BuddeBlog

I am sure that, like me, many of you will be tired of hearing all those ICT managers saying that they are, oh, so focused on their customers and that their major occupation is listening to what they want.

Even if we give them the benefit of the doubt and accept that they really may be doing this, these customer-focused exercises seldom produce anything that demonstrates the fact. They always seem to come up with the most complex price plans; with bundles that don’t suit me; and with devices that are classic examples of user-unfriendliness.

Just some of the issues that come to my mind …..

• Providing a mobile call plan that really delivers me the best service for what I want – we estimate that the failure of the industry to provide such customer services nets them 10%-15% in additional revenue, since nobody is actually able to find the best plan. There might be a conflict of interest here with true customer service.

• Installing new services on our PCs, mobile phones, iPods, etc. They all say that their devices (with that new program or update) are extremely simple, yet the consensus is that it is very likely they will not work first time, leaving you with a problem to sort out. And, while I am happy to pay for a service to do this for me, most of the time that service is simply not available.

• Vendors’ features, not my features. True, most devices I own have over a thousand features – perhaps, who knows, even the ones I need. But, unless you are a teenager, what hope do you have of finding them? Why can’t they be delivered pre-set with ‘my’ applications? This is one of the key reasons data services on mobile phones are not seen to be user-friendly, and therefore are not used.

• Supporting customers’ Internet connections when they are attacked by a virus. For most users this is a traumatic experience, as their providers leave it up to the customer to sort out the mess.

• Simplifying the myriad wires connecting VCRs, DVDs, digital TV and pay TV receivers and surround sound. If you have more than three or four devices it is likely that you won’t be able to manage the cable forest at the back of the home ‘entertainment’ set-up.

• No outages – of several hours, several minutes, or even several seconds. This is particularly relevant when trying to obtain an Internet connection, a dial tone, or when trying to record your favourite show on your DVR.

• The curse of bundles. Give me the choice to select my own bundle of triple play or pay TV services.

• Feel free to add your own customer service wishes to this list.

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In September 2006 BroadIP indicated it is retreating from the telco market and sold its VoIP business to MyNetPhone.

In April 2006 the Australian publicly-listed company, Broad Investments, a major services provider in the premium mobile content market, entered the broadband telephony market with the launch of wholly-owned subsidiary BroadIP, a corporate and residential VoIP provider offering full national coverage.

BroadIP has embarked on an aggressive growth strategy and is aiming to become the market leader based on paying subscriber numbers and customer revenue in the SME market within one year. It is also looking to become a significant player in the large corporate space.

This is a market segment for which BroadIP has developed a very cost-effective product, offering savings of 50%-55% on their current telecoms expenditure.

BroadIP has also acquired 2,000 residential customers following the acquisition of the small but profitable broadband provider Shiftreload.

BroadIP is negotiating with US and European VoIP providers for global termination and reciprocal trade. Once these deals are in place the company will generate additional revenue streams by means of unlimited international call products and by terminating calls for the customers of other international VoIP providers.

BroadIP claims to be the first Australian company to offer a bundled broadband, unlimited VoIP and line rental product and a true unlimited local and national access plan for residential customers.

Exhibit 1 – BroadIP price plans

Residential

$19.99 per month

Local and national calls – 200 minutes and then 10 cents flat rate per call thereafter

Calls to mobiles – 27 cents per minute – international rates start at 2 cents per minute $49.99 per month

Unlimited local and national calls



Calls to mobiles – 27 cents per minute – international rates start at 2 cents per minute $120 per month

Bundled broadband and voice

Broadband connection plus unlimited local and national calls (as per the $49.99 per month plan) and Telstra line rental

Corporate

From $25.00 per month per user

Local and national calls – 250 minutes and then 10 cents flat rate per call thereafter

Calls to mobiles – 27 cents per minute – international rates start at 2 cents per minute

(Source BuddeComm)

BroadIP and Uecomm join forces in VoIP

In July the company announced an agreement with data specialist Uecomm to work together in delivering VoIP services and data telecommunication solutions for the SME and Corporate market in Australia.

