Archive for July, 2013

Migration to NGN raises overall telecom investment in Luxembourg

Wednesday, July 31st, 2013

Luxembourg has one of the smallest telecom markets in Europe, greatly supported by an influx of workers and migrants from larger neighbouring countries. Luxembourg City is also one of the political centres of the European Union, and so attracts affluent migrant employees.

Overall revenue from electronic communications services bucked the downward trend seen in many other European markets, growing slightly in 2012 with similar growth anticipated into 2014. Much of this growth is due to the strong mobile services sector while revenue from fixed-line telephony continued to fall. Steady growth is expected during the next few years at least as the Duchy’s upgraded network infrastructure attracts international interest from companies seeking high-end connectivity.

Total investment in fixed-line infrastructure has also risen steadily, and is expected to continue to do so for the next five year as operators migrate from copper to FttH and FttC. Equally, there is considerable investment in mobile networks to provide mobile broadband connectivity to subscribers based on HSPA and LTE technologies, though the amount invested in 2012 fell year-on-year.

Investment has been maintained in spite of the impact of the financial crisis and by the effects of Luxembourg’s general economic slump, which saw GDP fall in 2009, largely due to the knock-on effects of the poor economic performances of the Duchy’s neighbouring trading partners. Nevertheless, GDP per capita, at about US$105,000, provides one of the highest disposable incomes in Europe to maintain consumer spend on telecom services.

The incumbent POST Telecom (formerly P&T Luxembourg) remains the dominant player in all market sectors, despite the telecoms market having been liberalised in 1998. Regulatory measures during the last few years have encouraged broadband competition through local loop unbundling, yet the proportion of unbundled lines remains relatively low. As yet, there are few broadband subscribers on fibre networks but this is set to change as the country migrates to FttH architecture. POST Telecom has set aside €500 million to build its NGN, an open access platform which should allow for effective competition though high wholesale access prices may need to be addressed by the regulator.

In common with most other markets, revenue from the fixed line sector has been falling steadily. Indeed since 2005 income generated by mobile telecoms has far exceeded that from of fixed lines, while revenue from the broadband sector has propped up total revenue.

High mobile penetration has slowed subscriber growth in the mobile market since 2005. Partly as a result of fixed-mobile substitution, Luxembourg has one of the lowest fixed-line densities in Europe, at about 50%. As a consequence, revenue from the fixed line sector has been falling steadily as consumers migrate to mobile-only solutions. In 2005 income generated by mobile telecommunications exceeded those of fixed lines for the first time.

Luxembourg – key telecom parameters – 2010; 2013

Penetration rate by service:

2010

2013 (e)

Fixed-line

51%

53%

Broadband

31%

32%

Mobile (SIM): 144% 145%

(Source: BuddeComm)

Market highlights:

  • P&T Luxembourg in mid-2013 rebranded as POST Telecom to reflect the diversity of services it offers.
  • POST Telecom has launched two m-payment services via the operator’s post offices. Customers can make purchases via smartphones and similar devices from selected bank accounts
  • The government’s ‘National Strategy for very high-speed networks’ aims to encourage telcos to implement FttH nationally, providing at least 100Mb/s connectivity by 2015 and 1Gb/s by 2020. The progressive roll-out calls for some 80% of the population to have access to 100Mb/s by the end of 2013 and 50% to have access to 1Gb/s downlink by the end of 2015.
  • A number of geographic zones reserved for economic activity have been prioritized for the FttH service: since the beginning of 2011 buildings have been equipped with passive in-house ducts and equipment required for FttH. A national infrastructure inventory (similar to one developed in Germany) as well as more efficient use of civil engineering works have helped reduce roll out costs: a registry of civil engineering works is intended to identify work permits usable for fibre deployment. In addition, the regulator has worked on a framework to release appropriate spectrum bands for use in mobile broadband.
  • Luxembourg’s mobile SIM penetration continues to be the highest in Europe, largely due to the high number of transient workers and to the popularity of multiple SIM use.
  • POST Telecom in early 2013 began trialling DSL vectoring to provide higher broadband data rates.

