Archive for September, 2008

Telecommunications in Nigeria

Tuesday, September 30th, 2008

Telecommunications in Nigeria

Nigeria overtook South Africa in early 2008 to become the continent’s largest telecom market with over 44 million mobile subscribers. New customers are currently signing up at a rate of almost one per second, and yet market penetration is still at relatively low levels. However, declining ARPU levels are forcing the operators to introduce new services and transform themselves into providers of converged fixed, mobile and broadband services. Far reaching liberalisation has led to hundreds of companies providing virtually all kinds of telecom and value-added services. The mobile sector has been joined by a number of additional players under a new unified licensing regime which is expected to also boost the country’s underdeveloped Internet and broadband sector. A fifth GSM operator was licensed in 2007 and 3G mobile services launched in early 2008. The new market entrants are receiving hundreds of millions of US$ in investments from local and foreign investors while Nitel, the recently privatised but still ailing incumbent telco, is looking for an additional strategic investor and new business models to turn the company around.

 

For more info see:  http://www.budde.com.au/buddereports/4634/2008_Africa_-_Telecoms_Mobile_and_Broadband_in_Western_Region.aspx

We invite your comments: Comments Off on Telecommunications in Nigeria

Google supporting smart grids

Tuesday, September 30th, 2008

Google supporting smart grids

A new alliance between Google and GE will work towards improving the US electricity grid to support emerging renewable energy developments. The alliance will also develop technology and policy initiatives to improve the capacity and capability of the grid.

Another goal of the alliance is to make renewable energy more accessible and efficient, and to include wide support of plug-in hybrid vehicles.

One of the challenges the alliance will face is the limited transmission capacity which the US electricity grid currently has. This limits the supply of power from renewable plants which are typically located away from the areas which can utilise it.

The initiative is similar to Google’s foray into the submarine cable market. BuddeComm views this enterprise as Google entering the utilities market not as a new player, but as a company which sees the benefit of using current market and industry structures in order to develop new business opportunities.

Importantly, a smart grid will offer a whole new range of energy management and energy monitoring services for the end user, including Google’s own energy demands.

We envisage the grid of the future to be similar to an internet grid, and predominantly used by energy management applications. We also envisage that it will eventually become an Energy Exchange (EX) network which will manage and organise the energy requirements of millions of buildings, cars and other energy-using utilities.

Google is also a shareholder in the Current Group, an electricity network technology company.

We invite your comments: Comments Off on Google supporting smart grids

IBM opens more cloud computing centres

Tuesday, September 30th, 2008

IBM opens more cloud computing centres

IBM is putting millions of dollars towards the concept of cloud computing and now has 13 centers worldwide after opening up new centres in India, Vietnam,  Brazil and South Korea in September 2008. In addition to IBM, the concept of cloud computing has received interest from a number of key players including Hewlett-Packard, Intel Corp and Yahoo which are providing computer resources to universities to assist in the advancement of research in cloud computing. Google is also reportedly building a cloud system.

 

Exhibit 1 – Cloud computing definition

Cloud computing refers to the ability to connect to software and data on the Internet (the cloud) instead of on a users own hard drive or local network.

(Source: BuddeComm based on ComputerWorld, 2008)

 

For further information see separate report: Global – Digital Media – Internet Media Companies.

We invite your comments: Comments Off on IBM opens more cloud computing centres

Travelogue USA – September 2008

Monday, September 29th, 2008

While in Washington during September 2008, I arrived at the midst of the financial crisis. The key reason for my visit was Gridweek, where I was invited to present a paper on Smart Grid Australia.

I arrived during the weekend Paulson announced his rescue packages and the news was discussed continuously on TV and in the street. The crisis will have a major effect on future infrastructure developments.

I spent some time discussing this with some of the local experts during my visit, and discovered that another headache for the new administration will be the switch-off of Analogue TV in February 2009.

The Financial Crisis (separate report)

Being in Washington DC in the midst of the financial crisis provided me with a unique opportunity to experience it as it occurred. This report contains my analysis and comments on the financial crisis as I saw it. (See Global Analysis – The US Financial Crisis and the effects on Communications)

Security in the USA

While jogging through Washington it is impossible to avoid the amount of security – there are guards, blockades and no-go zones everywhere. Every time I visit the US it hits me and makes me feel rather uneasy. I am sure that the Americans are used to it and might not even notice it anymore, but coming from Australia it feels quite intimidating. It reminded me of our travels through the Soviet Union in the 1970s. The US doesn’t look as bleak as Russia did then, but still, I don’t get that feeling of intimidation while travelling through Europe, India and China.

