Smokers who had to endure long flights without their fix were known to get so stressed that many disconnected smoke alarm systems in airplane toilets in the order to sneak a quick ‘drag’. Now it’s the ‘unconnected’ who are searching out airlines offering onboard wi-fi and cell coverage – at whatever the cost! There’s even those total desperadoes that ignore all the warnings and flick out of airplane mode under the blankets when other passengers are dozing. They want to join that elite band of ‘mile-high connecters’, but they dare not tell friends and relatives about their exploits.

The need to be connected is so strong that some completely disregard warnings about bill shock whilst roaming and surreptitiously turn on data roaming just to see what the weather is like back home, get the latest app or check their emails – even downloading an episode of their favorite TV series they fear missing. They then complain bitterly when they get the bill for supporting their habit.

This is the sickness of the ‘tensies’ decade. Psychiatrists will make fortunes from it, clinics will be set up to help rehabilitate habituals, ‘CA’ will attract bigger audiences than ‘AA’ and the few sane ones left will carry the torch leading the afflicted away from the light (or signal).

Does all this sound a little far-fetched to you? Having recently moved to an area that has intermittent cell coverage, intermittent internet access and intermittent satellite TV I can assure you that it is possible, no, likely to bring on a rather nasty case of ‘connectivitis’ accompanied by bouts of depression and rage that can, at times, lead to heavy drinking. Trust me.

Still don’t believe me? OK, turn off your phone, disconnect your wi-fi, pull the plug on the TV, the DVD player, the set-top box, toss the iPod, iPad, PC, even the satellite weather station and don’t forget to hide the car keys so you don’t sneak out to the garage for some secret connecting.

Now see how long you last!

When I first wrote about this, and the fact that the iPad could eventually do away with magazines and newspapers, I was howled down, mainly because of the cost factor. However, in educational terms, the cost savings from using tablet devices could be astronomical, and in more areas than one could imagine.

For many, September marks the beginning of the school year and progress into a higher class. Depending on the level students are reaching and where they go to school, they will almost certainly be allocated a number of textbooks, reference manuals and novels that have to be carted home and, quite often, to and from school. These things can weigh your children down, and as one having a daughter that suffered from scoliosis (spinal curvature), I can assure you that young spines are easily damaged in the process.

Think for one minute about the cost of printing and distributing those millions of text books and the fact that they are out of date almost the moment they come off the presses. No wonder our kids rely on the internet to get the latest information on any subject. Sure, students have been using personal computers and the internet for years and some advanced schools have even demanded that each student acquires a notebook as an integral part of the schooling process, but even carting these to school is a pain.

The agility and flexibility of an iPad-like device, and there will many more tablets appearing in the coming months now that Apple has established a new niche market, make them an ideal tool. The ability to download current texts, access the internet, receive and file homework, track grades, communicate with email, etc., on one light and easy to use device is tantalizing, to say the least.

The educational software market is set to boom and has the potential to surpass games in revenue terms. It is a well established fact that young children grasp early mathematical and language skills much faster when they are part of interactive experience.

That’s all well and good, but how can CSPs and telecommunications market, in general, contribute to and benefit from this potential revolution. Well, apart from providing the obvious internet access and communications systems and backup, enterprising CSPs may offer to subsidize the software, wi-fi infrastructure at the schools or even the devices themselves. After all, it is common for VSPs to subsidize mobile handsets in many markets and they send marketing amounts on marketing when this type of activity actually targets a key market demographic very early.

Perhaps the greatest potential lies in the fact thats this whole educational infrastructure is ideally suited to Cloud Services. Everything from the hosting of applications, distribution, security, filtering and device controls are value-added services that the new age CSPs are looking at addressing. Everybody will love any enterprise that can save them money, save the environment (think of all those trees saved), help kids to stay healthy and improve education methods and standards.

You will be forgiven for perhaps not knowing that Australia recently held a national election and that the result, almost two weeks later, is still unknown. The election resulted in a ‘hung’ parliament with neither the ruling Labor Party, headed by Australia’s first female Prime Minister and the Liberal/National Party Coalition, headed up by a brash cycling and fitness fanatic most often photographed in Speedo swimming attire, popularly known as ‘budgie smugglers’ down under. I digress (and no pun intended).

