The Pain Truth
NBN – At last some vision and opportunity for leadership
It’s hard not to get excited and slightly awed by the prospect of a nationwide communications infrastructure that delivers real broadband for everyone.
Before opening the window to the seemingly limitless opportunities that such a network will bring Australia, I’d like to dispel some of the myths that keep cropping up and confusing the general public – although the last election gratifyingly has seen that they may be smarter than we think.
Myth No 1 – Fibre is not a long term investment and will be superceded soon.
While the technology that connects at the end of the fibre will change, just like our PCs, the fibre we rollout will have a lifetime of at least 50 years. As we consider the cost of rolling out a nationwide fibre network – consider this – over 90% of that cost is the deployment of the fibre. It doesn’t take a genius to understand that fibre rollout is a long-term investment.
Myth No 2 – Wireless can do the job just as well as fibre
Does anyone saying that actually do the maths? Which part of 100Mbps guaranteed per household in Australia fits into a shared wireless access network with limited spectrum? This is unless you have a base station per customer – that is connected by fibre, assuming each base station can do 100Mpbs. Hmmm.
What did you say – we won’t need 100Mbps? Tell that to all those on dialup today – I too remember when 56kbps was market leading – what, less than 10 years ago? Besides most of us won’t be getting fibre access for a few years yet, unless you live in Armidale or Port Macquarie. By then 1 Gbps will be the competitive default for medium businesses.
Myth No 3 – No one will invest in the NBN Co after the initial Government investment.
Ok, now we have the government largely funding, to the tune of $26 Bn, the crucial majority of deployment of a 50 year lifetime national fibre network. This will occur during the first 8 years or so. Thereafter private investors will be invited to buy in and fund the rest ($10-17Bn).
I predict that in 8 years anyone who isn’t seriously moving to using fibre from a small business point of view will be seriously disadvantaged. In fact it will be a world-wide no-brainer – just like mobile become after the initial investment in the ’90. With all the “heavy lifting” already done, investment to fund continued growth will be needed and as close to a sure bet as there is in business. I predict the NBN Co, or the privately owned version of it will be making real money 10 years from now.
The opportunities NBN promises Australia
For the Telecommunications Industry – Building an equal access broadband network will encourage and create lots more competition for retail telecoms services. Frankly, it’s also a get out of jail free card for Telstra in dealing with their problem of growing copper network obsolescence, ongoing cost of maintenance of that network and a corresponding shrinking revenue base. An opportunity, I would argue would be attractive to all copper-based incumbents. It’s great micro-economic reform and even offers a modest return in the long term
For the greater economy – the NBN really about transforming the Australian economy. It’s the next generation distribution network that will underpin serious productivity improvements and new innovative industries. Think of the great distribution networks of the past – for water, gas, electricity, transport, telephony. Each was associated with far wider consequential economic change – whether in terms of where people live, where food is grown and stored, to how we wash our clothes, where we work – and how we communicate.
To have real effect these distribution networks needed to be widespread and available to a majority of people. It may not be a coincidence that all these major distribution networks started as public investments. That in return created major consequential benefits through innovation that transformed economies and created wealth for countries with the foresight to take the lead.
The UN, on 19th September, 2010 has challenged global leaders to ensure that half the world’s people have access to broadband by 2015. They see access to broadband now akin to a basic civil right. No wonder they worked it out in rural Australia.
Numerous studies for example by the European Commission, Brazil, China, Thailand and most recently the OECD point to the significant impact that broadband has on labour productivity.
Paul Budde in his contribution to the UN Broadband Commission, extols a “Trans-sectoral Approach” to exploit the underlying value of a ubiquitous broadband network to transform society for the better. I agree with him – except for that word, trans-sectoral. It still sounds too telecoms oriented – it’s actually fundamental economic reform.
From an Australian point of view, our foresight in deploying a nationwide broadband network gives us a unique opportunity to get our act together and transform ahead of the pack , creating new industries.
A fledgling example of how we are already galvanising our intellect around the NBN opportunity is the Institute for a Broadband-Enabled Society (IBES). IBES had their Inaugral Annual Symposium on 21st September where they showed the fruits of their first year of activities: 40 projects involving 144 researchers and wider participation of universities, government and industry players. A most impressive beginning and an event that bristled with excitement and anticipation of something greater to come.
I, for one, applaud the broadband vision and would welcome debate on how we can get the most out of the NBN – rather than being diverted by myths.
