Archive for November, 2010

CRTC may include broadband in ‘basic services obligations’

Tuesday, November 30th, 2010

Canada’s telecom regulator, the Canadian Radio-television and Telecommunications Commission (CRTC) is currently considering whether it should amend the 10-year-old ‘basic service obligations’ under which incumbent phone providers are obliged to provide, at the very least, local phone services and dial-up Internet services, to communities in rural and remote areas. Responses to the review have been diverse.

For instance, incumbent phone companies are calling for the modernisation of out-dated service obligations in the face of increased competition from alternative service providers. Specifically, some are insisting on the complete elimination of basic service obligations thus creating a level playing field for all competitors. In contrast, others are arguing that market forces will be insufficient to close the gap between rural and urban service quality, calling instead for the government to mandate universal high-speed broadband access in order that all Canadians may realise the benefits of advanced information and telecommunications technology.

The Chairman of the CRTC agreed that a minimum broadband speed goal should be set for the entire country. In its analysis of the public hearing, the CRTC agreed that there was merit in considering high-speed Internet access within the context of a basic service objective. However, the CRTC also noted that there are already a number of government-sponsored initiatives in progress that aim to facilitate the expansion of high-speed broadband access across the country. Indeed, many operators insisted that the CRTC refrain from upgrading the basic service obligation to broadband, with Bell Aliant suggesting such a move would signal a return to the days of ‘old school regulation’.

The outcome of the CRTC review may have profound implications for the future of broadband across Canada.

For more information on the Canadian broadband market see Canada – Broadband Market – Overview, Statistics & Forecasts.

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Smart infrastructure

Tuesday, November 30th, 2010

The Hon Greg Hunt, Shadow Minister for Climate Action, Environment and Heritage, made an interesting observation at the recent Smart Grid Australia conference in Canberra. He suggested investigating whether powerlines, particularly transmission lines, could be buried underground, and that the land be used as parkland and any remaining land sold for commercial purposes to finance the plan.

This suggestion led to broader discussion of using roads, corridors, gas pipelines and projects such as inland waterways, as infrastructure-sharing opportunities. Mr Hunt mentioned a project in Victoria where a community put power cables underground which were needed for a desalination plant.

In the meantime, the powerlines which Horizon Power is putting underground in the Kimberley in Western Australia will also include broadband infrastructure.

However, it was also mentioned that a large water pipe project for the Mardi Dam on the NSW Central Coast was a missed opportunity for a broader smart infrastructure approach.

Because all projects with similar infrastructure require smarts, opportunities should be explored for all such opportunities.

Mr Hunt invited the delegates at the conference to think outside the square and come up with new ideas and suggestions for smart infrastructure projects.

See also: Australia Smart Grids Infrastructure

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NBN – the key is not ‘superfast’ but ‘economic reform’

Tuesday, November 30th, 2010

My promotion of high-speed broadband – in Australia and also in NZ, USA, UK, NL and the UN – has been geared towards a trans-sectoral approach.

That means that it is not sufficient to simply say that the network is there and that the services will now develop – active government policies are then needed to direct the other sectors to start using the digital infrastructure for those services and access to an open network needs to be made available on a genuine wholesale basis.

This means that money must be reallocated towards the digital economy. In Australia active e-health, e-education and smart grid policies are now in place, all aimed at directing these sectors to use the NBN.

This has not been the case in countries quoted in the report: Superfast: Is It Really Worth a Subsidy?.

That report argues that the social and economic benefits of high-speed broadband networks are oversold.

I agree that to simply roll out a broadband network and then hope for those applications to arrive is not working, and will never work. Also, these trans-sector services typically require a national approach.

 Korea, for instance, has now recognised this and has set up a Presidential Committee for e-government, the specific aim of which is to develop policies that will see those sectors using their high-speed networks. To the same end the Prime Minister of Australia has now added Digital Productivity to Minister Conroy’s portfolio.

Another important element here is that having high-speed broadband only in a particular areas (islands) is not going to stimulate other sectors to use that network for what in general are national services.

What the Superfast report clearly shows is that if those policy decisions are not made such a network can indeed become a white elephant.

Most examples used in the report look backward and use research that is sometimes a decade old, and not based on the open-network and new trans-sector rules. Obviously developing an FttH network on the principles quoted in the report will not work.

If you want to do what Australia is doing you will have to come up with radical changes such as structural separation and trans-sector policies. Without that the NBN would be a total failure.