BroadIP will provide VoIP termination and the Customer Premises Equipment (CPE) and IPT hardware, while Uecomm will provide the data component of the solution.

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Handset unbundling was introduced in Australia in 1999 by dingo blue; its impact was small. It was not until 2002 that a serious attempt was made to introduce handset unbundling. Telstra went the full way and unbundled its packages, Vodafone at that stage still continued bundled packages and Optus only made some minor changes. While Virgin has always had its unbundled offerings, at the same time it offers a bundled product to its ‘high-value’ customers. Soon after the initial unbundling attempts, competition forced all parties to maintain handset subsidies.

Unbundled offerings would not doubt result in a more economic market situation. On the one hand, customers will be confronted with the real value of a mobile phone and either hang on to this phone for a longer period, and/or also base their purchase on economic grounds. In a bundled offering they often have no idea about the real value of the handset. On the other hand, as operators fail to attract higher spending users to new services offered such as WAP, GPRS, MMS, 1X, etc, they don’t have to waste money on those more expensive handsets that users are not using to generate extra revenue for them.

With handsets becoming a fashion item, handset subsidies have further increased, especially from Telstra and Optus, which are in a battle for market share. Traditionally in the ‘competition’ season, operators launched a range of new mobile phones during the Christmas period with colour screens, cameras and multimedia and other features. These expensive phones ($1,000 plus) can only be subsidised through bundled packages. Despite the costs, competition will force players to subsidise new (expensive) handsets and bundling will thus remain an important feature of the industry, mainly for higher value services.

Unbundling will continue in the lower-end of the market and this offers new market opportunities for handset manufacturers, especially those with a good understanding of the consumer electronics market. Watch out for some of the Japanese and Korean manufacturers.

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Mobile numbers 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

Allocated 2,500,000 500,000 3,300,000 2,420,000 6,500,000

Surrendered 100,000 500,000 400,000 0 1,000,000

Net increase 2,400,000 0 2,900,000 2,420,000 5,500,000

Cumulative total allocated 26,700,000 26,700,000 29,600,000 32,020,000 37,520,000

(Source: ACMA)

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iTouch was founded in 1995 and shortly thereafter began developing and operating value-added mobile services with the largest mobile operator in South Africa – Vodacom.

For Consumers services, iTouch licenses content and creates propositions that they then distribute via direct marketing channels to mobile users (eg. Using the premium SMS short code "193193"), via operator portals (eg. Optus Zoo), or via affiliate partners (eg. NineMSN).

The company builds its own consumer brands by extensively advertising services available through its direct channel model, but also offers "white-label" mobile technology solutions to corporate clients who wish to have a visible presence in the mobile space. This white label solution offers the corporate partner the benefit of a rich content site at an affordable entry cost.

They have established and grown relationships with some of the world’s leading content brands (i.e. Zomba Records, Universal, EMI, Warner, Sony Pictures etc). The company acts as an aggregator and licensee for this content which is delivered via its mobile technology platform.

The Group has continued to strengthen its position as a global mobile services company through a number of strategic acquisitions in various territories, including Telequity (Australia 2001), Thus Group (UK 2002), Movilisto (Spain 2003) and Jippii Mobile Entertainment (2004). The Jippii acquisition increased the iTouch footprint to over 25 countries with connectivity to 94 network operators. The Group has an extensive library with more than 34,000 items and growing daily.

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In September 2005, Orange launched a landline substitution offer. The company is attacking the second most expensive landline service in the OECD offered by Telstra. Consumer watchdog PhoneChoice rubbed more salt in the wound by stating that 80% of their members are dissatisfied with their monthly line rental costs. According to them monthly line rentals and fixed-to-mobile costs are now the biggest components of many home phone bills.

Already 7% of PhoneChoice members a have made the switch to having no landline and a further 14% said they plan to switch soon.

