Archive for September, 2010

Mobile subscribers growing strongly in Bangladesh but hard times for local fixed-line market

Thursday, September 30th, 2010

Bangladesh remains one of the poorest, most densely populated, least developed countries in the world; yet it has somehow managed to show considerable spirit in its approach to the development of its telecom sector. Bangladesh has discovered a way to grow the sector in spite of the odds. This nation of 165 million people, with its comparatively low GDP, has been involved in the creation of a very competitive mobile telephone market. Most noticeable has been the willingness of Bangladesh to encourage foreign participation in this endeavour. Following a number of years of strong growth, starting from a very low base, mobile telephone penetration was around 36% (or 60 million subscribers) by mid-2010.

The outstanding success of the mobile market, however, has been achieved in a Bangladesh that continues to struggle with its lowly economic status, its frequent natural disasters such cyclones and floods and the slow implementation of much-needed economic reforms. This state of affairs is reflected in the fixed-line segment of the local telecom market which remains stagnant with a teledensity of less than 1%, the lowest in South Asia. With almost 99% of homes lacking a telephone and with a substantial waiting list for fixed-line services, the country is still struggling with some of the most underdeveloped telecommunications infrastructure in the world. Interestingly, about 80% of Bangladesh’s 1.7 million fixed telephone services were to be found in its four main cities and most of these had been provided by the state-owned Bangladesh Telegraph and Telephone Board.

So, it is with some fascination that the outsider observes what has been, and continues to be, a booming mobile market in Bangladesh. In the first half of 2009, there were signs that the growth rate was easing, but 12 months later it was still growing at an annual rate of close to 30%. The challenge for the operators is to maintain viable business models, given that ARPU has been rapidly falling as the telcos chase subscribers in the rural areas where 80% of the population lives in 86,000 villages. The booming mobile phone industry is estimated to have created nearly 250,000 jobs throughout the country.

Meanwhile the languishing fixed-line market struck a major setback in 2010 when the regulator shut down five of the country’s fixed-line operators over their alleged involvement in the handling of illegal VoIP traffic; this caused something in the vicinity of 700,000 fixed subscribers to be disconnected. The drama was continuing to be played out in mid-2010 with the operators challenging the regulator’s decision in the courts.

Market highlights:

  • Bangladesh’s mobile market passed 60 million subscribers by June 2010 with penetration running at 37%.
  • This had been preceded by a significant three-year period in which the country saw mobile subscriber numbers more than treble as the market expanded rapidly.
  • GrameenPhone was far and away the leading mobile operator, claiming close to 27 million subscribers, or 44% of the total mobile subscriber base, as at mid-2010, despite the best commercial efforts of its five competitors.
  • Orascom was fastest growing mobile operator, its subscriber base lifting 46% in the 12 months to June 2010.
  • Internet penetration remains low (0.4% user penetration by end-2009) and Internet subscription rates are considerably lower.
  • Although broadband Internet services remain virtually non-existent in Bangladesh, following the granting of a number of WiMAX licences in 2008, there was considerable optimism that this is about to change as WiMAX networks were being rolled out.
  • The fixed-line market was rocked in the first half of 2010 when the regulator shut down five operators and in the process an estimated 700,000 customers were disconnected. The regulator took the action as part of a major move against illegal VoIP services.

Bangladesh – key telecom parameters – 2009 – 2010

Category 2009 2010 (e)
Fixed-line services:    
Total number. of subscribers1 1.66 million 2.00 million
Annual growth (e) 24% 20%
Fixed-line penetration (population) 1.0% 1.2%
Fixed-line penetration (household) 4.7% 5.6%
Internet:    
Total number of subscribers2 250,000 300,000
Annual growth 25% 20%
Internet penetration (population) 0.1% 0.1%
Internet penetration (household) 0.6% 0.7%
Mobile services:    
Total number of subscribers 52.4 million 65.0 million
Annual growth 16% 24%
Mobile penetration (population) 32% 39%

(Source: BuddeComm)

Notes:

1Fixed-line estimates subject to resolution of dispute between regulator and operators over illegal VoIP traffic that has seen five operators shut down and the subscriber base substantially cut.

2Estimates for both 2008 and 2009.