For detailed information, table of contents and pricing see:

Luxembourg – Telecoms, IP Networks, Digital Media and Forecasts

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What PRISM, credit card hacking and Chromecast have to do with FttH

Wednesday, July 31st, 2013

While it is great to note that in recent months the debate around the plumbing issues of the Australian NBN has quietened down, it still has not been replaced with the debate we need to have – the debate that will deal with the following issues:

  • why do we want an NBN; and,
  • given the overall bipartisan government involvement, what national social and economic benefits does the Coalition want to achieve with the NBN?

As we have said many times in the past, the second issue should be the basis for the selection of the plumbing technologies – not the other way around.

The government has made it abundantly clear that it sees the NBN as the national infrastructure that will deliver digital productivity to the economy, and will enable them to transform sectors such as healthcare, education, energy (smart grids), etc. They might not always have communicated this well but they certainly now have policies in place – for example, in the form of the National Digital Economy Strategy, the Smart Grid/Smart City project and the Personal Controlled Electric Health Record system (PCEHR) that will enable Australia to obtain some of those benefits.

Let us analyse this in more detail ….

We already see the massive economic impact on the businesses and sectors that are failing to make the necessary transformation and as a result are missing out on using the digital economy that could help them improve their productivity. Companies are going under and others are complaining, while those who are embracing the new economy are flourishing and are now among the most valued companies in the world.

How much longer do we want to wait to give Australian companies and whole sectors the right infrastructure tools to assist them in that transformation and create the digital productivity that Australia so desperately needs? As the most recent OECD figures show, we are still running well behind many of our international trading partners in providing the Australian economy with the same ICT tools that are taken for granted in other countries. This has been addressed by the NBN, but we don’t want to see a slowdown by falling back to second-rate solutions such as FttN.

The NBN has very little to do with the speed needed to access internet content for consumers – that is only one aspect of what an NBN will deliver.

The main reason why over 130 countries around the globe are now involved in developing and implementing national broadband networks is to obtain the national benefits that such networks will deliver. It has become crystal-clear that many of the current business models, as well as industry, government and sector structures, are no longer capable of coping with the changes that are taking place in our global society and global economy.  With consumers now operating a wide variety of devices to use the internet for many aspects of their life – such as social contacts and communication, professional purposes, household management, internet information, shopping, banking, health applications and so on – these people (voters) are now in charge, shaping the future of society and the economy and deciding which companies they buy from. And this is taking place on an international scale.

The massive use of the internet has also attracted a range of unwanted activities and far too often hackers are now getting access to credit cards. In the US alone $1 billion a year is lost by the banks on cyber fraud and every new hacking announcement breaks yet another fraud record.

If spy agencies can break into the internet to get personal details, as well as people such as Edward Snowden and Bradley Manning, then surely it is also possible for less friendly people and authorities to hack in a similar fashion – and here we are not even just talking about terrorist and criminal organisations.

A key reason this hacking is possible is that, while we have very quickly moved into this new digital world, many of the underlying technologies being used are, in some cases, up to 50-years-old. They cannot cope with the growth of the digital economy. Technology under stress is far easier to hack into than first-class state-of-the art ICT infrastructure.

Another aspect of the massive growth in the digital world is mobile broadband. The capacity needed to even keep up with consumer demand here is gigantic. Even when only a relatively small amount of the overall mobile broadband use is actually carried over the mobile networks. The fact is that from an internet-use perspective the majority of mobile broadband use takes place on smartphones, tablets and laptops which are linked to the fixed network, most of the time through WiFi connections in the home, business premises, cafes, etc.

The new Google development of Chromecast is another good example of what engineers call ‘bandwidth-sucking applications’. With this US$35 device you can connect any device to the TV and stream content from smartphones, etc to the TV. There will be an enormous increase in internet use via the Chromecast stick and the WiFi connection, all going back to the fixed broadband connection. With much of this traffic now becoming video-based it will be almost impossible to continue to do this over the copper network. Within three to five years we will simply run out of capacity to handle the traffic in such a way that it delivers quality, reliability and security of the delivery.

So we urgently need to move the debate on to the far more fundamental issues in relation to society and the national economy.

Given the unstoppable and explosive growth in the digital economy let us analyse what is at stake here.

