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BuddeComm’s 2008 Australia Broadcasting and Pay TV Annual Publication profiles key market sectors in Australia’s free-to-air TV, digital TV, pay TV and radio markets. It provides revenue and subscriber statistics as well comprehensive market overviews in areas such as personal video recorders, digital radio, Interactive TV, set-top boxes, podcasting and datacasting.

The report reveals that although the dominance of FTA television as a mass communication medium has been unsurpassed for many decades, the industry is now facing challenges from a number of fronts as incumbent broadcasters cling to their lucrative oligopolies. Digital FTA TV has been held up in a vicious cycle since it was launched in 2001. Available digital content, beyond simply offering better picture qualities, has been nowhere near sufficient to help drive digital TV.

The recent changes to media ownership and broadcasting regulations in Australia are likely to lead to further consolidation of radio operators and increased cross-media ownership. The proposed shake up of the market by Lachlan Murdoch could start off a range of new developments. Competition from within and outside the industry, which is already strong, is predicted to increase.

After decades of delays, digital radio will finally be introduced in Australia from January 2009. It however seems that the radio innovations for the foreseeable future will come from the Internet and other new media developments rather than from the radio broadcasting industry.

Free-to-air TV

• Marketing and media buyers are increasingly turning to alternative media, such as through Internet and mobile channels in order to reach consumers. The Internet will become increasingly entertainment-based as broadband penetration is predicted to continue to rise steadily over next few years.
• Consumers will be demanding a richer and extensive online experience through services such as video-based entertainment.
• The FTA networks are expected to see intense competition for viewers and advertising in 2008 and beyond, which will impact on their cost margins as they will be forced to put more money into programming and marketing.
• TV stations will be forced to market themselves more aggressively due to threats from the new media sector. Broadcasting’s ad revenues are already gradually being squeezed due to falling audiences and rising costs.

Digital TV

• By 2008, the move towards flat panel TVs had further accelerated with CRT TVs only constituting a very small proportion of TV sales as the price of the smaller screen LCD TVs and standard definition plasmas had dropped further. This trend will continue to accelerate through to 2009 as CRT televisions should by that time be totally phased out by retailers.
• Household penetration of digital TVs (including set-top boxes, PVRs and integrated digital TV sets), is predicted to rise from 28% in 2007 to 37% in 2008 and 51% by 2008.
• Pay TV DVRs currently dominate the DVR market, with proprietary FTA based recorders (mainly TiVo recorders) taking only a small slice of the market. Of the pay TV market, the Foxtel iQ recorder holds the vast majority.
• BuddeComm predicts that the launch of Seven’s TiVo recorder will lift the numbers of current FTA PVRs, but not to level significant enough to break out of its niche product status, or to be of any sort of threat to the pay TV PVR model.

Pay TV

• Early indicators show that digitalisation of the service alone has not made a huge difference to pay TV. People continue to look for good content, and in principle, the more channels the better, plus reasonable prices.
• By 2007 pay TV penetration had only reached 24%, and growth is expected to continue to increase modestly to around 29% by 2009. However this still falls well short of most other developed nations.
• While it is still not impossible for pay TV penetration to reach the 40% penetration mark, this can only reached if pay TV companies offer more attractive price packages, or include competitively priced broadband.
• An overall pay TV revenue growth of 14% was recorded in 2007 and we expect growth to remain reasonably strong in 2008, with a slight drop to around 12%.
• From 2007 the cost structure of the industry began to become more sustainable and the industry reaches profitable territory. This trend is continuing into 2008.

Radio

• Although its advertising base is growing, the radio market is losing share to other media sectors such as TV. The declining power of FM radio is expected to be a key trend during 2008 and beyond.
• The launch of digital radio, which will start in capital cities from January 2009, is expected to cost the radio sector about $400 million.
• Rather than looking at it as essential infrastructure technology, which would allow radio broadcasters to run their networks more efficiently and effectively, the industry has concentrated on finding exclusive services that they could offer over this network.

Phil Harpur
Senior Analyst Oceania

See also:
2008 Australia – Broadcasting and Pay TV

Digital TV Focus reports

Pay TV Focus reports

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BuddeComm’s USA Annual Publication, 2008 USA – Telecoms, Wireless and Broadband, profiles the fixed-line, wireless (mobile) and broadband markets in the USA. It also examines the convergence of these technologies with each other and with digital media such as digital TV and the emergence of new telecommunication services such as VoIP and IPTV.

