Archive for November, 2007

A Labor victory – what’s next for the telecoms industry?

Tuesday, November 27th, 2007

Now that we have the Labor victory it will be very interesting to see how the broadband policies are further developed – and, even more importantly, how they will be executed.

This election certainly put broadband on the national agenda; there aren’t many other countries in the world where this important element of national infrastructure has been so widely debated.

The subject has generated very heated discussion because the stakes are extremely high. In one way or another some $5 billion worth of direct or indirect government spending is at stake, and who wouldn’t want a share of that?

All the signs indicate that the new government is willing to sit down with the industry and discuss how to proceed from here. Broad outlines of the plans are in place and there is general agreement between the new government and most players in the industry – and, importantly, there is room for discussion.

The industry should be able to harness this unique level of goodwill and use it to the advantage of, not just the industry, but of the whole country. Again, there is broad agreement that the best solution for the country is also the best solution for the industry.

High on the industry agenda is a high-level FttH vision and the industry will shortly present the new Minister, Stephen Conroy, with an industry vision. This has been developed over the last month and will include ideas and suggestions for an infrastructure that supports e-health applications (video monitoring of patients, elderly people, remote diagnostics); smart grid (linking the electricity network to broadband, allowing utilities and their customers to save energy); and tele-education – as well as e-entertainment, of course.

It will be very interesting to see if Telstra is prepared to play ball. This would mean the incumbent accepting the new government’s open networks concept and genuinely working with the government and the industry towards solutions that are good for the country, for competition and for innovation.

That would be a massive turnaround for Telstra.

But if it doesn’t play ball its situation will be worse under this new government, and we can expect all-out war – a war even bigger than the one it waged under the previous administration. This will make it extremely difficult for the Labor government to speedily implement their plans. In the worst case scenario it could take it three years to execute its FttN plan. This would be disastrous for the government and would reflect badly on a policy that was a major part of its campaign. Ministers and bureaucrats would be dragged through the courts as Telstra is expected to continue to try to hold onto its monopoly.

Nothing less than very, very tough structural separation legislation will ensure Labor’s capacity to execute its plans under such a scenario, but even this could take at least a year, which would again undermine Labor’s promise to start rolling out in 2008.

There is still a reasonable chance that Telstra will pre-empt all of this and announce its own structural separation, since this could be most financially lucrative for the management team. But to date they have indicated that they prefer a vertically-integrated future.

Now is the time to ensure that we make use of the lessons learned in 2007, and that the potential economic and social benefits are included in the next part of the process of building the new national infrastructure. This new government will begin to lay the foundation for the national infrastructure that will be with us for the next 25 years, so we need to get it right.
Paul Budde

See also: Australia Government Policies

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Progress in NZ at the expense of competition

Monday, November 26th, 2007

Shortsighted industry
When I addressed the TUANZ conference in May 2006, I very much supported Teresa Gattung’s overtures to the industry, after the government’s announcement it would force Telecom to make structural changes.

However, I was very critical about the industry in New Zealand, whose total focus was to get some quick fixes to the wholesale regime in relation to local loop unbundling (LLU). Telecom had made it very clear that it would take until 2008 before new wholesale products would become available.

BuddeComm consistently warned that New Zealand was fighting battles which occurred in Europe in the early 00s and in Australia in the mid 00s, and that in the meantime the world had moved on. By 2008, also in New Zealand, the discussion would have moved onto fibre networks. Unfortunately nobody at that time wanted to seriously discuss that issue and started to beaver away in what we called old-world wholesale issues.

Telecom fibre plans are no surprise
Based on our analyses of Telecom NGN plans going back to the early 00s, we were certain that Telecom did have a plan which would see them moving deeper into fibre networks, as a matter of fact we had mentioned the company at several occasions in our global research reports as being one of the early adopters of this new concept and their GEN-I initiative also made it very clear to us where their future thinking was. It therefore didn’t come as a surprise to us that they announced their new fibre plans in the way they did it, making 2,000 copper based exchanges obsolete in this process. What does puzzle me is that the industry obviously failed to negotiate a good transition plan with Telecom and that this was not more firmly specified in the new legislation.