The Orange service includes the ability to:

• to make 000 emergency calls;

• to make and receive calls during a household blackout;

• provide adequate voice quality; and

• there is no minimum term contract required.

Mobile + Home features a mobile phone which acts like a home phone when at home. In addition, customers benefit from other features like FREE+ 5 min calls and FREE+ text Orange to Orange and 10c for 20 minute local landline calls from your home.

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Hutchison was the first cab of the rank and has since kept the pressure on mobile prices. In late 2004 it dropped a fresh set of capped mobile plans into the market, adding a bottom-end $29 per month offering and two mid-range plans to its existing $79 and $99 capped-plan stable.

The mid-level plans range from $49 to $69 per month. The lowest-priced $29 plan expires when calls to the value of $60 are made. After that, standard ‘3’ mobile charges apply. The $49 plan includes $200 worth of calls, and the $69 plan offers $400 worth.

These plans are really starting to bite into the mainstream mobile market. It is a departure from the earlier campaigns, which were aimed at attracting the high-end users to the capped services. As expected these initiatives has hastened the substitution process, with hundreds of thousands of customers abandoning their fixed phone service.

While broadband and Internet requirements will discourage many users from abandoning their fixed phone line, it is important to realise that almost a third of the population doesn’t use these services, and this group will be attracted by the lower caps. This was proven by Australia where substitution levels have reached 35%.

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IPWireless develops an advanced, 3G standards-based mobile broadband and multimedia technology called UMTS TD-CDMA (also called UMTS TDD), the high-speed solution designed for mobile operators that drastically improves the way people around the world connect and communicate at home, at the office or on the road. With a full range of commercially available network solutions and devices based on the UMTS TD-CDMA standard, they allow operators to offer a spectrum of completely mobile, portable, or stationary packet-based services with unmatched economics and true broadband performance.

UMTS TD-CDMA’s high average sector capacity, strong cell edge performance, and low cost per megabit make it an ideal technology for mass-market mobile broadband networks. It has emerged as a leading global standard for mobile broadband with deployments in numerous countries around the world including Australia, the Czech Republic, Germany, Malaysia, New Zealand, Nigeria, South Africa, the United Kingdom, and the United States. IPWireless has more than 30 global deployments/trials with tier one operators such as Sprint Nextel, T-Mobile, Orange, and PCCW, along with OEM partnerships with industry leaders such as UTStarcom and Alcatel. A nationwide network is rolled out by Woosh Wireless in New Zealand, which launched the world’s first commercial VoIP offering over a TD-CDMA mobile broadband network in September 2005. In Australia, IQ Networks announced the rollout of a network in 2004 for coverage in Townsville and Cairns in the 1900-1920MHz spectrum.

UMTS TD-CDMA operates in a non line-of-sight environment allowing fast wireless data access indoor, outdoor and in vehicular mobility environments. The technology has higher performance, greater flexibility and lower lifetime costs than existing mobile data access offerings such as FDD UMTS, CDMA 2000, GPRS, and proprietary technologies. The air interface technology utilises advanced signal processing techniques that results in higher throughput – combined downlink and uplink data rates up to 16Mb/s (peak rates); 90% of coverage is within 10km.

UMTS TD-CDMA can be deployed in a very similar manner to a cellular network, with the flexibility of omni, three and six sector cells. An existing cellular operator can leverage a great deal of its existing and planned network infrastructure in deploying the IPWireless solution.

The equipment is built on, and complies with the 3G Project Partnership (3GPP) UMTS TDD standard. 3GPP is the international standards body that develops, publishes and maintains standards for third generation wireless. The 3GPP family of standards consists on three alternative air-interface (physical layer) standards. These air-interface standards are: FDD WCDMA, UMTS TDD, and Time Division Synchronous Code Division Multiple Access (TD-SCDMA). UTMS TDD is a packet data implementation. Time-division-duplex is used, allowing operation on unpaired spectrum anywhere in these bands.