These markets continued their trends towards a triple play model during 2007 and early 2008. In particular, the telcos started making genuine strides towards their vision of triple play, by aggressively accelerating their deployment of optic fibre networks across their footprint. Their sense of urgency was highlighted by the rate of wireline losses; both Verizon and AT&T Inc posted fixed-line losses of around 10% for 2007. The main beneficiaries of the telcos’ significant churn rates, were the cable companies, whose VoIP services enjoyed rapid subscriber gains.

The Internet economy continued its meteoric rise, with sites such as Facebook becoming $100 billion companies virtually overnight, highlighting the enormous scale of network economies that can be harnessed by the Internet’s expansive reach.

Online advertising and e-commerce are becoming an increasingly significant share of the overall advertising and retail markets. Microsoft’s bid for Yahoo!, if successful, would give the merged entity, together with Google, a combined 50% of the $20 billion per annum online advertising market.

This report provides overviews, analyses and detailed statistics on the US fixed-line, wireless and broadband markets including their sub-markets such as DSL, cable, FttH, wireless broadband, utilities broadband, the Internet, VoIP and IPTV.

Key highlights:

• During 2007 total revenue for the telecommunications industry grew by around 8% to reach over $1 trillion. Telecom service
• revenues reached $458 billion, of which wireless service revenue accounted for approximately 31%.
• The number of traditional fixed-line customers continued to drop sharply during 2007, with Verizon and AT&T both reporting
• declines of around 10% in residential wireline accounts. The growth in VoIP was a major contributor to this decline, in
• particular cable VoIP, with subscriber growth rates around 75%.
• Thus the RBOCs continued to focus on their fibre deployments in response to increasing competition from the MSOs’ VoIP and
• triple play offerings. State-by-state video franchising reform continued apace, thus facilitating the deployment by the
• RBOCs of IPTV on their expanding fibre networks. By late 2007 FttH deployments in the US were growing at over 110% per annum.
• Total broadband subscribers continued to grow solidly, although in terms of broadband penetration, the US continued to edge towards the bottom half of the OECD tables.
• Broadband DSL subscriber growth continued to outpace cable subscriber growth, though cable still leads in terms of market share. However, with the telcos aggressively deploying fibre networks, they will soon overtake the cable companies in terms of broadband market share.
• WiFi was becoming increasingly commonplace in the USA during 2007, with a burgeoning hotspot network, laptops being automatically equipped with WiFi cards and WiFi moving beyond the laptop; nevertheless doubts were being raised over the viability of municipal WiFi programs following the difficulties experienced in cities such as San Francisco, Chicago and Philadelphia.
• On the regulatory front, after a series of complaints were filed with the FCC by public interest groups, the Commission demonstrated some support for the principles of net neutrality in late 2007 by launching an inquiry into network management practices by broadband providers.
• The US wireless industry continued to enjoy considerable growth through 2007 reaching approximately 83% subscriber penetration by early 2008. Significantly, the percentage of wireless-only households exceeded, for the first time, the percentage of wireline-only households.
• The wireless industry was characterised in 2007 by a number of acquisitions by major carriers of smaller regional and rural carriers. The acquisitions are seen as a means by which major carriers can increase their subscriber numbers and network footprints as wireless penetration reaches saturation point.
• Wireless data revenues continued to enjoy strong growth in 2007, underpinned by robust wireless data revenue growth. Thus while overall voice ARPU decreased during the third quarter of 2007, data ARPU sustained a steady incline. By late 2007 data service revenues accounted for approximately 18% of total wireless service revenues, up from around 4% in 2004.
• Significantly, the majority of wireless data revenues were being generated by non-messaging applications and services such as music downloads, mobile TV, video blogs and Internet-accessed entertainment services.
• During 2007 the MVNO market witnessed a number of high-profile exits, causing a cloud of uncertainty to hang over the sector. A number of causes which may explain the trend include over-reliance on a content-focussed business-model and/or distribution issues with MVNOs failing to secure channel deals with large retailers.
• The selection of 4G wireless technologies became more compelling in late 2007, with Sprint Nextel on the verge of an extensive WiMAX deployment and Verizon Wireless announcing its decision to start LTE trials in late 2008. These open access platforms both offer significant scope for increased convergence among services and devices.
• In the broadcasting sector, with mandatory analogue switch-off scheduled in February 2009, the transition to digital TV gathered pace in 2007. This drove the growth of VoD services in particular. For instance, by 2007 it was estimated that approximately 45% of all cable subscribers utilised VoD.
• During 2007 the major satellite providers, DirecTV and the DISH Network, continued to make gains at cable’s expense, due in part to their competitive pricing plans and comparative advertising campaigns against their cable competitors. However, with the market moving towards a triple play model in the longer term, satellite will struggle to maintain these gains as it cannot match the cable companies’ broadband networks.

