Archive for July, 2007

Europe’s über regulator may be difficult to forestall

Monday, July 30th, 2007

Moves within the European Commission (EC) to develop a more harmonised approach to national regulators (NRAs) have been brooding since at least October 2006, when the European Regulators Group (ERG), the EC’s principal advisory body which comprises representatives from the EC and each of the 27 national regulators, proposed a number of steps aimed at delivering a more harmonised approach to regulating the telecoms markets in the EU.

In May 2007 the ERG started work on this project, identifying priority markets where a common regulatory approach might benefit consumers, and developing a guide for NRAs to remedy shortcomings and to advise other NRAs in areas where they have gained experience. Much of this work is the result of the challenges faced by regulators from market developments, including VoIP, international roaming retail tariffs, wholesale broadband access, and how the evolution from legacy to next generation, IP-based networks will affect the regulatory approach to IP interconnection and interoperability issues.

The EU’s telecoms commissioner has successfully tackled some of the issues: in the face of opposition from mobile operators and the Global Mobile Suppliers Association (GSA), the EC has managed to deal with exorbitant international roaming charges, placing a sliding scale of tariff caps for the next three years. Yet difficulties remain as a result of the residual interest which national governments have in the incumbents. A case in point is Portugal: in April 2006 the EC sent Portugal a formal request to abandon the special rights held by the state in Portugal Telecom, believing that the special powers held acted as a disincentive to investment from other member states in violation of EC Treaty rules. Despite continuing EC concerns over the golden share, in March 2007 the government reiterated its desire to keep its golden share in the national operator.

Secondly, the EC is aware that not all NRAs are particularly efficient. The EC’s annual reports of the state-of-play of Europe’s telecom industry rely heavily on contributions from NRAs, and lacunae in the required market analyses are numerous. Although the EC makes the rules, the NRAs enforce them, to a greater or lesser extant and through different processes and approaches. Harmonising these approaches will be particularly important in coming years as operators and incumbents progress with their Next Generation Networks (NGNs). Already there is some diversity in NRA approaches to NGNs, with the German example (including a three-year regulatory holiday for Deutsche Telecom, locking out competitors from wholesale access to its hybrid fibre/VDSL network) representing the most inimical to the EC’s vision..

Under-performing regulators have also been viewed as a fundamental obstacle to the European telecoms market, worth some €290 billion in 2006, reaching its full potential. Thus it is that the Commissioner, Viviane Reding, in October 2007, will elucidate plans to overhaul EU telecoms legislation, take control of some regulatory powers currently held at a national level, and push through the break-up some incumbents to increase competition in the industry. The proposed measures would come into force in 2010.

One of the areas where the EC wants to expand its powers relates to remedies ? currently, NRA decisions on remedies (in areas such as wholesale product obligations) can be commented on by the EC, but not vetoed, and this is one of the limitations which the EC aims to address. However, the ERG is opposed to the veto power over remedies, arguing that NRAs would have a clearer picture of the national markets and environments. Similarly, the European Telecommunications Network Operators’ Association (ETNO), which represents European incumbent operators, believes that better harmonisation can be achieved with existing systems, and does not require another bureaucratic layer.

The proposals have worried Europe’s incumbents, which fear the EC’s enthusiasm for structural separation. Yet this last measure has had some notable success: after BT hived off its network access division from its consumer operations in 2005, setting up Openreach in the process, the company has gone from strength to strength, while fair competitor access to the local loop has made the UK’s broadband market among the most competitive in Europe. Opposition to these plans from companies such as France Telecom, both on the regulatory aspects as well as on functional separation, is as much due to national pride as to preserving the status quo, but a über regulator covering the E27 is perhaps inevitable, given the extraordinary inconsistencies which frustrate the Brussels’ bureaucrats.

See also:

Europe – Regulatory Environment

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Interfacing with home networks

Monday, July 23rd, 2007

Media centres provide total content management solutions through ‘one source multiple delivery platform’ capabilities. They offer global transmission of services like Internet Protocol TV (IPTV), Video-on-Demand (VoD) and streaming distribution capabilities via terrestrial fibre optics and satellite. They also offer:

  • Broadcast quality studio, mobile and post-production services;
  • origination services for linear TV networks and live events;
  • High Definition TV (HDTV) production and origination; and
  • quality control and media management services, including encoding and storage.