  • What infrastructure is needed to protect critical private, business and national information from hackers, criminals and terrorists? How important is the robustness of the network in relation to this?
  • Over 550,000 people in Australia now have a PCEHR and over 5,000 GPs and other healthcare providers are now also including MRIs, scans and other imaging material in the system. What does this mean for infrastructure capacity requirements and, again, its robustness? And what level of privacy guarantee is required?
  • Videoconferencing is now increasingly used by organisations for education, job interviews, interactive training, etc. Again, what sort of capacity, robustness and security is required to manage that?
  • Mobile networks can no longer handle the traffic going over their networks and are offloading traffic as quickly as possible to fixed networks; and they will soon start introducing premium pricing to better handle the traffic load, especially during peak time. What does this mean for their requirements regarding the fixed network, and also in relation to the affordability of access to these networks?
  • Cloud computing is seen as an essential tool to make our economy more productive. This means that many large-scale applications – with gigantic capacity requirements – will move online. This not only requires infrastructure capacity but also robustness, very low latency and security.
  • The same applies to M2M developments. While each sensor, meter or device may only need a tiny bit of capacity, what will be the effect of literally billions of these devices over the infrastructure – with many of them requiring real-time analyses and feedback?

It is rather shocking to conclude that none of these issues are being discussed when the politicians talk about the plumbing of the NBN. I challenge any telecom engineer to tell BuddeComm that all of the above does not require an FttH network. We would also challenge any politician to argue that, with the reality of the abovementioned developments, a copper or HFC network will be able to guarantee the infrastructure capacity, robustness, low latency, security and privacy protection requirements.

Until now we have allowed some leniency by saying that we could perhaps use copper and HFC for a few more years. But the developments mentioned above show that the pace has increased. Cloud computing in Australia, for example, only started to take off six months ago and already close to 90% of enterprises are now using these online applications. This segment alone will grow at a rate of 25%-30% per annum over the next 3-5 years. Could Computing can only grow if there is online capacity, robustness, security, etc. etc. All of this is now happening at such a pace that we would argue that the window for interim-based FttN and other solutions is rapidly closing.

Everybody, including the Australian Coalition, agrees that FttH is the end solution. Let us stop politicking and fiddling around and simply make it happen!

Paul Budde

See also:

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Bad Predictions

Tuesday, July 30th, 2013

In relation to the current debate about the need for high-speed broadband, Fibre-to-the-Home technologies,  the uptake of e-health, the capacity needs of M2M and in general predictions regarding what people need or will not need or use or will not use, it is interesting to see what other people had to say about technology and business ideas and developments in the past.

It is safe to say that in general it is a bad idea to say something can’t or won’t be done, especially in the realm of science and technology. The following are quotations that have failed to stand up to the test of time:

