Archive for November, 2008

Broadband will create energy bottleneck

Friday, November 28th, 2008

According to a study by the University of Melbourne, Australia’s Internet will be slowed down further as a result of a surge in energy consumption caused by an increase in the uptake of broadband. The study has shown that even with an expansion in the energy efficiency of electronics, the Internet’s power consumption will rise from 0.5% of today’s national electricity consumption to 1% by about 2020.

The capacity of the Internet will have to be considerably increased to support the new high-bandwidth services eg video-on-demand, social networking, web-based real-time gaming, peer-to-peer networking, video conferencing, tele-working, and outsourcing etc. Greater than ever amounts of energy will be required to power and cool high-speed broadband Internet equipment, and this will lead to an increase in energy consumption, which will place a load on the country’s power infrastructure and contribute to the production of greenhouse gases. The University’s model takes in the network infrastructure needed to supply the growing traffic volume caused by the new high-bandwidth services.

For more information see: www.ee.unimelb.edu.au/green_internet/.

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Higher broadband prices for Telstra customers

Friday, November 28th, 2008

It looks as though Telstra customers in Australia are going to pay more for true broadband services than those serviced by other providers such as Internode and iiNet.

Obviously Telstra has a much larger network coverage than any other player in the country, and that situation is not going to change in the near future. However, these competitors, as well as other such as Optus, AAPT and Primus, are increasingly offering high-speed broadband services – often at half the price paid by Telstra customers.

Without national coverage companies such as iiNet (through Westnet) and Internode are now offering Telstra’s high-speed service (ADSL2+) to customers who are not on their network. To do this they have to buy the Telstra wholesale service, and this is often double the price of the retail service they are charging for their own service.

It will be interesting to see how long Telstra can maintain this situation, as surely their customers will eventually start complaining about it.

Also, in its response to the NBN tender proposals Telstra is still talking about very high charges going forward – not a good omen for affordable broadband under a Telstra NBN. This must be of concern to the government, which has done everything to entice Telstra to be part of the NBN.

Paul Budde

 

See also:

Australia – Broadband – ADSL2+ Providers;

Australia – Broadband – DSLAMs and ADSL2+;

Australia – Broadband – Network Operators and Wholesalers.

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North American e-commerce growth

Friday, November 28th, 2008

In North America e-commerce has grown steadily over the past five years. During that period, the average rate of growth in the value of online sales has been approximately 25% per annum. During 2007 the growth rate dropped to approximately 17%, largely reflecting a slowing economy, although the growth rate still greatly outstripped GDP.

The fastest growing e-commerce sectors by mid-2008 included, for instance, video games, consoles and accessories, furniture appliances and equipment and sport and fitness. Other sectors during that period witnessed a decline in spending, such as computer software, music, movies and videos.

By 2008 the value of e-commerce sales in the US was estimated at around $130 billion. This value amounts to approximately 3.3 percent of total US retail sales, up from around 1.5% in 2003. The share of retail accounted for by e-commerce is expected to continue to grow steadily over the next 5 to 10 years. In the short to medium term however, growth of e-commerce in absolute terms will remain constrained by the global financial crisis and the US recession.

See also: USA – Internet Market – Analysis, Statistics & Forecasts.

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The NBN – what’s next?

Friday, November 28th, 2008

The NBN – what’s next?

In the end the Minister didn’t lose too much face. The only reason he began this rather flawed tender proposal process in the first place was to get Telstra on board, and at least the incumbent is still involved.

 

However, the content of Telstra’s proposal will make it extremely difficult for the Minister and his Expert Team to compare apples with apples. It is also highly unlikely that Telstra’s letter can be checked against the 18 key points the Minister has set for the NBN.

 

So, plenty of room for yet another year of ongoing delays, frustrations, bickering and no doubt the usual Telstra mudslinging. The Opposition could not have wished for a better outcome, as they seem to have no motivation whatsoever to operate in the national interest on this issue. Shadow Minister Nick Minchin will align himself with his old friends at Telstra simply to make political points against the government.

 

We have said all along that Telstra has to be part of the solution. At the same time the Minister remained firm on open access – open access in the context of the principles developed by the industry (which have been praised by telecoms experts in both the USA and Europe) and not on terms yet to be determined by Telstra.

 

However, we should now start moving towards what the government’s broadband promise is all about – delivering improved services to Australians and creating the right infrastructure for the emerging digital economy. This will need to support two-way video communications services in the areas of healthcare, aged care and education, as well as in business, entertainment and communications.