However, we are very disappointed that Telecom at the same didn’t indicate how they are going to take the rest of the industry with them on this exiting new path. This is certainly against the sentiment that I first encountered in May 2006 and that we have quite publicly supported over the last 18 months.

As a matter of fact, the lack of a visionary national approach could potentially set the country back many years, basically throwing it back into the dark days of the monopoly. Surely the new operational separation legislation will eventually assist the industry. However, without Telecom’s support that could take many years.

No progress in wholesale
At the same time Telecom, has failed to come up with sustainable wholesale products that would provide the industry with opportunities to start developing more innovative broadband services, rather than the current more-of-the-same Telecom products, perhaps at slightly cheaper prices. We certainly don’t call that a good outcome of the wholesale debate.

Current indications are that wholesale prices will go up and the already meager wholesale margins will go down. At the same time the new fibre announcements will make it impossible for competitors to invest in technologies such as DSLAMS which will become obsolete within the next 3 years, as there is no place for them in a fibre network.

In good faith, the industry has been pre-empting Telecom’s positive attitude and have made tactical changes to their organizations, which has led to a substantial increase of their customer base in anticipation to bring them over to the new environment. They now see that the emperor is not wearing any clothes, and they are left stranded and in a financially very dangerous position.

Broadband prices double that of other countries
A simple calculation indicates that as a result of these higher wholesale costs, the entry level of broadband in New Zealand will increase to around $45. Currently in comparable countries that level is a low as $9.95, but on average between $19.95 and $29.95.

These high broadband prices will be a major set back for economic progress and innovation in New Zealand, something the OECD has already been mentioning to New Zealand for many years.

New endless regulatory debates?
The fact that Telecom didn’t come up with a wholesale strategy indicates to me that they have abandoned their cooperative approach, or it could even let us to conclude that their supportive behaviour has all been smoke and mirrors. If they do have a plan to take the rest of the industry with them, why didn’t they announce that at the same time? This is a very worrying development indeed.

We have learned from the past that innovation will be stalled when there is no or little competition, and the current uncertainty alone is enough to kill any future investments made by Telecom’s competitors.

If the government has to now step in, it will mean more regulatory and perhaps even further legislative processes which are going to take months, if not years. In the meantime this will only increase the damage already done to the industry.

Paul Budde

The future of the New Zealand telecoms industry will be discussed at next week’s BuddeComm Roundtables.

‘State of the Industry’ Roundtables with Paul Budde
cost $425 pp excl GST

Auckland – Monday 3rd December 2007
Wellington – Tuesday 4th December 2007
Theme: New Zealand Telco Market moving into 2008

Venue:
Auckland – Monday 3rd December
Duxton Hotel Auckland, 100 Greys Ave, Auckland

Wellington – Tuesday 4th December
Duxton Hotel Wellington, 170 Wakefield Street, Wellington

Booking:
Online registration:
http://www.budde.com.au/consultancy/public-workshops-seminars.html
Telephone: 02 4998 8144
Email: pbc@budde.com.au

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Travelogue: China – November 2007

Sunday, November 25th, 2007

1. Synopsis

The fact that this was my third trip to China in twelve months demonstrates that it is becoming an increasingly interesting place. This time we started in the capital of Yunnan Province, Kunming, and proceeded from there to Dali, Lijang and Zhongdian before going to Beijing. The trip coincided with the 17th Party Congress of the Chinese Communist Party, where the policies for the next five years will be laid down. Slow political progress and fast economic progress were the outcomes. Telecommunications was not a particularly hot issue but nevertheless, in and around the Congress, interesting facts, figures and policies could be picked up.

2. Travelling into Regional China

Travelling within China is becoming more and more of a problem. The airline system is over-used and under-staffed. Flights can simply be cancelled without notice and this is followed by a wild scramble at the airline desk, with 400 people trying to change their flight and only one airline staff member behind the counter.

Anyone who has travelled to China would know that the Chinese are not patient people, and the battles that take place at the desk are often most unpleasant. This reinforces the advisability of including a local guide in your itinerary, even if you are a seasoned traveller.

But, putting all that aside, the highlight of this trip to China was that we travelled beyond the east coast where our business contacts are.

