BuddeBlog

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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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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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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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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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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One of the key messages coming our of the GSMA conference in Barcelona was that mobile telecom is an engine for growth and will get the global economy out of recession. One of my European colleagues commented that he thought that what was amazing hat telco’s like Deutsche Telekom and Telstra promote their value to society by mentioning how much money the extract from society. Telstra actually were happy to announce that their share of GDP had grown. However, when questioned on this they failed to mention whether they had delivered anything more for the privilege. Both DT and Telstra are amongst the last remaining fully vertical integrated monopolies in the world.

See also:

Telstra Corporation Limited – Company Overview and Operating Statistics

Deutsche Telekom

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It is interesting to follow some of the global discussions regarding open networks.

Ben Verwaayen, the man who ‘opened up’ BT, is now the head of Alcatel Lucent. Of course, the interests of an operator are quite different to those of a vendor.

Operators argue for open networks – particularly in relation to markets outside their national footprint, as that would reduce costs and make the infrastructure more effective.

Vendors, on the other hand, have an interest in selling as much gear as possible and closed networks require more equipment, so their aspirations lie in that direction.

Verwaayen carefully manoeuvres through this minefield but it will obviously be hard to marry the two. Also, perhaps Verwaayen wasn’t the ‘open man’ he has been portrayed as being. In the United Kingdom BT’s openness is very much limited to Layer 2, whereas real open networks operate as such on Layer 1.

Interestingly, he is supporting the idea originally launched by Ericsson many, many years ago, of the integrated multimedia system (IMS). Such a system would allow the operators to clip the customer for every message, piece of information and whatever else is passed over the infrastructure. Obviously this requires a lot of equipment, but it is at odds with the open network model. Such an ‘integrated’ solution will kill off innovation and efficiencies.

At the same time Verwaayen promotes fixed mobile integration, so one can only conclude that the aim of the game is to maintain some sort of operator/vendor monopoly over the networks.

Given absence of any strong unified regulatory view on open networks, and the need to implement this at an OSI Layer 1 level, it is obvious that both operators and vendors will aim to keep the networks as closed as possible. This is obviously in their own best interest and I have no issue with that. However, it is not good for the digital economy, and especially if we let every country develop their own level 2 based regime it would be very detrimental to an efficient global economy.

Vision, leadership and good government policies and strategies, especially in the USA and the European Union, will be needed if we really want to create an effective and efficient global economy. If we don’t get the infrastructure right for this new economy we will be forever struggling to make it a sound, functioning tool for its users.

Paul Budde

Surprise, surprise

A week or so after expressing his views on open networks, Verizon Communications announced the key vendors for the company’s LTE network deployment.  Ericsson and Alcatel Lucent scored deals to be the primary infrastructure vendors for the radio access network. In addition, Alcatel Lucent and Nokia Siemens will be the key suppliers for the IMS network that will enable rich multimedia applications. 

See also:

Global – Infrastructure – Open Networks

Global – Mobile Data – HSPA & IMS

Technology – Mobile 7 – 3G CDMA2000, EV-DO, UMB & IMS

Technology – Mobile 6 – 3G UMTS, WCDMA, HSPA, LTE

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While I am a keen supporter and user of the new developments that are offered to us in the new Web 2.0 environment, I am becoming increasingly worried about potential privacy issues that are not fully understood at this stage.

Companies such as Facebook, MySpace, Google, Yahoo, Twitter and so on now hold gigantic databases of personal data on tens of millions of people. What is worrying is that the ‘contract’ these companies have with their users (to which almost everybody quickly presses ‘agreed’, without reading) gives them substantial control over that data.

While to date there has been no evidence of any major misuse of data, at regular intervals we do see mishaps, and under political pressure some information is actually handed over to authorities in other countries. Facebook this week rapidly withdrew its plan to commercialise some of it data.

Some of the most highly valued companies on the stock market are among those whose value lies in owning these large databases, which they can use to generate advertising money.

But what happens if greed gets hold of this industry? What happens if these companies come under financial stress? These are scenarios that are most certainly going to arise sometime in the future.

