Archive for March, 2014

Healthcare – ‘no outcome, no income’

Monday, March 31st, 2014

As we have mentioned before, the rising costs of healthcare are becoming unsustainable in many countries; and in all countries these costs continue to grow, with the exception of Finland where the costs are actually decreasing.

The reason for this is that in 2012 Finland introduced a nationwide tele-monitoring service for a range of people – in particular the aged population and those with chronic diseases. Already, in just one year, it has become clear that the overall healthcare costs have started to show signs of decrease.

In most countries e-health is basically ‘boycotted’ by the various health professional organisations, who over the last decade have successfully carried out FUD campaigns (fear, uncertainty and doubt) – claiming issues such as security and privacy, and warning that people could die if such services were introduced. These organisations do not like the transparency that becomes available through e-health, which would undermine the high charges they claim for services. Computerised diagnostics based on big data analytics are another threat to them.

Research conducted by IBM into healthcare has shown an efficiency level of minus 42%, easily the worse of all public sectors. IBM also calculated that a 30% efficiency gain is achievable through e-health.

Obviously the USA represents the worst case scenario, where unbridled capitalism has seen this sector paying the highest average salaries to doctors and specialists, ranking only after the executives in the financial sector. With little or no accountability the government has indicated that it will address this high income level of the professionals in these sectors with the slogan ‘no outcome, no income’. How successful they will be remains a big question.

The costs of healthcare (selected countries)


% of GDP





OECD Average






(Source: BuddeComm based on government data)

Key areas that should see the largest improvement by the introduction of e-health include, in order of ranking:

  • Cardio monitoring
  • Sleep monitoring
  • Tele-health applications
  • ECGs
  • Tele-medicine

Apnoea specialist Resmed indicated that it could see a 31% decrease in medical costs through the use of tele-monitoring. It estimates the economic cost of apnoea in the USA at $16 billion and in Australia at $2.5 billion.

Paul Budde

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The rise and rise of broadband in China

Friday, March 28th, 2014

While there are plenty of articles continuously updating us on the incredible social and economic developments that are taking place in China it is still sometimes good to stand still and have a look at some of these developments.

It was 15 years ago that the Chinese Government – in its 5-year plan – stated that it wanted to connect all of its half million villages to the telecommunications network. At that point the plan simply called for narrowband telephone connections. Now in 2014 over 95% of these villages are connected to fixed and mobile broadband networks.

These rapid developments saw for example in 2011/12 300 million smartphone connections added to the overall telecoms penetration in the country, by far the largest uptake anywhere in the world. This in turn – the following year (2013) – led to the launch of the $50 high quality smartphone from Huawei. Obviously this affordable device is equally sought after in other parts of Asia, Africa and South America.

This year the country plans to put a further 30 million FttH connections into people’s homes. This will bring the total number of users benefited from the country’s FttH program to nearly 200 million by the end of 2014. The new broadband map includes 13,800 villages.

Higher bandwidth qualities of 50 to 100Mbs, will be extended to regions with mature networks, while over 30% of total users will have 8M Internet access.

Most Chinese Internet users connect via 2 to 4Mbs broadband; government support has reduced the cost per Mb by 50.8% since 2011. The 4G network is also part of the plan, with 30 million new TD-LTE users and 300,000 new base stations expected in 2014.

It is not just connectivity that is happening in China. These developments have also led to a large number of income generating opportunities.

E-business has become the way for young entrepreneurs to move forwards. This new platform provided for 80 million jobs in China in 2013, 70% of them went to these young entrepreneurs.

At the same time China is actively using the new broadband platform to provide education for young people with among others programmes directly aimed at job opportunities that are becoming available within the digital economy.

Paul Budde

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Asia’s booming mobile and broadband sectors are quietly underpinned by the region’s all-important fixed infrastructure

Thursday, March 27th, 2014

The changing nature of the telecom market has had a major impact on the approach to investment in infrastructure. With shifting revenue patterns across the market segments and falling ARPUs on many services, operators became considerably more selective about what they actually invest in. Telecom operators throughout Asia have been adjusting investment levels on the back of carefully considered investment strategies. This has seen companies shifting business focus, looking for new ways to add value to existing revenue streams; it has also seen a strong desire to leverage new value from infrastructure that is already in place. This has especially been the case with mobile network moving increasingly to support mobile broadband services and newer generations of mobile technologies.

