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The retail clause in the proposed NBN Co legislation is exactly what is needed to guarantee that the NBN can be used to deliver the national social and economic benefits that BuddeComm (along with others) envisaged in the very early days, when they were involved in the strategic plans behind what is now the NBN.

Throughout the debate around the development of the NBN it is crucial to keep the focus on why we are building this infrastructure in the first place, and why we are spending taxpayer dollars on it.

From the outset BuddeComm clearly identified that a trans-sector approach was required. The NBN infrastructure should be used for the delivery of a range of services such as healthcare, education, public safety applications and energy and environmental apps such as smart grids. If the NBN were to be built for commercial services, like high-speed Internet, delivery would cost an exorbitant $200 plus per month per user. So, from an economic point of view also, it is essential that we ensure the infrastructure is used trans-sectorally.

The OECD had identified the delivery of health, energy and transport services over high-speed networks as key benefits to support the accelerated deployment of high-speed broadband networks by governments. This concept is now receiving such widespread support that I am currently working with the UN to move this trans-sector concept up into international telecoms policies.

The Australian government has been an international leader here; from the beginning it clearly stated that the NBN should be used for non-commercial applications. At the same time we also know that if the NBN is not made available to these sectors on a utilities basis the costs of using the NBN for such purposes will be too high. This would result in a continuation of the private networks that are currently used within these sectors and the opportunity for an important revenue stream for NBN would be lost.

So we have to make sure that the NBN plans realise the opportunity for the delivery of trans-sector services in an effective and efficient (affordable) way.

The scant international evidence we have indicates that incumbents are the entities most likely to be effective at value-adding a basic access offering to an NBN such that high quality and functional business and government services are delivered.

The competition advantages that will flow from an NBN constructed to as basic a formula as possible are fine for commercial purposes. However, these commercial advantages stand in stark contrast to the difficulty that will arise due to the fact that very few trans-sectoral services can afford to run over an NBN that would potentially force these sectors to use services that can only be provided by one national wholesale player. We certainly need to ask the question: what gets priority here – competition policy subtleties or the national interest? I would like to stress that the issue here is the creation of an infrastructure such that competition may be maximised at the services level.

This concern seems to be addressed in the proposed NBN Co legislation, which will give the government the possibility of allowing sectors to buy infrastructure capacity directly from NBN Co. This doesn’t mean that NBN Co will, for example, become the healthcare retail operator. Others in the ICT industry will still have to build the systems and services on top of that network. NBN Co will not be involved in any of that and if necessary that may need to be enshrined in the legislation as well.

This does not mean that these sectors will have to use the ‘retail clause’. The clause in itself could be enough for the wholesale operators to ensure that they provide their services to these sectors at an affordable price.

Paul Budde

See also:

• Australia – National Broadband Network – Competition and Regulations
• Australia – National Broadband Network – Deployment Strategies
• Australia – National Broadband Network – Early Projects
• Australia – National Broadband Network – Government’s Trans-Sector Conference
• Australia – National Broadband Network – Industry at crossroads
• Australia – National Broadband Network – NBN Co and Infrastructure
• Australia – National Broadband Network – Overview and Analysis
• Australia – National Broadband Network – Telstra
• Australia – National Broadband Network based on Trans-sector model
• Australia – National Broadband Network Municipal Networks
• Australia – National Broadband Network Trans-sector projects

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Chile is the most mature telecom market in Latin America and the region’s pioneer when it comes to new technologies. In fact, Chile was the first country in Latin America to see services such as mobile WiMAX, IPTV, wireless TVoIP, triple play, EDGE, and mobile voice-to-text, among others. It was the second country in the region, after Puerto Rico, to have 3G mobile services. In December 2009, Chile became the first country in Latin America and the fifth in the world (after Sweden, Norway, Japan, and the USA) to test LTE technology. 

Chile is viewed as a role model by the international business community for its competitive free market approach. In the Global Competitiveness Report 2009-2010, Chile was ranked thirtieth in the world and first in Latin America, scoring well thanks to a highly developed infrastructure, transparent institutions, and well-functioning goods and financial markets, but doing poorly in terms of its education system. 

The country is the regional leader in terms of Internet and broadband penetration. It used to boast the region’s highest penetration rates for mobile telephony, but has been overtaken by several other countries. In terms of fixed-line teledensity, it lags behind six other Latin American nations. 

Chile’s success in the broadband market can be attributed to the country’s relatively high GDP, its receptivity towards new technologies, and a setup that has succeeded in creating some competition between broadband providers. Nevertheless, Chile’s broadband map shows considerable disparities between regions, ranging from 13.5% broadband penetration per capita in Region II, an important industrial hub, to 4.5% in Region VII, a predominantly rural area. 