This time we went to the province of Yunnan in southwestern China. Starting from the capital, Kunming, we journeyed to Dali, Lijang and Zhongdian (known in James Hilton’s novel Lost Horizons, as ‘Shangri-La’). The altitude in the country we covered varied between 2,000 and 4,000 metres, with many snow-capped mountains – a stunning environment. This was the first trip to China where we enjoyed a clean environment and clear skies; at the same time we heard on TV that Beijing and other cities on the east coast were experiencing shocking pollution, due to fog.

In Yunnan, it’s the people who make this province very special indeed. It is the home of 50 of China’s 56 ethnic groups and the mix of cultures is unique. I was surprised and impressed at the enormous effort that goes into maintaining the traditions, languages and cultures of these communities. China has been unified in way or another for more than 2,000 years and yet the old cultures are still well and truly alive. The people are very proud of their culture and heritage and they are supported in this by the federal government.

And, with the exception of the Tibetans, the various groups seem to be quite happy to live under the Chinese umbrella.

2.1 Catching up with the China Boom

My first impression of regional China was similar to what I felt when I visited China five years ago, after an absence of 15 years – absolute awe.

Kunming has a population of close to six million people and has the same metropolitan characteristics as the cities on the east coast. True, the pace is not as fast as on the east coast and developments might not be as glamorous. It is a bit more laid-back and there is, naturally, a more rural atmosphere. In general, however, the same increased prosperity is evident – lots of new developments and a great deal of progress in infrastructure, communications, personal income, etc. And the people, in general, appear happy.

But much smaller cities, such as Dali (three million people) and Lijang (only one million J) are showing similar signs. However, as the rest of the country is beginning to catch up with the east coast, the further we travelled the closer we seemed to get to the start of the China boom.

A good example of this was Zhongdian, a Tibetan town not far from Tibet proper. Most parts of the old city have quite recently been demolished and awesome new buildings have now risen from the ashes. These new buildings were either approaching completion or had just been finished.

I am not talking about a few new streets here. I am talking about the entire inner city! Streets and streets of new buildings, all in a modern yet definitely Tibetan style – very tasteful – and the whole development allows for at least 50 years of growth.

As I have said in previous reports on my travels in China, it is sometimes heartbreaking that people have to lose their houses to allow for progress. The reality, however, is that most of these houses are slums and, while I feel for the people, there is really no other way to improve the conditions of these very poor communities. People in some of these neighbourhoods live in absolute poverty, with appalling heath conditions; yet many are reluctant to move to modern multi-storey flats that are often a fair distance from their previous homes.

I must say that I have seen far more humanitarian poverty and misery in (democratic) India than I have observed in (communist) China.

Nevertheless the majority of Chinese people are very poor and this is at the same time China’s weakest point. The current sharp increases in energy prices, is hurting regional and rural China the most and this is where the majority of these poor people live. Most uprisings and revolutions in China have started in these areas.

Back to Zhongdian .. the town is also a tourist destination and, here also, a significant part of the inner city has been rebuilt in the traditional Tibetan style. All buildings are in timber, beautifully designed, carved and painted, but, with the exception of one historic building from the Ming period, all these ‘old’ buildings are new. Again they are tasteful, not tacky, and with none of the trappings that some spoiled tourists look for. Local culture and tradition has been maintained, but good restaurants, coffee shops, tasteful craft are also available.

2.2 Telecommunications Rule!

Two blocks in the main drag of the modern town consist of telecommunications shops; commercially they dominate the main street. China Telecom, China Mobile and China Unicom are there, of course, but there are a dozen other smaller stores with mobile phones, MP2 and MP3 products. And, right in the middle, is the Telecommunications Hotel.

All the buildings are ultra modern in design and I would argue they look better than many telecoms shops in other parts of the world.

To return for just a moment to the local environment – Zhongdian is situated on top of a rugged mountain plateau 3,500 metres high. It is a harsh environment and in the suburbs on the outskirts of the new inner cities (500 metres from the glamorous telecoms shops I mentioned above), yaks, pigs and chickens own the roads.

3. Yu Hu Connected to the world

Travelling even further into the countryside we went on foot into the village of Yu Hu (Jade Lake). There are only Tibetan farms in this village. It is situated at the foot of the 5,600 metre high Yu Long (Jade Dragon) mountain. And through the middle of the village, just above the main street, which is continuously flooded by water coming down from the snow-capped mountain, runs a thick telecommunications cable.

