Archive for October, 2007

The productive potential of Crowdsourcing

Monday, October 29th, 2007

User Generated Content (UGC) websites such as MySpace, Facebook, YouTube etc have been traditionally thought of as sites that allow users to communicate and share personal information and images. Sites such as Wikipedia have demonstrated that pooling user generated information together can create a useful information source based on collective knowledge. There is a realisation occurring that bringing related industry enthusiasts and specialists together in an online environment creates a powerful assembly of untapped knowledge, talent and creativity. Enterprises are beginning to utilise this external labour source in order to create products, predict markets, share resources, organise data etc. Some crowdsourcing sites offer financial incentives to encourage participation; one example is Innocentive which offers financial rewards to scientists who work on Research and Development (R&D) projects.

Examples of some sites based on the concept of crowdsourcing include:

  • Innocentive []- co-founded by Alpheus Bingham, Innocentive evolved from foundation work at Eli Lilly when the company examined ways to leverage external knowledge in order to reduce the high costs of developing new medicines. InnoCentive is a web-based community matching top scientists to relevant R&D projects from companies from around the world.
  • iStockphoto [] – offers a collection of user-generated royalty-free images at low prices.
  • [] – designs submitted by users to this company’s website are printed onto T-shirts. Such a simple idea has led to this company generating millions (~$20 million) in revenue.
  • CambrianHouse [] – users submit ideas for software products. Participants are then able to vote on which ideas are the best, and expand upon the concept by offering thoughts on possible alterations and improvements. To encourage contribution all members are able to earn ‘Glory Points’ which reflect the amount of financial compensation the member as earned. Over 4,000 ideas have been submitted to the site, which has resulted in the launch of products such as Prezzle, which combines online gift certificates to well known retailers into flash e-cards.

Kylie Wansink Senior Analyst Global Markets, BuddeComm

See also: Global – Digital Media -Social Networks & User Generated Content (UGC).

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Eastern Europe: Content for sale

Monday, October 22nd, 2007

For more than twenty years I have been involved in debates about whether ‘content is king’.

While I have never disputed the importance of content, I have consistently argued that without access the value of content is questionable.

However, in many countries the access issue has finally been solved; cheap, good quality broadband has become, or is rapidly becoming, available.

So, yes, we can now safely refer to content as being ‘king’. However it must not just be content – it must be highly specialised, good quality and unique content.

While nobody would try to view the millions of clips on YouTube, by now most broadband users will have looked, at least once or twice, at a ‘unique’ clip on the site.

And this is only the beginning of the content revolution. Yes, I am certainly talking about revolution here, not evolution. This development will go faster than most people expect.

There is no way that the current commercial content providers will be able to cope with this revolution. They all date back to a time when the use of video content was limited and lots of money was spent on the production of content, which took the form of advertising material, corporate video, docos and movies.

It is impossible for most content providers to change their business models. They face the same problems as everybody else involved in digital media, that of cannibalising old business models.

Enter the world of the new professional digital media entrepreneurs …….

They now offering you broadcast quality TV spots for as little as €25. Many of these new companies operate from the former Eastern Europe, in countries such as Poland and the Czech Republic. Some of you might recall a travel report I wrote on the incredibly innovative Czech content market. Look at many of the cartoons and you will find Czech names in the credits.

The business models are varied. They are using software programs that allow customers to design their own adverting spots (the €25 option). They also operate fully-equipped video studies where they are still able to produce professional commercial material for less than 80% of what is being charged by the traditional producers.

One of these entrepreneurs is Europe Marketing Group (EMG) operating from an industrial site in Warsaw. With good broadband connections they can communicate with their (mainly West European) customers, and productions fly from east to west at the speed of light – no need to operate from expensive locations in London or Frankfurt.

Interestingly, their key markets so far have been their own home markets. Businesses in these new emerging economies simply didn’t have the money to spend on content productions for advertising like their counterparts in the west of the continent.

Necessity is certainly the mother of invention.

Also, not unimportantly, labour is still significantly cheaper in Eastern Europe, especially for those operating in the film industry.

EMG’s next growth market is the production of Internet TV. With digital TV now becoming available across the world there are more channels to fill with content, and the company wants to play a key role in producing for this market as well.

Netherlands-based is using cheap production facilities in Romania, Ukraine and Uruguay, with the same result – costs can be 80%-90% lower than those charged by the traditional advertising and film production studios. Via the Net, freelance producers from around the world can easily participate in these new alternative content-producing networks.

