Dubai: With the rapid growth in mobile telephony coming to an end, the next phase of revenue generating for telecom providers will be broadband services.
This is one of the results of a study by Global Investment House, based in Kuwait, that was presented last week.
The analysts looked at the entire GCC market and found that companies were focusing their attention on the broadband segment as one of the core drivers, as cellular and fixed line markets reach saturation.
For the future, the analysts recommended etisalat and its partly owned subsidiary in Saudi Arabia, Mobily or Etihad Etisalat.
"In the GCC telecom space etisalat and Mobily are our top picks," said Faisal Hasan, head of research at Global Investment House.
The study said the rapid growth in mobile subscribers in recent years had been boosted by price competition and more companies stepping into the market as part of liberalisation measures. The growth would slow down, it said.
The compound annual growth rate seen at 29.9 per cent between 2005 and 2009, would drop to 8.5 per cent in the period from 2010 to 2012, the analysts said.
On the other hand, the study anticipates that the mobile penetration rate would rise from 171.9 per cent in 2009 to 184 per cent in 2010 and to 195 per cent in 2012, meaning that at that time almost each resident in those countries on average would possess two SIM cards.
"For incumbents, we are of the opinion that going forward in home markets growth is likely to be limited and careful diversification in other markets is the only way forward for further growth," the study said.
"We believe that operators need to be more diligent in their strategy because diversification in other unfamiliar markets beyond the GCC can prove to be difficult."
The performance of incumbent operators in the GCC had increasingly become dependent on overseas operations.
"They have invested in overseas markets to hedge against the decline in revenues and market share in the domestic market," the analysts said.
To offset the saturated markets, Global Investment House said operators needed to concentrate on the broadband market.
"The next phase of growth in the GCC will be led by increased broadband penetration which has lagged behind due to both demand-side and supply-side factors," the study states.
"However, advances in technology, an increase in awareness, availability and affordability have played a key role in influencing broadband growth which is likely to accelerate in the next three to four years."
Broadband penetration was not just increasing but also replacing the dial-up connections in these countries as subscribers migrated to these higher speed connections.
The broadband connections as percentage of total internet connections in the GCC were around 38 per cent a few years ago. In 2009 it was around 50 per cent and likely to grow.
• 67.8m the number of subscribers to mobile phone accounts in the GCC
• 50% number of internet connections which are broadband
• 7.07m the number of fixed-line phone account subscribers across the GCC
• 16.96m the total number of internet users across the GCC as of 2009
Monday, August 16, 2010
Thursday, August 12, 2010
Mobily's net profit jumps 40%
RIYADH: Etihad Etisalat (Mobily) announced the interim consolidated financial results for the period ended June 30, 2010, in which the net profit for the first half of the year amounted to SR1.62 billion as compared to SR1.16 billion for the same period of last year, presenting a 40 percent growth.
The net profit for Q2, 2010 amounted to SR901 million against SR675 million for the same quarter of last year, presenting a growth of 33 percent and compared to a net profit of SR714 million for Q1, 2010, according to a press release received here on Tuesday.
The revenues for Q2, 2010 amounted to SR3.97 billion presenting a growth of 24 percent over the same period of last year. The operating profit for Q2 amounted to SR940 million against SR728 million for the same quarter of last year, presenting an increase of 29 percent. Earnings per share (EPS) for the first six months of the year amounted to SR2.31 compared to SR1.65 for the same period of last year.
Mobily's Chairman, Eng. Abdulaziz Alsaghyir said: "The growth of our Q2 revenues is due to the increase in broadband revenues and attracting more postpaid customers, in addition to the increase in the international interconnection margin, all of which have led to an increase in EBITDA to reach SR1.39 billion for Q2, 2010 as compared to SR1.18 billion for the first quarter of this year. Our EBITDA for Q2, 2009 was SR1.13 billion. Besides an increase in usage levels and the success of Mobily's customer loyalty program, Neqaty."
Alsaghyir added: "Mobily has adopted its strategy for the next five years, known as 'GED', standing for Growth, Efficiency and Differentiation, to provide integrated telecom services built around fixed and mobile broadband technologies. The appeal of the telecom sector in Saudi Arabia and the Kingdom's strategic and economic strength will help Mobily to achieve its goals."
The net profit for Q2, 2010 amounted to SR901 million against SR675 million for the same quarter of last year, presenting a growth of 33 percent and compared to a net profit of SR714 million for Q1, 2010, according to a press release received here on Tuesday.
The revenues for Q2, 2010 amounted to SR3.97 billion presenting a growth of 24 percent over the same period of last year. The operating profit for Q2 amounted to SR940 million against SR728 million for the same quarter of last year, presenting an increase of 29 percent. Earnings per share (EPS) for the first six months of the year amounted to SR2.31 compared to SR1.65 for the same period of last year.
Mobily's Chairman, Eng. Abdulaziz Alsaghyir said: "The growth of our Q2 revenues is due to the increase in broadband revenues and attracting more postpaid customers, in addition to the increase in the international interconnection margin, all of which have led to an increase in EBITDA to reach SR1.39 billion for Q2, 2010 as compared to SR1.18 billion for the first quarter of this year. Our EBITDA for Q2, 2009 was SR1.13 billion. Besides an increase in usage levels and the success of Mobily's customer loyalty program, Neqaty."
Alsaghyir added: "Mobily has adopted its strategy for the next five years, known as 'GED', standing for Growth, Efficiency and Differentiation, to provide integrated telecom services built around fixed and mobile broadband technologies. The appeal of the telecom sector in Saudi Arabia and the Kingdom's strategic and economic strength will help Mobily to achieve its goals."
Saturday, August 7, 2010
NBN makes a SerCo choices'
NBN Co has named the contractors it has selected to construct the passive optical fibre for the first five release sites of the Federal Government's national broadband network.
Three of the selected organisations are Silcar for Armidale in NSW; Transfield Services for Minnamurra and Kiama Downs in NSW, and SA power distribution
company ETSA Utilities for Willunga.
Ergon Energy will construct the passive optical fibre network in Townsville, and at the fifth site, Brunswick in Victoria, NBN Co is discussing with Telstra the use of the telco's existing infrastructure,explained Mike Quigley, CEO of NBN Co.
"The selection of a mix of construction contractors and power utilities will further allow NBN Co to evaluate the suitability of different contractor and
construction models," Quigley added.
Three of the selected organisations are Silcar for Armidale in NSW; Transfield Services for Minnamurra and Kiama Downs in NSW, and SA power distribution
company ETSA Utilities for Willunga.
Ergon Energy will construct the passive optical fibre network in Townsville, and at the fifth site, Brunswick in Victoria, NBN Co is discussing with Telstra the use of the telco's existing infrastructure,explained Mike Quigley, CEO of NBN Co.
"The selection of a mix of construction contractors and power utilities will further allow NBN Co to evaluate the suitability of different contractor and
construction models," Quigley added.
Tuesday, August 3, 2010
DU rocks the world
Emirates Integrated Telecommunications Company, known as du, is expected to earn a net profit of Dh103 million in the second quarter, 79 per cent more than the telecom operator reported in the same period last year, according to Al Mal Capital -- an investment bank.
The Dubai-based carrier had reported a four-fold gain for the first quarter profit, which reached Dh58 million compared to Dh23.4 million it earned during April to June in 2009.
It is also projected that the telecom operator's second quarter net profit would be higher by 6.2 per cent, compared to the first quarter's profit of Dh97 million.
