company laid off over 30 staff but maintains that there will be no further job cuts in 2007. An IPO was put on hold in October 2005 following a lack of interest in the company.

See also: New Zealand – Wireless Broadband – Statistics, Overview & Providers.

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Woosh Wireless still believes that it will reach breakeven in 2007. It says that cost reduction measures are beginning to flow through and that the company is experiencing customer and revenue growth.

Woosh is always looking to sell customers onto its wireless network by preference because of the higher margins. In the past its high chum rate had been due to people moving out of the Woosh coverage area, but the fixed line option now allows customers to retain their account with Woosh, and should have the effect of reducing churn.

See also: New Zealand – Wireless Broadband – Statistics, Overview & Providers.

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OTE chose equipment from vendor Aperto in January 2006 as part of a trial WiMAX network in the Halkidiki region in Northern Greece, ahead of a planned nationwide rollout. The network is capable of providing both voice and data services and will be part of a future wireless network operating in the 3.5GHz frequency band. Wireless local loop services are currently offered to approximately 200,000 residential users in remote areas using legacy wireless access systems operating in the 1.5GHz and 2.5GHz bands.

Rollout of the network follows the release of €210 million in funding by the government to boost private sector investment to ensure affordable broadband access services to the public. Implementation activities for the €210 million were underway in December 2006 when ISPs Hellas Online, ForthNet, and Cyprus Telecommunications Authority (CyTA) were awarded contracts to roll-out infrastructure. Under the plan broadband infrastructure deployment is 50% funded by the state with the remainder funded by the private sector participants. A requirement of the tender was a ceiling placed on proposed retail tariffs, with €33 per month the maximum charged to households, rising to €54 for businesses.

See also:
Greece – Key Statistics, Regulatory & Fixed Line Telecoms Overviews;
Greece – Convergence, Broadband & Internet Market – Overview, Statistics & Forecasts;
Greece – Mobile Market – Overview & Statistics.

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