With the help of our guide I had a conversation with a farmer who was walking out of his house as we passed by. He told us that he was 74 years old, had lived all his life in this 400-year-old village and was on his way to play a game of or croquet with his friends. The telephone had arrived in his village three years ago, and everybody also had satellite TV (35 channels). ‘I am connected to the world’ he said, putting his hand in his pocket and producing his mobile phone.

4. Tibetan Monks with PDAs

One of the highlights of our trips was a visit to the Songzanglin Lamasery of Tibetan Buddhism, the largest of its kind in Yunnan. I was completely blown away by what I saw that morning, the highlight being watching 400 monks in prayer, chanting in this ancient building. (I have written a separate account of this experience.)

We visited this sacred place on a sunny but cold October morning. Imagine a huge, cold, half-lit hall with shrines along the walls, lots of incense burning, huge statues of Buddha and, in the middle, those 400 red-robed monks sitting cross-legged on about 30 wooden benches, some with Tibetan firepots next to them to give a bit of warmth.

Yet, to my amazement, we saw several monks using PDAs, accessing the Internet and others sending SMSs from their mobile phones.

5. And everywhere, mobile connection

I would not say that we travelled into remote areas, but we certainly were in the country, between mountains as high as 6,500 metres. Yet we had reception everywhere we went, even in the fairly remote Padacuo National Park.

How is it, then, that where we live in Bucketty, between hills 300 metres in height, 100Km from Sydney, we have no mobile reception?

The conclusion I have come to is that the rest of the world hasn’t even begun to grasp what is happening in China. There is no point in talking about where China will be in 25 or 50 years’ time – it is already leapfrogging the rest of the world in many ways and the developments taking place there are all implemented with a long-term vision at their core. The infrastructure has been built according to a 25-50 year vision and, when fully employed and utilised, this will put the country ahead of many parts of the developed world, where most plans do not extend beyond the next quarter.

6. Hard to compehend the speed of progress

By any standard the developments in western China are as impressive as those on the eastern seaboard. However, within the spectacular Chinese economy wealth grows faster in the east than in the west. President Hu Jintao has spent a lot of time travelling in rural regions, demonstrating that the government is working hard to lift the economic standard in those areas also. This is a massive task, but progress has been made and many of the processes that have been put in place will deliver in future years.

This time, more than on my previous trips along the east coast, I witnessed the industrious nature of the rural Chinese people and the innovative solutions they apply to the many problems faced by them. This gives me great confidence in the overall development of the country.

While it is true that 80% of the rural population still has many decades to go before it will reach our level of living standard, I did not see any real poverty. Yes, there are beggars; but I saw more of them in New York than I saw in Beijing. And, yes, some of the work I saw people doing would be unacceptable in the developed world, but they are willing to take on all kinds of work to advance themselves and their families.

Everywhere in the countryside we saw farmers building new farmhouses, and most were very substantial, three-storey buildings. Cooperation between rural families is also helping communities to move forward – this, of course, is not dissimilar to the way communities in the developed world have moved forwards over the last 200 years or so.

While all the attention is directed at the east coast, the true strength of China rests in its rural economy. But this can also prove to be its weakness if the gap between the rich east and the poor west increases, and this certainly seems to be the trend at the moment. The lives of people in urban China are advancing far more rapidly than those in country areas. More work certainly needs to be done to improve the lifestyle of those hard-working rural Chinese people – they truly are the backbone of the country.

The 17th Congress (see below) did promise more progress in free education and healthcare services and this would greatly benefit the rural population.

From what I have seen during this trip these people deserve great respect for their hard work, often under extremely harsh conditions. However, we always received a big ‘ni hao’ (hello) back from them, generally accompanied by a big smile.

7. The casualties of progress

My conversations with these people confirmed what I had also picked up from official sources – that there is a great deal of injustice in regional China.

For instance, in Zhongdian some local people sold their houses for 300RMB ($50!!) to make way for expensive new buildings.