Lawrence Baker
Senior Analyst North America

Forecast wireless subscribers, penetration and revenue growth – 2008 – 2013

(Source: BuddeComm forecasts)

For more info see:

• 2008 USA – Telecoms, Wireless and Broadband
• USA – Broadband Market – Cable modem & DSL – Analysis, Statistics & Forecasts
• USA – Broadband Market – Fibre to the Home (FttH) Overview, Statistics & Forecasts
• USA – Broadband Market – Wireless Broadband
• USA – Convergence – Digital TV & IPTV
• USA – Convergence – Triple Play & Quadruple Play
  
• USA – Internet Market – Analysis, Statistics & Forecasts
• USA – Telecommunications – Key Statistics
• USA – Telecommunications – Regulatory Environment
• USA – Telecoms, Wireless & Broadband – Overview & Analysis 2007-2008
  
• USA – Utilities Broadband – Smart Grids & Broadband over Power Line (BPL)
• USA – VoIP Market – Analysis, Statistics & Forecasts
  
• USA – Wireless Market – Analysis, Statistics & Forecasts
  
• USA – Wireless Market – Major Operators

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The debate around smart grids took a very interesting turn in Australia at an industry meeting with the Minister on 6 March.

At this meeting The Hon Stephen Conroy, Australian Minister for Broadband, Communications and the Digital Economy, urged the industry, several times, to put maximum effort into smart grids.

While many of our leaders fully understand their benefits, to date it has not been possible to use the concept of smart grids as an ICT tool to address problems such as climate change, energy saving, carbon emissions, etc. Smart grids are an essential element for the management of distributed generation and customer demand response. However, a vision for the future is required since the rollout of smart grids is a new paradigm for utilities – one that will require new skills and management of significant technical complexity

The Minister strongly urged the industry to strive to lift the profile of smart grids, beyond the telecoms and utilities industries. A more widespread debate would hopefully also encourage the electricity utilities to act with more speed and less reluctance.

The Minister has also instigated inter-departmental discussions on the matter, and he has offered to facilitate meetings between our industry group and other ministerial advisors, and people within government circles he believes we should meet.

GridWise is an alliance that promotes a new way to think about how energy is generated, distributed and used, using advanced communications and up-to-date information technology.

It envisions a transformed electricity system that will improve coordination between supply and demand, and enable a smarter, more efficient, secure and reliable electric power system. Considering the accepted fact that about 40% of the world’s CO2 emissions come from electricity power generation GridWise emphasises in its education, advocacy and lobbying work that the smart grid is an absolute prerequisite for any serious action in effectively addressing global warming.

We are now looking at broadening the UtiliTel initiative to the wider ICT industry, following the precedent set in the USA. Following discussion with the USA Gridwise team, there are clear benefits in combining the know-how of the technology industry and utilities to form a similar body to Gridwise in Australia. Electricity distributors are primarily represented through the ENA as their industry body; however ENA is the domain only of these companies, whereas smart grids will require a cooperative approach from technology companies, utilities and government. It is important that any Australian GridWise initiative includes the ENA and obtains credibility at high levels within electricity distributors.

The aim, as advocated by the Minister, is to act quickly. During March/April we intend to develop the parameters for the launch in Australia of an Alliance similar to Gridwise. The official launch will take place at an industry dinner on 23 April, on the eve of the 2008 Smart Grid Summit in Sydney.

Representatives of the Federal Departments of Climate Change, Energy and Broadband will be present at the Roundtable. I am in the process of inviting one of the Ministers to launch the initiative and I am also looking at a keynote guest for the dinner.

Click the link for more details on the Roundtable and industry dinner

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As mobile networks increasingly become platforms for mobile and wireless broadband applications, with access to the Internet and email, it is interesting to contemplate what is going to happen on the question of security.

I had an interesting conversation on this topic with London-based Gareth MacLachlan, COO of AdaptiveMobile.

For one thing, organised crime is definitely showing interest in tapping into these networks and siphoning off some of the hundreds of billions of dollars that are flowing through them. Data use, SMS and MMS all involve charges, and many customers would not notice a small siphoning-off through ‘ghost’ SMSs – perhaps until months have passed – at which point a great deal of damage will already have been done. Corporate users rarely sight their own bills, making this a heaven-sent opportunity for organised crime.

It is estimated that SPAM already constitutes 2%-5% of SMSs and, while almost all of this is intercepted, it is clear that there are criminals out there trying very hard to hit the jackpot.