My first home media centre experience was back to 1981, when I demonstrated in my home in the Netherlands the ‘Home of the Future’, together with the local consumer electronics and telecoms industries. While very little of that service took place in any integrated format, I was able to demonstrate most of the services that we are still trying to introduce some 25 years later. The concept was already there all those years ago. The next event I attended was in 1994 when Comcast launched, very much ahead of its time, the first media platform delivering, which had, amongst other services, Video-On-Demand (VoD). I was there again when the relaunch of this service took place exactly a decade later, at the same NCTA show, in the same city, New Orleans.

The big difference between these three events is broadband. In 2007 we now have an infrastructure platform that is able to deliver video quality entertainment over such networks. Of course, the market hasn’t stood still in the meantime and there are now several players, all coming from different industries – the cable TV industry in the USA, the telcos, the IT industry and the consumer electronics industry.

Media centres certainly have the potential to power an entire family of devices designed to work together. These devices can power a single TV directly, while also serving as the central manager of all the digital content in a home. The concept is right; now we just have to figure out the right model and the right business approach, and this requires industry cooperation.

Migrating from PC-centric beginnings
Home networking is now migrating beyond its PC-centric beginnings, to incorporate a variety of consumer electronics (CE) devices, from digital TVs, to multi-room DVRs, digital media adapters, set top boxes and game consoles. The drive to incorporate IP-based connectivity in more CE and PC devices is being driven by both telecom/network operators and consumer electronics manufacturers. By the end of 2006, 76 million home LANs were deployed.

IPTV and multi-room DVR demand is driving cable, satellite and telecom operators to consider a variety of new high-speed home networking technologies, ranging from Coax (Moca, HPNA, Hana), to powerline, to WiFi (802.11n).

TV and other CE manufacturers are incorporating IP-based connectivity to enable a path to both user-created content and to new Internet-based media portals. This will be vital for Internet TV growth.

The awareness and demand for media home networking is growing among consumers. According to iSuppli’s Q1 2007 consumer demand survey:-

  • 61% of respondents “agreed” or “strongly agreed” that they wanted the ability to connect the internet to their TV.
  • Male respondents were even more favourable with a 71% “agreed” or “strongly agreed” response.

Across select computing, consumer electronics and consumer networking devices, iSuppli’s research identified nearly 240 million networked devices shipped in 2006. These devices will grow to nearly 760 million networked devices by 2011. By 2011, WiFi will be the most common physical interface, followed by Cat 5, and powerline, and Coax, in relative percentage of shipments. The technology choice will be significantly influenced by which geographic region devices are shipped into.

Among the different physical interface technologies, 802.11x is projected to have the largest silicon TAM through 2011; however, we will see a sharp rise of Coax and Powerline.

For more information see:-

Global – Digital Media

Global – Digital Media – Home Media Centres

2007 Global Digital Media Volume 2 – Content and Application Markets

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Broadband is Essential Infrastructure

Monday, July 16th, 2007

As the Internet economy, digital media and other telecommunications activities become more established; the need for modern and efficient infrastructure is becoming more critical. Broadband services are becoming an essential commodity, and while some countries like Japan and Korea are leaders in this area, many other countries are failing to keep pace with demand.

In 2007 we see that fixed broadband is still mainly confined to the developed markets. This is because there are enough good quality fixed networks in place to allow for roll outs of the technology. There are now close to 300 million broadband subscribers worldwide, and DSL is by far the most popular access technology.

At this stage other technologies, such as fibre and satellite are minor players. DSL has so far been the most effective and economical route to global broadband deployment. The emphasis of the next phase of broadband is on increasing speeds, which via ADSL2+ and VDSL will eventually lead to Fibre-to-the-Home (FttH). The market will need to focus on fibre because in the coming years the use of popular high-bandwidth applications will dramatically strain existing copper-based networks.

Asia is the one region of the world where FttH has started to emerge as a serious broadband platform. Not unexpectedly, the movement towards fibre is occurring in Asia’s more developed markets where positive government intervention has been playing an important role.