In a nutshell, the Labor Party proposed, legislated and began the rollout of a very ambitious National Broadband Network that would reach 93 per cent of the population and cost a whopping AU$43 billion (US$38.6 billion). In the process, leading quad player and ex-PTT, Telstra would be structurally separated with the NBN Company buying a fair swag of its existing fixed line network. The opposition party, sensing some electoral concern over the cost of the NBN boldly stated that if it came to power it would dump the whole thing!

As the election drew close the Opposition realized that this may not have been a good idea so it came out with its own plan to rollout relatively high-speed internet access to the masses via fixed line, mobile and satellite, using mainly existing infrastructure – at a much lower cost of around AU$6.35 billion and with much lower speeds.

The electorate, probably not too savvy about the speed differences for their internet access, if they even knew what it was, seemed to like the idea of government spending less money and that may have won the Opposition a lot of new votes. But the story doesn’t end there.

The fate of both parties lies in the hands of four successful Independent candidates, three of which are from rural areas that constantly bemoan being under-serviced by telecommunications. One of their main decision factors will certainly be to favor the NBN plan they think best suits their electorates and they have asked both sides to substantiate and support their arguments in this area. Early indications are that they favor the Labor Government plan. But wait, there’s more!

Just to add some spice to the mix a newly formed grouping of smaller CSPs threw fuel on the fire by proposing a new broadband plan that appears more aligned with the Coalition’s policy than Labor’s national broadband network.

The Sydney Morning Herald newspaper reported that The Alliance for Affordable Broadband – comprising telcos including Allegro Networks, PIPE Networks, BigAir, Vocus Communications, AAPT, Polyfone and EFTEL – proposes government-subsidized fibre backhaul but recommends connecting the country with a fourth-generation (4G) national wireless broadband network. Whereas Labor’s government-funded plan will connect 93 per cent of homes with fibre-optic cables, the alternative plan, similar to the Coalition’s, will connect homes via a new wireless broadband network. The 4G network would connect 98 per cent of Australians and offer speeds of up to 100Mbps.

Yikes, that was a blow across the bow! Whatever the independents decide, after all that, will determine who wins government. This is one case where ‘the shoe is, well and truly, on the other foot.’ I’m hoping whoever does win, and governments elsewhere, will have a new found respect for our industry.

Yes, we all know those old arguments about national security and spectrum management, but when governments start telling CSPs who they can and can’t buy equipment from, how they should manage their own networks and who they can have as customers then the whole thing starts to go a little haywire.

It seems utterly absurd that in this day and age countries, and I’ll name India and the USA as examples, would dare instruct private business, publicly, not to buy equipment from Chinese vendors because they ‘think’ there ‘may be’ links with the Chinese military and could be a risk to security. Oh, really? Give me one telecoms manufacturer in the world that does not have ‘links’ with security and military organizations in their own country. Isn’t it the case that much of our advanced telecoms technology came out of developments for military purposes. Why pick on the Chinese vendors, why not review all the rest with potentially dubious links from countries that we don’t like, are ultra competitive, have low cost structures that give them market advantage or simply don’t play the same politics. This is the stuff that started wars in years gone by.

The duplicity of a government that bans the purchase of Chinese network equipment because it may contain code that compromises national security then threatens to ban BlackBerry usage because its technology is so secure the very same government cannot compromise the privacy and security of its own citizens, defies logic.

It is almost as difficult to understand the current debate around net neutrality in the USA. Surely no-one wants to see restrictions placed on internet access by regulators or governments but extending this to things like traffic-shaping by fixed and mobile broadband operators is unfair. CSPs have paid big money for spectrum, network rollout, BSS and OSS support and they employ hundreds of thousands of people to boot. This is their business and if they choose to throttle abusers on their networks or provide a priority service or higher bandwidth to people that want to pay for it, that is their business. The beauty of a free market system is that if people don’t like it they can go somewhere else. That is the basic premise of the capitalist system.

Perhaps governments and regulators should concentrate their efforts in ensuring that anti-competitive and collusive activities are eliminated so that competition flourishes. That will, in itself, guarantee some level of net neutrality. Of course, if customers don’t like that they can always set up their own network and direct link into the internet.