A potential catalyst for the UAE telecoms sector is the opening up of the fixed voice and broadband segment throughout the UAE.
In 2009 du had a 15 per cent revenue market share of this Dh6.55 billion segment and we expect du to gain market share over the medium term once infrastructure sharing is launched," Al Mal said in a statement.
The carrier's revenue is expected to grow to Dh1.63 billion, a 3.4 per cent quarter-on-quarter rise and 25 per cent year-on-year gain.
EBITDA (earnings before interest, taxes, depreciation, and amortisation) is projected to grow to Dh400 million in the second quarter, a 4.3 per cent rise compared to first quarter and 26 per cent gain over 2009 second quarter. EBITDA margins are expected to improve on quarter-on-quarter to 24.5 per cent in the second quarter from 23.2 per cent in the first quarter and 18.5 per cent compared to the second quarter last year.
Du's Dh1 billion rights issue has helped to strengthen its balance sheet. However, it has taken its toll on du's share price as investors have sold shares to take up their rights entitlement, at Dh1.75 per share.
The Dubai-based carrier had reported a four-fold gain for the first quarter profit, which reached Dh58 million compared to Dh23.4 million it earned during April to June in 2009.
It is also projected that the telecom operator's second quarter net profit would be higher by 6.2 per cent, compared to the first quarter's profit of Dh97 million.
A potential catalyst for the UAE telecoms sector is the opening up of the fixed voice and broadband segment throughout the UAE.
In 2009 du had a 15 per cent revenue market share of this Dh6.55 billion segment and we expect du to gain market share over the medium term once infrastructure sharing is launched," Al Mal said in a statement.
The carrier's revenue is expected to grow to Dh1.63 billion, a 3.4 per cent quarter-on-quarter rise and 25 per cent year-on-year gain.
EBITDA (earnings before interest, taxes, depreciation, and amortisation) is projected to grow to Dh400 million in the second quarter, a 4.3 per cent rise compared to first quarter and 26 per cent gain over 2009 second quarter. EBITDA margins are expected to improve on quarter-on-quarter to 24.5 per cent in the second quarter from 23.2 per cent in the first quarter and 18.5 per cent compared to the second quarter last year.
Du's Dh1 billion rights issue has helped to strengthen its balance sheet. However, it has taken its toll on du's share price as investors have sold shares to take up their rights entitlement, at Dh1.75 per share.
Monday, August 2, 2010
Voda has a new man
After three years in charge, Farmside Chief Executive Tony Baird has resigned to take up a role of Head of Networks and Operations at Vodafone.
Farmside said that while they look to fill the gap, Board Chairman Richie Smith will assume the role of Acting Chief Executive.
“Under Tony’s guidance Farmside has grown over 700% with a customer base of over 11,000 rural and urban New Zealanders. Tony has played a huge part in leading Farmside towards being New Zealand’s leading rural telecommunications provider and has himself been a strong champion for the rural sector,” smith said.
Farmside said that while they look to fill the gap, Board Chairman Richie Smith will assume the role of Acting Chief Executive.
“Under Tony’s guidance Farmside has grown over 700% with a customer base of over 11,000 rural and urban New Zealanders. Tony has played a huge part in leading Farmside towards being New Zealand’s leading rural telecommunications provider and has himself been a strong champion for the rural sector,” smith said.
Friday, July 30, 2010
Africa and Middle East going off?
The Africa and Middle East (AME) market represents a great opportunity for telecom operators and vendors alike, but huge obstacles will have to be surmounted before the region's potential is fully realized.
That's one of the main findings of a new Africa & Middle East Telecom Insider report from Pyramid Research , "3G & WiMax to Drive Broadband Services Growth Through 2014."
The report's author, Hussam Barhoush, predicts that broadband penetration in the AME market will increase at a compound annual growth rate (CAGR) of 20.4 percent in the period between 2009 and 2014, a figure second only to Latin America on a global comparison.
As the report's title indicates, "traditional" (predominantly ADSL) fixed-line broadband will play second fiddle in this anticipated growth story, mainly due to poor-to-nonexistent wireline coverage in the more rural parts of the region, especially rural Africa. Instead, 3G and WiMax stand to make the biggest gains in the broadband battle.
WiMax, for example, accounted for just 1.9 percent of the region's fixed broadband connections in 2009, but Pyramid predicts this will grow to 8 percent by the end of 2014. Barhoush points out that WiMax networks are already, or close to being, deployed in most countries in the AME region. (See ITU Day 2: WiMax Brings It, Telecom Market Spotlight: Africa, Samsung Wins Saudi WiMax Deal, Moto Does WiMax in Jordan, and Alvarion Wins African Deal.)
Where fixed-line will continue to figure largely will be in the rich Gulf countries, in the shape of FTTH (fiber-to-the-home). Etisalat in the UAE, for example, plans to reach all UAE homes with fiber by the end of 2011. (See Etisalat Does FTTX With Zhone.)
Pyramid predicts that FTTx will account for 9 percent of the AME region's total fixed-line connections by the end of 2014.
But the barriers to ubiquitous broadband are obvious, notes the report. The cost of a PC in Mozambique, for example, equates to 66 percent of the country’s GDP per capita, putting it way out of reach of the vast majority of the population. And in some markets, around 40 percent of the population are illiterate, so worthwhile Internet browsing would not be possible even if the necessary technology were in place.
It's for these reasons that, even after the projected growth in the region in the coming years, broadband penetration levels will still only have reached 6.2 percent in AME by 2014.
That's one of the main findings of a new Africa & Middle East Telecom Insider report from Pyramid Research , "3G & WiMax to Drive Broadband Services Growth Through 2014."
The report's author, Hussam Barhoush, predicts that broadband penetration in the AME market will increase at a compound annual growth rate (CAGR) of 20.4 percent in the period between 2009 and 2014, a figure second only to Latin America on a global comparison.
As the report's title indicates, "traditional" (predominantly ADSL) fixed-line broadband will play second fiddle in this anticipated growth story, mainly due to poor-to-nonexistent wireline coverage in the more rural parts of the region, especially rural Africa. Instead, 3G and WiMax stand to make the biggest gains in the broadband battle.
WiMax, for example, accounted for just 1.9 percent of the region's fixed broadband connections in 2009, but Pyramid predicts this will grow to 8 percent by the end of 2014. Barhoush points out that WiMax networks are already, or close to being, deployed in most countries in the AME region. (See ITU Day 2: WiMax Brings It, Telecom Market Spotlight: Africa, Samsung Wins Saudi WiMax Deal, Moto Does WiMax in Jordan, and Alvarion Wins African Deal.)
Where fixed-line will continue to figure largely will be in the rich Gulf countries, in the shape of FTTH (fiber-to-the-home). Etisalat in the UAE, for example, plans to reach all UAE homes with fiber by the end of 2011. (See Etisalat Does FTTX With Zhone.)
Pyramid predicts that FTTx will account for 9 percent of the AME region's total fixed-line connections by the end of 2014.
But the barriers to ubiquitous broadband are obvious, notes the report. The cost of a PC in Mozambique, for example, equates to 66 percent of the country’s GDP per capita, putting it way out of reach of the vast majority of the population. And in some markets, around 40 percent of the population are illiterate, so worthwhile Internet browsing would not be possible even if the necessary technology were in place.
It's for these reasons that, even after the projected growth in the region in the coming years, broadband penetration levels will still only have reached 6.2 percent in AME by 2014.
Monday, July 26, 2010
Upgrade nationwide optical fibre and microwave links.
