The focus of the market is rapidly moving from networks to in-house high-speed and high-capacity user interfaces. The effect that smartphones and tablets have on the mobile networks is there for all to see – the mobile networks cannot handle it and caps and WiFi offloading are needed to manage the use of the network.

The mobile networks are being upgraded, at great cost, but still  the majority of smartphone and tablet internet access takes place via the fixed network. WiFi equipment linked to the fixed network allows those mobile devices to efficiently and cost-effectively use broadband capacity needed to download apps, access the internet, conduct transactions and so on. The future of mobile broadband depends to a large extent on the rollout of FttH networks.

Next will be the smartTVs, connected TVs, new smart set-top boxes, game computers and Blu-ray devices – these will all follow the same path. The in-house network capacity is set to increase a thousandfold over the next five years.

What we see is an unprecedented consumer electronics revolution. These new devices will soon have gigabyte storage and gigabit speed capabilities. The bottleneck will be the telecommunications network. And while politicians are still arguing about megabytes the real world is moving to gigabytes.

Those with the foresight to start building FttH networks will, of course, be the first ones to profit from this development and there are now more than 50 countries involved in building FttH networks. The vision of all of these countries is gigabytes.

However it is more likely that the developments in devices such as smart TVs, smartphones and tablets will easily outpace the ability to roll out fibre. There will, at least in the interim, be a range of new technologies that will use gigabyte storage to try and alleviate the problem as much as possible, but unfortunately that will not be much more than a stop-gap solution.

This will also severely hamper the growth of cloud computing since it depends on fibre network capacity.

It is these new developments that are stimulating a range of new FttH projects, particularly in Europe and some parts of Asia. Australia is one of the leading the visionaries with its national FttH network.

Paul Budde

See also:

• Global – Broadband and FttH – Key Statistics and Insights
• Global – Broadband – Regulating Fibre Access
• Australia – National Broadband Network – Infrastructure Analysis
• Australia – National Broadband Network – The FttH Rollout

The concept of smarter homes, communities and cities encompasses a range of policies and strategies that need to be developed parallel to each other.

Smart infrastructure is needed for communications, energy, transport, etc. The key element in ‘smart’ is its ability to gather data, analyse it and provide intelligent feedback.

Communications is an essential element in all smart activities. Currently all the silo-based sectors operate separate and independent infrastructure, which of course creates significant financial waste and a lack of interoperability.

Without sound government policies to actually direct the various sectors to share utilities-based infrastructure nothing ‘smart’ will happen in the near future. We call this the trans-sector approach. Leadership from the top is needed to direct the sectors to work together, share infrastructure and provide a seamless service for the customer. This involves:

• people – and empowering them to take control over, for example, the management of their energy use, e-health requirements, e-education, etc; and
• things – as in sensors and devices that collect data and process this in real time. The combined data from, for instance, the weather bureau, the transport authorities, energy companies, local authorities can then be analysed (also in real time) to supply instant information to users. This can be in relation to natural disasters, traffic jams, energy prices, energy efficiencies of buildings, personal healthcare information and so on.

Currently most of this information is collected and stored in silos, often on incompatible systems and most of the time not shared with others. It is highly unlikely that these sector-based silos will readily agree to work together. They will all take cover – rightly or wrongly – behind security, privacy, reliability and so on. Only a leader at the top (President, Prime Minister, Emir) can provide the overall leadership that is needed to create a trans-sector policy that will bring together the various infrastructures and application policies.

Once the foundation is established, industry will jump on board, operating in accordance with clear policies, guidelines and regulations. Governments can promote this further with policies that will see some budget redirection from the various sectors (healthcare, education, energy, environment, transport) towards the development of e-services.

Through positive incentives private industry will develop strategies and come up with most of the investments needed for the building of these smart systems.

Paul Budde

See: Paul Budde at QUITCOM 2012

Competition in the form Free Mobile is the disruptive force which the market has needed for some years. Launched in early 2012, Free Mobile has borrowed some elements of the successful business models which made the parent company, Iliad, such a force in the broadband and bundled services sectors. Free Mobile’s model is based on cheaper services including unlimited calls, SMS and MMS, as well as access to the internet through peer-to-peer and VoIP. Free Mobile also has no lock-in contracts, unlike the other MNOs which all have expensive penalty charges for broken contracts.