The governments of Asian nations have long recognised – some earlier than others – that there needed to be some encouragement of private sector investment to meet the demand for the all-important capital needed in the telecom sector. At the same time, it was also generally well recognised that this strategy could not rely on local investment alone, and would inevitably mean a substantial level of foreign investment. Of course, despite this recognition, there has inevitably been some resistance within some administrations to opening up the telecom sector to foreign investors and as a consequence the level of ‘encouragement’ across the region has been variable.

The initial round of substantial investment in telecom infrastructure in Asia was in fixed telephone networks. Over a number of decades the regional economies were progressively building their often quite substantial fixed-line national networks. These fixed networks were in time followed by the building of mobile networks. In many of the developing nations of the region, the building of fixed-line infrastructure was not far advanced before it was overwhelmed by the introduction of mobile infrastructure. This created the phenomenon of ‘substitution’ in many of the markets of Asia (where mobile services perform the function of the limited, or even non-existent, fixed telephone services.) Nevertheless, despite the unevenness in disposition, fixed infrastructure has been and continues to be an important component in the overall development of the region’s telecom sector. Coming into 2014 there were an estimated 500 million fixed-line subscribers in Asia; this was down from a peak of around 570 million in 2009; of course, fixed-line numbers are considerably less than the more than 3 billion mobile subscribers to be found in the region. Whilst the fixed line numbers have gone into an overall decline, in some markets the numbers have continued to increase. Overall, it is anticipated that the decline will continue for a few more years before the market ‘levels off.’

As already suggested, the focus of infrastructure building has been shifting. There has been a major push to upgrade domestic telecoms networks to Next Generation Networks (NGNs). This process has seen large scale investment by Asia’s leading telecoms markets in new-generation IP-based telecommunications networks. At the same time there has been a major surge in infrastructure building as mostly developed economies roll out National Broadband Networks (NBNs). These networks come in various ‘shapes and sizes’ as governments work with operators to tackle the strategic challenge of delivering high speed to the nation. Not surprisingly the NBNs rely heavily upon fibre; in some cases it is Fibre to the Premises (FttP), while in others it might be Fibre to the Node (FttN). And the cost varies accordingly. Those countries that have government backing for NBN roll-out are generally the ones that have been setting the pace.

In addition to the national networks, international connectivity remains central to the overall effectiveness of the region’s telecommunications services. Submarine cable routes criss-cross the Asia Pacific area, providing both intra-regional and inter-regional networks. This sector of the market has been characterised by widely fluctuating supply and demand, which in turn has seen somewhat erratic investment strategies. Submarine projects are subject to this boom and bust market phenomena, with planned projects commonly being delayed or abandoned, consortia being reshaped, etc. In fact, over-supply of capacity has been common in the Asian market. More recently investments have been less speculative and more focused on predicted growth. In the meantime, new submarine cable projects continue being proposed and the cables installed throughout the region. As Asia’s broadband usage surged, a major effort went into managing the shortfall in capacity between Asia and the US. At the same time there has been a shift away from the heavy reliance on the US as a hub for data traffic and this has inevitably resulted in a further change in focus.

As the demand for wholesale services continues to rise in Asia, still driven in the short term by voice, but rapidly being overtaken by data, there has been a boom in IP-based services, with the volume of international Voice over Internet Protocol (VoIP) traffic into and out of Asia having increased at a rapid rate at the expense of the traditional International Direct Dial (IDD) traffic.

For detailed information, table of contents and pricing see: Asia – Fixed Telecommunications Infrastructure

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The battle to capture skilled expertise for deep learning efforts

Thursday, March 27th, 2014

In late 2012 a concept known as “deep learning” or “machine learning” began to gain mass industry attention and this continues to gain momentum in 2014 with Google’s purchase of DeepMind Technologies.

Also known as “neural networks”, the idea can be traced back to the 1950s and is based on working problems out in the same way the human brain works. It uses pattern recognition and categorisation at the core of its technique and is currently being applied to speech recognition applications by companies like Microsoft.

With a limited global pool of qualified professionals in the AI sector – it is thought Google acquired DeepMind Technologies for the skilled employee base rather than its current products. The purchase of DeepMind Technologies demonstrates the increasing interest in Artificial Intelligence and machine learning – and it is not only Google displaying great interest in this evolving sector.

In 2013 in order to share expertise – Facebook, Amazon and Microsoft created a research group known at this stage as AI team.

Kylie Wansink, Senior Analyst – Global and Middle Eastern Markets

For related information, see separate reports: BuddeComm Intelligence Report – Smart Societies based on Artificial Intelligence

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Is the government opening an NBN Pandora’s box?