What the report fails to acknowledge is the new paradigm that is now emerging – not just in Australia, the USA and Europe, but even in countries such as Rwanda.

In order to achieve those social and economic benefits the national infrastructure must be used on a utilities basis; otherwise it will either be too expensive for those sectors to use the network, or the services will become too expensive for the users. None of the cases cited in the report are based on an infrastructure that has been developed along those principles, and so it is no wonder that new applications are not developed.

That is why the structural separation and the NBN Co utilities-based approach are so important.

In relation to smart grids – of course it would be ridiculous to roll out an FttH network for that purpose. But if such a network is in place the incremental costs of using it for smart grids are lower than they would be if the utilities were to build their own telecoms network. In Australia, where the utilities’ networks have one million points (eg, sensors) that require communications, it makes no sense to build one communications network for broadband and a separate one for smart grids. The NBN has separate rulings for utilities based M2M requirements.

Regarding healthcare, the key is that we are building a network for the future. And we are building one that links not only hospitals and health centres, but people at home.

Australia already has a shortage of 15,000 nurses, and this situation is not likely to improve in the future.

At the same time we have an ageing population and chronic disease is the fastest growing category of illness. If we want to address the future problems in healthcare we will need to start looking for other solutions, and e-health will certainly play a key role. It is perhaps hard to supply precise data on this but very few would argue against it.

At such a time vision becomes important – national leaders in the past have shown similar vision in relation to the building of infrastructure. Because of the inexact nature of the new paradigm it makes perfect sense for governments to step in and assist in building infrastructure. Isn’t that one of the key roles governments have performed over the last 2,000 years (dating back to the Roman roads)?

Other examples in the report indicate that some of these services can be delivered over current infrastructure, such as copper networks and HFC networks, and this is most certainly true. But reference is also made to the large number of users who are attracted to it. Obviously these services will grow, and at a certain point in time it will be necessary to upgrade – a possibility that is not rejected by the report. So why continuing ongoing investments in copper, while it is widely agreed that eventually these networks need to be upgraded to fibre?

We also discussed this situation in the ITU/UNESCO Broadband Commission for Digital Development and the conclusion was that there is no silver bullet. Each country will have to find its own way, and existing technologies, including wireless, can play a key role.

But if fibre is in fact the end solution; if a visionary trans-sector-based plan is created; and if such a rollout is going to take ten years anyway; then doesn’t it make sense for some countries who can afford it to say let us do this strategically, rather than on an ad hoc basis – let us develop a national plan?

True, with the GFC especially, it is hard to see Ireland, Greece or Portugal doing this at present. The Asian countries are doing it, but they are basing it on a rather different economic and political model. Australia has combined the Asian model with a more direct link to a trans-sector approach.

Should others follow Australia? Most certainly not. But in the same way that Australia is learning from other countries involved in rolling out broadband, others can learn from Australia, and they can develop their own model, choosing what suits them from the experiences and information that are available elsewhere.

The report is correct in that there is no business case for building national high-speed broadband simply to replace telephony, entertainment and Internet. And if you are going to build it with other social and economic benefits in mind and you do not develop good policies to make that happen, again there would be no business case.

The NBN in Australia is placed within the context of social and economic reforms and that is exactly where it needs to be positioned. It is a facilitator and catalyst for transformation and this is widely acknowledged by the UN, OECD, World Bank, USA Government, European Union and many others. It would be hard to argue that they are all on the wrong track. However, to achieve those reforms a range of wide-ranging policies in relation to all those sectors needs to be developed and implemented.

Only with such a comprehensive approach will those benefits be realised.

Paul Budde

More BuddeComm NBN research

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2nd tier telcos at the NBN crossroad

Tuesday, November 30th, 2010

The telecommunications market in Australia is dominated by three firms, Telstra, SingTel Optus and VHA (Vodafone); however it includes a large number of second-tier firms, some of these being large in their own right. Many second-tier companies provide access to fixed line and mobile voice services, as well as Internet access via fixed line or wireless technologies.

The second-tier market is competitively vibrant and offers a very diverse range of products. Price competition is also enhanced by the presence in the industry of many smaller resellers and network operators.

Revenues in second-tier mobile services and data services (including Internet access) continue to show satisfactory growth. However, the fixed voice market is declining in the second-tier market at an even faster rate than it is in the first-tier market – it fell by more than 11% in 2008/09, and more than 8% in 2009/10.