Free Mobile has certainly caused a strain to the system managing MNP: following its launch the number of portings increased from an average of 12,000 per day to the system’s capacity of 40,000. As a result, MNOs and the body managing MNP, the GIE EGP, agreed to increase the processing capacity to 80,000 portings per day.

For Orange, Free Mobile has provided a particular headache. Orange was obliged by the regulator to hand over a portion of its spectrum holding to Free Mobile, as well as provide 2G and 3G roaming services. This deal kicked in once Free Mobile’s network provided 27% population coverage, which the company managed to achieve before launch. Orange’s revenue from mobile services grew by less than 1% in 2011, year-on-year, and the impact of competition from Free Mobile will make the operator nervous for the 2012 results.

This marginal growth will be exacerbated by subscriber losses: although Orange secured an additional 837,000 mobile subscribers in the first six weeks following Free Mobile’s launch, almost 1.4 million subscribers churned to other providers during the same period, leaving a net loss of 201,000 (or 0.7% of the total customer base). Most of these customers churned to Free rather than to the other MNOs: in the first two days following Free’s launch Orange was subject to 150,000 MNP requests.

In addition, Free Mobile’s success has also strained Orange’s network; Orange recently complained that 97% of calls made by Free Mobile’s customers took place on its own network rather than that of Free Mobile, creating capacity problems in some areas

Orange has responded to this pressure by trying to play Free at its own game. It almost immediately cut tariffs, and in late 2011 launched a low-cost brand, Sosh, which replicates Free’s lower costs, no handset subsidies, no contract lock-ins and online billing and sales/service facilities. Orange’s Open quad-play packages are similarly marketed as a direct challenge to Free’s own successful quad-play offer.

The difficulty for Orange is that thus far it has acted like the same incumbent behemoth seen across Europe, forced to respond to the more nimble new players and losing as often as it gains.

The updated France – Mobile Market Insights, Statistics and Forecasts report provides key statistics on the French mobile market, including recent developments in the competitive environment, the status of upgraded network infrastructure and regulatory measure. In the report we also provide an analysis on the major players and their strategies in the wake of Free Mobile’s market entry.

Key developments:

Auction for 2.6GHz frequency licences completed; national 4G availability envisaged for early 2012; Vodafone finalises sale to Vivendi of 44% interest in SFR; Bouygues Telecom joins the Telefónica Partners Program; Omea (Virgin Mobile) becomes the first full MVNO in France; MVNO market shows 35% growth in subscribers in Q4 2011; MNP process reduced to three days; Bouygues Telecom launches B&You mobile service including VoIP via WiFi; MTRs set to 2013; Bouygues Telecom buy’s KPN’s MVNO Simyo; Orange launches low-cost brand; regulator market data for 2011; operator data to December 2011; market developments into early 2012.

Companies covered in this report include:

Orange, SFR, Free Mobile, Bouygues Telecom.

Henry Lancaster,
Senior Analyst, Europe

For more information see the updated reports:
France – Fibre and Wireless Broadband Insights;
France – Broadband Market Insights, Statistics and Forecasts;
France – Digital Economy and Digital TV – Insights, Statistics and Analysis;
France – Mobile Market Insights, Statistics and Forecasts;
France – Mobile Data Market Insights – 3G, 4G and Forecasts.

That is a truly remarkable job. Congratulations to the new owners of the service.  It shows that internet media is better left to new digital entrepreneurs than to traditional corporate publishers.

They have made some excellent strategic decisions. They were lucky to be able to maintain a significant loyal customer base, clear evidence of how sticky these sites can be. MySpace was well and truly positioned right in the middle of the youth market and despite the fact that many of the early MySpace users will have grown into teenagers and young adults they have been able to maintain a base large enough for this reincarnation.

Rather than try and compete with Facebook and Twitter they decided to become a specialised site, selecting music as their niche, a subject very much related to their user group. The company has a music library with more than 42 million titles.

So they now have the right audience and the right product.