 

While these goals should be the focus, it seems that the whole issue is about who will be allowed to build that infrastructure. Frankly, we don’t mind who builds the network. What is critical, however, is that whoever builds the infrastructure delivers an open network that will generate competition, innovation and affordable prices for real broadband services. For that purpose a delegation of the CEO Forum of the Digital Economy Industry Workgroup will meet with the Minister on December 2nd.

 

Telstra’s proposed 1Mb/s service for $29.95 is rather ridiculous and indicates that it will stick to its high end-user prices of around $85+ for some form of true broadband. This most certainly will not stimulate the development of a digital economy in Australia.

 

Why didn’t it come up with a price for the government’s demanded rate of 12Mb/s? It looks as though Telstra has something to hide. The talk of 25Mb/s services demonstrated innovative thinking, but again there was no mention of consumer pricing – that is most likely in the Rolls Royce class.

 

In order to make true broadband affordable for most Australians a 10Mb/s service should be available for around $39. While in Australia we continue to fiddle around with 1Mb/s services the industry and the regulator in the Netherlands have basically agreed on an FttH (100Mb/s) access fee starting from E12 per month. It is about time we started benchmarking this level of services. While the FttN service, as proposed for Australia, was perhaps a viable option three or four years ago, to start with that now would place us once again right behind the eight ball. It will at least take another year to sort out the current mess and then another three to five years to build it, and only after that will Australia start considering FttH. So, rather than catching up, we would be getting further and further behind.

 

This state of affairs has largely been brought about by the procrastination of successive governments.

 

Telstra’s proposal for a 90% fibre coverage does, however, make perfect sense and also confirms our analyses that it will (at least in the medium term – the next five years) be extremely wasteful to ignore the reality that we should use wireless for most of the last 10% of the population.

 

Sol Trujillo will be going back to the US soon, so let us hope that, with a new CEO (and chairman), we will then be able to start some serious negotiations. Nothing will change while Trujillo is at the helm. Things will be dragged on for as long as possible and no serious attempt will be made to negotiate an outcome that would be in the spirit of the Minister’s NBN vision and that will be acceptable to both the national interest and that of Telstra’s shareholders.

 

Trujillo will also find a totally changed telecoms environment when he gets back to the USA. The Obama Team is talking about open access and structural reforms. So it looks like that Australia will even drop behind the USA.

 

We simply can’t afford to sit behind the rest of the world and under the current (Sol Trujillo) circumstances very strong legislation is necessary – nothing less than a government proposal for full structural separation; whatever is necessary to get Telstra to the negotiation table.

 

Minchin will be delighted if the Minister fails to take decisive action now. He is more than ready to obstruct the government process to the maximum and this alone could easily help drag the process out for at least another year.

 

The political price for such a prolonged process would be very high for the Labor Government. Australians are becoming more and more disillusioned by the promises that seem to end up either watered down or simply not delivered on. Only swift and strong action can stem the tide. Rightly or wrongly the people are increasingly seeing the current broadband process as a farce. If the government is serious about getting true broadband delivered in this term of government it had better get serious about it. We hope that this political threat will be a strong enough incentive for them to now finally act decisively.

 

Both the ACCC and the Expert Team who are now reviewing the tender proposals have had ample time to prepare themselves. Let’s be honest, there are not that many scenarios to consider so they should be able to make the right recommendations.

 

We are fairly confident that these recommendations will be sound, but there is no guarantee that the Minister will act upon them. If he wishes, he can throw them all away – do whatever he likes with all the proposals and all the recommendations. That is a rather scary thought.

 

While swift and decisive action is required, the last thing the country needs is a hasty panic-driven decision that is not going to deliver competition and innovation, or that will water down the open access principles, which will result in unaffordable high end-user prices. The Minister owes the country a transparent process; having attacked the previous government on several occasions on its failure to do so.

 

Paul Budde

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The NBN – what’s next?

Friday, November 28th, 2008

In the end the Minister didn’t lose too much face. The only reason he began this rather flawed tender proposal process in the first place was to get Telstra on board, and at least the incumbent is still involved.

However, the content of Telstra’s proposal will make it extremely difficult for the Minister and his Expert Team to compare apples with apples. It is also highly unlikely that Telstra’s letter can be checked against the 18 key points the Minister has set for the NBN.

So, plenty of room for yet another year of ongoing delays, frustrations, bickering and no doubt the usual Telstra mudslinging. The Opposition could not have wished for a better outcome, as they seem to have no motivation whatsoever to operate in the national interest on this issue. Shadow Minister Nick Minchin will align himself with his old friends at Telstra simply to make political points against the government.