AAPT

AAPT is one of the larger telecommunications carriers in Australia, offering local, national and international voice, data, mobile and Internet services to business, corporate and government customers. AAPT is a wholly-owned subsidiary of Telecom New Zealand and is one of only three Australian telecommunication providers to own and operate its own national voice and data network.

AAPT has a long history of business problems and after years of trying to sell the company, or parts thereof, in 2010 it was finally able to sell its residential business to iiNet. Telecom New Zealand acquired PowerTel, and both AAPT and PowerTel were combined under the same operating structure. However, it is the PowerTel component that is still core to the current business. Its on-net strategy is centred on leveraging proprietary network infrastructure to improve underlying economics. AAPT’s high-bandwidth fibre optic backbone links PoPs located in state capitals and regional centres, providing coverage to 98% of Australia. AAPT interconnects with Telstra in major exchanges to supplement its backbone infrastructure, and for last-mile access to customers. In major cities and metropolitan areas AAPT delivers fibre optic cable to buildings of high-volume customers; broadband wireless LMDS to corporate and government users; and DSL to SMEs.

Amcom Telecommunications Limited

Amcom is a second-tier telecommunications carrier providing fibre, DSL broadband, data centres, IP voice solutions and Internet services to the corporate, wholesale, government and SME markets. Amcom is one of the best-placed telcos in the Australian market, with excellent prospects for future growth, and it remains a well-managed and focused business.

Based in Western Australia, Amcom has constructed over 1,900km of high-speed fibre optic networks in Perth, Darwin, Alice Springs and Adelaide, accessing over 1,200 buildings. The network provides access to around 80% of business premises in those cities. Amcom has completed a DSLAM network rollout of 37 exchanges in Perth and Adelaide that capitalises on its existing fibre network. It has acquired a 23.4% stake in iiNet.

Amcom claims that its recent revenue growth is a product of its fibre investments, driven by growing demand for high-speed data services. Earnings growth is expected to continue in 2011 on the back of buoyant market conditions.

gotalk

gotalk is a full-service telecommunications company with operations in Australia and New Zealand and sales in excess of $125 million per annum. Since its establishment in 2000, the company has grown steadily through acquisitions and the creation of new products. Prepaid products include the new gotalk prepaid mobile, prepaid wireless broadband, international phonecards and ezichat prepaid landline.

iiNet Limited

iiNet was established in 1993 and listed on the ASX in 1999, growing from a small Perth business into the third largest Internet service provider in Australia, at which time the company provided 750,000 broadband, telephony and dial-up services nationwide.

As part of iiNet’s goal to lead the market with the best Internet access products the company acquired Victoria-based Netspace for $40 million in March 2010. The company already had its own high-speed ADSL2+ network reaching around four million households across Australia; and it has the largest VoIP network in the country. The purchase cemented iiNet’s position as Australia’s third largest fixed-line retail broadband provider, with 540,000 DSL connections. That places it just ahead of Soul-TPG (490,000) and behind tier-one telcos Optus (1 million) and Telstra (2.2 million). With the NBN moving full steam ahead the company has indicated it is planning network expansions to further increase its customer base.

Internode

Internode is an Australian-owned national ISP, which provides fixed-line broadband, wireless DSL, WiFi, dial-up, 3G wireless broadband, Voice over Internet Protocol and ethernet services across Australia. Internode’s services utilise the Agile International network, a tier-one IP network with more than 15.5Gb/s of international data capacity linking Australia to the Internet globally. Internode maintains overseas points-of-presence in San Jose, Los Angeles and Ashburn in the USA, and Tokyo, Hong Kong, Singapore, Auckland and London. In early 2005 the company launched the country’s first ADSL2+ network and, through its subsidiary Agile Communications, it now operates around 190 DSLAMs.

In this report BuddeComm overviews Internode and outlines the developing regional broadband infrastructure and services that the company provides, including broadband services to areas such as Port Pirie, the Riverland, Murray Bridge, Port Augusta, Stirling North, the Coorong and the Yorke Peninsula.

Internode uses alternative broadband platforms such as regional WiMAX networks and metropolitan WiFi hotspots. Strong growth is reported in the naked ADSL product line.

In 2009 Internode launched fibre-to-the-home at greenfield housing developments, delivering 100Mb/s residential services for less than $100 per month. BuddeComm also outlines newer developments, including Internode’s entry into the mobile broadband market, a commercial content delivery network for the distribution of media content, and a commercial relationship with TiVo.

