BuddeBlog

Around the world the telecoms industry is reaching new heights, this time it includes the developed markets as well. In these countries the latest boom has just surpassed the one of the late 1990s in both profits and new investments.

We at BuddeComm are in a prime position to witness this boom because one of the first things that investment companies do at times like this is buy research reports. And, as our 2,000-plus reports cover 170 countries, 500 companies and 200 technologies and applications, we get a pretty good idea what they are interested in.

This time, of course, the boom is led by the Internet companies, but the telcos who have embraced the structural changes that the telco bust generated are also in the lift again.

Interestingly, there are significant differences between the developments in the USA and those in the rest of the world.

The two US telcos, AT&T and Verizon, have moved into the interactive entertainment world and are trying to look more like their cable counterparts. But, despite previous predictions, the cable TV companies are dominating the broadband market. This clearly shows that the Internet is very much seen as an entertainment product.

Entertainment services are mainly sponsored by advertising and this is what is driving the fibre networks and the interactive TV services they are carrying over them. However the advertising spend in the USA is often three times greater than it is elsewhere in the world, and so it would be unwise for other countries to follow the US example.

In the rest of the world broadband is developing from a broader base. While entertainment plays a key role here as well, it is the community-based networks and services – based on personalised interactive communication – that are the driving force, with regional social and economic development, healthcare and education being other major leading forces in the process.

Europe is the global leader in broadband and the case studies coming out of that region are more relevant to most other countries than those coming out of the USA.

Interestingly, however, the web-based services are predominantly led by US companies. This, in itself, is a very interesting phenomenon, as web-based developments often undermine proprietary based broadband infrastructure-based applications from the telcos and cable TV companies. For example, while proprietary-based, walled-garden IPTV is struggling to get the users’ attention, web-based video services are taking up more than one-third of all global broadband capacity.

This development is destabilising the remaining telco dinosaurs, who are still trying to build walled gardens and hold back new developments and innovations. Most people in those markets are on broadband speeds lower than 1Mb/s, which makes it impossible to participate in the innovations and new applications that are now widely used in all other developed markets of the world.

While most fixed network operators are now moving towards structural change, the mobile world is still light years behind. Their days are numbered, but they have a great incentive to hold on for as long as possible to their lucrative voice and SMS charges. The last thing they want is for VoIP and email to challenge their business models.

Nevertheless changes are underway. New wireless spectrum auctions will be needed to get this market moving. Left alone no innovative changes will come out of this industry. They keep on throwing out the biggest hype in the world and are prepared to spend millions of dollars setting up smokescreens, such as mobile TV, to try and persuade us that new innovations are just around the corner. What a farce!

New wireless broadband spectrum auctions will bring in new players from other industries such as the media and the Internet companies. However the incumbents are using everything in their power to lobby the regulators and the government not to open up that spectrum for innovative services and new business models. It is to be hoped that governments will do what best for their countries, but, again, this could be a long process, and the results could easily be watered down.

All of this doesn’t make us feel very hopeful about speedy structural changes in the mobile industry – if it can be done by 2010-2012 that would be a positive achievement.

In the meantime structurally separated infrastructure companies are doing a roaring trade, as more and more fibre is needed. The much-maligned company, Level 3, which in its heyday was working its way around the world, laying fibre (and which also went under in the telco bust) is now back in full swing and doing a roaring business. (I have reported separately on other successful fibre networks such as Pipenetworks in Australia and Reggefiber in the Netherlands.)

So the telco industry is back in favour and many financial institutions are eagerly watching this space, ready to become involved again. Fingers twitching when they see unnecessary costs and missed opportunities, they are ready to step in and do the work for the telcos if they fail to act.

We expect that this boom will continue till at least 2012-2015, so there’s still plenty of time for those lagging to jump aboard.

Paul Budde

See also:

Global – Analysis – Telecommunications Industry

Global – Analysis – Markets and Forecasts

Most European mobile operators have acknowledged that to deal with the fierce competition for voice traffic and the consequent collapse in voice revenue they must promote mobile data use among consumers and take advantage of the new 3G/HSPA networks which have been built out across the continent during the past two years.

A number of avenues are open to these operators, yet consumers remain a cautious and fickle lot, and have shown continuing reluctance to take advantage of mobile broadband, which is still perceived as an expensive indulgence. One solution for operators is to mimic fixed-line pricing models by offering a flat data rate for their HSPA services. That such a business model can be successful is partly due to the growing maturity of the HSPA market, as well as the increasing range of HSPA devices (more than 250 currently available), and the realisation among operators that charging consumers by data volume is a non-starter.

The slow consumer shift away from negativity began with the launch by 3 Group of the X-Series in partnership with Skype, Sling Media, Yahoo!, Nokia, Google, eBay, Microsoft, Orb and Sony Ericsson. The service (initially launched in the UK in December 2006 with roll outs across Europe during 2007) allows customers to make unlimited calls from their mobile using Skype, watch home television via their mobile using Sling, access home PCs remotely using Orb and have access to the Internet and messaging services from Yahoo!, Windows Live Messenger and Google. The X-Series is priced like fixed line broadband, with a fixed fee on top of the basic subscription, and as such is based on a completely different economic model than that of most mobile operators, overturning the traditional telephony model of charging per minute, per message, per click, per event and per megabyte.

