Thursday, July 9, 2009

Diverging incentives emerge in Australia's NBN

David Kennedy, Research Director at Ovum

AUSTRALIA: The Australian government announced in April 2009 that it was abandoning its tender for the construction of an FTTN network, and would instead pursue an FTTH access network to reach 90 percent of the market within eight years.

The accompanying discussion paper sought recommendations for regulatory change both in the short term and in the long term. After the publication of the submissions on 12 June, the expectation was that the government would digest the submissions and develop draft policy proposals.

In fact, the relevant Minister issued a press release last Friday 3 July, seeking industry input on several specific issues related to the NBN:

* The optimal access regime for the NBN, including, for example, the legislative obligations that should be required to ensure the NBN company operates on a wholesale-only, open-access basis; the process for identifying services to be offered; how the prices and non-price terms and conditions of those services should be set, and for how long; and the role of the Australian Competition and Consumer Commission.
* The appropriate equivalence obligation for the company and the services it offers, and how this would operate in practice.
* The nature of ownership restrictions applied to private-sector investors to protect the government’s equivalence objective for the wholesale-only network.
* Arrangements for the government to sell its stake in the network in the future.
* Any other rights and obligations to be conferred on the company.

These are all very good questions, but why are they being asked now, and in this manner?

Diverging incentives
When the industry submissions were released on 12 June, it became apparent that most industry operators, particularly Telstra’s competitors, were focused on the short-term structural separation of Telstra’s copper access network. In contrast, scant attention was paid to the regulatory requirements for an NBN. This is why the government has been forced to seek further input.

We believe that this reflects a gap between the industry and the government. While the government is committed to the long-term goal of building an FTTH access network in Australia, Telstra’s competitors have far more interest in the regulation of the existing copper access network than in an FTTH network that will take years to build.

So far, this is mere short-termism and therefore unsurprising. However, there are deeper forces at work that are setting the government and Telstra’s competitors more seriously at odds.

Telstra’s competitors are currently abandoning DSL resale and are generating good operating margins on their installed DSLAMs. The NBN threatens this arrangement because it will ultimately force them off regulated ULLS into the uncertainty of a wholesale fibre network, where wholesale pricing and their ability to differentiate may be less favourable.

We think these fears are well-founded, because the NBN will be far more viable if ULLS is actually cut off as FTTH is rolled out, avoiding revenue fragmentation and reducing the need for government subsidy of the NBN.

There is also a real prospect that the current de-averaged prices for ULLS access, with lower prices in the cities, will give way to uniform national wholesale pricing and push up access seekers’ costs in their key markets.

Transition management will be key
This problem underlines how tricky the transition from copper to NGN will be. In fact, the policy challenge can be summed up as a complex process of transition management.

The apparently minor incident of a press release points to the more substantial reality: that the government, Telstra’s competitors and Telstra itself do not have the same incentives in this process. As a result, the Minister cannot assume that he will have the automatic support of either side of the industry for the government’s NBN objectives.

130 EDGE network launches in 2008 pushes total to 443 globally: GSA

UK: The latest survey of GSM/EDGE network deployments by the Global mobile Suppliers Association (GSA) highlights the continuing globalization of GSM/EDGE.

The new EDGE Fact Sheet published by GSA confirms that 443 EDGE networks are now commercially launched in 181 countries, compared to 313 commercial networks in 147 countries reported by GSA one year ago.

Operators in all regions have made significant investments to enhance the capacity and coverage of existing networks, often extending EDGE capabilities to their full GSM coverage area. The commercial availability of EDGE-enabled services was expanded to an additional 34 countries/territories in the past year, and to an additional 68 countries/territories in the past 2 years.

This latest GSA survey identified 478 EDGE network operator commitments in 189 countries (compared to 363 commitments in 165 countries a year ago). The number of operators committing to EDGE network deployments has increased 66 percent over two years. EDGE became commercially available on almost twice the number of networks over the same period (there were 223 commercial EDGE networks in May 2007)

GSM/EDGE, a software enhancement to GPRS networks, is a mature global technology which is supported by a well developed ecosystem. There are a huge range and many thousands of EDGE-capable user devices in the market today, extending to all but the lowest cost segments.