Macquarie Telecom

Macquarie Telecom delivers a full range of hosting, data, voice and mobile services specifically to the business and government market.

Established in 1992, Macquarie Telecom is one of the first telecommunication providers of the deregulated era and successfully publicly listed on the Australian Securities Exchange in October 1999. Macquarie’s two key target markets are Australian mid-sized corporates and the government sector, where it services over 2,000 customers.

The company remains focused on delivering shareholder returns through growth of its two core businesses: hosting and telco. The hosting business is a key growth platform and Macquarie Telecom will continue to pursue its strategy of enhancing its market leadership position through growth in market share. The telco business will remain a core offering of Macquarie Telecom and the company continues to focus on customer service and growing its corporate client base.

Macquarie Telecom’s Metro Access Network supports voice, data, VoIP, DSL and Internet applications. Hosting and data are a large focus of Macquarie’s strategy and its data centre is becoming increasingly important. In 2010 voice revenues continued to fall, reaching the same level as data and hosting.

M2 Telecommunications

Established in 1999 and listed on the ASX in 2004, M2 Telecommunications Group (M2) is Australia’s largest network independent provider of fixed-line, mobile and data telecommunications services. It also provides fixed-line and 3G mobile services in New Zealand. M2 has shown consistent growth over the eight years up to 2010, through organic growth and strategic acquisitions.

In 2009 M2 acquired People Telecom and the business assets of Commander Communications, both at bargain basement prices. In May 2010 M2 completed the acquisition of selected business assets of Clever Communications Australia and in August 2010 it completed the acquisition of the business assets of Bell Networks Voice and Data.

Nextgen Networks

Nextgen Networks is a telecommunications carrier that specialises in data services for carriers, service providers, government and corporations. Nextgen owns and operates Australia’s third-largest national fibre network of over 8,500km, fibre rings and Co-Lo assets in all capital cities, plus an extensive national virtual private LAN service switched data network.

The fibre network runs between the country’s principal capital cities of Brisbane, Sydney, Melbourne, Adelaide and Perth, and has links to nodes in around 70 regional cities and centres. Nextgen’s national virtual private LAN service, launched in 2006, and Australia’s first, was the first step in moving the company from the initial business plan of focussing on high capacity wholesale to becoming a full data service provider to the broader Australian market.

In 2008 Nextgen acquired the business and assets of Silk Telecom, which substantially enhanced its metro fibre footprint in Victoria, South Australia and Western Australia. In late 2009 Nextgen was awarded a contract to supply the Department of Defence with high-capacity transmission services over a five-year term.

TPG Telecom

TPG Telecom is a provider of IP telecommunications and multimedia services in the Australian marketplace. Services including voice, Internet and data solutions are provided to a customer base ranging from the consumer market through to small and medium enterprises, corporate and government sectors.

The company has the largest data network and voice network after Telstra; the largest fully-converged voice, video and data IP-based access network in regional Australia; and the largest voice-enabled IP network. IPTV is included with ADSL2 packages and is available at most TPG exchanges throughout Australia. The IPTV trials are looking at a pay TV-type model based on content for niche markets.

In early 2008 Soul formally acquired ISP TPG, but who is really in charge became obvious when the company name was changed in late 2009 to TPG Telecom. In addition, Soul formally acquired ISP Chariot in mid-2008. During 2009/10 the company was enabling over 60 new exchanges with the main expansion area being in Western Australia.

In late 2009 TPG launched a merger with dark fibre and submarine cable operator Pipe Networks.

TransACT Communications

TransACT is a Canberra-based, privately owned company that builds and operates high-speed broadband communications infrastructure across the ACT region, including Canberra, Queanbeyan and other surrounding towns in southern NSW. It delivers quadruple-play communications services of voice, high-speed data, subscription TV services and mobile services (via and MVNO with Vodafone).

TransACT’s subscription television service offers a real-time video-on-demand service, a range of content across some 60 channels that includes movies and sporting programs.

TransACT continued with its network extension by provisioning ULL to exchanges where the FttC network did not cover. In 2007 TransACT began rolling out its FttP network in greenfield estates across the ACT region.