1 – meddling

Chief financial officer John Stanhope told an analyst meeting in Sydney recently that bad debts increased 44 percent in the year ended 30 June 2010 to some AU$364 million. This is a little surprising because the Australian economy, and its businesses, largely escaped the economic recession the rest of the world endured.

In an incredibly stark admission Stanhope described as ‘self-inflicted bad debt’ – debts that Telstra believed it either could have prevented or could prevent in the future by simplifying internet and phone plans and making them more easily understood by customers.

“We’re pretty hard on ourselves,” Stanhope said. “What happens is that a customer might be described a plan, but when they get their first bill it’s hard to understand or doesn’t match the plan they thought they were going to get as described by someone at the front of house. Then a dispute occurs with the bill.”

“Part of our simplification strategy is to make sure that customers understand the plan they have and how it will look on their bill.”

Bloggers came alive after the news was released. One wrote, “And how many deception-induced bills should have been challenged and weren’t, instead becoming part of Telstra’s profit?” Another wrote, “All the enticing sales patter of what a great deal you have made finally makes sense once the first bill arrives. It is invariably way north of what you thought it would be.” “It’s about obfuscation – remove the detail from the bill so the customer doesn’t know what they are being charged for and hopefully, for Telstra, won’t seek redress. And how many deception-induced bills should have been challenged and weren’t, instead becoming part of Telstra’s profit?”

Also quick to ‘put the boot in’ were newspapers that took the opportunity, again, to highlight multiple ‘bill shock’ cases they had uncovered, especially around international roaming. I have lost count how many times I have reported ‘bill shock’ stories with warnings that they are the worst press any CSP can get, but still they come.

The Australian Telecoms Industry Ombudsman was unable to reveal how many complaints have been received regarding international roaming. In adjudicating in cases of financial ‘over-commitment,’ it says an important factor is whether a telco provider had issued any warning about a debt and whether that had been effectively expressed to a customer. It also says it looks at what steps the customer may have taken to limit the debt once he or she has been advised of it.

Rosemary Sinclair, managing director of the Australian Telecommunications Users Group, stated unequivocally that, “unhappily, we’re at the point where regulators and governments now have to take direct action.” Isn’t that always the case?

To be fair the problem does not just lie with Telstra. The Australian market for many years has been inflicted with countless and complex pricing plans, particularly from mobile operators. It is almost a national pastime comparing plans to see which is best suited only to find, after the first bill usually, that unknown extras pop up. Try as I might to understand the logic of ‘capped’ plans where you got lots of extra minutes or kilobytes of data but actually pay more per unit than ‘normal’ plans. If I’m confused as a ‘billing guy’, how does the average customer cope?

It is fascinating to see the CFO of a tier one CSP to talk about a ‘simplification strategy to make sure that customers understand the plan they have’. Blimey (Australian vernacular for ‘Crikey’), why not just make the plans simple?

For those operators rueing the day they offered their remarkably simple ‘all-you-can-eat-plans’, at least their customers understand them! If you take the Telstra example then they may have saved themselves US$80 million, not to mention the savings from less calls to customer support.

After negotiating the TrueMove website, that changes regularly from Thai to English, depending which page you are viewing, I came across the following:
“Voice Mail and Call Forwarding services are active even when you roam abroad. Charges for received calls and calls to Thailand may cause a heart attack. To avoid costly charge, you should deactivate the service on your mobile phone or call TrueMove Care.”

That really got me interested so I called TrueMove customer care to find out why using the voicemail service was a risk to my health. A very courteous and English-speaking CSR explained not once, but three times, that if I activate voicemail, whilst roaming, all third party incoming calls to my voicemail will be charged to my account at international roaming rates and that when I call to listen to my voicemail I will also be charged the roaming rates relevant to the country I am calling from.

Wow, no wonder I am likely to suffer from a heart attack! Needless to say, I’m also not in a rush to activate voicemail either!

There is no doubt that the acquisition underlines Intel’s bet on “hardware-enhanced security” and demonstrates that that security is a necessary component as the tech company’s reach expands to handle billions of new Internet-ready devices, such as mobile phones and computers, TVs, cars, medical devices and ATM machines. The chip-maker itself said the deal would help it make security a core component of online computing, by building McAfee’s security features into its chips for mobile phones and other devices.