The next step was to link this service to the other sites. That makes absolute sense, since many of these youngsters are also heavily involved in the other media and the combination seems like a perfect fit. This is a very clever strategy! The other social sites are perfect channels to attract more youngsters – and music lovers in general – back to MySpace, they will use the other sites for broader communications and MySpace for music.

The deal also makes sense from the perspective of Facebook and Twitter; it will increase traffic on their sites, which are more generic than specialised.

This approach might also suit some of the niche (national) language-based social media and music sites, as the model should also be attractive to those groups.

For related information, see separate report:

• Digital Media – The Competitive Internet Media Environment;
• Digital Media – Social Networks and Gaming Insights.

The Essential Research survey also showed:

• 56% of 1042 respondents were in favour of the NBN, an increase from April 2011 when the figure was 54%.
• Support for the $35.9 billion project has risen by eight percentage points from 48% in February last year.
• 25% of those surveyed opposed the NBN, down from 31% in February 2011.
• 19% were still undecided about it.
• The greatest supporters of the NBN were Labor voters at 80%, with Greens voters on 77%.
• While 42% of Coalition voters were in favour of the network, 43% were not, with 15% undecided

These are very promising figures for the NBN. With some 750,000 people being connected to the NBN during 2012, the network will become more of a reality to many people, rather than an abstract entity. The 19% of people still undecided could possibly lift the ‘in favour’ percentage to close to 75%.

However, there has also been a hardening with people being totally opposed growing from 7% to 10%.

Of course NBN Co will have to deliver – it does indeed have to roll out a large chunk of its network. Further delays could have a negative effect on the results of a survey like this, especially on those people who are undecided.

The opposition will have an increasingly difficult task to protect its ‘kill or stop the NBN’ campaign, as 58% of its own voters is at least not against the NBN, and given the right circumstances that percentage could even increase.

As we have mentioned before, the NBN has been a key election item in the last two federal elections, both of which were lost by the Coalition of the Liberal and the National Party.

Paul Budde

See also:

• Australia – National Broadband Network – Moving into 2012
• Australia – National Broadband Network – Market Forecasts 2015, 2020

The government committed itself to a programme of privatisations intended to raise €5 billion by the end of 2011, €15 billion by 2013 and €50 billion by 2015. This included the sale of its remaining stake in the telecoms incumbent OTE, a reduction in its stake in Public Power Corp, and the sale of a portion of its interest in Athens International Airport. These measures have since been amended, given that there was little chance of attracting buyers while the threat of Greek default and euro exit remained. The new target agreed by the IMF/EC/ECB is to raise €19 billion by 2015, all of which will go to repaying foreign debt rather than returning to the Greek treasury.

The government also committed itself to a tightening austerity programme (though a vote on the latest measures is still pending) aimed at reducing the country’s debt to 120.5% of GDP by 2020 – still far too high by EU standards, but an indication of progress nevertheless if it can be achieved. The debt sustainability report from the IMF/ECB/EC has warned of a 160% debt ratio by 2020 if Greece – as many suspect – fails to deliver the required structural reforms. Austerity measures include a further €3.3 billion in spending cuts for 2012.

One of the difficulties facing the government is that tax funds are dwindling as businesses falter: tax revenue from VAT fell by almost 19% in the first month of 2012 year-on-year (despite VAT on many products increasing from 13% to 23% in late 2011). Lower tax revenue is partly due to the thousands of businesses which have gone bankrupt recently. Overall tax receipts fell 7% year-on-year, while the economy, having contracted by 7% in 2011, is expected to contract by a further 4.5% in 2012.

Telcos have seen the direct effects of lower customer spend. OTE in early 2011 adopted measures to reduce operating costs, including the introduction of a 35-hour week, a 15% reduction of the monthly allowance paid to managers, the elimination of non-essential overtime work, and the loss of some 1,600 jobs. Yet further savings will be needed to achieve the €300 million cost-cutting target by 2015. In the first nine months of 2011 OTE reported an 8.7% drop in revenue year-on-year as well as a 12.7% drop in EBITDA. This was partly caused by the continuing loss of customers, including a 12.9% drop in the number of fixed-line subscribers in the year and a 10.2% loss in the number of mobile subscribers.