Vodafone Hutchison Australia (VHA) has announced plans to deploy thousands of new Ericsson microwave radio and optical fibre links throughout Australia.
The wireless vendor was contracted as turnkey project manager for VHA's nationwide transmission network, assuming responsibility for the design, supply, rollout and integration of new gear.
VHA has been working on the transmission project since Vodafone and Hutchison 3 merged last year, a spokesman said.
The contract came into effect last week, following what VHA described as an "extensive" request for proposals. The new network was expected to be launched within 12 months.
According to a statement from Ericsson, the new network would be scalable, and provide increased capacity to meet the increasing load of smartphone applications.
It is based on Ericsson's MHL 3000 DWDM platform, OMS 1400 series of optical transport products, and MINI-LINK TN microwave solution.
The VHA spokesman declined to specify transmission speeds, stating: "As we rollout the new transmission network, our customers will be able to enjoy faster data speeds and improved call quality."
"This will ultimately make the network more reliable and prepare it for future technologies."
"We're taking the opportunity to migrate our mobile backhaul to an all-IP network," said VHA's CTO, Andy Reeves.
"This allows us to greatly increase our network capacity and end-user speeds at a fraction of the cost of older backhaul technologies."
In May, VHA inked a seven-year managed services contract with Nokia Siemens Networks (NSN) to consolidate Vodafone and Hutchison 3's core networks, removing Ericsson kit in the process.
The NSN deal sparked a review of Ericsson's relationship with Hutchison 3. Ericsson had previously held the managed services contract for Hutchison 3's core network and IT.
Today, VHA told iTnews that it had "a successful working relationship with Ericsson which was formed through work with both Hutchison and Vodafone."
Ericsson's Australia and New Zealand CEO, Sam Saba, said: "We are extremely proud to have been chosen for this major upgrade to the transmission network.
"Ericsson's leadership in optical/DWDM and microwave transmission networks will enable VHA's mobile network backbone to expand capacity and meet the dramatic rise in traffic."
The wireless vendor was contracted as turnkey project manager for VHA's nationwide transmission network, assuming responsibility for the design, supply, rollout and integration of new gear.
VHA has been working on the transmission project since Vodafone and Hutchison 3 merged last year, a spokesman said.
The contract came into effect last week, following what VHA described as an "extensive" request for proposals. The new network was expected to be launched within 12 months.
According to a statement from Ericsson, the new network would be scalable, and provide increased capacity to meet the increasing load of smartphone applications.
It is based on Ericsson's MHL 3000 DWDM platform, OMS 1400 series of optical transport products, and MINI-LINK TN microwave solution.
The VHA spokesman declined to specify transmission speeds, stating: "As we rollout the new transmission network, our customers will be able to enjoy faster data speeds and improved call quality."
"This will ultimately make the network more reliable and prepare it for future technologies."
"We're taking the opportunity to migrate our mobile backhaul to an all-IP network," said VHA's CTO, Andy Reeves.
"This allows us to greatly increase our network capacity and end-user speeds at a fraction of the cost of older backhaul technologies."
In May, VHA inked a seven-year managed services contract with Nokia Siemens Networks (NSN) to consolidate Vodafone and Hutchison 3's core networks, removing Ericsson kit in the process.
The NSN deal sparked a review of Ericsson's relationship with Hutchison 3. Ericsson had previously held the managed services contract for Hutchison 3's core network and IT.
Today, VHA told iTnews that it had "a successful working relationship with Ericsson which was formed through work with both Hutchison and Vodafone."
Ericsson's Australia and New Zealand CEO, Sam Saba, said: "We are extremely proud to have been chosen for this major upgrade to the transmission network.
"Ericsson's leadership in optical/DWDM and microwave transmission networks will enable VHA's mobile network backbone to expand capacity and meet the dramatic rise in traffic."
Friday, July 23, 2010
So who pays?
Telecom's partner in building the XT network, Alcatel-Lucent, counter-claimed against Telecom over the XT debacle after Telecom complained about components of the network it had supplied.
The dispute is revealed in Alcatel-Lucent New Zealand's latest financial statement, which gives a brief account of the events in January and February when Telecom's new 3G mobile network suffered a series of damaging, widespread outages.
At the time much speculation focused on whether and how much Telecom would obtain in compensation from Alcatel-Lucent, whose global CEO Ben Verwaayen flew in to New Zealand in May to hold personal talks with Telecom chief Paul Reynolds.
Neither side has commented on who footed the bill for fixing the network, but the report reveals their dispute was settled without an admission of liability.
The size of the deal is not stated in the report but it is clear that it involved a payment, as ''the cost will be split between the Alcatel Lucent group delivering units and Alcatel Lucent New Zealand.''
The effect on the New Zealand unit was ''not expected to be material''.
For the year to December, Alcatel-Lucent NZ reported a sharp decline in revenue and profit after a bumper 2008.
Revenue was $333.9 million, down 21 per cent on the previous year's $423.5 million, split 60/40 between service income and hardware sales.
Profit was more than halved at $12 million, down from $30.5 million.
During the year the company paid a dividend of $16 million to its parent company.
A spokesman for Actatel-Lucent New Zealand said the company was in a quiet period until the release of its group half year results on July 30 and could not comment beyond the information provided in the financial statements.
The dispute is revealed in Alcatel-Lucent New Zealand's latest financial statement, which gives a brief account of the events in January and February when Telecom's new 3G mobile network suffered a series of damaging, widespread outages.
At the time much speculation focused on whether and how much Telecom would obtain in compensation from Alcatel-Lucent, whose global CEO Ben Verwaayen flew in to New Zealand in May to hold personal talks with Telecom chief Paul Reynolds.
Neither side has commented on who footed the bill for fixing the network, but the report reveals their dispute was settled without an admission of liability.
The size of the deal is not stated in the report but it is clear that it involved a payment, as ''the cost will be split between the Alcatel Lucent group delivering units and Alcatel Lucent New Zealand.''
The effect on the New Zealand unit was ''not expected to be material''.
For the year to December, Alcatel-Lucent NZ reported a sharp decline in revenue and profit after a bumper 2008.
Revenue was $333.9 million, down 21 per cent on the previous year's $423.5 million, split 60/40 between service income and hardware sales.
Profit was more than halved at $12 million, down from $30.5 million.
During the year the company paid a dividend of $16 million to its parent company.
A spokesman for Actatel-Lucent New Zealand said the company was in a quiet period until the release of its group half year results on July 30 and could not comment beyond the information provided in the financial statements.
Tuesday, July 20, 2010
US to get first wholesale-only 4G provider
Nokia Siemens Networks (NSN) has secured an eight year US$7 billion deal to build, operate and maintain America’s first wholesale-only 4G-LTE (Long Term Evolution) network for newborn telco LightSquared.
The ambitious and privately funded project will see NSN install 40,000 base stations over eight years, which LightSquared has said would cover 92 percent of the country’s 300 million people.
The wholesale-only network is the brainchild of Philip Falcone, founder of New York-based investment firm, Harbinger Capital Partners.
The investment outfit had previously snapped up SkyTerra Communications, which has now been absorbed by LightSquared. The SkyTerra Communications acquisition gave the investment firm 59 MHz of nationwide spectrum, according to the telco.
Heading up the new wholesale only wireless operator will be former Orange Group chief exeuctive, Sanjiv Ahuja who said it will be a “disruptive force” in the US.