In 2007, Japan continues to lead the world in fibre deployments, and South Korea is rapidly rolling out. The US is also focusing on fibre, and will probably catch up to Asia over the next ten years. In Europe, deployments by municipality and property developers have shown the fastest growth, although the telcos still account for a higher proportion of lines installed. On a government level, those of Ireland, The Netherlands and Sweden have been among the more progressive FttH providers, installing extensive fibre connections to neighbourhoods or homes.

The focus of Broadband over Powerline (BPL) has changed within the last year from broadband connectivity to smart meters on broadband infrastructure, which allows householders to reduce energy costs and energy companies to better manage their networks. The next step for BPL is to make the transition from the current trial status to the commercial arena, and this will require the establishment of an appropriate regulatory framework to support the technological developments that are occurring.

It is a positive sign that this sector is looking at alternatives for broadband use; beyond the usual high-speed Internet access. It is important for the overall industry to realise that Internet access will be just one of many services that will be delivered over broadband infrastructure. There are other important services emerging that will depend on high quality broadband infrastructure, such as e-health, education, e-business, digital media, e-government, smart utility meter reading, etc. In countries where the national telco is lagging behind, we are seeing that local governments have no choice other than to take a leadership role – just as they have done with similar infrastructure over the last 100 years.

Key Highlights:

  • There will be close to 500 million broadband subscribers worldwide in 2012.
  • Overall telecom industry spending grew by more than 12% in 2006, driven by the demand for broadband and high-speed services.
  • DSL is the most common broadband access technology worldwide, capturing over 65% of the market.
  • VDSL and VDSL2 will provide telcos with the ability to not only offer telephony and high-speed Internet access, but also High Definition TV (HDTV), VoIP and multiple and simultaneous video streams over the same copper pair. However there are still a number of issues hindering the uptake of this technology.
  • The cable modem sector lags behind DSL with only around 22% share of the market, however VoIP technology has provided the sector with new opportunities; evidence of this coming from North America and Europe in particular.
  • Worldwide cable telephony services revenue is expected to reach around $11 billion in 2007.
  • At the moment around 50% of Internet traffic is consumed by less than 5% of Internet users, however it is only a matter of time before the other 95% catch up. This will result in a wild growth of local infrastructure projects over the next five years.
  • To compete with fixed broadband, it is essential for reliable high-speed wireless technologies to be developed. The competing technologies include the intermediate mobile standards like GPRS, emerging 3G standards, the fixed wireless technologies such as WiFi, WiMAX and a range of proprietary services operating in 3.4GHz band.
  • Latin America is one of the world’s fastest growing regions in terms of broadband uptake, with an annual growth rate of around 54% in 2006. However broadband penetration at the end of 2006 was only 2.5% – considerably less than the global average of 5.4%.
  • The USA is one of only two countries in the OECD in which cable subscribers outnumber DSL subscribers. However DSL is expected to overtake cable in 2008, and the telcos’ massive fibre deployments will vastly improve the speeds and bandwidth of the telcos broadband networks, allowing for new services such as IPTV. The response by cable may be DOCSIS 3.0, a relatively cost-competitive, easy-to-deploy ‘wideband’ answer to the telcos’ fibre networks.

This annual report offers a wealth of information on the worldwide fixed broadband industry, and includes analyses, statistics, trends and forecasts. The report also provides a market overview of the various broadband technologies, including DSL, cable modem, fibre, BPL and broadband satellite. Regional information is also included, providing a comprehensive overview of how broadband is progressing around the world.

Subjects covered include:

  • The current broadband market
  • Worldwide and regional broadband statistics
  • Broadband infrastructure analysis
  • The DSL market
  • The cable modem market
  • FTTx market
  • Broadband over Powerline (BPL) market
  • Broadband satellite
  • Regional information

For more information see: Global Broadband – Broadband is Essential Infrastructure

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Australia – 3G is dead – long live WiMAX

Wednesday, July 11th, 2007

Companies that have been upgrading their networks to 3G are unable to recoup their investments in spectrum and technology. As we have consistently predicted since 1998, there is no need for 3G, beyond efficiency upgrades required in situations where mobile operators are running out of network capacity. Up until now this has been limited to a few cities in Europe – beyond that there has not, to date, been an economic need to upgrade the current 2G systems.