And, interestingly, there has been a clear shift on the (fixed) Internet networks – away from the ‘hobbyist’ hackers, who created a lot of havoc but relatively little damage, to far more sophisticated criminal behaviour aimed at defrauding the users. While mobile networks are much more difficult to ‘crack’ than fixed networks, the potential spoils of breaking into mobile networks are potentially much greater.

Users on the fixed networks understand the need to protect themselves from viruses, SPAM, etc, but those same users expect the mobile network operators to look after security for them. To put this even more strongly, in circumstances where serious breaches are possible it is likely that regulators would step in and force the operators to look after the security of their mobile networks.

The cost of investigating even simple complaints in relation to alleged security breaches, fraud, etc quickly mounts up, with the mobile operator incurring customer handling costs of up to $60.

With more open mobile and wireless networks on the horizon it is critical that the industry, as well as the broader market, becomes more aware of this situation and that more protective measures are introduced.

For this purpose the security needs to be within the network, and the operators will need to be in control; they won’t be able to rely on the users and their handsets.

And the concerns are not limited just to fraud. Hundreds of millions of young people are using mobile networks and these youngsters become vulnerable to predators, attracted by an industry that actively promotes the use of mobiles to ever younger audiences.

Nowadays new mobile security systems are available from companies, such as AdaptiveMobile, which enable parents to use web interfaces to set the parameters within which their children can use the mobile network. It allows them to limit access to certain content, as well as allowing them to establish financial parameters.

A final point – a bullying via mobile phones has also become a very serious social issue in recent times, and mobile security can be helpful in addressing this problem.

Paul Budde

See also:

• Technology – Mobile 5 – 3G Technologies, Spreading & Scrambling
• Technology – Mobile 8 – Fixed-Mobile Convergence, UMA, GAN & Femtocells

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The ABC has foreshadowed a mega-move to a more technology-based media and communications service which ­ among other things ­ will focus on producing broadband content, and demand hefty investment in new equipment.

Broadband is going to play an even bigger role than it does now in delivering the ABC’s content ­ and made it plain more work would be contracted out.

ABC.net.au is already one of Australia’s most heavily downloaded media sites, with millions of users both in Australia and overseas, downloading radio podcasts as well as video-on-demand shows like At The Movies, Enough Rope and The Chasers’ War On Everything.

Earlier this month the ABC announced four new Internet-based services, including ABC Playback, a full-screen media player that will offer three channels of TV content delivered via the Net.

ABC staff will have to be multi-skilled and retrained to deal with the technological changes.

Source: Computer Daily

See also:

Australia – Digital Media – Music, MP3 & Podcasting

Australia – Digital Media – The Media Industry

Australia – Digital Media – Video Comms, P2P, Instant messaging, Blogging, Social Networks

Australia – Digital Media – Video entertainment

Australia – Digital Media – Video Entertainment – Telcos & ISPs

Australia – Digital TV – Market Overview and Statistics

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NTT and AT&T join Trans-Pacific Express consortium

Two more big telcos NTT and AT&T have announced that they are joining the consortium that is building the Trans-Pacific Express (TPE) optical fibre cable network. The participation by NTT will ensure that the cable is linked with Japan, Asia’s largest economy. The companies already in the consortium are mainland Chinese companies China Telecom, China Netcom and China Unicom, as well as Korea Telecom, Taiwan’s Chunghwa Telecom and US-based Verizon Communications. The project was originally estimated to cost some US$500 million. In the first phase, a cable stretching 18,000km from China’s east coast to the western US state of Oregon is set to go into service by August in time to transmit high-speed data from the Beijing Olympics. NTT Communications said that the branch connecting Japan with other parts of Asia would be operational by the first quarter of 2009, with a Japan-US section finished by early 2010.

See also: Asia – Infrastructure – Submarine Cables.

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India sets 3G auctions plans: Open for foreign players

India’s Department of Telecommunications (DoT) has announced plans that will enable new players including foreign operators to acquire 3G spectrum in the country. The latest media reports quote the DoT as saying that new GSM entrants will be allowed to bid for up to 10 MHz of 3G spectrum, or two blocks, which would give them enough capacity to launch 3G services. The decision overrides the Telecommunications Regulatory Authority of India (TRAI), which had earlier proposed that only existing GSM operators be allowed to bid for single blocks of 5 MHz spectrum, thereby boosting their existing capacity and enabling them to launch 3G services. Under the new DoT guidelines the rule regarding existing players remains in place. The Indian government approved a global 3G auction during 2007, but the TRAI opposed the move, claiming it would not be financially viable for new players to build new networks, compared to existing GSM operators, which have already made substantial infrastructure investments.