“We’re providing everyone, including underserved communities, with a fast, reliable experience regardless of where they are located in the United States. This network will return our country to its rightful position as a leader in wireless broadband technology and solidify its reputation as the center of global innovation,” he said.
Locally, Nokia Siemens Networks undertaken LTE tests with Australia's number two telco, Optus, which earlier this month claimed it achieved download speeds in excess of 50 Mbps.
The trial network architecture includes NSN's Flexi base stations, network gateway and network server products.
The LightSquared win came just a day after Nokia Siemens Networks snapped up US mobile dinosaur Motorola.
Some analysts yesterday criticised Nokia Siemens Networks' acquisition of Motorola's network arm as a "desperate attempt to gain market share" in the US following its failed attempt to buy Nortel's mobile network business last year.
The ambitious and privately funded project will see NSN install 40,000 base stations over eight years, which LightSquared has said would cover 92 percent of the country’s 300 million people.
The wholesale-only network is the brainchild of Philip Falcone, founder of New York-based investment firm, Harbinger Capital Partners.
The investment outfit had previously snapped up SkyTerra Communications, which has now been absorbed by LightSquared. The SkyTerra Communications acquisition gave the investment firm 59 MHz of nationwide spectrum, according to the telco.
Heading up the new wholesale only wireless operator will be former Orange Group chief exeuctive, Sanjiv Ahuja who said it will be a “disruptive force” in the US.
“We’re providing everyone, including underserved communities, with a fast, reliable experience regardless of where they are located in the United States. This network will return our country to its rightful position as a leader in wireless broadband technology and solidify its reputation as the center of global innovation,” he said.
Locally, Nokia Siemens Networks undertaken LTE tests with Australia's number two telco, Optus, which earlier this month claimed it achieved download speeds in excess of 50 Mbps.
The trial network architecture includes NSN's Flexi base stations, network gateway and network server products.
The LightSquared win came just a day after Nokia Siemens Networks snapped up US mobile dinosaur Motorola.
Some analysts yesterday criticised Nokia Siemens Networks' acquisition of Motorola's network arm as a "desperate attempt to gain market share" in the US following its failed attempt to buy Nortel's mobile network business last year.
Saturday, July 3, 2010
NBN Service Company Prospects
NBN Co, Australia's government-owned company building the national broadband network, will ask 21 Australian companies including six utility companies, to tender for the progressive roll out of the fibre access network. NBN Co issued a request for capability statement for the design and construction of the network in March, which saw 45 companies start their formal engagement process with the company. NBN Co expects the design and construction request for proposal to be complete towards the end of the year.
The companies invited to take part in the formal request for proposal are:
Baulderstone Pty; Bovis Lend Lease; Communications & Fibre; Connect X (AbiGroup/UGL Joint Venture); Downer EDI; Ergon Energy; ETSA Utilities; Jemena Asset Management; John Holland / Bilfinger Berger Services; Laing O’Rourke; McConnell Dowell; Monadelphous Inabensa Joint Venture; Powercor Network Services; Service Stream; Silcar; SP AusNet; Telstra; Tenix; Transfield Services; Visionstream Australia; and Western Power.
The companies invited to take part in the formal request for proposal are:
Baulderstone Pty; Bovis Lend Lease; Communications & Fibre; Connect X (AbiGroup/UGL Joint Venture); Downer EDI; Ergon Energy; ETSA Utilities; Jemena Asset Management; John Holland / Bilfinger Berger Services; Laing O’Rourke; McConnell Dowell; Monadelphous Inabensa Joint Venture; Powercor Network Services; Service Stream; Silcar; SP AusNet; Telstra; Tenix; Transfield Services; Visionstream Australia; and Western Power.
Wednesday, June 30, 2010
NBN network equipment suppliers selected
Australia's National Broadband Network (NBN) is wasting no time getting its network implementation in order by naming Alcatel-Lucent as one of its key network equipment suppliers.
This deal comes only after NBN struck a multi-billion deal to leverage Australian incumbent Telstra's wireline facilities. Following a nine-month battle between Telstra and the government, NBN came to agreement with the incumbent carrier where the NBN will be able to leverage its copper and cable network facilities (ducts and conduits) to build out its Fiber to the Home network.
NBN Co. has committed an initial $60 million fixed price purchase and has also committed to spend up to $1.5 billion on GPON equipment, aggregation and engineering assistance during the lifetime of the project. In addition, NBN has signed a $13 million contract with Alcatel-Lucent for engineering and testing services during the initial phase of the network build out. Separately, NBN has asked 21 companies to submit tenders for network construction.
Although Alcatel-Lucent is the first network equipment vendor to be named for the NBN project, Andrew Butterworth, Alcatel-Lucent's managing director for Australia, is aware they won't be the last.
Butterworth said that NBN told them that "once we get to the mass rollout, they may draw upon another supplier to support them."
This deal comes only after NBN struck a multi-billion deal to leverage Australian incumbent Telstra's wireline facilities. Following a nine-month battle between Telstra and the government, NBN came to agreement with the incumbent carrier where the NBN will be able to leverage its copper and cable network facilities (ducts and conduits) to build out its Fiber to the Home network.
NBN Co. has committed an initial $60 million fixed price purchase and has also committed to spend up to $1.5 billion on GPON equipment, aggregation and engineering assistance during the lifetime of the project. In addition, NBN has signed a $13 million contract with Alcatel-Lucent for engineering and testing services during the initial phase of the network build out. Separately, NBN has asked 21 companies to submit tenders for network construction.
Although Alcatel-Lucent is the first network equipment vendor to be named for the NBN project, Andrew Butterworth, Alcatel-Lucent's managing director for Australia, is aware they won't be the last.
Butterworth said that NBN told them that "once we get to the mass rollout, they may draw upon another supplier to support them."
Sunday, June 27, 2010
Tasmania Rocks the NBN world
Communications minister Stephen Conroy has officially opened NBN Tasmania’s Network Operations Centre as the firm forges on towards its July start date.
Located in Derwent Park, Hobart and operated by Opticomm, the NOC will take customer orders, consolidate connections and control network traffic; it has received its first serving of connection orders in preparation for the switch-on of commercial services. The facility will take some of the load off the Mornington proof-of-concept test centre, which was supporting systems while the NOC was constructed.
“Today’s launch is another important step in the delivery of the NBN in Tasmania,” said Conroy. “In just a few short weeks, residents and businesses in the communities of Midway Point, Smithton and Scottsdale will have access to services under the NBN and the Network Operations Centre is a crucial component of this roll out... I’m pleased with the level of interest that has been shown by people in the first three communities and I am aware that the number of people providing legal consent for NBN Tasmania to run optic fibre to their premises has been encouraging.”
“The NOC is critical to the delivery of the NBN in Tasmania, and it has been successfully completed, as necessary, prior to the provisioning and operation of the first services,” added NBN Tasmania
Executive Chairman Doug Campbell. “NBN Tasmania has conducted a comprehensive community engagement program to support the rollout and gain the property-owner consents needed to connect the network to houses as they are passed. We are very pleased with the response from the communities, and look forward to celebrating the activation of the first commercial services in July.”
Located in Derwent Park, Hobart and operated by Opticomm, the NOC will take customer orders, consolidate connections and control network traffic; it has received its first serving of connection orders in preparation for the switch-on of commercial services. The facility will take some of the load off the Mornington proof-of-concept test centre, which was supporting systems while the NOC was constructed.