Although most people consider telecoms as an essential service, customers in Greece are clearly shy of spending more than is necessary. This is placing OTE and other telcos in a similar position to the government – chasing its tail. The dwindling pool of customers, and thus of revenue, makes it ever harder to invest in the upgraded networks which it needs to hold on to those customers in the first place.

The second bailout fund, if it stimulates economic growth a planned, may be the welcome boost which telcos need to see them through the next few quarters.

Key developments:

ATHENA submarine cable from Cyprus to Greece nears completion; regulator assesses work programme for 2011; economic crisis affecting telecoms revenue and investment; OTE signs three-year wage deal in bid to save cash; operator data to September 2011; market developments into early 2012.

Companies covered in these report include:

OTE, ForthNet, Wind Hellas, On Telecoms, Tellas.

Henry Lancaster,
Senior Analyst, Europe

For more information see the updated reports:
Greece – Mobile Market Insights, Overview and Statistics;
Greece – Key Statistics, Telecom Market and Regulatory Overviews;
Greece – Digital Media and Broadband Markets – Insights, Statistics and Forecasts.

It started with the music industry, followed by the publishing industry. The retail sector is learning its lessons the hard way but it is now beginning to understand the new environment. The entertainment industry is still trying to stop the tsunami by employing armies of lawyers, but it will soon also be engulfed by the changes. The banking sector is making a much smoother transition, while the demise of Kodak is another example of ‘missing the boat’.

One by one, all sectors of the industry are being confronted with the business transformation that the internet is bringing with it, and yet, incredibly, the ICT industry itself is still struggling with it (Sensis, Nokia, Microsoft, Motorola, Nortel, etc).

Progress in e-education is moving at an enormous pace and already some schools are limiting the number of printed text books – some are going totally e-book. With over a million children now with laptops it is only a matter of time before the education system switches over. The savings in books and other printed material alone will pay for this digital revolution. South Korean schools will be entirely e-book-based by 2015.

Changes in e-health are following the same path, with electronic patient records slowly being introduced and health insurance schemes starting to refund e-health services. This will be a user-driven development as it is more likely that the users will be able to adapt to e-health much faster than the healthcare system can deliver it.

This will clear the way for a whole new e-health industry, worth billions of dollars. One only has to look at some of the e-heath systems linked to the high-end private hospitals in the USA to see what is in store. They use their e-health facilities as a major marketing tool to attract customers, not just to the actual hospital, but to all of the other facilities around it. The add-on revenues are significant.

Those who are still talking about broadband as an end in itself do not understand the situation. Broadband is simply the tool that will further enable and advance the digital economy. So those who are looking at broadband in isolation are totally missing the point.

Included in this group is the Liberal opposition in Australia, and for that matter the Republican party in the USA. To them broadband is ‘it’ – they are completely missing the point of the digital economy.

On the other hand, as an example, the former chief information officer to the United States, Vivek Kundra, praises the Australian national broadband infrastructure investment for all the reasons mentioned above, clearly stating that the cost of that investment should be judged within the context of the digital economy.

FttH is not needed to get the digital economy started – that actually started a decade ago. One only has to look at Apple, Google, Facebook, Amazon, eBay to see what effect the digital economy is having on their valuations and compare it with what is happening to those who were slow to act upon that change. Those who are still lagging behind are going to find it increasingly difficult to catch up. There are now enough examples of struggling sectors that made the change too late that we can predict the impact this will have on these sectors.

In Australia the high dollar is having a negative effect on many business activities in traditional industries such mass manufacturing, retail, banking, airlines, etc. At the same time the unemployment rate remains low. This suggests that it is not so much an economic decline as a shift towards new jobs in new and different sectors, using new technologies and creating innovations and value-adds.

A digital infrastructure is essential to manage this transition. One only has to look at manufacturing – Germany, for instance, remains one of the leading global manufacturing countries, based on technological innovations that give it the edge over the countries whose manufacturing industries continue to operate in more or less traditional ways.

The digital infrastructure plays a key role in German innovation and manufacturing leadership.