  • “I think there is a world market for maybe five computers.” — Thomas Watson, chairman of IBM, 1943.
  • “Where a calculator on the ENIAC is equipped with 18,000 vacuum tubes and weighs 30 tons, computers in the future may have only 1,000 vacuum tubes and weigh only 1.5 tons.” — Popular Mechanics, 1949
  • “I have traveled the length and breadth America and talked with the best people, and I can assure you that data processing is a fad that won’t last out the year.” — The editor in charge of business books for Prentice Hall, 1957.
  • “But what…is it good for?” — Engineer at the Advanced Computing Systems Division of IBM, 1968, commenting on the microchip.
  • “There is no reason anyone would want a computer in their home.” — Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977.
  • “640K ought to be enough for anybody.” — Attributed to Bill Gates, 1981, but believed to be an urban legend.
  • “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” — Western Union internal memo, 1876.
  • “The Americans have need of the telephone, but we do not. We have plenty of messenger boys.” — Sir William Preece, chief engineer of the British Post Office, 1876.
  • “The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?” — David Sarnoff’s associates in response to his urgings for investment in the radio in the 1920s.
  • “While theoretically and technically television may be feasible, commercially and financially it is an impossibility.” — Lee DeForest, inventor.
  • “The concept is interesting and well-formed, but in order to earn better than a ‘C’, the idea must be feasible.” — A Yale University management professor in response to Fred Smith’s paper proposing reliable overnight delivery service. (Smith went on to found Federal Express Corp.)
  • “Who the hell wants to hear actors talk?” — H. M. Warner, Warner Brothers, 1927.
  • “I’m just glad it’ll be Clark Gable who’s falling on his face and not Gary Cooper.” — Gary Cooper on his decision not to take the leading role in “Gone With the Wind.”
  • “A cookie store is a bad idea. Besides, the market research reports say America likes crispy cookies, not soft and chewy cookies like you make.” — Response to Debbi Fields’ idea of starting Mrs. Fields’ Cookies.
  • “We don’t like their sound, and guitar music is on the way out.” — Decca Recording Co. rejecting the Beatles, 1962.
  • “Radio has no future. Heavier-than-air flying machines are impossible. X-rays will prove to be a hoax.” — William Thomson, Lord Kelvin, British scientist, 1899.
  • “So we went to Atari and said, ‘Hey, we’ve got this amazing thing, even built with some of your parts, and what do you think about funding us? Or we’ll give it to you. We just want to do it. Pay our salary, we’ll come work for you.’ And they said, ‘No.’ So then we went to Hewlett-Packard, and they said, ‘Hey, we don’t need you. You haven’t got through college yet.'” — Apple Computer Inc. founder Steve Jobs on attempts to get Atari and HP interested in his and Steve Wozniak’s personal computer.
  • “If I had thought about it, I wouldn’t have done the experiment. The literature was full of examples that said you can’t do this.” — Spencer Silver on the work that led to the unique adhesives for 3-M “Post-It” Notepads.
  • “It will be years — not in my time — before a woman will become Prime Minister.” — Margaret Thatcher, 1974.
  • “I see no good reasons why the views given in this volume should shock the religious sensibilities of anyone.” — Charles Darwin, The Origin Of Species, 1869.
  • “With over 50 foreign cars already on sale here, the Japanese auto industry isn’t likely to carve out a big slice of the U.S. market.” — Business Week, August 2, 1968.
  • “That Professor Goddard with his ‘chair’ in Clark College and the countenancing of the Smithsonian Institution does not know the relation of action to reaction, and of the need to have something better than a vacuum against which to react–to say that would be absurd. Of course, he only seems to lack the knowledge ladled out daily in high schools.” — 1921 New York Times editorial about Robert Goddard’s revolutionary rocket work. The remark was retracted in the July 17, 1969 issue.
  • “You want to have consistent and uniform muscle development across all of your muscles? It can’t be done. It’s just a fact of life. You just have to accept inconsistent muscle development as an unalterable condition of weight training.” — Response to Arthur Jones, who solved the “unsolvable” problem by inventing Nautilus.
  • “Ours has been the first, and doubtless to be the last, to visit this profitless locality.” — Lt. Joseph Ives, after visiting the Grand Canyon in 1861.
  • “Drill for oil? You mean drill into the ground to try and find oil? You’re crazy.” — Workers whom Edwin L. Drake tried to enlist to his project to drill for oil in 1859.
  • “Stocks have reached what looks like a permanently high plateau.” — Irving Fisher, Professor of Economics, Yale University, 1929.
  • “There is not the slightest indication that nuclear energy will ever be obtainable. It would mean that the atom would have to be shattered at will.” — Albert Einstein, 1932.
  • “The bomb will never go off. I speak as an expert in explosives.” — Admiral William Leahy, U.S. Atomic Bomb Project.
  • “Airplanes are interesting toys but of no military value.” — Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre.
  • “There will never be a bigger plane built.” — A Boeing engineer, after the first flight of the 247, a twin engine plane that holds ten people.
  • “Everything that can be invented has been invented.” — Attributed to Charles H. Duell, Commissioner, U.S. Office of Patents, 1899, but known to be an urban legend.
  • “Louis Pasteur’s theory of germs is ridiculous fiction.” — Pierre Pachet, Professor of Physiology at Toulouse, 1872.
  • “The abdomen, the chest, and the brain will forever be shut from the intrusion of the wise and humane surgeon.” — Sir John Eric Ericksen, British surgeon, appointed Surgeon-Extraordinary to Queen Victoria 1873. 

From the website: Things People Said.

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Looking beyond BRIC – mobile communication in other emerging markets

Tuesday, July 30th, 2013

There are exciting opportunities for the mobile communications sector, beyond the traditional BRIC markets which have received much attention. BuddeComm’s Senior Analysts have identified further emerging markets worth consideration and wish to highlight the markets of South Africa, Mexico, United Arab Emirates, Colombia, Indonesia and Nigeria.