The decision by the DoT was likely to be welcome news for AT&T; the US-based carrier has been lobbying the Indian government to allow it to bid for 3G spectrum. However, the DoT has imposed strict licence obligations for operators that are successful in their 3G bids and has reiterated that it will come down hard on those that fail to meet them. Operators who do not achieve their rollout obligations will be given one further year to meet them, during which they will be fined 2.5% of their winning auction bid per quarter. After that, if operators do not complete their rollout obligations within the one year grace period, then their spectrum assignment would be cancelled and the spectrum would be allocated via an auction to a new operator. Furthermore, no entity related to the defaulting operator would be allowed to bid in the consequential auction.

See also:

• India – Mobile Communications – Market Overview ;
• India – Mobile Communications – Major Operators ;
• India – Mobile Communications – Technologies including 3G ;
• India – Telecommunications Regulatory Overview .

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BuddeComm to be represented at ‘Outlook 2008: New Faces in the C&M Industry’ conference in Malaysia

BuddeComm’s Peter Evans, one of our Senior Analysts for Asia , has been invited to make a presentation to an industry conference being sponsored by the Malaysian Communications & Multimedia Commission (MCMC). The conference will be held on 1^st April 2008 at the MCMC headquarters in CyberJaya, Selangor. With ‘New Faces in Communications & Multimedia Industry” as the theme of the conference, Peter will join a strong line-up of speakers drawn from local and international industry players; he has been invited to speak on the topic ‘Convergence Service – How Real is it?’ The MCMC, Malaysia’s telecom sector regulator, said that ‘the purpose of this [annual] conference is to enhance the links and cooperation among various stakeholders within the Communications & Multimedia (C&M) industry by creating a platform on annual basis for considering and discussing the trends and developments across the C&M landscape both in Malaysia and globally.’

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Vietnam’s first satellite ready for launch

Vinasat-1 Vietnam’s first satellite is on the launch pad at the Kourou Space Centre in French Guyana. It is scheduled to be sent into orbit next month. The precise scheduled launch time is 5am on 12 April 2008. It has been assigned a slot at 132 degrees east, the position that Vietnam originally registered with the International Telecommunications Union (ITU) in 1999. Vinasat, which will be operated by VNPT’s international unit Vietnam Telecom International (VTI), has been designed to cover the entire country, providing telecoms services to all remaining unserved areas, as well as having a footprint over neighbouring countries. Designed for a lifespan of 15 years, the satellite was expected to save Vietnam around US$15 million annually on leasing satellite capacity.

See also: Vietnam – Telecommunications Infrastructure and Major Players.

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Mobile data card market quadrupling

Sales of mobile data cards, which enable broadband access in laptops via a service provider’s mobile data network, are forecast by Infonetics Research to nearly quadruple between 2007 and 2011, when they will reach $2.9 billion.

According to Infonetics’ new “Mobility: Broadband, Phones, Subscribers, and Services” report, these mobile data cards could threaten the WiFi hotspot market as HSDPA and EV-DO-based mobile broadband becomes more available, more affordable, and a higher performance choice.

The mobile data services market is becoming more competitive, as mobile operators try to recoup their investments in 3G networks and drive up flattening ARPU (average revenue per user). Currently, mobile data services are generally too expensive for mass market adoption, but that will change with the increasingly extensive rollout of high speed HSDPA, the launch of new data plans offering increased download limits, and better subsidies for mobile data cards. The iPhone has proven that if the user experience is right, users will take advantage of mobile devices for Internet sessions.

As mobile data plans become more affordable, consumers will use mobile data cards to enable download of Internet- based content (MP3s, games, video clips) to mobile devices and for transferring user-generated content (photos, video clips, etc.). A small proportion of consumers will use a mobile data plan as their primary means of broadband access.

Other highlights from the report:

• Worldwide mobile subscribers topped 3 billion in 2007
• Worldwide mobile data subscribers will accelerate dramatically over the next few years, reaching 144 million by 2011
• Worldwide sales of smartphones reached $36.7 billion in 2007
• Sales of mobile broadband routers are forecast to nearly quadruple between 2007 and 2011

In 2007, Nokia continued its strong lead in the mobile phone market, with 35% of worldwide revenue share, followed by Samsung and Motorola

See also:

• Global – Mobile Data – Overview & Analysis – 2008
• Global – Mobile Data – Mobile TV & Video Media
• Global – Mobile Data – HSPA & IMS
• Technology – Mobile 6 – 3G UMTS, WCDMA, HSPA, LTE

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