Once there is more widespread understanding among business leaders, union leaders and politicians of the impact that these developments are having on the overall economy it becomes clear that we do need to make sure that we have the right conduit for the development of the digital economy. Those who don’t understand the impact of the digital economy – or who, for political reasons, don’t want to know about it – will argue that we can make do with second-rate infrastructure. It would be most regrettable if their lack of vision were to put a brake on the economic transformation that is already clearly taking place – this would result in Australia missing new economic opportunities for its future.

There are certainly many ways to skin the infrastructure cat, but unless the importance of the digital economy is made the central factor of the decision-making process (and not simply broadband) the right choices will not be made – decisions that will have to deliver the social and economic benefits that lie ahead.

Paul Budde

See also:

• Digital Media – The Dynamic Digital Economy
• Australia – Digital Economy – Trans-sector concept
• Australia – National Broadband Network – Digital Economy
• Australia – Digital Economy – E-Education and E-Government
• Australia – Digital Economy – E-Health – Overview, Stats and Analysis

Around the world we see that IPTV is driven by high-speed broadband deployment – Fttx rollouts in particular are generating a significant uptake of these services. It is envisaged that the NBN will play a key role in these developments in Australia.

In 2010 Telstra launched its new IPTV service and it expects that the video content service will constitute more than 90% of consumer traffic by 2013.

Growth is continuing at a slow pace, in all there are some 300,000 ITV subscribers, with Telstra having close to a 70% market share in 2012.

Several TV manufacturers, including LG, Panasonic, Samsung, Sharp, Sony and Toshiba, are also coming on board with their integrated TV models (smartTV) for IPTV services. LG and Telstra agreed to deliver seven TV channels to the LG NetCast-enabled TVs. BigPond Movies Online is also available on the LG TVs. The technology used to deliver the user experience is based on Google’s Widevine adaptive streaming technology, which delivers content of as high a quality as the line speed can provide.

Pay TV bundling is also proving a winner for Telstra, with revenue increasing by nearly 16%. However, the complexity of its relationship with Foxtel, plus its inflexibility around offering products in a customer-friendly and competitive way, makes these scenarios extremely cumbersome. In the end it looks as though Foxtel will lose this battle.

Optus launched its IPTV service in late 2011. It joined other telcos and ISPs who had all put their weight behind the fetchtv model. Its legal win in relation to its smartphone offering gave the service a great deal of free advertising and boosted its position in this market.

Furthermore, Google TV and Apple TV are expected to become major contenders in this space.

Other IPTV offerings include:

• TransACT provides over 50 digital channels via its TransTV service. The service is supplied on a subscription basis and includes a PVR STB;
• TPG provides its IPTV service free, with access to about 15 channels, but it is also poised to move over to the fetchtv model.
• Sony Bravia TV has internet video, offering access to SBS, ABC’s iView and Seven’s catch-up TV services.

FTA broadcasters are providing an increasing selection of their programs via their websites. Both public and private broadcasters compete and the ABC, with its iView platform, has enjoyed significant success in attracting viewers. After YouTube it is the most popular IPTV service In Australia.

For more information, see:

• Australia – Digital Media – IPTV – Major Players
• Australia – Digital Media – IPTV – Market Overview

In addition to upgrading networks, operators are busy investing huge sums on securing additional spectrum. Although AT&T’s failed bid for T-Mobile USA cost it some of its own spectrum allocation, the deal had at its heart the need to win T-Mobile’s spectrum assets. Similarly, Verizon’s recent $3.6 billion purchase of 122 AWS spectrum licences from SpectrumCo, a joint venture between Comcast Corporation, Time Warner Cable, and Bright House Networks was to secure assets which will be crucial for future growth.

That investment on this scale is being undertaken despite ongoing economic travails is testament to the truth that there is limited growth to be expected from mobile voice services revenue while the potential growth from mobile data is huge. The popularity of smartphones has set a trend whereby mobile data usage may increase 10-fold during the next four years. To cope with demand operators must deliver upgraded networks, as well as have sufficient spectrum.