On the outskirts of booming regional towns, developers (often party members linked to the local government) force farmers to sell their land. When they are given, say, 30,000 RMB ($5,000) they think they are millionaires, only to discover that, with no new income they quickly run out of money. Often poorly educated, these people don’t realise that they have no economic future, as they can no longer farm and they find it difficult to find any other work. They may be forced to hand-hew rocks for roadworks, or else live from a barely existing social benefit system.

The federal government is addressing the is sue but, as the saying goes in China, it’s a long way to Beijing.

8. 17th Party Congress

8.1 The Communist Party (Chinese Style)

The trip coincided with the 17th Party Congress of the Chinese Communist party. This 237-member presidium is setting the policies and directions for the next five years. It is a most interesting event and one of the very few opportunities for outsiders to get a glimpse of what is happening behind the often very secretive Chinese system of politics.

At a political level any discussion of democracy revolves solely around the selection of party delegates.

The political wheel, however, turns extremely slowly. It was suggested at the 12th Congress that some of the internal procedures should be opened up, creating a more competitive arena for the election of delegates. The subject was first mooted in 1989 and only now is some progress apparently being made.

The Communist Party remains the most influential organisation in relation to decision-making in every aspect of Chinese society and the Chinese economy. It therefore is no surprise that in a buoyant Chinese economy, where an awful lot is at stake, membership of the Party has increased more than 100% since the last Congress in 2002.

In all the Party has over 70 million members, representing 5.5% of the population.

8.2 Bureaucratic power breeds corruption

However, because of its influence and the relatively low level of democratic scrutiny a massive amount of corruption and even more serious criminal behaviour takes place everywhere in bureaucratic China.

A crackdown was launched in 2003, during which more than 110,000 party officials were investigated. As a result 2,500 were dismissed or demoted, 1,300 were disciplined and over 400 are under judicial investigation. The government hopes that this will encourage most of the others to lift their game. It is increasingly making the results of the crackdown publicly available, to send a warning out to others. However that was only the tip of the iceberg – corruption is so endemic in the Chinese system that change will only be achievable over a long period of time, and with a great deal of hard work.

In the current Congress selection process more attention is at last being given to investigating the candidates’ backgrounds, to avoid what is becoming a public embarrassment for the national leaders.

Corruption is also impacting heavily on the billion people in regional China. They are suffering from the day-to-day effects of the corrupt system, more so than in the cities; in the cities the negative impact of corruption is at least partly compensated for by the enormous economic growth that the Chinese city dwellers enjoy.

8.3 New Government – More of the same

At the 16th Congress Hu Jintao was elected President and, in accordance with good old Chinese tradition, now (five years later) is the time for him to consolidate his power base.

Before the 17th Congress had even commenced the jockeying for new positions had well and truly started and, as is always the case everywhere, the battle is between the traditional, more conservative forces and the new liberal factions of the Party (a battle that is also reflected within Chinese society).

The instigator of China’s current economic boom, former President Deng Xioping, is still enormously influential within the Party. His favourite, Xi Jingping (the Party boss of Shanghai) and Hu’s favourite Li Keqiang were both elected to the inner circle of nine – although it was rumoured that Hu would have preferred to bring this number back to the original group of seven.

Xi and Li are both seen as the president and premier. Xi is certainly a progressive leader, and he is a leader who will be able to do business with the rest of the world. He is very well-respected among the progressive factions of the Party, as well as overseas.

However, the overall outcome of this year’s Congress was very much ‘steady as you go’, ‘don’t rock the boat too much’ and a continuation of the current one-party system, now labelled ‘communism China style’. In this context the word ‘democracy’ was used many times.

The major outcomes of the Congress were:

Increase government transparency

Increase government accountability

Fight corruption

A serious approach to environmental protection

Continuation of fast economic growth

Political stability (one-party system)

9. Telecommunications

Telecommunications was not a particularly hot is sue but nevertheless a few morsels could be picked up in and around the event.

There were some interesting statistics in the Congress papers from the Chinese National Bureau of Statistics (NBS).