“Today’s launch is another important step in the delivery of the NBN in Tasmania,” said Conroy. “In just a few short weeks, residents and businesses in the communities of Midway Point, Smithton and Scottsdale will have access to services under the NBN and the Network Operations Centre is a crucial component of this roll out... I’m pleased with the level of interest that has been shown by people in the first three communities and I am aware that the number of people providing legal consent for NBN Tasmania to run optic fibre to their premises has been encouraging.”
“The NOC is critical to the delivery of the NBN in Tasmania, and it has been successfully completed, as necessary, prior to the provisioning and operation of the first services,” added NBN Tasmania
Executive Chairman Doug Campbell. “NBN Tasmania has conducted a comprehensive community engagement program to support the rollout and gain the property-owner consents needed to connect the network to houses as they are passed. We are very pleased with the response from the communities, and look forward to celebrating the activation of the first commercial services in July.”
Thursday, June 24, 2010
They all want some of the action - but can they really do it
Capgemini Australia is pulling out all the stops to grab a potentially vast opportunity it has identified within the NBN: the massive OSS/BSS setup that will underpin the project’s operations as a nationwide telco wholesaler. But while the firm’s new telco VP and Telstra alumnus Christophe Bur is bullish on winning a big slice of NBN IT system integration work – in the backend areas where he believes competitors lack Capgemini’s global weight of specific expertise – his designs on the Australian telco space extend well beyond the national network rollout “We’re very keen to win the NBN OSS/BSS [business]!” Bur told CommsDay. “Our advantage is the intimate knowledge of what a telco is, of how it really works.” Capgemini is set to leverage the accumulated know-how of its 8,000 staff in the telco space globally , plus partnerships with VMWare, Cisco, Microsoft, Oracle and others, to stake its claim.
Bur’s own appointment, fresh from a three-year stint as Telstra’s strategy, planning and operations executive director, is emblematic of the specialised resources the consulting and outsourcing outfit is bringing to bear on Australia.
The NBN has already proven lucrative for other consulting firms like McKinsey and KPMG, who between them produced the A$25 million implementation study. But Capgemini is confident of carving out its own niche. “McKinsey, Deloitte, Ernst and Young are working more on the management consultancy side... it’s a very high level point of view. A company like Capgemini is working on a more operation level – product definitions, customer experience for resellers and end-users, system integration,” said telecom, media and entertainment director Laurent Byé. “The business process will be a key point... and it has to be defined up front. We have a set of about a thousand businesses processes which are already defined, and we believe 30-40% of these are directly applicable to the NBN.”
NBN Co has said that it wants to put as much operational control as possible in the hands of service providers, and is already engaging with industry as it pushes out into largely uncharted waters with OSS/BSS on a national scale. Head of network operations Steve Christian has previously urged telco players themselves to contribute their expertise to the project. However, Bur was sanguine that there would be ample opportunity for professional consultancy in the same area. “I think [NBN Co] understand the magnitude of what they’re facing; given their startup nature, they can’t possibly tackle everything. They’ll need all the help they can get for the best results!” he said. “Having said that, the great expertise they’ve got internally makes them very capable of directing resources to achieve what they want... it’s a good model.”
BROADER OFFENSIVE: Of course, a Coalition victory in the next election could see the NBN in its current form scrapped – and the carefully-guarded status of the ongoing negotiations with Telstra is another unknown factor in the project’s future. But Bur sees huge opportunity in Australian telecoms for Capgemini with or without the national network, with the local market on the brink of an evolutionary change: telco players beginning to consolidate, while the shift to cloud computing continues unabated. “I wouldn’t have joined Capgemini simply on the basis of the NBN!” he said. “There are not many times in this industry where there’s a change of the magnitude of the cloud change – virtualisation, software as a service, and so on. And those are going to happen, no matter what.”
Bur’s own appointment, fresh from a three-year stint as Telstra’s strategy, planning and operations executive director, is emblematic of the specialised resources the consulting and outsourcing outfit is bringing to bear on Australia.
The NBN has already proven lucrative for other consulting firms like McKinsey and KPMG, who between them produced the A$25 million implementation study. But Capgemini is confident of carving out its own niche. “McKinsey, Deloitte, Ernst and Young are working more on the management consultancy side... it’s a very high level point of view. A company like Capgemini is working on a more operation level – product definitions, customer experience for resellers and end-users, system integration,” said telecom, media and entertainment director Laurent Byé. “The business process will be a key point... and it has to be defined up front. We have a set of about a thousand businesses processes which are already defined, and we believe 30-40% of these are directly applicable to the NBN.”
NBN Co has said that it wants to put as much operational control as possible in the hands of service providers, and is already engaging with industry as it pushes out into largely uncharted waters with OSS/BSS on a national scale. Head of network operations Steve Christian has previously urged telco players themselves to contribute their expertise to the project. However, Bur was sanguine that there would be ample opportunity for professional consultancy in the same area. “I think [NBN Co] understand the magnitude of what they’re facing; given their startup nature, they can’t possibly tackle everything. They’ll need all the help they can get for the best results!” he said. “Having said that, the great expertise they’ve got internally makes them very capable of directing resources to achieve what they want... it’s a good model.”
BROADER OFFENSIVE: Of course, a Coalition victory in the next election could see the NBN in its current form scrapped – and the carefully-guarded status of the ongoing negotiations with Telstra is another unknown factor in the project’s future. But Bur sees huge opportunity in Australian telecoms for Capgemini with or without the national network, with the local market on the brink of an evolutionary change: telco players beginning to consolidate, while the shift to cloud computing continues unabated. “I wouldn’t have joined Capgemini simply on the basis of the NBN!” he said. “There are not many times in this industry where there’s a change of the magnitude of the cloud change – virtualisation, software as a service, and so on. And those are going to happen, no matter what.”
Monday, June 7, 2010
Stop laying Fibre - Not
US-based developer and manufacturer of outdoor wireless solutions, Exalt, can't understand why carriers in countries like New Zealand are so fixated by laying fibre cables.
The company's solutions are used by mobile operators wanting to back-haul their cell tower data as well as business customers connecting buildings across a city. They are also used as outdoor situations where long distance links are needed for mines in Australia.
Exalt claims that new wireless solutions can have lower latency than fibre, carry up to 2Gbps and cost as low as 5% of the cost per mile of laying fibre cables.
The company's solutions are used by mobile operators wanting to back-haul their cell tower data as well as business customers connecting buildings across a city. They are also used as outdoor situations where long distance links are needed for mines in Australia.
Exalt claims that new wireless solutions can have lower latency than fibre, carry up to 2Gbps and cost as low as 5% of the cost per mile of laying fibre cables.
Saturday, June 5, 2010
Where would we be - ADSL2+, VDSL2
The good people at Bell Labs and other research and development powerhouses continue to come up with ways to make those copper speeds faster. Currently ADSL2+ will provide maximum speeds of 24Mbps (with the emphasis on maximum). Meanwhile VDSL2 services, which Telecom has been trialling for a year and will launch in mid- August. Crockett says on day one 15% of all telephone lines will be able to receive VDSL2 services, by the end of the year it will be 35%, and by the end of 2011 when cabinetisation is finished it will be 60% of all lines.
The catch of course is that you have to be located within 1km of an exchange or cabinet to get the speeds, which Crockett says are a minimum of 15Mbps down and 5Mbps up.
Digital divides
So broadband speeds would get faster, probably keeping pace with customer demand – as new applications came onto the market, broadband services would improve to cater to the increasing demand for bandwidth.
