Archive for February, 2009

Against the grain – economic downturn will strengthen Telecom infrastructure

Friday, February 27th, 2009

In economic terms, the telecoms sector is one of Europe’s most significant, with annual turnover of around Euro290 billion. The sector also accounts for around 4% of the jobs in the EU. As a result of market liberalisation, enforced from the mid-1980s, the price of telecom services has fallen dramatically, partly through competition and partly through regulatory measures. Competition provided a much needed kick in the backsides of complacent incumbent operators, resulting in improved standards of service generally.

The current crisis presents a catalogue of problems for operators, but it should be anticipated that consumers will again be better off. For telcos, the financial crisis has increased the cost of servicing debt and will make it difficult to refinance existing debt during the next two years or so. This could have a knock-on effect on their ability to invest in those network upgrades which are debt-financed. A number of operators, as well as vendors, have responded to the current crisis with job cuts and belt tightening, including Vodafone in the UK, Sony Ericsson (culling 2,900 jobs in Scandinavia) and Nokia. These moves within companies are tempered responses, aimed at rationalising their workforce and reeling in unnecessary spend. Yet for the future welfare of Europe’s telecom infrastructure the larger picture is not as bad as it seems.

 

Crucially, during the current turmoil governments are being pressed to fund NGNs, generally through allocating a hefty proportion of the funds provided in national stimulus packages. Because governments are handing out public money, they are in a position to ensure that the new infrastructure is shared, thus promoting competition and improving the quality and pricing of services for consumers.

 

In Europe, the UK, Germany, Spain, Portugal, France, Hungary, Ireland and Finland have recently proposed legislation aimed at expanding broadband access and data rates for end-users. On the one hand, governments are keen to be seen to be doing something constructive for their citizens as a whole, rather than simply bailing out failed businesses. This will provide them with much needed credibility among the electorate. In the longer term, say five to ten years, governments are also anticipating the potential for investors and skilled job seekers who will be attracted to the ‘switched-on’ regions harbouring the best in telecoms infrastructure. The rage of knock-on benefits is almost limitless, ranging from improved entertainment services (IP-delivered HDTV and the like), to the cost-saving potential of e-health and tele-education services. These long term benefits dilute the arguments of detractors who may assert that stimulus funds would be better spent on other areas such as transportation and construction.

The effect on telecom infrastructure derived from stimulus funding will be far reaching. At the very least it will keep the telecom sector in the limelight, encouraging investor interest and providing a beacon of optimism in troubled times.

For more information, see the separate reports:

United Kingdom – Broadband – Fixed Network Overview, Statistics & Forecasts;

United Kingdom – Key Statistics, Telecom Market & Regulatory Overviews;

Germany – Key Statistics, Telecom Market & Regulatory Overviews;

Spain – Key Statistics, Telecom Market & Regulatory Overviews;

Europe – Infrastructure – FttH, NGNs & IP;

Europe – Regulatory Environment;

Europe – Broadband – Regulating fibre access;

Global – Analysis – Government Infrastructure Policies as Economic Stimulus;

Global – Analysis – The Financial Crisis and Economic Stimulus Packages.

 

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High Middle East mobile penetration rates

Friday, February 27th, 2009

Six countries in the region have penetration levels well over 100%. This is mostly due to a recent increase in competition – a second or third operator has entered the market or a new investor has bought a share of an existing operator – causing a subsequent drop in tariffs or improvement in services. Multi-SIM ownership is common as subscribers aim to maximise special offers and different deals. Jordan is a standout case of a country with high penetration levels for its GDP per capita due to a ferociously competitive market.

The mobile markets of the Gulf Cooperation Council (GCC) countries of Bahrain, Qatar and the UAE, with penetration levels in mid-2008 of 163%, 150% and 187%, would appear to be well past saturation point even considering multiple-SIM usage. However, it should be remembered that penetration statistics are only a very rough guide, particularly in these countries, due to anomalies in the population counts. The populations of the GCC countries are very fluid with very large numbers of expatriates constantly arriving and leaving, which makes determining exact penetration levels very difficult. For example, at least 80% of the population of the UAE is made up of expatriates. The fluidity of this expatriate population also makes growth possible for new competitors in the market despite the high penetration levels. Bahrain, Qatar and the UAE would otherwise appear to have quite astonishing annual growth levels considering their high levels of penetration. In addition, both Syrian and Jordanian subscriber numbers have included the large proportion of the Iraqi middle class that have been residents but not included in population totals. Israeli subscriber numbers include many Palestinians who are also not included in population statistics.

For more information and detailed forecasts of most Middle East countries see:

Middle East – Mobile Market – Overview & Forecasts.

For information relating to individual Middle Eastern countries, see: The Middle East.