Russia during the Cold War and America during the War on Terrorism felt so threatened that they needed to implement an unprecedented level of security to protect their citizens.

The endless queues for air travel in the USA are a real nightmare, as well as such a simple thing as queuing for a taxi. The government can only guarantee the safety of passengers if they use a particular taxi company which has been accredited by the government. Obviously things are so bad there that the free enterprise system cannot be trusted any more.

One of my friends changed jobs simply because he was fed up with the problems and low level of service involved with flying throughout America. I can vouch for that because the quality of service and comfort on American planes is much lower than what we are used to in Australia and Asia.

However, to my surprise, the American airlines now provide normal metal cutlery (including knives) on their flights, leaving Australian flights as one of the few which still provide plastic utensils.

Poverty in the USA

In my Travelogue on India on another leg of this trip – (see soon to be released report – watch this space) – I wrote about the poverty in that county. However, while not on such a large scale, the poverty in the USA is equally obvious. Possibly many Americans don’t even notice it anymore, but two blocks away from the White House, in the park around the corner from my hotel, homeless people occupy all the benches day and night. Every day I saw a lady, surrounded by six or seven large garbage bags containing her possessions, animatedly talking to her imaginary friend next to her. I have never seen anything like it anywhere else.

Surely this is an indication that there is something seriously wrong with the richest country on earth.

Hopefully one result of the financial crisis in the USA will be to create a better balance which will also value elements other than money.

Still a beautiful country with beautiful people

However, despite all of this it is still a beautiful country with beautiful cities, and Washington certainly fits into that category. Jogging past the famous monuments, the White House and Capitol Hill, still gives me a thrill.

Whenever I get the opportunity I visit the Lincoln Memorial. I never tire of reading the wise words of this man over and over again. When reading this time I thought – we human beings have so much in common, and there are only small details which separate us.

This certainly applies to the American people, very close cousins of ours, and to a great many people who are my friends and colleagues.

It was good to catch up with old friends, several of whom where involved in a venture in the late 1980s called Numedia. Even 25 years ago we were well ahead of our time.

But this time, thanks to my participation in Gridweek (see below), the trip was also about making new friends from the energy community. I never come back from the USA without being inspired and invigorated by new ideas and different approaches.

Infrastructure separation discussion

During my telco discussions in Washington I wanted to test my analyses that the US will eventually face some structural changes to its telco/cable infrastructure. My argument for the last three or four years has been that FttH will be the ultimate infrastructure and not the HFC network. Cable companies will also need to eventually install FttH. So sooner or later the cable companies will have to face that situation, and when they do it would make sense to start looking at using the FttH infrastructure that is already in place, which I believe will result in some form of separation in order to safeguard competition.

In a recent analysis of the municipality broadband market (Global – Broadband – Infrastructure Trends & Developments) I mentioned the success of this development. In my discussions in Washington it was mentioned that this development could eventually have a major impact on FttH infrastructure developments in the USA. It certainly is something that I would take on board in my further analyses of infrastructure developments, not only in the USA but also in other countries with strong municipality developments such as Canada, Sweden and the Netherlands.

With more focus on proper governing, BuddeComm predicts that issues of governance and regulations for the infrastructure needed to operate a successful society and economy will become more acceptable.

Looming Digital TV issues

Apart from the legacy of the financial crisis, one of the first issues that the new government in the USA will have to face is the switch-over of Digital TV in February 2009. This will most certainly create a massive headache for the new government as tens of millions of people for various reasons will suddenly find themselves without TV. People will be provided with a subsidy, in the form of coupons, for an analogue-digital converter, but millions are missing out because of the bureaucracy involved with the registration system and the fact that these coupons have rather short due dates. Apart from that there are also technical issues all over the country.

Our senior analyst in North America will write a separate report on this development.

Gridweek

The reason for my visit this time was an invitation to speak at Gridweek, the national conference on smart grids. Judging by the number of people who approached me directly after my presentation and also during the course of the conference, I felt my presentation was very well received and worth the effort.