As elsewhere in the region, cell phones are far more popular than fixed lines in Chile. But mobile growth had already slowed before the onset of the global financial crunch, indicating that the country may be facing early mobile market saturation. In fact, while Chile’s GDP per capita is high compared with the rest of the region, the steep income disparity leaves a sizeable section of the population unable to afford a mobile handset. However, more and more people own two SIM cards: one for their cell phone, and one for mobile broadband. 

Market highlights:

• Differently from other Latin American countries, Chile’s Telecom Development Fund is financed from the national budget rather than through levies on telecom operators. It offers one-off subsidies allocated through competitive tenders to private companies willing to invest in special projects.
• Following the acquisition of Compañía Nacional de Telefonos Telefónica del Sur (also known as CNT or Telsur) in January 2010, the locally owned GTD Group increased its fixed-line market share from 4.2% to 10.2%.
• Thanks to the popularity of triple play packages in Chile, VTR’s cable modem service has been making a comeback in terms of market share.
• Chile has adopted the Japanese standard ISDB-T/MPEG-4 for digital terrestrial TV services, with a ten-year period for analogue TV to be completely replaced by digital TV.
• Chile’s regulator Subtel expects to hold an LTE/4G auction in 2010 and operators hope to launch commercial LTE services in Chile by 2012. 

For more information see: Chile – Telecoms, Mobile, Broadband and Forecasts

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South Africa’s telecom sector boasts the continent’s most advanced networks in terms of technology deployed and services provided. Following years of delays with its licensing, the second national operator (SNO) Neotel has finally launched services in competition with Telkom SA and is gaining traction in the market. This, in combination with other sweeping liberalisation measures – also delayed by years – is beginning to change the country’s telecoms landscape fundamentally and bringing prices down. 

Under the new regulatory regime, hundreds of alternative service providers are now pushing into the market with converged services. There has been consolidation in the sector which is expected to continue. Key regulatory events shaping the market in 2010/11 will be the auctioning of WiMAX spectrum and the unbundling of the local loop (ULL, or LLU). 

The country has a vibrant mobile market that has seen rapid uptake since competition was introduced 15 years ago. With market penetration above 100% and number portability available, the network operators – Vodacom, MTN, Cell C and Telkom SA – are increasingly forced to find innovative ways of distinguishing themselves from the competition in order to gain and retain customers. While emerging as the country’s leading broadband providers, the major mobile operators are also aggressively entering the fixed-line market in a rapidly converging environment. 

In addition, the government has created Broadband InfraCo, a national infrastructure company to provide cheap backbone network capacity to service providers. Despite the significantly increased competition between different service providers, many municipalities in South Africa, including the country’s largest cities, are implementing their own fibre and wireless broadband networks. 

The arrival of Seacom as the second international submarine fibre optic cable in South Africa in 2009 has brought down the cost of international bandwidth dramatically. Previously, Telkom had been monopolising access to the only major cable serving the country, SAT-3/WASC/SAFE. Several other cables are scheduled to go live in 2010 and 2011. 

South Africa’s Internet and Broadband market is finally taking off after years of stagnation due to the expensive operating environment created by Telkom SA’s dominance in the fixed-line and international bandwidth market. Wireless broadband, including WiMAX and 3G/HSDPA mobile data services now rival available ADSL offerings in terms of both speed and price, and consequently subscriber numbers. With its fixed-line network reaching less than 10% of the population, the incumbent has reacted by launching its own 3G network and the country’s first commercial WiMAX service, but various competitors are hard on its heels rolling out the same technology, including second national operator Neotel. 

South Africa is also taking a regional lead role in the convergence of telecommunication and information technologies with the media and entertainment sector, promising reductions in telecommunication costs and better availability of information and services. Billions of dollars are being invested into IP-based NGN that are capable of delivering converged services more efficiently. 

Telecom carriers and ISPs are moving into delivering audio and video content over their networks, while in turn the traditional electronic media carriers are discovering the potential of their infrastructure for telecommunications service delivery. Digital media and social media have reached a level of development to foster an associated advertising and marketing industry. 

Market highlights of the new BuddeComm report:

• 2010 estimates for mobile, fixed-line, Internet and broadband market;
• Mobile penetration has broken the 100% barrier;
• Decreasing ARPU and increasing churn;
• More 3G mobile broadband than DSL subscribers;
• New international fibre links;
• Profiles of major players in all market sectors;
• 2009 financial results;
• Online advertising is growing at the fastest rate among all English-speaking countries in the world;
• More Twitter users than Japan, China, Spain and the Netherlands. 

For more info see: South Africa – Telecoms, Mobile and Broadband

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