Table 1 – Telecoms Statistics 2002, 2006

Service Statistic 2002 2006
Total business volume of postal and telecoms services Y570 billion Y1,532.6 billion
Business volume telecoms services Y521.2 billion Y1,459.5 billion
Fixed telephone subscribers 214.2 million 367.8 million
Mobile subscribers 209.6 million 461.1 million
Business volume SMS 138.6 billion (2003) 429.5 billion
Internet subscribers 60.9 million 140 million

(Source National Bureau of Statistics)
In other data from NBS, over the same period long-distance calls increased by 150%.9.1 Internet

The government will retain its iron grip on the Internet as it says it wants to make sure that information technology serves the country’s development, and information deemed harmful should be circumscribed.

There was also a clarification regarding cyber-attacks – it is the hackers who should be blamed for this and not their countries. This clarification was, of course, a response to the blaming of foreign countries for recent cyber-attacks in South East Asia. China mentioned that its government computers have also been victim to cyber-attacks, in particular e-espionage.

9.2 Mobile

I think this is the fifth time in a row that I can report that no progress has been made regarding 3G developments in China. The industry has been waiting for this since 2004.

The official line is that the country wants to see a completely sustainable package in relation to 3G. It wants to see, not just technology, but also a good business case for it, and there is reluctance to is sue licences that could lead to commercially harmful results for the companies involved.

They also pointed to 3G developments in Europe and North America, indicating that the business case for 3G has certainly not yet been proved.

Officials questioned whether the current 3G technology would be sufficiently robust to allow the industry to move successfully into new mobile data markets.

I certainly have some sympathy for these arguments. I, also, have consistently questioned the 3G technology and the business models that are currently deployed around the globe. However some of my colleagues in China argued that the position taken was simply a ploy to give the Chinese TD-SCDMA standard more time to develop, so as to allow the Chinese to develop their own system.

My comment here would be that if, after all those years of development, the Chinese still haven’t figured it out there must be something seriously wrong with the technology. Nevertheless, I wouldn’t be surprised if China were to take that development a step further and look at a 4G, rather than a 3G, technology. It looks as though the Chinese are going to keep us guessing for a while longer.

It also would be more difficult to launch the TD-SCDMA standard before the Olympic Games. In order to get some decent penetration, reasonable time would be needed to roll out such a service, and that time is certainly starting to run out.

With the relatively low costs for mobile data service there has been an explosion of new companies involved in this new industry. Some of these, such as Linktone, Kongzhong and Hurray, have even listed themselves on NASDAQ. According to NBS the total revenue of value-added services has now reached Y108.8 billion.

Another Chinese success story is Gnome, one of China’s largest electronic retailers. They began to sell mobile phones in 2002, and in that year sales reached Y5 million. In 2006 revenues stood at a staggering Y9.8 billion. They estimate that they will double this figure during 2007!

10. Media Laws

Interestingly, the Chinese government has indicated it will relax media laws. This will see Chinese media being allowed to become listed on the stock market. Considering the government’s obsession with media control this announcement comes as rather a surprise. While discussions have been taking place for many years, it was expected that, in order to maintain control, media companies would perhaps be split, allowing a tighter control over the content.

But, no. That will not be the case – and companies will be able to list their entire company. The first of a dozen listings are expected within the next two to three months.

The new laws will apply to electronic and printed media and even Government and Party websites!

The government rationale seems to be that through listings these companies can acquire more investment, which would allow them to expand and would, in turn, lead to an increase in the reach of government propaganda.

11. International Telecommunications and Digital Media Mission to China

As you know, I am very excited about the economic and social developments in China.

Over the last few years I have visited China five times and have made contact with several Chinese telecommunications and digital media companies, as well as with government representatives.

I have also organised a number of Roundtables in China. Given those contacts and experiences – and with a successful Broadband Mission to the Netherlands under my belt – I have made the decision to organise a 4-5 day telecommunications and digital media mission to Beijing in May/June 2008.

If there is sufficient interest in the media component, I intend to tap into my contacts. I have been able to build links with the Chinese media through the annual conferences the UNSW has organised for this group, where I have addressed them on the topic of new media developments.

Mission Topics

Telecoms

FttH

smart grids (BPL)

WiMAX,

3G and 4G

Digital Media

mobile content

Internet media

entertainment (IPTV, games, social networks)

e-health

e-education

The focus will be on visions, strategies, new trends and developments (non-technical).