In January 2006, IPWireless entered the mobile TV space with the launch of TDtv, a Multimedia Broadcast and Multicast Standard (MBMS)-based offering that enables mobile operators to deploy mobile TV using their existing 3G spectrum and cell site infrastructure. This is a huge advantage over competing technologies such as DVB-H and MediaFLO, both of which require separate networks. TDtv also allows operators to maintain control of mobile TV services, as opposed to sharing it with broadcasters. Orange is trialing TDtv in the UK, IPMobile is deploying TDtv in Japan and Sprint Nextel is testing TDtv as part of its ongoing UMTS TD-CDMA trial in the U.S. To date, IPWireless has announced two TDtv partnerships with MobiTV, a content provider, and Vidiator, a mobile multimedia streaming company, to develop next-generation mobile TV delivery solutions.

In February 2006, Sprint Nextel announced that it would be the first operator globally to test the next generation of IPWireless’ mobile broadband technology, which is progressive to Long Term Evolution (LTE) for the 2.5GHz Band. Beyond Sprint Nextel, the true value of IPWireless and UMTS TD-CDMA has to do with Long Term Evolution, or LTE. The technology direction for LTE has been set by operators and vendors, and it shares fundamental principles with TD-CDMA. In fact, IPWireless LTE Progression Platform offers operators the only software-upgrade path to LTE.

• Self Contained Transmissions:

? Allows different modulation in different slots: OFDM, SC-FDMA, CDMA.

• Common Frame Structure:

? LTE and TD-CDMA can coexist on the same carrier, in different sub-frames, or;

? RF coexistence on adjacent carriers.

• Benefits:

? Backward compatibility (LTE/TD-CDMA) so operators can deliver LTE type services more than three years early and migrate to LTE;

? Support for paired and unpaired operation;

? Variable duplex spacing.

The IPWireless Partner Program and chipsets allow device manufacturers and infrastructure vendors to very quickly bring innovative new TD-CDMA solutions to market. The company is currently shipping an end-to-end TD-CDMA solution including end user equipment, network infrastructure and software, and third party devices. Consumer devices include both PCMCIAs for laptops, PDAs and Tablet PC’s, as well as desktop modems that use either USB or Ethernet to support PCs and LAN Gateways. Both devices are plug-and-play, use extremely low power and support downlink speeds of up to 3Mb/s. Both devices are also equipped with SIM card readers to support secure provisioning, authentication and roaming.

In May of this year, IPWireless was selected by FierceWireless as one of the “Fierce 15,” an annual award recognizing the top 15 emerging wireless companies. This followed on the heels of an additional $10M investment from Sprint Nextel in January 2006, which brings the total funding to $14M. Sprint Nextel has made it very clear that they are going to decide which technology to deploy in their 2.5 GHz spectrum by this summer and right now, based on media and analyst reports, UMTS TD-CDMA is one of the leading remaining candidates for deployment. If UMTS TD-CDMA is selected it will thrust IPWireless into the top echelon of the industry and greatly increase the speed at which TD-CDMA will be embedded into wireless devices and handsets.

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Network partnering trial

In September 2003 Vodafone Australia and Telstra Wholesale announced a network partnering trial. The pilot project in central regional Victoria would assess the viability of sharing mobile base station infrastructure in areas where duplicate coverage exists.

If successful, Vodafone indicated that it would progress further network partnering with Telstra Wholesale on a commercial basis to minimise the costs of duplicated elements of each carrier’s GSM infrastructure in regional and rural Australia.

Telecoms and the real estate market

The announcement from Crown Castle in late 2005 that it is looking at selling its mobile towers in Australia made several people aware of this sub-segment of the market.

Interestingly, at my Roundtables, I increasingly encounter companies related to real estate asset management becoming involved in our industry. The enormous boom in telecoms requires more and more network coverage and more and more sites are needed for different infrastructure.