In 2008 TransACT Communications acquired Victorian carrier Neighbourhood Cable from TVG. Neighbourhood Cable is an owner and operator of HFC networks in Ballarat, Geelong and Mildura. It delivers similar triple-play communications services, excluding real-time video-on-demand. In 2010 Neighbourhood Cable commenced an upgrade of its network from DOCSIS 2 to DOCSIS 3 which it expects will enable it to deliver 100Mb/s Internet services.

Discussions with NBN Co were still going on in 2010.

Vodafone Hutchison Australia

Vodafone Hutchison Australia (VHA) is the third largest mobile carrier in Australia. It was formed as a 50:50 joint venture in June 2009 following the merger of Vodafone Australia with Hutchison 3G Australia.

Hutchison Whampoa remains the majority shareholder of Hutchison Telecoms, with an 87.9% stake.

VHA owns and operates the mobile brands of Vodafone, 3 and Crazy John’s, and offers a comprehensive suite of prepaid and postpaid mobile voice and data products to both consumer and business customers.

For detailed information, table of contents and pricing see: Australia – Telco Company Profiles – 2nd Tier

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Australian NBN on its way – will New Zealand follow?

Tuesday, November 30th, 2010

Great news for the telecoms industry in Australia – critical parts of the NBN legislation have passed through parliament.

The focus is now moving in the direction of the digital economy, where the social and economic benefits are going to occur. Over the next few days the Minister for Healthcare will host a conference on e-health, at which conference the Minister for Broadband will be a keynote speaker. Close to $500 million has been set aside for new developments in the e-health sector.

There are currently six pilots in operation regarding infrastructure-sharing between NBN Co and the utilities for the purpose of smart grids, and some interesting developments are happening there as well.

I will update you on all of this at the BuddeComm Roundtable in Auckland on 6 December.

And, of course, we will present our annual overview, update and analysis of the telecommunications market in New Zealand. This will coincide with the publication of our annual report on the telecoms market in New Zealand.

New Zealand measures 2009 – 2010

Measure/Year (June) 2009 2010 Annual change
Broadband      
Fixed line broadband subscribers (million) 0.880 0.967 10%
Wireless broadband subscribers (million) 0.240 0.299 25%
Total broadband subscribers (million) 1.120 1.304 16%
Broadband penetration 37% 38% 2.7%
       
Fixed Lines      
Fixed telephone lines in service (million) 1.87 1.88 1%
       
Mobile      
Mobile subscribers (million) (Sep) 4.74 4.99 5.3%
Mobile penetration (%) 110% 114% 3.6%
       
Telecoms and GDP financials      
Telecom services revenue (million) $5.5 $6.0 (e) 9%
Telecom services investment (million) $1.7 $1.9 (e) 12%
GDP real growth rate (Sep) 0.20% 3.00% 1400%

(Source: BuddeComm report: New Zealand – Telecoms, Mobile, Broadband and Forecasts

BuddeComm Roundtable – Auckland 6 December 2010

In December Paul Budde will be conducting the eighth of his annual Roundtables in New Zealand.

This year the focus will most definitely be on the developments in ultra-fast broadband (UFB), and in particular on the lessons that can be learned from Australia.

Paul is one of the strategic architects of the NBN and an in-depth analysis of the Australian situation will be part of the Roundtable, linking it to the circumstances in New Zealand and exploring what the possible consequences could be for that country. The topics for discussion will include:

  • business case analyses;
  • regional vs metro rollouts;
  • utilities-based vs telecoms-based infrastructure;
  • the changing role of incumbents;
  • the impact of trans-sector services on the economic viability of fast broadband plans.

Paul has also just returned from his trip to the United Nations in New York. He was instrumental in setting up the ITU/UNESCO Broadband Commission for Digital Development and he was the lead author of the report Broadband a Platform for Progress. From this unique perspective he will update the Roundtable delegates on global developments, again positioning New Zealand within the overall context.

Helen Clark is also a member of the above Commission, establishing a New Zealand connection with this important international development.

Of course there will be plenty of statistics on the New Zealand market, along with the latest BuddeComm research findings on New Zealand telecoms in general.

As usual the Roundtable will coincide with the launch of the annual BuddeComm publication on the New Zealand telecoms market. In addition to broadband, mobile will feature prominently on the agenda of the Roundtable, particularly wireless broadband and the impact it will have on the overall telecommunications developments in New Zealand.

I am looking forward to meeting you again in Auckland on 6 December. For bookings and more information see the BuddeComm Events page.

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