My rough plan for the Mission is as follows:

On the eve of the event (in Beijing)

Reception/Official Welcome

Day 1 – Telecoms and Digital Media Services Roundtable

This would be a full-day Strategic Business Roundtable between the delegates and Chinese telecommunications and digital media companies.

I will give a presentation for the Chinese delegates and I envisage that some of our delegates will also present on the topics listed above. On the Chinese side, I envisage similar strategic presentations from companies such as China Telecom, China Mobile, China Unicom, from digital media companies within CCTV, as well as from the Chinese Government.

Day 2 – Telecoms and Digital Media Networking Day

On Day 2 I plan to organise a networking event.

For this I intend to invite some of our customers in China, plus other Chinese telecoms and digital media companies. If you book early I will try to organise some matchmaking, with the assistance of our BuddeComm’s sales and marketing partners in Beijing – but please be aware that this takes time. I intend to invite up to 50 selected Chinese companies, so this will be a very focussed and unique opportunity to make valuable contacts in China.

I will start this day with a presentation on the future developments of the topics listed above. This will be followed by 3-5 minute presentations from the participating delegates, as well as from the Chinese participants attending on that day.

Both days would include networking lunches and dinners.

I envisage a matched number of visiting and Chinese delegates on Day 1 and between 25-50 Chinese representatives on Day 2.

Site visits (including the Beijing Olympic Site)

There will be a program of company visits and I will also endeavour to organise a visit to the Beijing Olympic Site, with a presentation on the ground-breaking telecoms and new media aspects of those preparations.

Private arrangements

Obviously there will be plenty of opportunity for you to make individual plans and appointments. I am sure that either Austrade or BuddeComm will be able to assist you with your individual business requirements.

Information Day

Before the trip I am also planning to conduct a half-day information day on telecoms and digital media developments in China for the participating delegates. This will take place in Sydney, Australia. A copy of this presentation will be made available to delegates from other countries prior to the Mission.

Organisation and Costs

Depending on your initial reaction I will make a decision to proceed with this plan. We would need between 10 and 15 delegates. I estimate the costs of participation in the Mission at between $2500 and $3500 per person (Australian delegates need to add 10% GST).

Delegates will be responsible for their own travel and accommodation costs.

I will be employing a local secretary/guide who can assist delegates with their bookings and other needs. Based on my own travel experiences, I strongly recommend that first-time travellers to China use this option, or at least seek advice before making their arrangements.

Registration of interest

If you are interested in receiving further information and updates, please email me to register your interest in the proposed Mission, so I can keep you informed about the progress of this activity. Of course please fell free to pass this message on to others who you think might be interested.

Looking forward to your response

Paul Budde

12. Other Reports

China (annual report)

China – Broadband Market – Overview & Statistics

China – Convergence – Digital Satellite TV, Digital Terrestrial TV & iTV

China – Convergence – Triple Play & Digital Cable TV

China – Infrastructure – FttH and NGNs

China – Infrastructure – IP Networks

China – IPTV & Video Broadband Market in 2007

China – Key Statistics, Telecom Market Overview & AnalysisChina – Major Telcos – Overview & StatisticsChina – Mobile Communications – 3G DevelopmentChina – Mobile Communications – Voice and Data ServicesChina – Mobile Market – Overview & StatisticsChina – New Internet EconomyChina – Regulatory Environment

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Mobile vendors set to lose the proprietary battle

Monday, November 19th, 2007

It is interesting to see how Apple and Google are threatening the cosy mobile handset market, and how they have been able to steal the lead from Nokia, the international leader in mobile handset innovations. Of course, the battle is far from over but there will certainly be a major shake-up of this extremely lucrative market.

Traditionally Nokia has played the role of market leader and market innovator. However, it will have to be very careful in this instance, as the mobile operators are its major customers. These telcos subsidise the mobile phones and it is crucial for the mobile vendors to be included in the mobile packages promoted by the operators. This requires them to play the same tune as the operators, and that means closed systems, proprietary standards and ways to lock in and lock up customers.

Nokia has launched its own ‘open phone’, similar to the iPhone and the proposed Google Phone, which very clearly promotes open access to the Internet. But the mobile vendors have been careful to limit this promise to the high end of the market, where some of the operators are offering Internet access to their high-paying customers.

