BuddeBlog

Whoever wins the upcoming federal election will have to articulate why Australian as a nation needs an NBN. And they will need to clearly convey why the government needs to be involved in this.  At the moment there is no clarity on the subject and this leaves room for the confusion that is exploited by politicians and some parts of the media.

The NBN is an investment that extends for the next 30 years, so we also need a vision that looks beyond the current term of government, and at present that vision – linked to clear policies – is still missing.

In BuddeComm’s opinion the reason the government should be involved in national broadband infrastructure is because of:

• national economic policy – to create digital productivity;
• social policy reasons – in order to be better-placed to address some of the enormous challenges that our society is facing (sustainability, environment, energy, healthcare, education and so on).

None of these challenges can be solved by broadband alone – but, equally, none of them can be solved without a first-class broadband infrastructure. Governments should supply the vision and the policies that will guide our society and our economy in that direction. This will give a clear direction for all those involved, in all sectors, to then develop the best possible infrastructure/ICT solutions.

These policies should also be used to break through many of the costly, inefficient and unproductive sector and industry silos. As we see elsewhere, the digital economy is able to take significant costs out of the economy, sometimes in the order of between 60%-80%. This is essential in order to address many of the current economic and financial problems being faced by western economies.

The current political debate – in particular from the Coalition’s perspective – is still mainly  focused on the plumbing. If that continues we will end up with a flawed plan for the future. Equally, the present government will have to quite dramatically change the financial foundations of NBN Co and put a far greater focus on the value of the transformative nature of the NBN, and better recognise the social and economic benefits it will bring to the nation.

Once the politicians involved (infrastructure, healthcare, energy, education, business, etc), together with their experts, have made an holistic national assessment they will need to develop trans-sector policies aimed at achieving horizontal social and economic benefits – let us say over a 10 to 20 year period (sector and industry transformations take a long time). Only then will it be possible to provide a brief to the ICT industry to come up with technical solutions.

Exhibit 1 – NBN policy focus beyond the election

 In the end (10 years from now) the basic infrastructure (national FttH/5G mobile networks) will be a national utility. It is extremely unlikely that there will be room for competing FttH networks.

5G will bring mobile towers to every corner of every street – totally integrated with the fixed FttH infrastructure. The costs of this deployment will gravitate towards mobile infrastructure dominance; look how much spectrum Telstra could afford to buy – it will soon be dominant in 4G infrastructure.

Only when the political parties are prepared to develop an holistic social and economic vision for our country – one that will take into account the tremendous technological capabilities that new ICT  developments are able to offer our society and our economy – will we be able to reap the full benefits of the national investment in the NBN.

There is still four months until the election and it would be great if, during that time, both Minister Conroy and Shadow Minister Turnbull could direct their NBN campaigns towards the issues mentioned above.

Australia is fortunate in having two of the most well-informed ICT Ministers in the world, and it would be regrettable if their expertise, insight and leadership were not directed in a more positive way towards those all-important national issues. After all, the Coalition has now come very close to the original NBN concept, so there should be much more room for a positive debate aimed at how to shape the NBN after the election.

Paul Budde

See also:

• Australia – National Broadband Network – mid 2013
• Australia – National Broadband Network and the Opposition
• Australia – National Broadband Network – Digital Economy

One of the ten countries which joined the EU in 2004, Slovenia has since lagged behind its peers in privatising state enterprises. This has been particularly true in the telecom sector, where revenue has fallen steadily since the high of 2008. Nevertheless, investment in the sector has risen year-on-year, mostly by operators developing fibre networks and upgrading mobile networks.

A key obstruction to further growth in the sector has been the lack of effective regulation and the political will to enforce it. Telekom Slovenije has strongly resisted competitors, as also the regulator, through the courts, and the majority state ownership of the company has long been viewed as an obstacle to effective regulation.

This is set to change. In the latest of a long line of failed privatisation schemes, the government has again announced plans to sell its remaining 52.5% stake in the operator. It had originally been envisaged that the first stage of privatisation would take place in 2000. This was set back to late 2001 then delayed indefinitely due to unfavourable economic conditions. Renewed efforts in mid-2005 resulted in only a 10% stake being privatised, while another attempt in 2007/8 would have seen the state retain 25%, though the bids proved to be too low and nothing came of it.

Nevertheless, Telekom Slovenije did remain one of the principal government holdings to be privatised, and the process being rekindled now (alongside state interests in a dozen or so other concerns) is perhaps evidence more of economic pressure than a willingness to reduce state control.

Telekom Slovenije used to be a handy source of revenue for the government, but this has not been so true in recent years, with company revenue having fallen steadily since 2009. In response to the financial turmoil of recent years the company has undertaken a range of measures to reduce costs, including the restructuring of operations in Macedonia and Kosovo (the merger with Mobitel, bought outright at the end of 2010, being a key development), the sell-off of non-strategic investments, the restructuring of business processes, the sale of real estate, and changes in sales and marketing. The Group’s business plan to 2016 also focuses on making the transition from being a provider of infrastructure-related services to a provider of IT and multimedia services. These processes will be better undertaken following privatisation, wherein the company can expect to utilise additional skills and investment.