Mobile broadband WCDMA-HSPA user devices usually also combine with quad band GSM/EDGE (850/900/1800/1900) capabilities. Over 83 percent of WCDMA-HSPA user devices, including USB modems, modules for PCs, Mobile Internet Devices, PC card modems, phones, routers, etc. also support EDGE, with new products arriving every month.

The first commercial EDGE network was launched in June 2003. GSA estimates that around 80 percent of GPRS operators have since committed to the EDGE enhancement, delivering significant data traffic and revenue growth.

A major driver for EDGE deployments is the capability provided to network operators to offer high speed Internet access to their customers. Around two-thirds of HSPA (High Speed Packet Access) network operators have also deployed EDGE for service continuity and the best user experience of mobile broadband services.

EDGE network capabilities are evolving as part of completed 3GPP Release 7 specifications. EDGE Evolution promises to deliver benefits including higher peak downlink and uplink speeds, and reduced latency for an improved user experience.

Wednesday, July 8, 2009

Over 100 million LTE mobile broadband subscribers by 2014

HAMPSHIRE, ENGLAND: The number of LTE next generation networks is set to grow significantly with the number of subscribers exceeding 100 million by 2014, according to a new report from Juniper Research.

The LTE report found that these market numbers will be buoyed by the embedding of broadband capabilities within consumer electronics devices such as MP3 players, Netbooks and digital cameras.

Market momentum
Juniper Research forecast that whilst subscribers will largely use handsets such as smart phones, and laptops, consumers will be motivated to connect devices in the home by LTE.

Report author Howard Wilcox commented: "There is intense activity in the LTE market right now, with in excess of 30 network operator commitments. Operators and vendors alike are moving rapidly to jump on the road to LTE, attracted by the connectivity-based opportunities that the technology offers. Sony, for example, announced that network connectivity is one of three top priority actions.”

Uncertainties ahead
However, the report determined that there are still several open issues that need addressing before the market takes off. One of these is the issue of device convergence: what will a smart phone look like, and be capable of, in three years' time?

Further report findings include:
* Whilst early LTE adopters will be enterprise subscribers, consumers will begin to take up LTE based services towards 2012/2013.
* There will be multiple millions of LTE subscribers as early as 2011.
* Embedded LTE chipsets will become the second most popular means of access behind SIM cards by 2014.

CDMA450 expansion raises demand for broader 3G device selection

COSTA MESA, USA: The CDMA Development Group (CDG) announced that increased demand for CDMA2000 3G telephony and mobile broadband services in the 450 MHz frequency band, also known as CDMA450, is placing an increased focus on new multi-mode and multi-band devices to further support both rural and urban communications as well as international roaming.

CDMA450 continues to expand rapidly around the world to meet the need for affordable telecommunication services in remote and rural markets, with 105 operators offering 3G services to more than 20 million people worldwide.

As a result, the addressable market for CDMA450 is increasing and the global solution is spanning the entire spectrum of 3G devices and services, including voice-centric applications, broadband Internet access, multimedia applications, location-based services and inter-standard roaming services.

To date, over 110 CDMA450 devices have been introduced to the market, including 87 CDMA2000 1X devices, 29 1xEV-DO (Rel. 0 or Rev. A) mobile broadband-enabled devices and 2 WorldMode devices.

The next wave includes CDMA450 EV-DO Rev. A fixed wireless terminals, data cards, modems and handsets; low-cost voice-centric CDMA2000 1X handsets; dual and tri-band capabilities for roaming onto networks using other frequencies such as 800, 1900 and 1900/2100 MHz; and multi-mode capabilities for inter-standard roaming onto GSM/GPRS, EDGE, WCDMA and HSPA networks.