For detailed information, table of contents and pricing see: Bangladesh – Telecoms, Mobile, Broadband and Forecasts

 

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Swedish government providing additional finance for ‘self-help’ broadband projects

Thursday, September 30th, 2010

Sweden’s national broadband strategy has moved on incrementally since the ‘Broadband for all by 2010’ policy announced in 2007, which called for a minimum access of 2Mb/s to all households and businesses by the end of 2010. This was updated in November 2009 with the aim of providing 45% of all households and businesses with access to symmetrical 100Mb/s broadband by 2015, rising to 90% by 2020.

Although this level of service has set Sweden among the top tier globally, there remain a number of difficulties to connect rural communities with broadband. In part, this has been addressed by the broadband ‘self-helpers’, a phenomenon which has become common in the Netherlands, Norway, and, though perhaps less so, in the UK. According to the Swedish telecoms regulator about a quarter of village associations in the country have rolled out broadband in their areas while another quarter plan to do so or have started work on projects. The incentive to undertake the work is common among most Europeans: the Internet has become the main medium for communication, while basic services such as Internet banking have become standard. Of those polled by the regulator, a third wanted broadband to enable them to work from home.

This commitment to providing broadband for rural communities is constrained by the same commercial considerations which have rendered them ill-served by existing operators – it is economically unviable to do so without public subsidies. Since 1999 the government has managed a national broadband policy aimed at providing a minimum service to all households and businesses through improving access. Up to 2005 about SEK9 billion (€600 million) was earmarked to support the fibre network infrastructure, including backbone networks, regional and local access networks as well as private access networks serving buildings. As for rural and remote areas, the government took direct responsibility to provide broadband where there was no market incentive to do so. Between 2009 and 2013 some SEK4.4 billion (€338 million) in grants has been allocated to furnish 185,000 households and businesses with broadband where no services exist. Subsidies have been developed through programs including tax reductions for access installations and funding to local authorities that establish operator neutral networks. As with previous funding for rural broadband infrastructure, government funding is limited to 50% of the costs, with operators and municipalities providing the balance.

From October 2010 an additional SEK95 million will be allocated to help finance broadband among ‘self-helpers’ specifically, in conjunction with grants provided through the national Rural Area Programme and the ‘Ducting Support’ venture – as part of this initiative, the government in June 2010 removed the requirement that installation of ducting could only be undertaken in conjunction with other excavation works. This restriction in effect hampered rather than helped engineering work. To qualify for the new grants ‘self-helpers’ must establish that the service will help communities as a whole, rather than themselves alone. For grants above €200,000 a market analysis is required to confirm that the network is open access, and to establish who will operate it when finished. Network operators which lease extra capacity must do so for a minimum of seven years, while charges are regulated by the local council to ensure that they are reasonable: any revenue gain over and above the national average must be repaid to the lessee.

Innovative measures such as these show other European countries what they can learn from the Swedish approach.

For more information, see the reports:

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Kosovo’s incumbent up for sale

Thursday, September 30th, 2010

Kosovo has received five bids in its attempt to privatise a 75% stake in state-owned telecoms incumbent Post and Telecom of Kosovo (PTK). The five bidders are: Telekom Austria; Croatia’s Hrvatski Telekom; Egypt’s Orascom Telecom; Yemeni mobile operator SabaFon; Turkey’s Turk Telecom and Albania’s AlbTelecom;

Kosovo hopes to gain €300 – 600 million from its privatisation of PTK, which offers services under the TK brand. The operator was established under the regulation of the United Nations Mission in Kosovo (UNMiK) as a network operator in the territory of Kosovo in 1999.  PTK offers postal services in addition to a full range of fixed-line, broadband and mobile services.

See also:

Kosovo – Telecoms Market Overview, Statistics & Forecasts

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The NBN and healthcare – depending on each other

Wednesday, September 29th, 2010

Healthcare is starting to shape up as a major driving force for the NBN.

If we truly want to see benefits for our society from the NBN healthcare would be the key sector to look at.

And, on the other side of the coin, the healthcare reforms that will push e-health to people in their homes depend, to a large extent, on the national coverage afforded by the NBN.

BuddeComm estimates that in a fully-deployed NBN a quarter of all the services over the network will be healthcare-related, in a combination of public and private services. So e-health over the NBN will open up an entire new e-health industry. We have already seen both Telstra and NEC sign lucrative deals with healthcare originations for the development of e-health services, once the first of a set of healthcare reform policies were implemented.