For the government, the sale is part of a bid to reduce debt and avoid the bailout which has dogged other countries in the region: as recent examples have shown, the terms of these bailouts can be harsh. The government nevertheless has submitted to an EC reform package, and as this may provide a clean sweep to remove residual excesses which drain its coffers, so too may privatisation of the incumbent provide it with new vigour in an intensely competitive market.

Henry Lancaster,
Senior Analyst

For more information see the report Slovenia – Key Statistics, Telecom Market and Regulatory Overviews

The digital entertainment market is now worth billions of dollars in revenue and is currently being driven by the growing uptake of smart phones and touchscreen tablets. From updating social networks, browsing interesting websites, watching online videos, downloading and listening to music, trialling new apps and participating in games and gambling – the online and mobile platforms now offers a myriad of services based on entertainment.

In particular, it is mobile broadband apps which have attracted much attention over the past couple of years. A stream of these new Apps and services are continually being released into the market and the entertainment and leisure sector is often the focus. The key players in this market have emerged over the past couple of years and include both Internet media and mobile industry leaders. Apple App Store and Android are examples of two app store leaders; each offering hundreds of thousands of apps. Following the iPhone phenomenon, the carriers are now trying to jump on board and provide their own AppStores for the devices they support – but it is very doubtful that they will have any chance of success in competition with these large players.

While social networks began as a basic tool to connect with friends; in 2013 these services are now available on both fixed and mobile devices and are used for much more including messaging services, gaming; business networking, e-commerce; accessing breaking news and video/photo sharing. The era of digital social media has certainly caused much disruption to traditional media industries and has also led to many very innovative new applications and services.

The popularity of SMS has remained strong on the back of the introduction of capped data changes, smart phones and bundled services. However other forms of messaging beyond text are gaining ground, particularly free messaging services offered by social networks and instant messaging mobile apps. This rise of alternative mobile apps which offer messaging services are becoming a serious threat to the carriers SMS revenue streams and are increasingly being seen as a disruptive trend.

Online gambling is heavily regulated or banned in many parts of the world, with the USA, China and Japan just three examples of large markets which have strict online gambling laws. Despite this barrier – online gambling is still a thriving industry and mobile gambling is beginning to gain popularity. The rise of smart phones and mobile wallets offering a better player interface will assist this growth in the future.

Purchasing and accessing online music has been very popular for a number of years and was one of the key drivers behind the early developments in digital media. However with faster speeds now available, video streaming is finally coming to the forefront over both the fixed and mobile networks. Digital music is still enormously widespread however and in 2013 such services are available to over 100 countries with providers such as iTunes and Spotify continuing to expand globally.

BuddeComm’s new report, Global Digital Media – Online and Mobile Entertainment are Key Drivers, provides important insights into the worldwide digital media industry with a focus on entertainment services. It includes trends, analyses, statistics and case studies. It provides insights into fixed services and the key growth area of mobile broadband digital media. Information at a regional level is provided for North America, Europe, Middle East, Latin America, Africa and Asia Pacific, written by BuddeComm’s Senior Analysts.

Examples of key insights:

• Improved infrastructure is helping to drive both the digital and mobile media markets with high speed broadband and 4G networks continuing to be rolled out around the world.
• A stream of new Apps and services are being released in areas of entertainment, travel and finance and also m-health; m-education; m-social networking; m-gaming and so on and there are now well over a million apps available worldwide.
• Despite its huge success, Facebook has strong competition from local social networks in some countries like China, Japan, South Korea and Russia.
• The purchase of business social network Yammer by Microsoft for $1.2 billion follows a growing interest in the opportunities presented by enterprise social networking.
• In 2013 there are over 7,500 dating websites worldwide and mobile dating is expected to be a significant growth area.
• In early 2013 mobile photo messaging began to receive attention following Facebook’s launch of a mobile app called Poke which is along the lines of an already established mobile app called Snapchat.
• Popular mobile games in 2013 include Angry Birds, Talking Friends, Doodle Jump and Plants vs Zombies.
• In Australia, mobile betting sees revenue, transactions and users increasing.
• In New Zealand Facebook growth is slowing but usage time is increasing.
• Egypt has Africa’s largest Facebook community with over 12 million users.
• Free-to-play online games with optional micro-currency and low graphics requirements are prevalent in Latin America.
• Music service to cellular handsets is a development gaining pace in the USA. Music is typically accessed using on-demand streaming or over-the-air download services to mobile phones over the internet via a 3G or WiFi connection.
• One factor which is aiding the popular take-up of mobile entertainment in Europe is the improvements in advanced billing and security capabilities of networks, making such services more attractive to businesses and consumers.
• The internet plays a significant part in the lives of vast numbers of people across Asia. The young and tech-savvy of the region spend vast amounts of time online in their pursuit of digital media entertainment.
• Mobile is shaping digital media developments in the Middle East. 