South Africa has a vibrant mobile market that has seen rapid uptake since competition was introduced to the sector in the 1990s. Market penetration is well above 100%, driven by separate subscriptions for voice and mobile broadband services, following the launch of third generation (3G) and LTE services. The network operators are increasingly forced to find innovative ways of distinguishing themselves from the competition in order to gain and retain customers, and to streamline their operations.

In Mexico, the regulator has determined that Telmex’s dominance warrants further regulation in certain sectors, and the company has been fined for obstructing interconnection to other operators. A telecom reform law passed in mid-2013 set up a new regulator and is aimed at removing barriers to foreign investment and reducing the market share of the dominant operators. These reforms will go far to making Mexico’s telecom market more competitive.

The UAE has long held the distinction of possessing a well-developed and technologically advanced telecommunications sector with high mobile, telephone and Internet penetration. Competition is slowly improving after the market was liberalised to fulfil World Trade Organization (WTO) requirements. Incumbent Etisalat competes with du and Yahsat. The UAE is a particularly unique market as the very high expatriate population at over 80% presents opportunities that might not be present in markets with a less fluid population.

Colombia is included in a group of up-and-coming nations (dubbed CIVETS) touted as hot markets because of their large potential returns. Hoping to attract tourism and foreign investment, the Colombian government is trying to shake off the country’s image as a trouble spot. In fact, according to some economic analysts, Colombia is becoming the hidden investment gem of South America.

Indonesian mobile telephone market is booming with penetration of 117% in early 2013. Despite this high penetration, there is still considerable opportunity for expansion in Indonesia’s mobile market when compared with some of its Asian neighbours. Consumer interest has started to shift to the 3G services being offered by the operators and take up of mobile data services is certainly on the rise, as evidenced by a significant surge in the sale of smartphones.

Nigeria is Africa’s largest mobile market with more than 110 million subscribers, and yet market penetration stands at only around 70% in early 2013. Subscriber growth accelerated again in 2012, driven by lower prices and a growing demand for mobile broadband services.

Kylie Wansink, Senior Analyst – Global Markets

For related information, see separate reports:

Emerging Markets – A New Wave for Mobile Communications – Colombia, Indonesia, Nigeria.

Emerging Markets – A New Wave for Mobile Communications – South Africa, Mexico, UAE.

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Third mobile network to launch in Cameroon, including 3G

Monday, July 29th, 2013

Cameroon’s third mobile licence was finally approved in June 2013. Vietnam’s Viettel will roll out the country’s first 3G network. Prior to this, Cameroon was one of only a few countries in Africa left with only two competing mobile networks, MTN and Orange. The re-entry into the mobile market by fixed-line incumbent Camtel as the third player has been delayed by controversy regarding its licence.

The result of the restrictive market structure has been a mobile market penetration rate below the African average and also below that of other countries with similar GDP per capita levels. Fixed-line penetration is extremely low, and the privatisation of Camtel’s fixed-line business has failed several times.

Mirroring a trend throughout developing markets, the average revenue per user in Cameroon’s mobile sector has fallen continuously as lower income groups gain access to services. The operators are developing new revenue streams from the virtually untapped Internet and broadband market by introducing mobile data and WiMAX wireless broadband services, as well as mobile banking services.

Until recently, Camtel was allowed to monopolise access to the SAT-3/WASC international fibre optic submarine cable, which has led to high prices and a grey market of unlicensed satellite gateway operators offering Internet access and Voice over Internet Protocol (VoIP) services. This is set to change following the arrival of two new international cables in 2012. A major expansion program for a national fibre backbone network is underway with funding from the Word Bank and China.

Market highlights:

  • Third mobile licence finally awarded, including 3G;
  • Major tower outsourcing deals;
  • New competition in international fibre bandwidth;
  • Significant improvements in national fibre backbone infrastructure;
  • All major players have adopted WiMAX as broadband access technology.

Estimated market penetration rates in Cameroon’s telecoms sector – end 2013

Market

Penetration rate

Mobile 69%
Fixed/fixed-wireless 3.6%
Internet 6.6%

(Source: BuddeComm based on various sources)

For detailed information, table of contents and pricing see:

Cameroon – Telecoms, Mobile, Broadband and Forecasts

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