Intel senior vice president, Renée James said: “Hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow. This acquisition is consistent with our software and services strategy to deliver an outstanding computing experience in fast-growing business areas, especially around the move to wireless mobility.”

Interesting that ZDNet read into this that, “Cloud Security Becomes Key Priority” for Intel. The last time I raised the issue of security for cloud services I was chastised by my colleagues for perpetuating the security myth surrounding cloud services. Whether it is a myth or not, almost every survey of enterprise users has security as one of, if not, the major concern.

It doesn’t help when we keep getting security patches from our OS suppliers every time somebody finds a loophole to exploit. Even if cloud services are ‘watertight’ there is no guarantee that our connection to them through dodgy PC operating systems and insecure wireless links will be.

Maybe with ‘Intel Inside’, future devices will be able to overcome these security concerns, at least until a wayward hacker finds a way to beat the system. We will also have to wait for regulatory clearance because the union may be deemed as potentially anti-competitive. Anyway, Intel has 7.68 billion reasons to think this is the solution we have all been waiting for. Time will tell.

It’s like world’s colliding. The traditional payment handlers such as banks and credit card issuers have the credit and distribution channels sown up as well as the all important merchants, and it has taken them years to get to that position. The transport authorities were quick to jump on the benefits of NFC and high throughput of passenger numbers, particularly for city transport systems but they have their own cards and their own top-up methods, usually via ATM-like machines.

The idea of putting NFC functionality in a mobile handset adds many benefits such as convenience, especially if multiple ‘cards’ can be stored on one device and the security of the card issuer being able to disable a stolen or lost device simply by sending it a message via the mobile network.

The take-up issue is not one of technology or customer acceptance, it’s all about trust and who gets a cut of the action or a share of the spoils. The credit card companies and issuing banks have a cosy revenue arrangement which they simply do not want to share. The CSPs want to get some if this action or charge ‘rent’ on their SIM and provide the necessary security. The transport companies have already made the investment on their own closed systems and don’t like the idea of sharing their meagre margins with anyone.

Add to this the fact that banks have become very wary of CSPs worldwide firstly because of the success of their pre-paid offerings and secondly their move into traditional banking areas by offering mobile banking and mobile payments, particularly in markets that banks have not been willing or able to service. The final nail in the joint NFC coffin was the realization that if all the parties were to work together successfully they would need another party, a ‘Trusted Service  Manager’, to act as the arbitrator for all the others. Yet another cost the system simply could not afford.

The result is that the parties appear to have parted ways and are doing their own thing. We are seeing the card giants like Visa and MasterCard running trials with handset makers and we are seeing CSPs offering card and payment services via their own handset and SIM combinations. The latest technology even removes the need for a special NFC handset by adding stickers, SIM overlays, and other brilliant technologies to the handset.

The recent news that Verizon and AT&T are planning a joint venture to break Americans’ love affair with plastic and sideline Visa and MasterCard is a clear sign that the gloves are off. According to insiders, T-Mobile USA will also join the crowd, working with Discover Financial Services and Barclays. The first tests are planned for later this year. Customers will be able to pay by waving their smartphones at special terminals, and the payments will come from their bank accounts or carrier bills. The phones will incorporate NFC contactless payments technology.

MasterCard and Visa have also been investing in their own mobile solutions, Visa working with DeviceFidelity on a technology to turn current handsets into payment devices handling multiple accounts. Visa says it is in talks with numerous CSPs round the world. MasterCard has worked with Citigroup to launch MasterCard PayPass stickers that can be stuck to the backs of cellphones to make contactless payments at about 230,000 US stores.

Perhaps the biggest disruptor to the mobile industry in the last five years may also have a say in the NFC revolution. Not long ago, Apple applied for patents around NFC technologies built into the iPhone and has just announced the appointment of NFC expert Benjamin Vigier to its ranks.

Is this just a case of deja-vu or could Apple really do it again? Whilst all the traditional players bicker, Apple could it sneak up from behind, again, and teach them how it’s done?

Aggressive and cash-rich CSPs are looking more and more at entering other markets, whether as a new player or by acquisition. Nothing new there, but the results for early movers have been mixed and what may work well in the home market may not always translate into the foreign one, particularly management style and accounting policy.