The companies advertising in the Yellow pages constitute a key market for these low cost production products. They are aware of the positive impact advertising has on their business, but so far they have been unable to participate in video-based advertising.

This is now changing and the SME market is more than keen to spend its money on low cost, good quality spots. Using the Internet and new digital TV channels, instead of the traditional media, to advertise they either place these spots on their own website or use high traffic sites that are relevant to their business.

In the meantime Spotzer has opened offices in London and Los Angeles. Another effect of the availability of low cost, high quality broadband is that countries that have this in place are now exporting their innovations and services around the world.

Another interesting site I came across when looking at these developments was, a YouTube-like site, specifically aimed at SMEs. The use of advertising companies and broadcasting in general has been too expensive for most SMEs in the past, but these new Internet-based activities are going to solve that problem.

For detailed information, seereport:- Europe (Eastern) Telecoms, Mobile & Broadband Overview and Analysis 2006-2007.

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Home care monitoring

Wednesday, October 17th, 2007

In October 2007 the Baptist Community Services (BCS) in Sydney commenced a pilot study of home-care monitoring which was still continuing in early 2009. The trial involved 26 patients, set-top boxes (STBs), plus Bluetooth-enabled blood pressure, blood glucose, weight and temperature monitors.

Patients were able to connect via the STB and broadband to a dedicated call centre so any anomalies could be detected early. Information about the patient’s status and condition would also appear on their television screens. The STBs incorporate two-way video-conferencing. Patients’ families would also have access to web-based information. Cisco and Optus were partnering in the trial.

The trial and pilot were continuing in Canberra and also at the BCS Age Friendly Home in Marsfield, NSW. The trial is unlikely to be expanded as the STBs in the trial are unable to be secured in Australia.

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Australia Telecoms Industry – 2007 Statistics and Forecasts

Monday, October 15th, 2007

Announcing the twentieth annual edition of our statistical overview of the Australian telecommunications market.

ATUG has dubbed this report ‘the bible of the Australian telecoms industry’, and we are proud to continue the tradition.

Packed full of statistical information, the report provides revenue, revenue growth statistics and analysis for the telecommunications market by major service between 2000 and 2007, as well as our market estimates for 2008 and 2009. The total telecoms service market is segmented according to telecommunications service: local access, mobile and data, as well as by major provider (Telstra, Optus and other providers). Detailed revenue and forecasting statistics and analyses are also included separately for the wholesale, mobile, data and broadband markets, with forecasts for 2008/09. Higher level forecasting is also provided to 2015.

BuddeComm estimates that the overall telecoms market grew by 5.2% to $36.6 billion in the 12 months to June 2007. Growth is expected to subside over the next two years as Telstra is forced to begin a period of transformation and rationalisation that has already been evident in many European countries. Overall telecoms market growth is expected to drop to 4.1% by 2008 and 3.4% by 2009.

Telstra maintains its stranglehold on the wholesale market with revenues of just under $3 billion in 2007, which constituted just over 70% of the $4.2 billion wholesale market. The total 2nd tier market (including wholesale revenues) grew at around 7.9% in 2007 to $9.2 billion and we expect that the growth rate will drop slightly to around 6% in 2008 and then maintain this level moving into 2009.

Australian Industry overview – 2007 – 2008

  • Telstra’s Retail broadband subscribers jumped 60% to 2.4 million, and market share increased from 45% to 47%. In fact, retail broadband for the first time exceeded the dollar decline in PSTN revenues.
  • Optus is the follower that must challenge the incumbent. It is starting to feel the pinch of a mobile market that has almost reached the point of saturation, local access revenue is declining and it has been slow in its broadband push.
  • After some very tough years the 2nd tier market is finally turning the corner, although still struggling. Regulations are finally started to fall in place that are providing the market with an economic viable wholesale platform.
  • With good wholesale prices in place, by late 2007 the industry has increased the number of lines which they now operate independently from Telstra.
  • The key drivers here are players such as Optus, PowerTel, iiNet and Internode. Within the next few years we will see broadband access becoming near universal, either through fixed or wireless connections. This will lead to further commoditisation and will see more consolidation.
  • While WiMAX will in the short term not have a major impact on the overall market, wireless broadband developments in regional markets and in niche metropolitan markets will certainly also allow for innovations and expansion.

Australian fixed line and data market statistics.