Current pricing models for flat data packages are in the region of €20 per month. The model does not cannibalise operator voice income: the €20 per month is on top of voice services, while very few people use the technology for VoIP. As such, the operators simply receive additional new revenue for the data service. In Sweden, both 3 and Telenor have claimed a quadrupling of traffic since their deals were launched in April 2007. The country’s HSPA networks are among the best in Europe: 3 will have completed its HSPA network upgrade from 1.4Mb/s to 3.6Mb/s in Stockholm, Gothenburg, and Malmö by August 2007, and eventually plan to deliver 7.2Mb/s. TeliaSonera belated woke up to the possibilities of HSPA in April 2007 when it began HSPA trials in parts of Stockholm and Gothenburg, also providing speeds of up to 3.6Mb/s. Elsewhere, faster speeds are already a reality: in March 2007 Ericsson was contracted to expand mobilkom austria’s WCDMA/HSPA uplink networks in Austria, Bulgaria, Croatia and Liechtenstein. The enhancements will allow uploads at up to 1.4Mb/s and downloads at up to 14.4Mb/s. In Vienna, where the system was rolled out in February 2007, mobilkom austria subscribers have the fastest mobile broadband speeds available in Central and Eastern Europe.

Of course operators try to protect their revenue sources where possible. In the UK, where one in three UK adults own an Internet-enabled mobile phone, T-Mobile’s Web’n'Walk aims to increase data usage and revenue, though the company has adopted a usage policy that prohibits VoIP, Instant Messaging, file sharing and media streaming over its service. Similarly, Vodafone in June 2007 introduced a pricing model which charges different amounts for mobile bandwidth depending on the application: between 0.5MB and 14.5MB per day is free, after which the charge is a penny for every 5KB used. Most users fall below the 15MB limit, yet Vodafone excludes VoIP and peer-to-peer services (P2P) from the offer, billed separately at £2 per MB. P2P is defined as including instant messenger services, text messaging clients, and file sharing.

Operators have also emphasised social networking services to boost data usage and revenues. In May 2007 Vodafone launched its YouTube service in the UK and introduce flat-rate data pricing so that users pay the same amount for Vodafone live! content and off-portal services. The scheme hoped to address the stagnation in Vodafone live! Use: although there are some four million users in the UK the walled garden approach has limited further take-up. Orange similarly planned to offer its customers access to the Bebo Internet social networking site on their mobiles, a move which would intensify the operator’s competition with Vodafone which has a deal with the rival social networking site MySpace.

Another option is to capitalise on the popularity of music downloads, a market particularly strong among the youth. Telenor in Sweden is the first operator in Europe to develop a flat-rate mobile phone music service to compete with Apple’s iPhone. In partnership with Omnifone, the MusicStation service allows mobile users to download as many music tracks as they want for €2.99 per week. More than 30 operators in Europe, Asia and South Africa have also signed up to the service, which can be used by about 75% of phones currently on the market. Revenue generated by MusicStation is split between operators, music companies and Omnifone.

The lesson from these developments is clear: introducing flat-rate schemes for mobile data services has resulted in sharp increases in usage, allowing operators to rake in a set sum from a far larger number of subscribers rather than a large sum from a limited number of largely business users. As long as the networks can cope with demand, this will be the mainstay of future payment models. Attempts to slow this development, such as by placing restrictions on P2P data transfers, can be expected from operators which try to control the market from their perspective, but the consumer-friendly model will win in the long term.

See also:

Europe – Mobile Market – 3G;

Europe – Mobile Market – Mobile Data;

Europe – Mobile Market – Overview & Statistics.

A Perth-based not-for-profit organisation will offer its enterprise in-house built e-health smartphone application ‘ComCare’ for cost-price to hundreds of aged care facilities.

The platform means nurses can build detailed patient records on medical treatments, symptoms, and pain, fatigue and nausea levels. Aged care providers can use the application for reporting and finance services.

ComCare, is used by more than 1000 Silver Chain mobile nurses using Ericsson smartphones. The WA health care provider has up to 700 nurses using the system at any given time who service more than 40,000 patients a year.

The system could eventually accept electronic data from pharmacies, general practitioners, or hospitals, and provide the industry with updated benchmarks on clinical treatments.

About 100,000 aged care beds, or 60% of the national total, are attached to electronic medical health records.

It is hoped that the system will integrate with e-health services that, as part of the Federal Government’s national e-health strategy, could see Australia’s health providers swapping clinical data over standard technology. Under that plan, electronic health identifiers will record each treatment, condition and aliment into a medical history that will stay with every Australian for life, and be accessible by each health practitioner in the country.