But it’s fair to say there would be a digital divide – not just between those living in the city and those on the farm but between those living in the same neighbourhood. It could become like zoning for high achieving state schools, those on one side of the street would get 50Mbps, those on the other 24Mbps.
Meanwhile, on the margins, there would spring up boutique fibre networks, maybe a bit like what happened with the North Shore Education Access Loop. Where Vector received a $4.5 million government subsidy to connect 45 schools at a concessionary rate but was able to charge businesses market prices to connect to the same fast fibre pipe.
The catch of course is that you have to be located within 1km of an exchange or cabinet to get the speeds, which Crockett says are a minimum of 15Mbps down and 5Mbps up.
Digital divides
So broadband speeds would get faster, probably keeping pace with customer demand – as new applications came onto the market, broadband services would improve to cater to the increasing demand for bandwidth.
But it’s fair to say there would be a digital divide – not just between those living in the city and those on the farm but between those living in the same neighbourhood. It could become like zoning for high achieving state schools, those on one side of the street would get 50Mbps, those on the other 24Mbps.
Meanwhile, on the margins, there would spring up boutique fibre networks, maybe a bit like what happened with the North Shore Education Access Loop. Where Vector received a $4.5 million government subsidy to connect 45 schools at a concessionary rate but was able to charge businesses market prices to connect to the same fast fibre pipe.
Thursday, June 3, 2010
Where would we be - FTTN and LLU
There would still be a national fibre network – in the form of Fibre to the Node, or cabinetisation, because the roll out is part of Telecom’s operational separation undertakings. There were some ISPs that were outraged when cabinetisation was announced, notably Orcon and Vodafone who claimed it would dampen their investment in Local Loop Unbundling.
Telecom Wholesale CEO Matt Crockett sights their reaction as one of three lowlights in his career at Telecom (see full interview in upcoming June TR). “When we confirmed our cabinet plans, our senior customers got taken by surprise, which surprised us because we’d shared a huge amount of information around where cabinets were going because we knew it would have an impact around their LLU investment.”
LLU investment has continued, with Vodafone and Orcon being joined by TelstraClear, Compass and CallPlus in providing unbundled services. It might seem as if it’s proceeding at a snail’s pace but according to the latest Commerce Commission audit, the growth in unbundled lines after 18 months appears to be better than international experience.
(Interestingly, Telecom’s rival in the UFB process Axia NetMedia, claims that the fibre Telecom has is about 5% of what is needed because 80% of the cost of deploying fibre is to the premise).
Telecom Wholesale CEO Matt Crockett sights their reaction as one of three lowlights in his career at Telecom (see full interview in upcoming June TR). “When we confirmed our cabinet plans, our senior customers got taken by surprise, which surprised us because we’d shared a huge amount of information around where cabinets were going because we knew it would have an impact around their LLU investment.”
LLU investment has continued, with Vodafone and Orcon being joined by TelstraClear, Compass and CallPlus in providing unbundled services. It might seem as if it’s proceeding at a snail’s pace but according to the latest Commerce Commission audit, the growth in unbundled lines after 18 months appears to be better than international experience.
(Interestingly, Telecom’s rival in the UFB process Axia NetMedia, claims that the fibre Telecom has is about 5% of what is needed because 80% of the cost of deploying fibre is to the premise).
Tuesday, June 1, 2010
Telecom New Zealand could be split into two listed companies
Telecom New Zealand could be split into two listed companies giving shareholders exposure to the fortunes of both Telecom's retail business and its fibre business, chief executive Paul Reynolds has suggested this morning at an investor briefing in Sydney.
Reynolds introduced a de-merger as a new alternative to achieve the structural separation Telecom believes is inevitably required if it is to participate in the government's $1.35 billion ultra-fast broadband project.
Speculation on how Telecom would split itself has centred so far on the partial or total sale of Telecom's Chorus unit, either in a trade sale or by being nationalised.
A fourth option for Telecom is non-participation in the UFB project and to go it alone and compete with the new operator, Reynolds said, although such a business would be weighed down by what he described as having gone from one of the least regulated to the "the most heavily regulated" telecommunications market in the world.
Reynolds said a partial sale of Chorus was "unlikely to deliver sufficient value", given the current political and regulatory climate, which has radically weakened Telecom's market position and future outlook as telecommunications infrastructure moves from Telecom's copper-dominated network to very high-speed fibre.
A full sale of Chorus was a possibility, "but we think it might cost a bit more," Reynolds said. "It requires a significant lift in the value of the demerged business."
The advantages of a de-merger option might be to attract a better regulatory outcome for both businesses while allowing shareholders a bet on which of the two was the better long term proposition.
"Which of these businesses will be more successful?" said Reynolds.
"Who knows? Shareholders would remain invested in both and de-risked from some of the uncertainty in the future."
Telecom shares were trading 0.5 per cent higher this morning at $1.91, having found support in the last day as the country's largest listed stock and contributor to the NZX50 Index plumbed historic lows in the uncertainty created by the conversion of regulatory issues and the UFB project.
Reynolds introduced a de-merger as a new alternative to achieve the structural separation Telecom believes is inevitably required if it is to participate in the government's $1.35 billion ultra-fast broadband project.
Speculation on how Telecom would split itself has centred so far on the partial or total sale of Telecom's Chorus unit, either in a trade sale or by being nationalised.
A fourth option for Telecom is non-participation in the UFB project and to go it alone and compete with the new operator, Reynolds said, although such a business would be weighed down by what he described as having gone from one of the least regulated to the "the most heavily regulated" telecommunications market in the world.
Reynolds said a partial sale of Chorus was "unlikely to deliver sufficient value", given the current political and regulatory climate, which has radically weakened Telecom's market position and future outlook as telecommunications infrastructure moves from Telecom's copper-dominated network to very high-speed fibre.
A full sale of Chorus was a possibility, "but we think it might cost a bit more," Reynolds said. "It requires a significant lift in the value of the demerged business."
The advantages of a de-merger option might be to attract a better regulatory outcome for both businesses while allowing shareholders a bet on which of the two was the better long term proposition.
"Which of these businesses will be more successful?" said Reynolds.
"Who knows? Shareholders would remain invested in both and de-risked from some of the uncertainty in the future."
Telecom shares were trading 0.5 per cent higher this morning at $1.91, having found support in the last day as the country's largest listed stock and contributor to the NZX50 Index plumbed historic lows in the uncertainty created by the conversion of regulatory issues and the UFB project.
Sunday, May 30, 2010
Leave fibre alone?
What if broadband had not become a political carrot in the last election and National had not promised to invest $1.5 billion on a fibre to the home network?
The Ultra Fast Broadband initiative (UFB) is already having a major influence on the industry and not one cable has been laid - the most dramatic effect is Telecom’s share price dipping below $2. So what would New Zealand telecommunications look like if the government had not interfered?
The Ultra Fast Broadband initiative (UFB) is already having a major influence on the industry and not one cable has been laid - the most dramatic effect is Telecom’s share price dipping below $2. So what would New Zealand telecommunications look like if the government had not interfered?
Telecom New Zealand Speculation
Speculation rose in New Zealand about the future of the incumbent, Telecom NZ. CEO Paul Reynolds has proposed some radical scenarios in response to the government’s Ultra-Fast Broadband Initiative (UFB). A structural separation of the company’s wholesale and retail divisions was suggested in order for Telecom NZ to be able to take part in the UFB tender process.