International expansion is not for the faint-hearted either. It usually involves some sort of funding component from third parties, extensive due diligence, foreign ownership rules, national security and legal compliance, and that’s before the deal is done.  The real battle begins after the takeover during the settling in period and may involve a number of third parties contracted to help in the ‘change management’ program.

Then, of course, is the politics, both internal and external. The former is always a real nightmare which often results in the loss of many good people who are targeted by others fearful of their abilities, and the latter by customers that may be reluctant to support any foreign owned regime.

For investors this is all pretty much irrelevant and when quarterly results are published they only want to see improved revenues and margins, anything less is just not good enough. This week saw the release of Bharti Airtel’s first results since the completion of its foray into the African market. Early days yet but despite adding 3 million subscribers in its home market of India during June, stiff competition left it with a 32 per cent drop in net profit. However, the future looks bright not only from the African investments but that ARPU in the home market only fell 2 per cent, arresting an alarming trend over the last year.

Nevertheless, the real worry for the big players such as SingTel, Bharti, Vodafone, Telstra, etc. comes from a source totally outside their control. I refer to foreign currency variations and their subsequent gain or loss in any one accounting period. So often we see the international properties performing brilliantly in their home market with substantial gains only to be reported poorly back at head office in a country a experiencing a strong currency period. Most of the companies listed above know how agonizing this can be. Try as they might to balance their international portfolio they can never predict the effect of currency movements in any period and the effect it has on their bottom line reporting and subsequent share value.

Bharti lost US$40 million to currency moves in the last quarter alone. SingTel said earnings before interest, tax, depreciation and amortization (EBITDA) in Singapore over the full year would decline while those in Australia would rise, although they could be affected by currency fluctuations. When you factor in the roll up effect from SingTel’s inversment in Bharti, it starts to get very complex.

Of course, currency movements vary from country to country and region to region but variances of tens of millions could be very handy for limiting any cost cutting exercise and the loss of jobs that it usually includes. Some would argue that gains and losses usually balance out over a gven accounting year, but this is not always the case. Anyway, try telling that to a fickle share market that ony likes hearing good news every reporting period!

Freer competition in the market does NOT mean less regulation. Apart from forcing the old monopolies to open up their networks and set ‘fair’ wholesale pricing to competitors, the regulators (and the governments behind them) keep sticking their noses in where they are not necessarily wanted or needed. The result is an industry that is so over-regulated it makes a farce of the terms ‘free market’ and ‘open competition,’ and the excuses for regulation are becoming more and more absurd.

National security has become the main driver for regulation of late. The horrific events of 9/11 and the subsequent ‘terrorist paranoia’ that set in allowed governments to push through far-reaching legislation that effected dramatic changes not only on national security coverage but also setting back civil liberties that took decades to achieve.

Apart from air travel the next most effected sector is telecommunications in all its forms. Governments now have the legal right to eavesdrop any voice conversation, read any electronic data and intercept any form of instant messaging. Privacy, at the cost of protection, is no longer the right of any citizen. Everything we do electronically, it seems, is being tracked.

And it’s not just governments taking advantage. It is rumored that third parties such as Google are amassing data about all our online habits, ostensibly for the purpose of making our lives easier when we go looking for something on the net. What is really happening is that same data is being used extensively for the purposes of profiling us into specific socio-economic groups and selling this information to advertisers wanting to target us.

The recent and ongoing BlackBerry ban threats by some regulators are examples of worst case scenarios of privacy vs protection. Is it really about national security or an attempt to control what citizens have access to?

So, who is all this regulation really for and who does it actually protect? Regardless all the arguments we hear about net neutrality, every other form of telecommunications is anything but neutral or private. Perhaps the worst effect of all this regulation is the fact that much of the cost, particularly enforcement, falls squarely in the hands of the CSPs.

That may have been OK when PTT monopolies were controlled and funded by governments but these days CSPs are commercial enterprises facing the same challenges as any other business. Increasing sales, cutting costs and maintaining profits are their priorities. It may not be long before they are forced to challenge the regulators and say, ‘enough is enough’! If you want us to do your work for you then you cover the cost.

For the rest of us it’s a matter of privacy vs protection and what we feel is most important. At the moment, however, that is not a choice we can make.