Australia’s first e-health monitoring service from the Loddon Mallee Health Alliance (LMHA) in northern and central Victoria has many exciting elements, but also some worrying aspects.

The monitoring service is for people with chronic conditions, such as heart disease, diabetes and asthma. A monitoring unit developed by the University of NSW and now marketed by MedCare Systems enables patients to be monitored at home. The touch screen unit can be used to measure blood pressure, lung function, temperature, carry out ECGs, as well as gather data such as blood glucose levels.

The information is sent back to a server hosted at the UNSW and from there it is distributed as web applications to nurses, GPs and other medical staff. The service helps to reduce the number of hospital visits these people need to make and improves their quality of life. At the same time it places less strain on the hospital system, thus saving money.

However, due to lack of broadband facilities in remote and rural Victoria, video monitoring is not possible although RPM technology is capable of delivering such functionality. Most of these patients don’t have a large discretionary income and most can’t afford a broadband connection. Furthermore, a video consult is not defined as a consult under the regulations of the Australian healthcare system, so doctors cannot claim this under the current regime.

LMHA is implementing 100 of these units in regional Victoria. The first units are now in operation in Mildura. In Kyabram (near Shepparton) 10 units would be used by the bush nurses for chronically ill people, many of them on remote farms in the area. Another group of units would be installed in Ouyen in the very north-west of the state and another group at Maryborough in central Victoria.

The project objectives were to:

• trial the implementation of a tele-health solution to manage chronically ill clients in their own homes;
• develop an understanding of the clinical efficacy of the RPM technology;
• gain insight into the technical capabilities of the RPM technology in Australian rural health environments; and
• measure clinical and economic benefits for ongoing sustainability for the project.

Acceptance and use of the units has been excellent and is influenced by the patients’ personal motivation to manage their own health and wellbeing. Clients felt much more reassured and connected to the health agencies and were aware that nurses were reviewing their data daily and would respond if necessary. Clients were taking ownership of their measurements and making positive changes to manage their health better. The pilot also found that there was a decreased number of routine nursing visits, significant savings in travel and RPM allowed agencies to increase their reach to clients that would otherwise not have been catered for.

The pilot concluded in December 2008.

Next G videoconferencing

Another innovative application being used by the Loddon Mallee Health Alliance (LMHA) in Bendigo and developed by Momentum Technologies uses the Telstra Next G mobile service. Nurses, patients and GPs are linked into this videoconferencing network.

LMHA is also working on a trial to use videoconferencing in air ambulances, for example, when critically ill patients need to be transported from regional hospitals to Melbourne. A videoconference can take place between the air ambulance and the hospital, and initial assessments can be made about who and what would be needed on arrival.

The service can also be used to assist ambulance staff in case of patient emergencies. A range of telemetry services can be added as well, transmitting essential diagnostics to the hospital.

Back in March, the venue for the Australian Netherlands Roundtable in Amsterdam was the impressive new headquarters of Cisco in the Netherlands. They hosted the event while Cisco Australia hosted the lunch for the delegates.

Cisco plays a key role in advising governments around the world on issues such as e-government, e-health, e-education and so on. They have also published a range of interesting background papers, so it has been good to have them as an active participant in both last year’s and this year’s events.

Nicola Villa presented an interesting paper at the Roundtable, based on the former US president Bill Clinton’s Global Program. The program aims to show to the emerging countries western ways to create economic development without harming the environment. A range of programs, in which Cisco also participates, are now under development.

Sixty per cent of Cisco’s carbon emissions is generated by air travel. The company has set a target to decrease this by 20% within the next 18 months, replacing it with videoconferencing and telepresence. It has built telepresence studios, amongst other places, in Amsterdam and Sydney, and these will be the venues for the next Netherlands-Australia encounter when we do the follow-up program, bringing together digital media experts together from both countries.

Cisco is also promoting the program in the wider community. Once good broadband networks are in place a number of options become available:

• Teleworking, telepresence
• Traffic management with RFIDs installed in cars (trialed in Singapore)
• Public transport, connecting buses and taxis and showing their location
• Municipality CO2 emission reduction (smart meters)

….. in general terms, creating smart communities.

Cisco has selected three cities to develop such programs and has built showcases that can be used – not just in emerging economies but also in western society. They have selected three western cities around which to build examples:

• Amsterdam, based on its emerging FttH network
• San Francisco, based on the wireless network it has under development
• Seoul, based on its combined fibre and wireless infrastructure

In such smart cities it will be easier to bring information to people (on-demand and profiling) as opposed to the current situation, where people are brought to the information. This will require the development of digital media policies that support these changes.

Paul Budde

For more info see: www.clintonglobalinitiative.org

PS 1. We are currently conducting a carbon emission survey at BuddeComm and we will report back to you on that as soon as we have the results of this.

PS 2. We are currently involved in facilitating the discussions on smart grids; making the electricity grids more intelligent which will save energy as well. For more information see:

Global – Broadband Power Line – Smart Grids

Australia – Broadband Power Line – Smart Grids