In early 2009, the government launched the UFB plan with a fund of NZD 1.5 billion to build broadband in New Zealand. The plan aimed to connect 75 percent of homes in 25 cities to fibre within six years. The plan was further developed in March 2009 with the establishment of the Crown Fibre Investment Company (CFIC), which is looking for co-investors in the 25 Local Fibre Companies (LFC) project. These investors are being asked to invest 1.5 billion NZ dollars. Principles of the network include: wholesale only (no ISP role) and open access for service providers. In September 2009, more elaborations to the plan came on board, as well as some delays. The goal now is to provide 75 percent of the population with at least 100 Mbps by 2020. Meanwhile, several parties have responded to the tender, including a Canadian combined Axia NetMedia as well as Vodafone NZ. The winner is expected to be announced in late June.
Telecom NZ has, just like Telstra in Australia, been placed in a tough spot with the government plan: to participate or compete? Incorporating Telecom NZ’s infrastructure is a foregone conclusion, but the government has set an inflexible demand: 'wholesale only', leading to Telecom NZ 'voluntarily' suggesting a possible structural separation. This would be a step beyond the existing functional separation of retail, wholesale and network. The question now is whether retail should be separated from the rest (wholesale + network), or whether the network (Chorus) should be sold off. But Paul Reynolds, formerly of BT Wholesale, has also left open the option of competing with full UFB and not participating in the tender process.
It is clear that the government has put Telecom NZ before a difficult choice. Competing with public funds is generally difficult, especially if FTTP or FTTH (premise or home) is pitted against FTTC or FTTN (node or cabinet, with VDSL from there to the subscriber). Structural separation is considered by most telecommunications companies as a negative. The cost and risks are considerably high and companies lose the existing synergies from vertical integration, something that Paul Reynolds has explicitly explained. Shareholders are also wondering about those costs and risks, judging by the recent stock price plunge - which also takes into account the debacle in the mobile market with the difficulties encountered by Telecom Nz and Alcatel-Lucent in the rollout of a 3G network.Vodafone, also interested in FTTH, would see its market share improve.
It is clear that the benefits of structural separation have been ignored. First, a market inequality is removed because the incumbent is no longer the only one to enjoy the advantages of vertical integration and cross-subsidisation. Secondly, it is difficult to compete with your customer and that iss exactly what is going on between the retail and wholesale division. Some telecom companies are very clear when explaining this disadvantage, such as Bouwfonds in the Netherlands, which through CIFpurchased the CAIW infrastructure. CIF categorically refuses to take on the role of service provider. Axia NetMedia also subscribes to this view. Many telecom companies do not want to go beyond functional separation, with additional wholesale revenues due to open access obligations remaining with the incumbent. Moreover there are also good margins to be made (KPN wholesale roughly has double the margins of KPN retail).
The government is taking a clear stand and Telecom NZ is being forced to bend (structural separation) or bust (compete with UFB). This problem is worldwide, but is especially topical in New Zealand, Italy and Australia (see earlier commentaries “Telecom Italia 'forces' competition into FTTH initiative"). The consumer is the real winner here, because competition will increase anyway. And that is exactly what every government and regulator wants.
In early 2009, the government launched the UFB plan with a fund of NZD 1.5 billion to build broadband in New Zealand. The plan aimed to connect 75 percent of homes in 25 cities to fibre within six years. The plan was further developed in March 2009 with the establishment of the Crown Fibre Investment Company (CFIC), which is looking for co-investors in the 25 Local Fibre Companies (LFC) project. These investors are being asked to invest 1.5 billion NZ dollars. Principles of the network include: wholesale only (no ISP role) and open access for service providers. In September 2009, more elaborations to the plan came on board, as well as some delays. The goal now is to provide 75 percent of the population with at least 100 Mbps by 2020. Meanwhile, several parties have responded to the tender, including a Canadian combined Axia NetMedia as well as Vodafone NZ. The winner is expected to be announced in late June.
Telecom NZ has, just like Telstra in Australia, been placed in a tough spot with the government plan: to participate or compete? Incorporating Telecom NZ’s infrastructure is a foregone conclusion, but the government has set an inflexible demand: 'wholesale only', leading to Telecom NZ 'voluntarily' suggesting a possible structural separation. This would be a step beyond the existing functional separation of retail, wholesale and network. The question now is whether retail should be separated from the rest (wholesale + network), or whether the network (Chorus) should be sold off. But Paul Reynolds, formerly of BT Wholesale, has also left open the option of competing with full UFB and not participating in the tender process.
It is clear that the government has put Telecom NZ before a difficult choice. Competing with public funds is generally difficult, especially if FTTP or FTTH (premise or home) is pitted against FTTC or FTTN (node or cabinet, with VDSL from there to the subscriber). Structural separation is considered by most telecommunications companies as a negative. The cost and risks are considerably high and companies lose the existing synergies from vertical integration, something that Paul Reynolds has explicitly explained. Shareholders are also wondering about those costs and risks, judging by the recent stock price plunge - which also takes into account the debacle in the mobile market with the difficulties encountered by Telecom Nz and Alcatel-Lucent in the rollout of a 3G network.Vodafone, also interested in FTTH, would see its market share improve.
It is clear that the benefits of structural separation have been ignored. First, a market inequality is removed because the incumbent is no longer the only one to enjoy the advantages of vertical integration and cross-subsidisation. Secondly, it is difficult to compete with your customer and that iss exactly what is going on between the retail and wholesale division. Some telecom companies are very clear when explaining this disadvantage, such as Bouwfonds in the Netherlands, which through CIFpurchased the CAIW infrastructure. CIF categorically refuses to take on the role of service provider. Axia NetMedia also subscribes to this view. Many telecom companies do not want to go beyond functional separation, with additional wholesale revenues due to open access obligations remaining with the incumbent. Moreover there are also good margins to be made (KPN wholesale roughly has double the margins of KPN retail).
The government is taking a clear stand and Telecom NZ is being forced to bend (structural separation) or bust (compete with UFB). This problem is worldwide, but is especially topical in New Zealand, Italy and Australia (see earlier commentaries “Telecom Italia 'forces' competition into FTTH initiative"). The consumer is the real winner here, because competition will increase anyway. And that is exactly what every government and regulator wants.
Wednesday, May 26, 2010
States busy preparing for NBN benefits
State-level NBN preparations are moving ahead at full tilt, with Victoria and New South Wales seeing a very real hunger for the high-speed connectivity promised by the project – and well into the process of laying the groundwork.
Speaking at the CeBit Australia conference in Sydney, NSW NBN Taskforce chair Peter Duncan (right) and Victorian Science and Technology director Matthew Dummett expanded on some of the NBN preparatory work going on in their respective states, and underlined the “pent-up demand” for the new network. “We’re acutely aware the government needs to lead the way in making engagement happen – waiting until the network is constructed is not an option,” said Duncan. “We need to act early and strategically, and that is what we’re doing.” He said that the NSW taskforce, which also includes CSIRO’s Dr. Alex Zelinksy, NICTA’s Dr. Terry Percival, and ATUG MD Rosemary Sinclair, was currently focused on:
• working with NBN Co to maximise benefits for the state economy
• providing applications development and training
• ensuring the planning process supports a speedy rollout
• leveraging state-owned land to help the rollout
• working for a priority rollout in NSW.
Duncan also revealed that the NSW Taskforce has completed a comprehensive audit of existing energy, road and rail assets in NSW that could be used to boost the NBN rollout – something that
McKinsey and KPMG actually drew upon in the NBN implementation study. And he added that the state was considering trialling solutions to the challenge of fibering multi-dwelling units.