We have said all along that Telstra has to be part of the solution. At the same time the Minister remained firm on open access – open access in the context of the principles developed by the industry (which have been praised by telecoms experts in both the USA and Europe) and not on terms yet to be determined by Telstra.

However, we should now start moving towards what the government’s broadband promise is all about – delivering improved services to Australians and creating the right infrastructure for the emerging digital economy. This will need to support two-way video communications services in the areas of healthcare, aged care and education, as well as in business, entertainment and communications.

While these goals should be the focus, it seems that the whole issue is about who will be allowed to build that infrastructure. Frankly, we don’t mind who builds the network. What is critical, however, is that whoever builds the infrastructure delivers an open network that will generate competition, innovation and affordable prices for real broadband services. For that purpose a delegation of the CEO Forum of the Digital Economy Industry Workgroup will meet with the Minister on December 2nd.

Telstra’s proposed 1Mb/s service for $29.95 is rather ridiculous and indicates that it will stick to its high end-user prices of around $85+ for some form of true broadband. This most certainly will not stimulate the development of a digital economy in Australia.

Why didn’t it come up with a price for the government’s demanded rate of 12Mb/s? It looks as though Telstra has something to hide. The talk of 25Mb/s services demonstrated innovative thinking, but again there was no mention of consumer pricing – that is most likely in the Rolls Royce class.

In order to make true broadband affordable for most Australians a 10Mb/s service should be available for around $39. While in Australia we continue to fiddle around with 1Mb/s services the industry and the regulator in the Netherlands have basically agreed on an FttH (100Mb/s) access fee starting from E12 per month. It is about time we started benchmarking this level of services. While the FttN service, as proposed for Australia, was perhaps a viable option three or four years ago, to start with that now would place us once again right behind the eight ball. It will at least take another year to sort out the current mess and then another three to five years to build it, and only after that will Australia start considering FttH. So, rather than catching up, we would be getting further and further behind.

This state of affairs has largely been brought about by the procrastination of successive governments.

Telstra’s proposal for a 90% fibre coverage does, however, make perfect sense and also confirms our analyses that it will (at least in the medium term – the next five years) be extremely wasteful to ignore the reality that we should use wireless for most of the last 10% of the population.

Sol Trujillo will be going back to the US soon, so let us hope that, with a new CEO (and chairman), we will then be able to start some serious negotiations. Nothing will change while Trujillo is at the helm. Things will be dragged on for as long as possible and no serious attempt will be made to negotiate an outcome that would be in the spirit of the Minister’s NBN vision and that will be acceptable to both the national interest and that of Telstra’s shareholders.

Trujillo will also find a totally changed telecoms environment when he gets back to the USA. The Obama Team is talking about open access and structural reforms. So it looks like that Australia will even drop behind the USA.

We simply can’t afford to sit behind the rest of the world and under the current (Sol Trujillo) circumstances very strong legislation is necessary – nothing less than a government proposal for full structural separation; whatever is necessary to get Telstra to the negotiation table.

Minchin will be delighted if the Minister fails to take decisive action now. He is more than ready to obstruct the government process to the maximum and this alone could easily help drag the process out for at least another year.

The political price for such a prolonged process would be very high for the Labor Government. Australians are becoming more and more disillusioned by the promises that seem to end up either watered down or simply not delivered on. Only swift and strong action can stem the tide. Rightly or wrongly the people are increasingly seeing the current broadband process as a farce. If the government is serious about getting true broadband delivered in this term of government it had better get serious about it. We hope that this political threat will be a strong enough incentive for them to now finally act decisively.

Both the ACCC and the Expert Team who are now reviewing the tender proposals have had ample time to prepare themselves. Let’s be honest, there are not that many scenarios to consider so they should be able to make the right recommendations.

We are fairly confident that these recommendations will be sound, but there is no guarantee that the Minister will act upon them. If he wishes, he can throw them all away – do whatever he likes with all the proposals and all the recommendations. That is a rather scary thought.

While swift and decisive action is required, the last thing the country needs is a hasty panic-driven decision that is not going to deliver competition and innovation, or that will water down the open access principles, which will result in unaffordable high end-user prices. The Minister owes the country a transparent process; having attacked the previous government on several occasions on its failure to do so.

Paul Budde
See also:
Australia – National Broadband Plan
Australia – National Broadband Plan Analysis RFP
Australia – National Broadband Plans from Telstra, Terria & others

Australia – National Broadband Plan – Analysis late 2008

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