"We see new opportunities throughout the world where CDMA450 can fulfill the need for affordable 3G telephony and mobile broadband services," said Perry LaForge, executive director of the CDG.

"Our focus now is to help bring a broader selection of devices with multi-mode and multi-band capabilities to market, allowing operators to leverage the propagation capabilities of CDMA450 in their rural and urban markets, while also enabling them to offer inter-standard and international roaming services."

CDMA450 is expanding its footprint around the world in underserved growth markets as well as in those with high mobile telephony and Internet penetration rates.

With its commercial launch this month, Mobilink will make Chile the seventh country in South America to offer CDMA450 services, while ANATEL in Brazil is currently seeking to allocate 450 MHz spectrum as part of its "digital inclusion" initiative for both urban and rural areas.

In Russia, Sky Link operates the largest 3G network in the federation, delivering 82 percent of all 3G traffic and growing its subscriber base by 130 percent year-on-year. 21 operators in 17 European countries are offering CDMA450 primarily to deliver 3G mobile broadband services using EV-DO Rev. A, which is the intent of the recent Serbian 450 MHz license-purchasers Telekom Srbija and Media Works.

CDMA450 networks are operating in another 23 countries across Africa and the Middle East and in 20 Asian countries, many of which have gone commercial over the past two years and are trialing EV-DO Rev. A.

Cloud computing will radically transform mobile applications

NEW YORK, USA: Apple’s iPhone sparked an explosion in consumer awareness of mobile applications. New applications are proliferating and “app stores” are springing up. But most of today’s applications need handsets with robust computing power, limiting their potential market.

However a new architecture based on software running in the cloud will drastically change the way mobile applications are developed, acquired, and used. According to a new study from ABI Research, this will be a profoundly disruptive development that could eclipse the current mobile application model by 2014, delivering revenue of nearly $20 billion annually by the end of that year.

“Mobile application developers today face the challenge of multiple mobile operating systems,” says senior analyst Mark Beccue. “Either they must write for just one OS, or create many versions of the same application. More sophisticated apps require significant processing power and memory in the handset.

"Using Web development, applications can run on servers instead of locally, so handset requirements can be greatly reduced and developers can create just one version of an application. This trend is in its infancy today, but ABI Research believes that eventually it will become the prevailing model for mobile applications.”

This approach is not without challenges, chief among which is intermittent network availability. A cloud-based application stops working if you lose your connection. However new programming languages such as HTML 5 will enable data caching on the handset, allowing work to continue until cellular signal is restored.

“Cloud computing will bring unprecedented sophistication to mobile applications,” Beccue notes. “To mention just a few examples, business users will benefit from collaboration and data sharing apps. Personal users will gain from remote access apps allowing them to monitor home security systems, PCs or DVRs, and from social networking mashups that let them share photos and video or incorporate their phone address books and calendars.”

Tuesday, July 7, 2009

Consumer LBS market will more than double in 2009

MUMBAI, INDIA: Worldwide consumer location-based services (LBS) subscribers and revenue are on pace to double in 2009, according to Gartner, Inc. Despite an expected 4 per cent decrease in mobile device sales, LBS subscribers are forecast to grow from 41 million in 2008 to 95.7 million in 2009 while revenue is anticipated to increase from $998.3 million in 2008 to $2.2 billion in 2009.

Gartner defines LBS as services that use information about the location of mobile devices, derived from cellular networks, Wi-Fi access points or via satellite links to receivers in (or connected to) the handsets themselves.

Examples are services that enable friends to find each other, parents to locate their children, mapping and navigation. Location-based services may be offered by mobile network carriers or other providers. They are also known as location-aware services.

“The LBS industry has matured rapidly in recent months through a mixture of consolidation, improved price/performance of the enabling technologies and compelling location applications,” said Annette Zimmermann, senior research analyst at Gartner. “Factors driving the increase in the next year or so include higher availability of GPS-enabled phones, reduced prices and appearance of application stores.”