  • The fixed-line voice market (voice calls and local access) has been losing overall market share over the past few years and by 2009 BuddeComm expects the fixed-line voice market to drop to just 28% of the overall market.
  • The data market continues to outpace other segment in terms of growth and market share. Up to 2006, mobile was the key driver of growth of the overall telecoms market; however, as the market is rapidly approaching saturation, growth has already begun to subside in this sector.

Australian Mobile Market Statistics.

  • Growth in mobile subscribers is slowing and ARPUs have been steadily declining over the past few years; however, by 2007 ARPUs across all operators had stabilised, driven in part by the take-up of higher spending capped plans and increased mobile data usage.
  • In addition to a market that has almost approached saturation, operators’ revenue growths will be modest from 2008 onwards. Growth was around 8.5% for 2006 and 10.3% in 2007 and we expect this to gradually taper off further to around 7.2% in 2008 and 5.0% in 2010.
  • Subscriber growth reached 7% in 2007 and we predict that growth will subside to 4% in 2008 and reduce further to only 2.0% in 2010.

Australian Broadband Statistics

  • Internet access revenues (dial-up and broadband) showed very strong growth in 2006 and 2007 driven by strong uptake of broadband.
  • The revenue growth rate for 2006 was 27% compared with 33% in 2007. Strong growth is expected to continue moving into 2008, although the market probably has peaked in 2007.
  • Telstra is expected to increase its overall market share of Internet access revenues moving into 2008, extending its market share from 36% in 2007 to 39% in 2008.
  • By late 2007 there was still pent-up demand for another 1 million users and by 2008 broadband penetration in Australia will cross the 5 million mark.

For detailed information, table of contents and pricing see:

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US FttH deployment gathers pace

Monday, October 8th, 2007

The US fibre-to-the-home (FttH) market reached more than two million subscribers by September 2007, according to figures released by the FttH Council and the Telecommunications Industry Association (TIA). This amounts to more than 100% growth since September 2006, driven largely by Verizon’s ambitious FiOS network deployment. The number of homes passed has grown by more than 50%, from around six million to nine-and-a-half million. The take-up rate has thus increased from around 15% to 20%, principally due to the active marketing of the networks in 2007.

Apart from rising demand for bandwidth hungry services on high-speed broadband connections, one of the main drivers behind the fibre networks is the desire by the telcos for a share of the lucrative TV market. They have been putting their substantial political clout behind lobbying efforts to lower TV licensing (video franchising) regulatory hurdles, efforts which have increasingly been paying dividends. There are now around 15 states which have passed state-wide TV licensing reforms which remove the requirement to obtain multiple local licences in each municipality of operation. Several more states are expected to pass similar reforms in the near future. The franchise reforms have already started translating into TV-over-fibre subscriptions, with nearly half of the current FttH subscribers now receiving TV over their fibre connections, up 160% from the previous year.

The largest FttH network is Verizon’s, which has been deployed to around 4 million households in twelve states and reported more than 500,000 subscribers in June 2007. However, its target of passing 18 million households (between three and four million subscribers) by 2010 indicate that it does not yet regard FttH to be an economical replacement for all of its DSL network, which currently passes around 33 million households.

The other major fibre protagonist is AT&T, whose fibre strategy, comprising a Fibre-to-the-Node (FttN) network with VDSL2, is starting to gain momentum following some initial technological glitches related to Microsoft’s IPTV platform. By September 2007 it had reached around 100,000 subscribers from approximately five million homes passed. AT&T’s U-Verse TV uses an all-IPTV architecture with a per household deployment cost estimated at around half that of Verizon’s FiOS TV service. Thus although AT&T’s FttN-VDSL2 solution will not provide as high broadband speeds as Verizon’s FttH network, it may soon surpass Verizon’s subscriber numbers, albeit in different footprints. Ultimately, with nearly half of all US households expected to be passed by some form of fibre network by 2010, the cable-TV companies will have to respond quickly to this growing threat to their TV-markets.

For more information on the US Digital TV sector, see our separate report

USA – Broadband Market – Fibre to the Home – Overview & Forecasts.

Strategies for Fibreing Australia – Roundtable with Paul Budde and Industry Experts
Thursday 18 October 2007 – Opening address by Senator Stephen Conroy, Shadow Minister for Communications. Venue: The Observatory Hotel, 89-113 Kent Street, Sydney

Bookings and information: See the BuddComm Roundtable Schedule

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