For detailed information, table of contents and pricing see: Global Digital Media – Online and Mobile Entertainment are Key Drivers

Market Highlights

• In 2013, Argentina’s fastest growing telecom segment is likely to be 3G, both for mobile broadband and for phone-based internet browsing. The country’s smartphone market is expected to outperform all other markets in the region.
• In partnership with Brazil, Argentina is developing the local link of a new submarine cable network, the Atlantic Cable System (ACSea);
• Argentina is the world’s most engaged social networking market in terms of time spent on social media websites. The country’s Facebook user base is the twelfth largest globally, and about 15% of the population use Twitter.
• The bitter fight between Cristina Kirchner and Grupo Clarín continues. The survival of the pay TV and broadband operator remains uncertain. The Audiovisual Law is, in the eyes of Clarín, nothing but an act of revenge on the part of a president unwilling to accept criticism. Kirchner, for her part, accuses Grupo Clarín of using its media outlets to try to topple her administration.
• Having been awarded about 25% of Argentina’s mobile spectrum in September 2012, state-owned Arsat is preparing to provide wholesale mobile services under the brand name Libre.ar, but the project may take some time to implement.

Key developments:

TASA’s and Telecom’s fixed-line revenues increase by 12% and 13% respectively; state-owned Arsat is building three new satellites (Arsat-1, Arsat-2, and Arsat-3); Argentina Conectada will require an investment of AR$8 million (about US$1.8 million); more than 30 telecom cooperatives have been awarded pay TV licences; Argentina’s three top mobile operators launch handsets with built-in free-to-air digital terrestrial TV reception; a new decree has been passed to regulate Mobile Virtual Network Operators.

Argentina’s fixed-line, broadband, and mobile statistics – 2011 – 2013

(Source: BuddeComm based on industry data)

BuddeComm’s yearly update of Argentina – Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Argentina, including the regulator’s statistics, company data, and other industry indicators to the end of 2012, as well as estimates for 2013 and expected market developments in the coming years.

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

• Regulatory environment;
• Economic trend and its impact on telecommunications;
• Analyses of Argentina’s telecom sectors;
• Telecoms operators – consolidations, acquisitions, new licences;
• Company performances and ARPU statistics;
• Spectrum auctions and regulatory issues;
• 3G and mobile broadband developments;
• Historical and current subscriber statistics and forecasts.

For detailed information, table of contents and pricing see:

Argentina – Telecoms, Mobile, Broadband and Forecasts

Telecom market overview

Mexico’s economy swiftly recovered from the downturn in 2008, with the OECD predicting that GDP would grow 3.8% in 2013, following similar growth since 2010. Growth in the telecoms market has long outpaced broader economic growth, primarily driven by the mobile and broadband sectors, as well as broadcasting. Growth remains strong compared with many other global markets, particularly those in Europe. A telecom aimed at reforming the telecom sector will set up a new regulator with a wider remit and empowered to impose fines, control pricing, and put a break on an appeals process which has hitherto obstructed the effectiveness of its resolutions. The bill would also update the country’s long-standing law limiting foreign investment in national telcos, and would force phone and TV providers to sell assets if they control more than 50% of the national market share.

Mobile market

LTE services have been launched by two of MNOs, following considerable investments in network upgrades. Telcel’s network already covers about 65% of the population. This is complemented by Telefónica’s service, using the 700MHz band. Both operators will also utilise 2.6GHz spectrum which the government plans to auction later in the year. These developments will further encourage the rapid development of the mobile data sector, which is accounting for an increasing share of overall mobile services revenue for operators.

Key telecom parameters – 2010; 2013

(Source: BuddeComm)

Market Highlights

• Telcel’s LTE network covers some 26 major cities, reaching about 65% of the population. The operator is investing US$3.95 billion to 2014 in network upgrades, including at least US$1 billion in equipment for LTE alone.
• The electricity regulator CRE is looking to modernise the country’s existing grid with smart grids, thereby reducing the high power loss in transmission. The smart grid plan should be completed by late 2013, and will spearhead the multi-billion dollar investment in smart grid infrastructure required.
• Telmex retains a dominant market share of fixed lines, given that the vast majority of communities are unprofitable for other operators to build competing networks. The regulator has encouraged competition where viable, in 2013 fining the company MXN657 million for failing to provide interconnection services on inter-city routes.
• The government’s long-standing law limiting foreign investment in national companies is being addressed by the telecom reform package, which will allow foreign investors to own more than 49% of telcos’ shares.
• The telco Alestra is investing MXN1.2 billion in a fibre network to meet consumer demand for converged services. More than half of the funding is being spent on infrastructure projects. The fibre-optic network will be extended to about 17,000km across the country, covering some 50 cities.
• In late 2012 the Ministry of Communications and Transport contracted HNS to deliver an 11,000-site solar-powered broadband satellite network providing national coverage and aimed at areas underserved by existing fixed-line and mobile networks. The network, completed in early 2013, is centered on anchor site such as schools, hospitals, government offices, community centres across all 32 states. 

BuddeComm’s annual publication, Mexico – Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media sectors of one of Latin America’s largest markets. The report includes the regulator’s market data to February 2013, telcos’ financial and operating data to Q1 2013 and market developments to May 2013.

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