Should we learn from the current crisis, where the greed and mismanagement of one sector, in only a few countries, is dragging the whole world down?

So far these social networking companies are not governed by any regulation, other than broad national legislation. Is that enough? I am not saying it isn’t, but we see that other industries, like banks, telecoms, insurance, media, are all regulated by specific legislation in order to safeguard the people they are dealing with.

Just as people’s money is at risk in the current economy, due to the lack of proper regulation against the greed and mismanagement of the financial institutions, in this newly emerging digital economy people’s personal details (and on the social network sites that is much more than just a name and a birthday) are at risk.

If we don’t want to regulate now then we certainly should start considering the situation and begin to address some of these issues, rather than waiting for a major crisis in this sector, which would then compel us to make quick fixes rather than a well thought through plan.

And this needs to be done internationally; while there could be many national flavours an international code needs to underpin this whole sector.

Paul Budde

See also:  Digital Media – Social Networks & UGC

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Hundreds of thousands of people worldwide are seeing live opera performances in movie theatres.

The Royal Opera House in London plans to transmit 10 opera and ballet performances in Europe this season and another 18 outside the continent.

The Italian opera houses of Parma, Florence, Venice, Bologna and Milan are beaming their productions, through the distributor Emerging Pictures. Emerging Pictures also transmits shows from the Glyndebourne Festival in England and the Salzburg Festival in Austria, as well as from the opera house in Valencia, Spain.

The Washington National Opera has been presenting simulcasts to schools and universities. The San Francisco Opera transmitted four titles last spring to more than 120 theatres, with limited success, and it has put the effort aside. It is now considering a narrower release to arts centres and independent film theatres in the West.

Unlike most of the above the New York Metropolitan Opera is broadcasting live, beamed via satellite to movie theatres with a high-definition signal, with sell-outs, group visits, opera buff chatter at intermission and picnic baskets. Backstage features and interviews have also become popular – born of necessity given the length of opera intermissions.

Late in January the Met surpassed a million ticket sales for the season, with 3 of the 11 planned broadcasts still to go. That already exceeds the expected total of 850,000 opera-goers who will attend the 220 performances given at the house.

The most recent broadcast, of Donizetti’s ‘Lucia di Lammermoor’, was seen in 31 countries in roughly 850 theatres. The Met is also negotiating to send an opera feed to an Argentinian base in Antarctica.

Recently there has also been an experimental demonstration with 4K HDTV from Theatre De IJsbreker in Amsterdam to Tokyo, featuring a Janacek play. In addition the theatre is collaborating with audio/video institutions in California over the broadcasting of the Gloriad Ring.

Add the new 3D glasses and recording and you end up with a massive extension of audiences and a higher occupancy in movie theatres, which are often surprisingly empty if you look at the box office figures.

See also: Global Digital Media

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A new radio system developed in Australia is transforming the vehicles on the street into nodes on a network. The technology, designed by scientists at the University of Southern Australia’s Institute for Telecommunications Research, is an application called “Dedicated Short Range Communications” (DSRC). Using a combination of GPS and Wi-Fi, cars can communicate their location data to a central office, but it also enables them to communicate with each other.

The system was developed by Cohda Wireless, a company formed by several of university’s scientists in 2004. Cohda claims their system “dramatically outperforms all radios available in the world today.” They’ve designed the system to work in harsh radio environments – like cities, for example – where signals can easily be lost among the buildings and tunnels. With Cohda’s technology, vehicles can maintain links not just in urban canyons, but also at speeds in excess of 200 mph – although we hope no drivers around us ever put that to the test.

With the DSRC system in place, cars can become nodes on Muni-Wi-Fi networks, Wi-Fi hotspots, and home Wi-Fi networks. The possibilities are nearly limitless for what that could mean. Dealerships can diagnose vehicles cable-free, cars can receive real-time downloads of maps and traffic conditions, they could communicate wirelessly with toll stations, and the vehicles could even automatically download music from home PCs.

http://www.cohdawireless.com/applications/dsrc.html

See also:

Global – Mobile Data – Location Based Services & GPS

Australia – Mobile Data – Telemetry, Location Services, RFID

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