In order to position itself in the extremely lucrative personal wireless broadband devices market Nokia has been using advertising slogans such as: “Open to Anything” and “Unlock your Potential”. This is clearly not quite as threatening to the mobile operators, but demonstrates that it also wants a share of the new market.

It will be very interesting to see how the mobile handset vendors will handle this new development of open networks and open systems. It is clear that the future will be driven by these open handsets and if they don’t act swiftly the Internet media companies will take the lead in this market away from the mobile operators.

In this analysis I have focused on Nokia, but of course the same applies to the others -Motorola, Sony Ericsson, Samsung, etc.

Closed systems are in operation in all mobile markets, but perhaps most conspicuously in Japan, Korea and the USA. The European GSM market offers a few more openings, but GSM can equally be locked up – as in Australia, for example, where local roaming is not possible at all (the operators make that service available to overseas visitors only – they don’t care about their own local customers).

With Apple and Google now setting the rules unlocking will be the major development and it will be the mobile operators and their vendors who will pay the price for a decade-long tyranny of closed proprietary mobile phone systems.

Paul Budde

See also:
Global Mobile Communication
Global Mobile Data

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National Fibre needed for New Zealand

Monday, November 12th, 2007

The New Zealand Institute has argued strongly for a national fibre to the home rollout, and has identified national economic benefits from broadband in the range of $2.7 to $4.4 billion per year with further upside potential possible. It has called for a New Zealand government shift in policy from encouraging broadband penetration to increasing the speed of the network, by investing in a fibre network.

It argues that there is a significant cost to the nation if it waits and the longer that New Zealand waits, the more economic value it will forego. Thus it argues, New Zealand should approach the investment in fibre with a sense of urgency. Each year of inaction leads to lost benefits: a five year delay it believes would cost the nation around $NZ16 billion.

New Zealand’s current Digital Strategy calls for at least 90% of the population to have at least 5Mb/s by 2010. The Institute would like to see this goal shift to rolling out fibre to 75% of the population by 2018.

The Institute has begun a two-part project to develop a broadband strategy for New Zealand. The first stage is to define a national aspiration for broadband. The next stage will focus on defining a specific pathway to fibre. It has released, a draft document representing phase one of this strategy: ‘Defining a broadband aspiration: how much does broadband matter and what does New Zealand need’, to stimulate discussion of the issues and to solicit feedback before releasing its final report.

It claims that its bottom-up estimates are in line with other studies into the economic benefits of fast broadband, both for Australia and those conducted for other countries.

See also: New Zealand – Infrastructure – NGNs and FttH.

‘State of the Industry’ Roundtables with Paul Budde
Auckland – Monday 3rd December 2007
Wellington – Tuesday 4th December 2007

Theme: New Zealand Telco Market moving into 2008
Presentations and discussions will mainly concentrate on the latest results of our new New Zealand report that we will publish at the same time.

I will bring you up to date regarding the latest research data and, perhaps more importantly, analyse the market with you – highlighting the areas where opportunities exist.

Agenda

09.30 – 10.00 Arrival and coffee
10.00 – 10.15 Welcome, introduction of delegates
10.15 – 11.15 Analyses of the New Zealand Telecommunications Industry (Revenues, Market shares, Trends and Developments)
11.15 – 11.45 Morning coffee
11.45 – 12.15 Analyses of Telecom, TelstraClear, Vodafone and the other players in the market.
12.15 – 12.45 Telecoms access & regulatory.

Regional telecommunications.

Statistics, Trends and developments in fixed voice, mobile.

12.45 – 13.45 Light lunch.
13.45 – 14.15 Statistics, Trends and developments in ISP, Broadband & data markets.
14.15 – 14.45 Emerging Digital Media Market.

Conclusions.

14.45 – 15.10 Afternoon coffee.
15.00 – 16.30 Roundtable discussion.
16.30 Close.

Cost:
$425 per person (excluding GST) – this includes morning/afternoon coffee and lunch

Venues:
Auckland – Monday 3rd December
Duxton Hotel Auckland, 100 Greys Ave, Auckland

Wellington – Tuesday 4th December
Duxton Hotel Wellington, 170 Wakefield Street, Wellington

Booking:
Online registration
Telephone: 02 4998 8144
Email: pbc@budde.com.au

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