Consumer Location-Based Services, Revenue Forecast by Region, 2008-2009 (Millions of Dollars)Source: Gartner (June 2009)

Gartner predicts that advertising-based or ‘free’ LBS (disregarding data charges by mobile carriers) will gain more traction as users adopt it as a way to limit costs.

Mobile carriers that stick to the current predominant business model of charging users $5 to $10 per month plus data plans will experience high churn rates as users will look for free alternatives. In North America and Western Europe, the share of users taking advantage of free services is approximately 10-15 per cent today and is expected to grow to 40-50 per cent in 2013.

Gartner expects more compelling and useful applications and services to come to market in the next 12 to 18 months such as digital coupons to be redeemed in a nearby shop and points-of-interest search services. Smaller niche players will survive in local markets only when they have an established user base and unique offering that larger players cannot compete with. Other players will be acquisition targets for larger vendors.

Gartner analysts said LBS market dynamics vary by region. For example, North America is the largest market due to mobile carriers' strong efforts in navigation services and family-safety solutions. In Western Europe, navigation is currently the most used application, followed by local search and "friend finder." There is still no significant uptake of safety applications.

Japan will continue to see steady growth as GPS has been required by law in mobile phones since 2007. In Asia/Pacific, during the summer Olympics, location services were for the first time offered in China which is now an advertising-based solution and free to the user.

“The competitive landscape will change and most mobile carriers need to alter their approach toward offering LBS and dealing with developers,” concluded Ms Zimmermann. “Subscriber growth will hinge on "free" - disregarding data charges - services. Mobile operators’ initiatives to open up the application programming interface (API) to third-party developers will help them compete against other players in the market and will also be beneficial to the different parties involved, down to the end user.”

SatNav rolls out Moov 300 multifunction SatGuide PND

NEW DELHI, INDIA: SatNav Technologies, pioneers in GPS Navigation in India since 2005, today announced the launch of the all new SatGuide PND Moov 300.

The new personal navigation device (PND) will provide hassle free road navigation with cutting edge features like voice prompted directions and a 4.3-inch touch-screen for better user interface to its consumers.

Loaded with the latest SatGuide maps, the new attributes of the device like GPS navigator, calculator and digital entertainment features -- audio and video player make it a multi-functionality gadget ideal to carry while traveling.

The comprehensive SatGuide Maps, which Moov 300 buyers will navigate from, include detailed road maps of 200+ cities and more than 15 lakh destinations (points of interest) for customers to choose from. The maps are constantly enhanced and on the anvil are plans to grow this to 500 cities, 30 lakh destinations, and ultimately the 6 lakh villages across the country.

“SatGuide PND Moov 300 is an indispensable travel tool”, said Amit Prasad, Founder and Chief Executive Officer, SatNav Technologies. “Our philosophy has always been that Indian consumers want cheap AND best, this product takes it a step further in that direction empowering consumers with a fully loaded device at a very reasonable price,” he added.

Moov300 offers the cost conscious Indian consumer, benefits of a widescreen personal navigation device without compromising on the quality and features. Installed with cutting edge technology, this sleek device makes navigation to a destination both easy and entertaining by the use of a convenient user interface, digital entertainment features and turn-by-turn voice prompted directions.

The device is priced at Rs. 16,990 online at www.satguide.in making it an eye-catcher for anyone who is looking at purchasing a stylish yet affordable PND. The product is available across all major Large Format Retailers (LFRs) across the country.

In fact, some stores like Ezone, Croma, Reliance Digital, HCL Digilife, XCite etc will be offering it at even more attractive prices. The device can be easily installed in vehicles and is accompanied with a USB cable and an in-car charger.

Moov 300 comes with the latest WinCE 5.0 version and sports a 64 MB Flash with 512 MB RAM. When compared with the other PNDs in the market, Moov 300 has faster GPS fix times with SiRFInstantFixII™ Technology and 20 channel receivers.