Mobile data has not delivered the extra revenues needed, and after a decade of flogging more than a dozen different mobile data flavours, it has now become clear that only wireless broadband will be able to deliver the much-needed break to move into the Wireless Broadband market.

Technologies such as WiMAX, Flarion and Ultra-Wideband (UWB) will become more prevalent, and these are much better suited to cater for the demand of such services. Key issues here are high speed and low cost. The current mobile technologies are unable to deliver on both. Furthermore, the entry levels to these frequency agnostic new technologies for newcomers are low, which makes it much easier for competitors to undermine the mobile operators. The WiFi operators have seen significant consolidation over the last few years, and they are now in a prime position to also aggressively move further into the WiMAX market.

Mobile operators are presently scrambling to find new directions. However, most of them are like slow-moving elephants, and it will be almost impossible for them to halt their current 3G rollouts in order to replace them with wireless broadband.

This is further complicated by the fact that commercial wireless broadband services are still one or two years out, and for UWB this might take even longer. On top of that, once these systems are available Voice over Internet Protocol (VoIP) can be delivered over them at a fraction of the cost of mobile calls (at least 90% cheaper than mobile calls). This means cannibalisation of their mobile network, something they are certainly not looking forward to.

The writing appeared on the wall in 2005/06 when the mobile vendors began to introduce so-called 3.75G – and even 3.99G (!?) – services, such as High-Speed Downlink Packet Access (HSDPA). This is like seeing those confusing 2.5G business model scenarios all over again. Most operators are still in the early stages of the rollout of 3G, a clear indication that 3G was too little, too late.

So far, very few mobile operators have made any significant investments in these new 3G versions, and I would warn against any such investment in the wake of new wireless broadband developments. True, WiMAX and UWB will also have to deliver on their hype, but there is a positive groundswell towards this development and it is very much in line with other communications developments, like the Internet, broadband, MP3, Digital Video Recorders (DVRs), etc.

The far more cost-effective wireless broadband mesh networks will spread like wildfire. The Unwired example in Australia shows that, through clever partnerships, nationwide interconnection can be developed at relatively low cost – in that case via a partnership with the regional pay TV operator, Austar.

While I do not underestimate the market power of the mobile operators, they are certainly going to get a run for their money, particularly since many of their business models are based on unsustainable handset subsidies, extraordinarily high termination rates and expensive fixed-to-mobile prices.

As well as new entrepreneurs entering this market we will also see municipalities becoming involved in such networks – especially those that are suffering from poor fixed broadband infrastructure. The United States is leading this market.

Mobile operators will now have to decide whether to move further into the mobile market with 3.75G and 3.99G solutions, or to become involved in the very disruptive wireless broadband technologies. Most of them will be betting each way, which will make it even more difficult for them to focus on the new opportunities.

If they have it their way, they would want to delay the introduction of their wireless broadband services (4G) until 2012-2015.

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Australia – Mobile Price Competition

Wednesday, July 11th, 2007

So far mobile price competition remains limited here, and with Voice over Internet Protocol (VoIP) around the corner to direct customers back to the fixed network it is highly unlikely that Australia will ever see a similar level of substitution. Nevertheless more and more calls are moving to the mobile networks, but in most situations they keep their phone lines.

The low level of interest was confirmed by research from AMR Interactive, published in 2005, which revealed that 90% of Australians aged over 15 surveyed do not intend abandoning their fixed-line and using a mobile phone exclusively. The researchers interviewed 1,915 consumers. Some 71% of users who intended on retaining their fixed lines, believed that relying on a mobile phone for all their calls was simply too expensive; 60% of fixed-line retainers would also do so for either dial-up or ADSL Internet access.

AMR respondents’ key reasons for retaining their landline were:

• Using only a mobile is expensive – 71%;

• Need the phone line for internet access – 60%;

• Other family members need to access the fixed-line – 46%;

• Don’t feel secure without the fixed-line – 35%;

• Family makes a lot of international calls – 20%;

• Quality of mobile coverage isn’t good enough – 30%;

• Don’t want other people using my mobile – 19%;

• It’s too much trouble to notify everybody – 16%;

• Need home line for security system – 19%.

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