With a far more open access model private healthcare services will proliferate over the new broadband network. E-health will transform the industry, changing the focus of the sector from the hospital to the home.

For example, a video nurse monitoring service for older-aged people in Europe saw many children and other family members actually installing broadband equipment and services in the homes of their ageing parents, as they also wanted to use the video opportunity to connect with them. And a large number of volunteers are participating, as in many cases elderly people contacted the video nurse simply because they felt lonely.

Self-help services, and in particular preventive care services, are other hot items ready for e-health implementation.

Obviously many privacy and security issues will need to be addressed, but the principle will be that people do want to play a more active and/or interactive role in their own healthcare management. The present closed healthcare model no longer fits our modern society.

This democratisation process is sometimes perceived as a threat by the incumbents in both the government bureaucracy and the various medical sector silos, and for more than a decade this has been delaying the implementation of e-health. However, with more and more government decisions being made, the people involved will now have a far greater incentive to get on board and become involved. The NBN will enable practitioners, carers and family members, community services and the patients to be connected into one allied team.

During the NBN election debates it became clear that far more people than expected understand the broad context of the NBN, and that over 70% of Australians want the NBN for services such as healthcare, education in addition to using it for Internet access and entertainment.

The reality with e-health is that, while most people don’t have a good understanding of precisely what it is all about, they do intuitively understand that this could be good for them. It is also amazing to see that elderly people, when properly taught, are more than willing to use e-health. The alternative for them would be a serious deterioration of their lifestyle and that is a great incentive to participate in e-health projects. As a result the adoption of e-health is turning out to be far easier than was originally anticipated.

While the consumer will certainly need to be much more engaged in this debate the reality is that when the need arises people are happy to become involved. Obviously this will be an evolving trend as it will take decades to fully implement national e-health services, but during that time the customers will become increasingly engaged.

However, we need to make a start somewhere so that both the sector and the customers can start that learning process.

Shortly before and during the election campaign in 2010 several e-health initiatives were launched, and these projects are providing an excellent starting platform. There are still some critics questioning the projects, but after a ten-year debate we think it is time to bite the bullet and, if needed, make adjustments as we go.

With the government now able to begin its second term a speeding up of this process can be expected, as the government now has three years to make sure it has results on the table that will secure the long-term continuity of e-health. Most technologies needed for e-health have been available for many years. The missing link has been the absence of clear government policies and a clear government commitment to deploy on a larger scale. This now seems to have been achieved and significant progress is therefore expected over the next two to three years.

Paul Budde

Australia – National Broadband Network – Competition and Regulations

Australia – National Broadband Network – Deployment Strategies

Australia – National Broadband Network – Early Projects

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 Trans-sector projects

Australia – NBN after the election – full steam ahead

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Austria prepares regulatory unbundling measures for fibre network access

Wednesday, September 29th, 2010

Although Austria’s telecom market has been progressively liberalised since the early 1990s, the incumbent Telekom Austria has remained the dominant player in all sectors despite Austria having one of the most competitive markets Europe. In the mobile sector, all four network operators are international players, with mobilkom austria having a particularly strong presence in central and eastern Europe. T-Mobile and Orange have the full resources of their parent companies at their disposal, which will help them secure the required technology upgrades for their networks during the next few years. A small number of MVNOs has aided competition, though most resellers are owned and operated by the MNOs in a bid to secure market share in the no-frills segment.

More than 70% of the population uses the Internet, and broadband household penetration at 58% (or about 87% if mobile broadband is taken into account) is above the EU average, largely the result of effectively competing cable and ADSL platforms. The number of fixed lines continues to fall as a result of consumer substitution for VoIP and mobile-only solutions. Together, TA and UPC Austria provide around two-thirds of all fixed broadband connections, with a substantial portion of the remainder provided by a small number of regional cablecos.

Although local loop unbundling was mandated in 2001, Telekom Austria was initially slow to implement its provisions, with the result that competition in the DSL sector fell far below that in other European markets. Amendments to the Telecommunications Act in June 2009 have addressed similar concerns with Austria’s future All-IP NGNs, aiming to provide improved access to existing infrastructure, both telecoms and other infrastructure such as electricity poles and sewage systems. However, the regulator’s proposal that Telekom Austria provide access to its copper network to alternative operators via a virtual unbundling access product – while making it easier for these companies to offer services – nevertheless excludes fibre networks and so does not establish rules to encourage competition in this sector. The EC has appealed to the regulator to ensure full fibre unbundling of TA’s network as soon as it is technically and economically possible.