Frank Zeichner 16 October, 2010
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iPad – Opportunity and Challenge to the Australian Mobile industry
iPad, scheduled for Australian release in late April, continues to attract plenty of controversy and mis-statements.
Many of the criticisms iPad are for what commentators think it isn’t, or can’t do, rather than what it can do. Few have actually touched, much less used an iPad.
Long-time Apple users know the initial release is just the first taste, as Apple will invest considerable R&D to build a market segment through product innovation and evolution.
Apple plans to take a good percentage of sales from Netbooks. Apple’s real goal is to redefine the market niche.
Why an iPad? – The Apple View: It’s the third niche
Many observers missed Apple’s intentions, and didn’t listen carefully to what Steve Jobs actually said in his Keynote introduction on 27th January 2010:
“The question has arisen lately, is there room for a third category of device in the middle, something between a laptop and a smartphone? And of course we have pondered this question for years as well. The bar is pretty high.
“In order to really create a new category of devices, those devices … are going to have to be FAR better at doing some really important things … better than the laptop, better than the smartphone …otherwise it has no reason for being.
(He offers examples including browsing, email, sharing photos, video, music, games and e-books).
“Now, some people have thought that that’s a Netbook. The problem is, Netbooks aren’t better at anything … they are just cheaper; they are just cheap laptops, and we don’t think that they are a third category of device.”
This selected quote contextualises the goal of redefining a new category, by doing things differently and better. People are generally reluctant to accept change until they SEE why it is better. And so it will be with iPad because, its true, netbooks do offer a compromised experience, and nothing new, and alternative “slates” suffer a swag of limitations that have condemned all to market failure to date.
iPad as a better Media Access Device
So iPad isn’t taking any market head-on. It is aiming to redefine how we communicate, access, share and present media.
Rather than a “computer”, iPad offers a media access device, enabling quick, easy access to movies, e-books, internet, and social communications in all their electronic forms. He was very clear about iPad’s role as an electronic reader:
“Amazon has done a great job of pioneering this functionality with their Kindle, and we are going to stand on their shoulders and go a bit further…”
Apple is offering the capable iWork “office suite”; Pages, Keynote and Numbers as practical and useful document creation tools for iPad, with capability to import and export to Microsoft Office. This shows this is no toy reader. It is ready for business and targeted to a new market niche.
Jobs was also clear on what was required to adapt this elegant office suite to iPad:
“…could we come up with an entirely new user interface for these apps? It’s very different than running on a personal computer.
“What they came up with is really magnificent.”
Soft, and special-entry, keyboards and smart gestures result in media/document creation that can rival current tools in productivity, creativity, and speed, but for niche needs.
iPad as a Business Tool
Looking at this device’s introduction, my “wow” instincts predict it will profoundly change not just people’s leisure activities, but how we do business
Laptops have been with us for over 25 years, yet none provide a convenient device that a couple or three business people can sit around to conveniently interact with media; whether photos, presentations or documents. The keyboard is the anchor that weighs the device down on the desktop, allowing only for small moves to overcome viewing angle limitations, while the presenter drives the presentation. Frequently, its a one-way watch-and-listen device while I show-and-tell.
iPad promises a truly interactive device for business people. In sales, business development, buying, learning, or just “doing business,” the person being presented to can move themselves from landscape to portrait, zoom in or out, backwards or forwards around the presentation, and click onto links to additional media. Their media viewing experience is different from a laptop, because it is personal. This is very different to just being shown a PowerPoint on a laptop, and suggests business people will leverage iPad to enliven and enrich their discussions with interactive media.
iPad provides an instant-on “let me show you how we do that” capability. As conversations frequently lead to live media access on the web, or corporate server, 3G data capability will be crucial for business people, to guarantee their media access device can always present what they want, when they want it, wherever they are.
Forget the “Wait, I have to find a public wi-fi hotspot”. It either makes sense with 3G data for ubiquitous business use, or it won’t make sense at all. This need is apart from the inevitable instant video conferencing capability foreshadowed for iPad, though not available in this first release. Meanwhile, joining Webex style multi-party sessions while mobile will become popular, even though the iPad user will offer voice only, while displaying video from fixed users on the call.
And there, dear reader, is the rub.
iPad’s effect on Australian Mobile Data networks
Australian mobile operators have been experiencing massive increases in data traffic, while enjoying only moderate growths in revenue. Telstra reports their mobile data volumes double every eight months.
While smartphones have played a part, the current dominant driver of mobile broadband volumes have been laptops, not smartphones. While the carriers have responded to improve their 3G data networks, particularly in backhaul bandwidth, they are running hard just to stand still in terms of data throughput, latency and in-building coverage.
iPad is set to compound this problem.