Gridweek was organised by the Gridwise Alliance, the sister organisation of Smart Grid Australia which I founded earlier this year. I was very well looked after by the Chairman of this organisation and was introduced to many of the leading players in US smart grid market. This was of course a great opportunity for me to establish contacts which will be very beneficial for future cooperation and collaboration.

What makes this US Alliance so strong and credible is that the Federal Government actively participates in Gridwise – the Assistant Secretary of the Department of Energy is the Co-chair. The organisation sees itself as a ‘movement’ and I think that is a realistic description because it is much more than just another industry association.

In all, it was a very worthwhile visit which has greatly assisted me in getting a deeper and broader understanding of the energy market.

For a full analyses of the latest smart grid developments see: soon to be released report – watch this space.

Other Reports

We invite your comments: Comments Off on Travelogue USA – September 2008

Travelogue – In the midst of the US Financial Crisis

Monday, September 29th, 2008

Being in Washington DC in the midst of the financial crisis provided me with a unique opportunity to experience it as it occurred. This report contains my analysis and comments on the financial crisis as I saw it.

I arrived in Washington during the weekend that Paulson announced his rescue packages, and the news was discussed continuously on TV and in the street. On the way back home the rescue package was launched.

The crisis will have a major effect on future infrastructure developments, and I spent some time discussing this with some of the local experts during my visit

Even the experts don’t know

While everybody has an opinion about the financial crisis, it is clear that nobody really has a full understanding of all the reasons for it – not even the endless army of financial experts which is rolled out on the Hill.

Similar to the dotcom bust, the financial analysts obviously didn’t anticipate the current dilemma and, even with their combined financial knowledge, they were unable to do anything to prevent it happening.

I have kept an email from a financial analyst who criticised me (because I was a business analyst and therefore not qualified to comment on financial affairs!) for commenting on financial greed during the dotcom crisis.

Selling to individuals who cannot pay

From the very start, the practice of selling mortgages to people who could not afford to repay their debt, and then securing investment packages world-wide to back that debt, was a recipe for disaster.

The same can be said for credit companies which handed out AAA credit ratings left, right and centre. This created an enormous imbalance between the commercial credit companies, stock exchanges and other so-called controlling institutions. In the process, they all earned an enormous amount of money by supporting a system which is in dire need of fundamental change.

In addition, financial research companies are dependent upon the advice they give to their financial advisors who, in turn, are dependent upon the commissions they earn from the clients they provide financial advice to.

Government failed to govern

Independent commentators and journalists have questioned some of the financial schemes which were developed, but the financial analysts continued to create more complex schemes while they paid themselves tens of millions of dollars worth of bonuses each year. While many people in the rest of the world looked on in disbelief, nothing was done about it.

Because it was not considered necessary, the financial analysts requested Congress not to regulate certain speculative schemes. So, in the name of free marketeering, year after year the US Government allowed them to experiment with more new and complex schemes.

Quick action needed to avoid panic

Resolution of the crisis requires quick, astute and decisive action. Unfortunately the people who were responsible for the crisis – and who, only a few short weeks ago, were still proclaiming that the economic system was stable – are also the same highly compromised people who are now attempting to rescue the US from the morass they have created. I must say this is not a very comfortable feeling.

It was Milton Friedman who once said that the best way to avoid corporate greed is to have a capitalist system. This may or may not be true, because it is this very system which created the current greed crisis and will now need to recover. And at what cost? If no further damage is done we may have a lucky escape and not slide into a severe recession.

Restructuring the USA

I am not a financial analyst so I am not able to assess what is needed to bail the country out, but it may involve recapitalisation of the American banking system. During the week that I was there more and more ‘experts’ were questioning the current process, which is something akin to a social welfare plan for arrogant and greedy investors.

I could not help being reminded of the Asian financial crisis less than a decade ago when the USA violently opposed any requests from the Asian governments to bail out some of its financial institutions. The USA clearly has a set of double standards (as was made obvious by its policy on torture), and is happy to compromise its own principles if it suits. Unfortunately this attitude does not gain international credibility.

I am also concerned that a bailout which does not address far-reaching changes to the overall economic and political system in the USA, is not going to be a successful long-term solution. Fundamental social and economic changes are required – not a quick bandaid fix.

A strong financial market needs less debt and more capital – something which has been sadly lacking in our modern-day financial climate.