Telecom revenue has fallen steadily since 2006, in recent years aggravated by unfavourable economic conditions. It is expected to be stable in 2011 and to show only moderate growth to 2013, being hampered by the effects of regulated tariffs on termination rates and mobile roaming, competition among players, as well as the continuing decline in voice revenue. Nevertheless this will be countered by increasing revenue anticipated from mobile data services, and stability in the market for bundled services.

Investments in the sector have also been affected by the troubled liquidity markets, having fallen steadily year-on-year. In common with other European markets, pressure to maintain investment momentum during the next few years will come from mobile operators: the auction for licences in the 2.6GHz spectrum band will enable them to develop their plans to deploy LTE technology, and so establish networks better able to manage bandwidth. This in turn will allow them to capitalise on high-end mobile data applications and services, and so generate higher ARPU.

Digital switchover in Austria progressed earlier than in most other EU countries. Analogue broadcasting was shutdown in Vienna/Lower Austria towards the end of 2007, with other areas achieving ASO sequentially by region. By early 2010 most households had switched to DVB-T, while a few could receive it but were still provided with analogue signals by their local cableco. During the switch-off phase additional space was made available for a further six multiplexes – by mid-2010, 95% of households could receive the channels bundled on MUX A and 87% were within the coverage area of MUX B. Further expansion of the MUX B platform coverage area is not currently planned, while a fourth multiplex (MUX D) has been reserved for mobile broadcasting.

Key telecom parameters – 2009 – 2011

Sector 2009 2011 (e)
Broadband:
Fixed broadband subscribers (million) 1.89 2.32
Fixed broadband penetration rate 25% 27%
Mobile broadband subscribers (million) 1.20 1.68
Subscribers to telecoms services:
Fixed-line telephony (million) 2.6 2.5
Mobile phone (million) 11.5 12.45
Mobile penetration (population) 140% 145%

(Source: BuddeComm based on industry data)

Market highlights:

  • The 900/1800MHz ranges currently reserved for GSM services are likely to be opened up for additional 3G use when the frequency allocations held by mobilkom austria, T-Mobile and Orange expire at the end of 2015, 2017 and 2019 respectively. This is in line with similar developments elsewhere in Europe where regulators are keen to refarm 2G spectrum to further develop the 3G sector.
  • Fibre deployment remains insignificant outside Vienna and a few other major cities. Nevertheless, Telekom Austria has made considerable progress with its national ‘FiberCities’ project, having rolled out FttH to about 150,000 households in Klagenfurt and Villach, providing speeds of up to 1Gb/s. This network complements the company’s VDSL2 strategy in rural areas using existing fibre backbone infrastructure. About 4,000 mobile base stations will also be connected to the network to support the company’s future LTE projects. FttH trials in Vienna are expected to start during the first quarter of 2011.
  • All MNOs have advanced plans for LTE roll-outs, with T-Mobile as early as October 2009 having reached data rates at over 130Mb/s. In June 2010 the operators tested LTE in Vienna and Innsbruck using the 2.6GHz band using equipment from Huawei, while H3 has contracted NSN and Orange Ericsson. Mobilkom austria (also with Huawei) demonstrated LTE in July 2010 in Vienna. The technology should see commercial launched during 2011.
  • The satellite TV sector is particularly strong in Austria, with the Astra system the market leader: about two thirds of digital TV households are Astra subscribers. Among DTH households, digital satellite has an 89% market share, compared to 39% for digital cable networks. The market has sufficient room to expand, with Austriasat introduced as a new competitor in late 2010. 

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Austria. It provides further information on:

  • Market liberalisation and regulatory issues;
  • The impact of the global economic crisis;
  • Telecoms operators – privatisation, acquisitions, new licences;
  • Mobile data market developments in coming years in light of new spectrum auctions and awards;
  • 3G developments, regulatory issues and technologies including HSPA and LTE;
  • Broadband migration to an FttH architecture;
  • Historical and current subscriber statistics and forecasts;
  • ARPU statistics and forecasts.

For detailed information, table of contents and pricing see: Austria – Telecoms, IP Networks, Digital Media and Forecasts

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