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Video Ezy

Thursday, February 26th, 2009

In 2007, video rental company Video Ezy developed its Electronic Rental service and plans to launch this service in Australia in the second half of 2008. Video Ezy acquired Blockbuster Australia in 2007 and the combined operation is known as the Franchise Entertainment Group Pty Ltd (FEGroup). 

Electronic Rental uses a physical kiosk to distribute digital content to the customer. Kiosks are planned to be located in FEGroup stores, as well as in other locations. Customers use a portable storage device (such as an iPod or flash memory device) to obtain movies, and then play these in their homes through a set-top box, or other supported device. The client device is connected to the Internet. Customers will pay only for the moves and the content they actually view. The Electronic Rental service will be capable of delivering both standard and high definition content. The set-top box will also be capable of future video-on-demand (where the network is used to deliver the content). 

The company’s franchisees will participate fully in the new media business within an overall structure developed by Video Ezy. 

Exhibit 1 – Video Ezy – 2008

  • 500 Video Ezy stores and 360 Blockbuster stores in Australia;
  • Over 500 stores in New Zealand, Fiji, Indonesia, Malaysia, Singapore and Thailand;
  • A customer database of 10,000,000 in Australia, of which over 5,000,000 are regular active customers;
  • An approximate 65% share of the Australian video rental market, and 10% of the Australian video retail market;
  • Celebrates its 25th anniversary in 2008.

(Source: BuddeComm, based on industry data) 

Indications are that they will likely tread the TV path; allowing both low speed and high speed downloads to its 160GB hard drive. While the main focus is on Australia, Video Ezy is also planning an IPTV launch across its international businesses in New Zealand, Thailand, Indonesia, Singapore, Malaysia, Fiji and the UAE. The coverage, and a 25-year rental relationship, makes Video Ezy an attractive proposition for Hollywood studios.

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Colombian ISP bites the dust

Thursday, February 26th, 2009

Colombiana de Comunicaciones (Coldecon) offered dial-up access, ADSL, wireless broadband, and VoIP telephony, as well as various corporate Internet services. Through acquisitions and mergers, it was one of the leading ISPs in Colombia, with a nationwide network covering all major towns.

Coldecon began operations in 1998, in Cali. It obtained approval from CRT in June 2005 to acquire rivals Andinet and Telesat. Andinet, in turn, had acquired LatinoNet, the Colombian operations of Universo Online (UOL), in February 2003. In early 2006, Coldecon absorbed another two ISPs, Geonet (in Medellin) and Enred (in Barranquilla and Cartagena). In January 2008, it bought ISP People On Line (in Cali).

Having won an international tender from Compartel, Coldecon contracted Airspan in January 2006 for a broadband rural access project to provide broadband to 2,224 schools and public institutions.

In December 2008, Coldecon ran into financial strife and became subject to bankruptcy and judicial liquidation proceedings. The following month, it suspended operations without notice, causing havoc for customers suddenly left with no Internet access, email service, or website hosting.

See also: Colombia – Convergence, Broadband & Internet Market – Overview, Statistics & Forecasts

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IT and telecommunications industries set to play the key role in e-commerce business

Tuesday, February 24th, 2009

Initially it was thought that banks and other financial institutions would take the lead in e-commerce, but over the last six years they have made very little headway. It appears instead that the IT and telecommunications industries are set to play the key role in the e-commerce business. The mobile phone is rapidly turning itself into a credit card. Governments and international organisations are also heavily involved in the new digital certification systems.

Both ISPs and telecommunications companies are well-placed to provide the infrastructure for the online transaction market. Access providers already host the transactional sites of many retailers and distributors, and it is only a small step to actually authoring the software, which will be used in providing both website graphics and backward integration with transaction processors and the vendors’ own records.

Telcos are also in a very strong position to offer e-commerce facilities for both ISPs and individual businesses using their own software. They have a direct medium to each of their customers – both through the physical communications infrastructure and through the monthly or quarterly billing process. These channels can be used to provide marketing materials to the potential vendor and also trial copies of software and services. It is possible that the service could be provided as a total solution – ie Internet access, telephone and e-commerce provision all through the same company – the true online business.

 

Other potential new entrants to the market include retailers and distributors, business services companies and Original Equipment Manufacturers (OEMs).

IIR’s Telecoms Risk & Fraud conference, running from March 23 2009 in London will discuss the best practice for identifying and combating fraud in telecoms markets today.

It covers crucial areas including the challenges of SIM Box fraud, NFC and m-commerce fraud, SIM cloning and interconnection and subscription fraud.   The conference will also examine the issues that the move to all IP NGNs will have on the Fraud environment, and how you can guarantee that you have the skills and knowledge within your fraud and security teams to manage the challenges it presents.

For more information see – www.iir-conferences.com/fraud

For a copy of the event brochure see – Brochure

For more information  on BuddeComm’s research see –

2008 Global Digital Economy – M-Commerce, E-Commerce & E-Payments

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