Indeed spectrum is a major concern for the FCC as well: it recently warned of a 275MHz spectrum deficit by 2014 if no more allocations are forthcoming. To help forestall this, the FCC has introduced a number of key measures. Among them is its hope to eliminate some of the 3G/4G dead zones with its Mobility Fund auction scheduled for later in 2012: up to $300 million will be awarded to operators which commit to providing 3G or (better still) 4G mobile voice and data services in underserved areas. It will also free up 500MHz of spectrum by 2020 (this scheme forms part of the National Broadband Plan), while it recently proposed revising the licensing model for the 800MHz band from being site-based to geographically-based, in line with the 700MHz band. This should make it easier for operators to roll out mobile broadband services.

These issues are analysed at length in the updated USA – Mobile Market Insights, Statistics and Forecasts report.

Henry Lancaster,
Senior Analyst, North America

Key developments:

AT&T ends bid to buy T-Mobile; Verizon’s LTE network reaches two-thirds population coverage, FCC proposes 800MHz spectrum licence changes; AT&T’s LTE network reaches 28 markets; Verizon secures AWS spectrum from cablcos; FCC plans to deal with 3G dead zones with Mobility Fund auction; operator data to 2011; market developments into early 2012.

Companies covered in this report include:

AT&T Mobility; Verizon Wireless; Sprint Nextel; T-Mobile; Tracfone; MetroPCS Communications; Leap Wireless; Frontline; Alltel; US Cellular; Clearwire.

For more information on America’s telecoms market, see the following reports:
USA – Mobile Market Insights, Statistics and Forecasts;
USA – Digital Media – Overview, Analysis and Statistics;
USA – VoIP Market – Analysis, Statistics and Forecasts;

]]> http://www.buddeblog.com.au/frompaulsdesk/usa-lte-developments-supported-by-investment-and-spectrum-policies/feed/ 0 http://www.buddeblog.com.au/frompaulsdesk/usa-lte-developments-supported-by-investment-and-spectrum-policies/ http://feedproxy.google.com/~r/BuddeBlog/~3/EqzYBf_JEFY/ http://www.buddeblog.com.au/frompaulsdesk/vivedwireless-a-big-boost-for-optus-mobile/#comments Mon, 20 Feb 2012 01:23:24 +0000 Paul Budde, Managing Director, BuddeComm http://www.buddeblog.com.au/?p=61716 Continue reading →]]> The move by Optus to acquire vividwireless from the Seven Group (operating the Seven TV network) is certainly a most interesting development.

It is a very strategic move by Optus and will enable it to begin to recapture market momentum in what is for it the critical mobile broadband market. Over the last few years Telstra had taken the lead from Optus in this market and obviously Optus couldn’t let that go unchallenged.

Spectrum access is a key issue in the mobile broadband market and Optus was prepared to pay a premium ($230 million) to vividwireless to acquire this valuable asset. However, viewed in the context of the $5 billion that the mobile operators will invest in spectrum over the next few years, this is a relatively small sum.

This acquisition will allow the company to spearhead its 4G/LTE activities in the market. Vividwireless had previously also incorporated the Unwired assets and further spectrum was bought in 2008 – altogether that covered 98MHz of spectrum in the 2.3GHz band.

Over the years Unwired/vividwireless had either commenced or planned operations inAdelaide,Brisbane,Canberra,Melbourne,SydneyandPerth. The vividwireless network used a different (4G) technology from Unwired, but the spectrum available in all these cities will now allow Optus to build a new 4G network using LTE-TDD technology.

This new network will deliver wireless broadband to households and businesses in metropolitanAustralia, with typical download speeds ranging from 25Mb/s to 87Mb/s. It will be integrated with Optus’s 1800MHz 4G network, which will be launched inNewcastleand the Hunter region ofNew South Walesin April 2012.

This is also good financial news for the Seven Group. BuddeComm has always argued that vividwireless would not be able to succeed on its own in competition with the other mobile operators, and that it would be yet another of the telecoms failures the company has experienced. This time they did receive a premium price for the asset, but if one looks at all the Unwired/vividwireless investment made by the Seven Group it is questionable whether it has broken even on this.

Paul Budde

For more on vividwireless see also: Australia – Mobile Broadband – Major Operators