For it to succeed as a valid tool for Australia business people. iPad is in part hostage to the Australian networks. iPad’s 7.2Mbps HSDPA will depend on mobile data for its utility, and will suck data like never before, unlike iPhone’s 3.6MHz-only HSDPA capability.
3G data performance is more important to iPad than to current laptops, because to have relevance, iPad applications will typically depend on pulling down current media, less so than displaying internal files. Laptops are often used pre-loaded with static presentations avoiding dependence on 3G. Business people have notoriously little patience with technology when “doing business.” This iPad 3G technology has to “just work” or it won’t be used at work.
We haven’t seen iPad applications yet, only glimpses in the iPad introduction, but I see Marketing and Operations Departments cranking out Keynote presentations or building their own apps, embedded with live data feeds and frequently-updated videos. The finance, medicine, and airline industries immediately suggest themselves as iPad consumers. Over the coming 18 months, we are likely to see a significant shift in how sales, marketing, business development, operations, and other professionals take their message to face-to-face and real-time markets.
iPad offers users choices: Hello, you aren’t tied to your phone plan!
Do Australian telcos yet recognize that, far more than voice, this style of mobile data is going to drive network choice and subscriber satisfaction levels because …
… iPad requires no allegiance to the voice plan!
So, while voice is “good enough”, will iPad users – when their data is “critical” – buy a different carrier than the one powering their iPhone?
If so, this could offer a tremendous short-term advantage to the carrier that has “the network that works better in more places”. Because iPad, like iPhone, is 850MHz only in the low band, as used by NextG, and does not support the 900MHz UMTS/HSDPA frequency used by Optus and VHA. (It does support 2100MHz UMTS 7.6MHz HSDPA used by all three).
This is a critical factor for business users to consider. 850MHz is what gets you better in-building coverage, and better range in the bush.
Telstra’s NextG is acknowledged as offering faster, lower latency, geographically ubiquitous performance with great in-building coverage. It has set a performance standard its competitors will not reach in the current 3G investment cycle. Five years from now, with efficient capital spends, mobile carriers could change that by reconfiguring their networks to use LTE in combination with the extensive geographical coverage of high-speed economical NBN fibre back-haul. By then, the iPad revolution will have moved on, and ubiquitous on-demand mobile high-speed data access will be given as much thought as breathing. It will just work.
iPad – how big an opportunity for Telstra’s NextG?
Until then, Telstra is presented with golden honey-pots they could grab – the mind share and customer loyalty of small business – provided they are intelligent. I don’t mean by continuing to gouge the market with heavy price premiums and mean data allowances. Their network may offer greater utility, but the others do work … well enough. It’s a question of how good is good enough.
Telstra has the lowest opex of the mobile networks. They could intelligently lower margins to take increased market share in data, thereby raising ARPUs for a Win-Win. Customers get iPads, laptops and smartphones that work as intended, enabling increased efficiency and effectiveness for those users. Telstra secures market, generates free cash flow and dividends (the current mantra), and Australians in general benefit.
Or it can continue its current focus on high premiums, and low data allowances, and let their competitors educate the market to accept incremental improvements that raise the lowly bar of “good enough”.
Telstra has always said that mobile, as the major unregulated sector of the Telco competitive landscape, has done better competitively than the regulated sectors of fixed line and data. iPad now challenges Telstra to pick up its game, not to be bypassed as it was by the iPhone revolution, and demonstrate a new competitiveness and willingness to wow customers with better value, not just expensive performance.
iPad and Australian Mobile Operators vision for the future
For everyone’s sake, let’s exhort the Australian mobile industry (Telstra, Optus and VHA) to set iPad and its technology free with innovative plans like AT&T’s. While an Australian unlimited plan is unlikely, given the industry’s difficulties in coping with mobile data, the Mobile Triumvirate are quite capable of offering a low volume (about 750Mb/$20) starter pack and perhaps pay-as-you-go 1Gb/$10 add-on packs for high volume use. And they must allow no-penalty post-paid switching from low-use to high-use plans, to allow users to tailor their needs in anticipation of heavy and light months.
Innovations in iPad mobile data plans can enable a pluralistic and innovative use of this new technology and positively influence how we do business face-to-face.
It is likely that VHA and Optus already get this, and will set their price and packaging to complement their already “good enough” data networks, ensuring they woo a large part of the SMB market, as well as their consumer strongholds. Their market are those who perhaps travel infrequently, and either place less value on, or do not appreciate, NextG’s ubiquitous 3G data coverage, and who are very sensitive to pricing.