Tuesday, March 25th, 2014

Without a firm plan in place for the NBN rumours continue to abound. I just spent a few days in Canberra and it is worrying to see the destructive forces at work in what is still a highly polarised political environment. Instead of moving forward the government keeps harking back to the past, concentrating on establishing blame rather than governing for the future.

More NBN reviews have been announced and the rumour mill on this topic varies from the aim being to find reasons to give up on the NBN altogether, blaming it on wrong processes initiated by the previous government, to it being an attempt to get back at Stephen Conroy because of his remarks about the military regarding their involvement in the refugee issue. So far nobody has come up with a positive reason for this review.

Then there are rumours of new handouts to Telstra, and possibly Optus also, in order to make the multi-technology model work. Both Telstra and Optus are reluctant to maintain their ageing networks and they are in a very strong position to get the government to foot the bill for that maintenance. This could be worth one to two billion dollars a year.

If that happens the government will have opened a can of worms. One only has to look at recent developments such as the asbestos scare and the various flooding incidents around the country that exposed the problems with the ageing copper network. Such issues would be a political nightmare for any government. It would also open the political floodgates for people in the bush where repair delays are sometimes measured in weeks and months. Any Opposition would love to get involved in looking after these customers by blaming the government for poor maintenance.

The ‘maintenance’ deal will not just include the copper and HFC networks. It will also relate to the various operational and billing systems (OSS and BSS) – another major problem area. Over the last 30 years tens of billions of dollars have been poured into these systems, often simply to make them as complex as possible in order to game the regulator during the decades of monopolistic behaviour. Despite efforts in recent years to streamline all of these systems that have been built, the situation around them remains messy. One of the positive elements of the FttH NBN was that all of these systems would simply be bypassed by one – wholesale only – new system. But yet another rumour is that this one system, as developed by NBN Co, is also faltering. Hard to know who and what is right.

There still might be a hundred or more such OSS and BSS systems that are linked to the old Telstra networks and in order to run the multi-technology model most of them will need to be maintained – who will do that?

The government has painted itself into a corner with its complex infrastructure model and it will most likely have to pay extra money to Telstra (and Optus) in order to maintain the ageing systems and infrastructure. Perhaps one positive that might come out of this is a clear commitment to an end date for these systems – I assume they will not be maintained indefinitely – and this will at least give us a policy indication of the final transformation of the total fixed infrastructure to FttH.

Pandora’s Box

In the meantime the already complex technology situation has been made even more complex, with conflicting advice in relation to infrastructure and its regulation being given to the government by organisations such as the ACCC and Communications Alliance, as well as by companies like Vodafone, Telstra and TPG (and many others).

The ACCC wants to see more infrastructure competition, something that TPG also has already indicated it would like to pursue, and if that level of cherry-picking is allowed than also Telstra has indicated it wants to jump on that bandwagon. This would totally demolish the NBN model, as NBN Co has already indicated – and the Minister has also raised concerns on that matter.

The ACCC also hints at such a wholesale demolition of the NBN, suggesting that the whole commercial NBN model be changed to one that provides full competition, but also full subsidies to those areas where competition will not deliver high-speed broadband.

Comms Alliances, quite correctly, indicates that VDSL competition would be a technical nightmare and Vodafone wants shared mobile infrastructure in regional areas. This proposal is fiercely opposed by Telstra, which has already indicated it is willing to take any such action to court.

Yes, I think that is what you can expect if you start to unravel the NBN model. As we have mentioned in our numerous analyses during 2012 and 2013, it could take years just to sort all of this out. When in Opposition, Malcolm Turnbull promised a swift resolve. It was first promised that his plans would become clear by mid-2014; he is now talking about December and even that is ambitious. As Comms Alliance also pointed out, we still don’t have standards or guidelines about this mixed technology solution, and the longer that takes the more difficult it will be to create a cohesive infrastructure plan – and the longer it will take to get such a complex plan underway.

The Minister also promised that during the interim period the NBN would continue to be rolled out along its original FttH plan, but here too the communities involved argue that these promises have been broken – we see an increasing number of disgruntled communities around the country.

With no clear direction on the horizon and many competing and contradictory messages coming from regulators and the industry it does not look as though the situation is becoming any easier for the government. With the government, the regulator and the industry all coming up with conflicting solution it will be the broadband users who are going to suffer from all of this.

Paul Budde

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