On the one hand we see that regional councils and communities are utilising their assets to attract new infrastructure players to their areas, assisting them in building better business cases for the deployment of new networks to their communities. They clearly understand the economic and social benefits of such policies. They actively use these assets to make it easier for infrastructure providers to develop business cases for the deployment of new services in their regions

However, the situation in metropolitan areas is quite different. Here the opposite is happening – there are more operators than assets that are available to extend infrastructure. So asset managers are looking for premium prices for the use of their facilities. This applies to mobile towers, as well as to assets close to telephone exchanges, to host, for example, Digital Subscriber Line Access Multiplexer (DSLAM) equipment from Telstra’s competitors which are needed for the delivery of fixed broadband services.

At the same time new developments in wireless broadband have seen WiFi entering this space as well, and the new World Interoperability for Microwave Access (WiMAX)-based developments will only increase the need for such facilities.

The uncertainties in these markets makes it so much more interesting for those companies who do understand the market and are able to make strong decisions regarding their future potential. Our own conservative estimate here is that the need for facilities to host telecoms towers and equipment is set to grow between 20% and 30% per annum over the next few years.

Industry taskforce for co-location

A National Carrier Co-ordination Group comprising Australia’s six mobile telephone carriers was formed in August 2000 to improve co-location of mobile phone facilities and promote industry liaison with local governments and the community.

The Carrier Co-ordination Group will develop a formal Code to support the government’s legislative requirement for co-location of mobile telephone facilities. It works with representatives of various consumer groups and local governments to ensure they adhere to the Communications Alliance Code that is intended to specify best contemporary practice in the area of design, installation and operation of radio communications infrastructure.

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Telco focus needs to be maintained.

Perhaps surprisingly, but since the Telstra onslaught started after Sol’s arrival we have seen that the government’s telecoms policies were able to withstand this onslaught, although BuddeComm are sure that many members of our industry (our self included) held their breath once or twice.

However, Sol’s uncompromising stand has actually been of great assistance to the industry, as it has reluctantly also brought the Prime Minister into the discussion. In the past BuddeComm have paid tribute to our Minister’s efforts, but we are also well aware that she would not have been able to follow the course she did without his blessing.

To illustrate the importance of the Prime Minister, we watched Helen Coonan quietly launch her excellent media policies in mid-2005, only to be totally undermined by the Prime Minister – resulting in a completely useless set of government media policies.

Although telecom policies are in place, they are not being implemented in any timely fashion. We now need to shift our attention from policies to implementation.

The Minister needs to become serious about her powers to implement the operational separation of Telstra. To date she has deliberately kept these powers on ice, but now is the time for her to use them.

On present appearances it seems that Telstra can delay the introduction for several more years, via a number of court cases. Time and again BuddeComm have asserted that the self-regulatory regime that underpins government telecoms policies is simply not working.

Why can other countries implement government policies within months, when in Australia it takes years?

And, as a result, our society and economy is missing out on the benefits that are available elsewhere in the developed world.

The government is falling over itself to proclaim the virtues of deregulation, economic reforms, etc, but it is failing to apply this in the telecom industry. Words are not enough – action is what is needed. It is ingrained in our democracy and capitalistic structures that competition and innovation are pillars of our economy, yet in relation to telecoms the government is failing to implement what are obviously sound policies – ones that will promote a competitive future for the industry.

In Europe e-health is shaping up as one of the killer applications of broadband, supporting, via broadband-based homecare services, government policies in relation to the care of an ageing population.

Forget about all the communications and entertainment aspects of true broadband. From a healthcare perspective alone a broadband network is essential, and without proper competition this is simply not going to happen in Australia. We are running 3-4 years behind North America, Europe and SE Asia.

Telstra is holding the country to ransom over true broadband and government action is now necessary to deal with this blackmailing.

The T3 issue is moving the focus away from where the government should really be taking action. If it weren’t so disturbing it would be interesting to follow the national ‘soapie’ that is developing in the media. But the presence or otherwise of Cousins is not going to make any difference to our telecoms environment. Real government action around operational separation and the implementation of local loop unbundling is what is needed now.

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