I also feel that those responsible for contributing to this financial disaster should be taken to account.

Further damage to US international standing

I also sensed some shame and damaged self confidence in Washington, particularly at a business and government level – and the financial analysts were obvious by their absence. Not surprisingly, President Bush has not initiated any real leadership role in the current crisis, and this was commented on in the Washington Post: “it is better that he keeps out of the debate, otherwise he would link this to al Qaeda and WMD”.

There is no doubt in some minds that the US has lost more credibility on the international scene, particularly after the Iraq debacle, and there is even talk about the end of the Century of the USA.

However, the longer we wait for a solution, the closer we get to reactions of panic – a scenario reminiscent of the Great Depression which needs to be avoided.

I also had a very interesting experience, in light of both the financial crisis and the upcoming elections, when I met with one of the advisors to Barack Obama. He commented that whoever wins the election will not be happy with the enormous financial mess he has inherited.

Asian revival

There is no doubt that the leading financial capitals of the world, London and New York, are the hardest hit by the crisis. It does of course affect all international financial institutions and it clearly shows our dependence on each other.

This is a good thing because it means that nobody can use the crisis for their own political gain.

There could also be some benefits in Asia, especially, as the Financial Times reported, because it may speed up overdue banking reforms in China.

In addition, over the last few decades financial centres such as Dubai, Singapore and Hong Kong have sprung to the fore. Because these financial centres are more strictly regulated, they may attract and benefit from many of the more well-managed and less speculative international financial institutions which still form a major part of the industry.

So there is still hope for infrastructure projects to get off the ground – especially those in emerging markets and which require the investment needed to deploy their new projects. Yes we will have to tighten our belts until the crisis is over, but all is not lost.

Recently I wrote a report on the need to divert speculative investment to investments aimed at actual deployment of infrastructure Global – Investing in the Communications Revolution. An early observation in that report is that the financial market in Australia is more similar to the Asian market than to the American and European markets.

Less ideology on infrastructure issues

Perhaps the debate on the government involvement in providing basic infrastructure will be less ideological from now on. In particular, it is to be hoped that this will also apply to the rhetoric vented on these issues by the American management of Telstra in Australia, under the leadership of Sol Trujillo.

When in New York recently, the Australian Prime Minister Kevin Rudd stated: “Governments, not speculators, should be responsible how markets worked”. While Telstra cannot be referred to as a speculator, I would say that the arrogance displayed by Sol Trujillo and his team in relation to Australian telecoms laws would surpass the level of arrogance that has been displayed by his counterparts in the American financial market. Telstra places greed above the national interest, as is indicated by the very generous pay packages handed out to their executives. Telstra shareholders’ objections were also treated with the same arrogance from the greedy team.

I imagine that Telstra’s credibility on issues like this has been severely dented by the financial crisis, and I expect that those looking at national economic and social benefits will see the crisis as possibly being a good thing to further their cause.

While this situation is rather topical in Australia, the same issue has also hampered progress in some of the European countries. Recently the city of Amsterdam was sued twice by American companies when the city announced that it would actively support a city-wide FttH network.

While Sol Trujillo was CEO of US West, he also sued municipalities left, right and centre when they launched their own municipality networks.

Infrastructure separation discussion

During my telco discussions in Washington I wanted to test my analyses that the US will eventually face some structural changes to its telco/cable infrastructure. My argument for the last three or four years has been that FttH will be the ultimate infrastructure and not the HFC network. Cable companies will also need to eventually install FttH. So sooner or later the cable companies will have to face that situation, and when they do it would make sense to start looking at using the FttH infrastructure that is already in place, which I believe will result in some form of separation in order to safeguard competition.

In a recent analysis of the municipality broadband market (Global – Broadband – Infrastructure Trends & Developments) I mentioned the success of this development. In my discussions in Washington it was mentioned that this development could eventually have a major impact on FttH infrastructure developments in the USA. It certainly is something that I would take on board in my further analyses of infrastructure developments, not only in the USA but also in other countries with strong municipality developments such as Canada, Sweden and the Netherlands.

With more focus on proper governing, BuddeComm predicts that issues of governance and regulations for the infrastructure needed to operate a successful society and economy will become more acceptable.

Other Reports

We invite your comments: Comments Off on Travelogue – In the midst of the US Financial Crisis