What will be REALLY interesting to watch, if Telstra really “gets it”, is how many Optus/VHA mobile phone subscribers take up a NextG micro-sim for their iPad. Because after all, part of the iPad promise is it “works better in more places”.
So couldn’t NextG truly be a “magical and revolutionary product at an unbelievable price”?
Let’s hope we like their definition of “unbelievable”!
That’s the Pain Truth about the iPad challenge to the Australian Mobile Industry.
2010 – A great year to look forward to?
2010 has opened with a mixed bag of opportunities, which is the way 2009 opened, and every year before that. And no doubt, the same way every year for the next millennia or so will begin.
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For those of us in the Australian telecoms industry, there is the satisfaction of knowing that events in 2010 could make it a banner year, laying a foundation for growth in the industry over many years to come.Why?
- 1. Telecoms didn’t recede during the GFC. In fact, every important metric is up. Broadband services and revenues continued to increase, as did mobile voice and mobile data. The only areas experiencing negative numbers are fixed line services and traditional data services. These declines have been outweighed by growth in IP based services.
- 2. Climate change: whatever your view on climate change, industry is backing the majority science viewpoint that GHG emissions need to be curbed. And they back that view with increasing dollar spend on “greening” their operations to reduce carbon footprint. This is fuelling corporate telepresence, unified communications and mobility applications, all supporting strong Telco services growth.
- 3. Peak Oil. Surprisingly little-mentioned in mainstream journalism, but set to become a genuine public concern as economic growth returns and the reality arrives that global oil production peaked in 2005 and that global oil production won’t rise to meet increased demand. Result: Oil will head back up past $150 to $200+ per barrel within three years. Result: the nature of work and consumption of services will change, fuelling work-from-home, shop-from-home, services/entertainment/delivery-to-home, and demand for telepresence-at-home, all to cut transport costs.
Three important factors:
The NBN in Australia will arrive just in time to support the rapid growth in demand for these capabilities, and change in lifestyle.
Don’t believe in Peak Oil? It is now confirmed by the International Energy Agency’s review in December 2008. Only, the IEA said it will happen by 2020. Their 2009 World Energy Outlook Fact Sheet http://www.worldenergyoutlook.org/docs/weo2009 /fact_sheets_WEO_2009.pdf expects supply to rise to 105 million barrels per day by 2030. Experts like Matthew R Simmons are saying Peak Oil production of 86 mbpd happened already in 2005, and the world will never see 86 mbpd again; see www.simmonsco-intl.com/research.aspx?Type=msspeeches
Who is right? Simmons brings compelling logic to his scenarios, while the IEA continues to rely upon unreliable and discredited reserve data from the OECD. If Simmons is right, we are set for major pricing and availability disruptions in the next three to five years.
At any rate, the West needs to move off its petrochemical dependency, and fast. It will – there are promising bio-engineered and renewable fuels on the horizon – but the question remains, can we move fast enough?
What we do know now is that telecoms will be essential in supporting the profound economic and lifestyle changes required. The process has started already, with NBN Co now moving more aggressively towards public clarity on its objectives, costs and schedule.
So 2010 marks the start of an economic high-growth decade for Telecom providers and suppliers in Australia.
Creator Tech is a continuously evolving work-in-process example of how telecoms technology can impact work productivity and life-style change. From the outset we adopted a “Federated Associates”, non-bricks-n-mortar, remote work process using traditional tools. Now we are moving to web-based collaborative tools, and increasing use of web video conferencing tools, not because of cost, but to save travel time, and energy and because it can be simply a more effective way to work. Yet, in a few short years, the NBN and 4G/LTE will enable a level of mobile telepresence to further enhance these benefits that we can only dream of today.
At the other end of the spectrum, for example, major oil companies are spending big research dollars to find how best to implement completely remote-operated production rigs. The potential savings in production costs are huge, as are the safety benefits. The main enabler is multi-wavelength 10Gig sub-sea cables that can support the massive video bandwidths required for the complex monitoring and control that would be required.
Our planet is increasingly hungry for telecom-enabled solutions, big and small, to help shift our energy production and consumption patterns towards more sustainable alternatives. Our life-style will become inter-woven with pervasive telecoms enabled technology to support these shifts and once again, we will wonder how we did without things we hardly could imagine only a half decade or so earlier.
That’s the Pain Truth about 2010 as the start of a rainbow decade of Telco growth.
Respond to Peter