Victoria is also busily forging ahead with NBN preparations. Dummett forecast that demand for NBNgrade superfast broadband would soon outstrip supply, leading to an unmet demand for the fastest broadband options – with the level of unmet demand for these services already estimated at around 220,000 customers, about 14% of the market. “That is the pent-up demand for fast broadband in Victoria. And it certainly makes some of the assumptions in the implementation study look conservative!” he said.
The state has commissioned a new set of reports reports from Gibson Quai and Access Economics tracking broadband uptake, to provide in-depth analysis and forecasting into the NBN future. Meanwhile, said Dummett, it is continuing to lay NBN groundwork via its VicFibreLINKS protected fibre optic backbone infrastructure project; the A$20 million Innovation Investment Fund, tipped to help drive the adoption of broadband-based applications; and evidence-based research to help get local policy settings to support the network.
Petroc Wilton, CommsDay
Speaking at the CeBit Australia conference in Sydney, NSW NBN Taskforce chair Peter Duncan (right) and Victorian Science and Technology director Matthew Dummett expanded on some of the NBN preparatory work going on in their respective states, and underlined the “pent-up demand” for the new network. “We’re acutely aware the government needs to lead the way in making engagement happen – waiting until the network is constructed is not an option,” said Duncan. “We need to act early and strategically, and that is what we’re doing.” He said that the NSW taskforce, which also includes CSIRO’s Dr. Alex Zelinksy, NICTA’s Dr. Terry Percival, and ATUG MD Rosemary Sinclair, was currently focused on:
• working with NBN Co to maximise benefits for the state economy
• providing applications development and training
• ensuring the planning process supports a speedy rollout
• leveraging state-owned land to help the rollout
• working for a priority rollout in NSW.
Duncan also revealed that the NSW Taskforce has completed a comprehensive audit of existing energy, road and rail assets in NSW that could be used to boost the NBN rollout – something that
McKinsey and KPMG actually drew upon in the NBN implementation study. And he added that the state was considering trialling solutions to the challenge of fibering multi-dwelling units.
Victoria is also busily forging ahead with NBN preparations. Dummett forecast that demand for NBNgrade superfast broadband would soon outstrip supply, leading to an unmet demand for the fastest broadband options – with the level of unmet demand for these services already estimated at around 220,000 customers, about 14% of the market. “That is the pent-up demand for fast broadband in Victoria. And it certainly makes some of the assumptions in the implementation study look conservative!” he said.
The state has commissioned a new set of reports reports from Gibson Quai and Access Economics tracking broadband uptake, to provide in-depth analysis and forecasting into the NBN future. Meanwhile, said Dummett, it is continuing to lay NBN groundwork via its VicFibreLINKS protected fibre optic backbone infrastructure project; the A$20 million Innovation Investment Fund, tipped to help drive the adoption of broadband-based applications; and evidence-based research to help get local policy settings to support the network.
Petroc Wilton, CommsDay
Monday, May 24, 2010
Telecom NZ considering splitting
Following a series of hints, Telecom NZ formally announced yesterday what had long been common knowledge: it is considering splitting its retail and network operations.
Previously Telecom has argued against separation and complained about the regulatory burden of its government imposed structural separation. However yesterday the company confirmed it is willing to fully separate its parts, if that’s the price of taking part in the New Zealand Government’s $1.5 billion ultrafast broadband program.
In a media statement Telecom NZ CEO Paul Reynolds said: “Telecom’s strong preference is to align the interests of its equity and debt holders with those of the Government and New Zealanders. The Government’s UFB initiative will fundamentally reshape the structure of the entire telecommunications industry in New Zealand and Telecom is therefore undertaking a thorough assessment of the merits of structural separation”.
Reynolds’ unambiguous declaration yesterday didn’t come as a complete surprise. In April Reynolds said his company was “open to working with the government on a wide range of approaches to its UFB initiative.” When asked if this included structural separation, he simply repeated “a full range of approaches.”
Telecom NZ also made a case for the regulatory burden to be eased. Reynolds said: “Telecom is required by legislation to deliver significant system and technology projects envisaged for a pre-fibre world. A large proportion of these projects must be deployed this year, so it seems sensible at this time to reassess these projects to avoid significant congestion and waste.”
The company has proposed three specific changes. First, it wants to suspend the forced bulk move of its existing broadband customers onto a new copperbased service. Second it would like the government to drop the requirement to move 17,000 customers onto a new VoIP over copper service by the end of this year. Last, it doesn’t want to build new wholesale systems not consistent with the UFB-era industry structure.
POLITICAL REACTION: Communications minister Steven Joyce issued a statement saying he regarded Telecom NZ’s announcement as positive. He said: “A potential structural separation of Telecom would involve a number of complex regulatory issues to work through. I am encouraging Telecom to work with Crown Fibre Holdings (CFH) and the Ministry of Economic Development.” Joyce said the CFH process allowed potential partners to raise relevant regulatory issues and Telecom wasn't the only company to have done so.
On the other side of politics, the Labour opposition communications spokesperson Clare Curran was less impressed. She said: “The government needs to reveal whether parallel discussions have been held with Telecom about structural separation while a closed tender process is underway to roll out ultrafast broadband to 75% of New Zealanders.”
Curran said the government should not bail out a troubled telco or deliver profit to shareholders –
especially if they are not New Zealand-based. During the day the company’s share price reached NZ$1.92 – an all-time low. The shares ended the day down 1.5% at NZ$1.96 while the overall NZX 50 Index rose 0.4%.
S&P GOES NEGATIVE: While Standard & Poor’s confirmed its ‘A’ long-term and ‘A-1’ short-term corporate credit ratings on Telecom NZ. The ratings agency revised its long-term rating on TCNZ to negative, from stable.
In a statement Standard & Poor's credit analyst Paul Draffin said: “We consider TCNZ's vertically integrated business model to be a key driver of the group's strong business risk profile. Accordingly, any separation of the fixed-line access network will have a material negative impact on TCNZ's business risk profile.”
The statement went on to say: “A lowering of the long- and short-term ratings on TCNZ could occur in the next 12-to-18 months if:
• TCNZ agrees to structurally separate it copper access network from the rest of the group;
• The group's financial profile deteriorates, including fully adjusted debt to EBITDA increasing to
more than 2x on a sustained basis; or
• There is a significant shift in earnings mix to lower-quality earnings sources, such as information technology services.”
Previously Telecom has argued against separation and complained about the regulatory burden of its government imposed structural separation. However yesterday the company confirmed it is willing to fully separate its parts, if that’s the price of taking part in the New Zealand Government’s $1.5 billion ultrafast broadband program.
In a media statement Telecom NZ CEO Paul Reynolds said: “Telecom’s strong preference is to align the interests of its equity and debt holders with those of the Government and New Zealanders. The Government’s UFB initiative will fundamentally reshape the structure of the entire telecommunications industry in New Zealand and Telecom is therefore undertaking a thorough assessment of the merits of structural separation”.
Reynolds’ unambiguous declaration yesterday didn’t come as a complete surprise. In April Reynolds said his company was “open to working with the government on a wide range of approaches to its UFB initiative.” When asked if this included structural separation, he simply repeated “a full range of approaches.”
Telecom NZ also made a case for the regulatory burden to be eased. Reynolds said: “Telecom is required by legislation to deliver significant system and technology projects envisaged for a pre-fibre world. A large proportion of these projects must be deployed this year, so it seems sensible at this time to reassess these projects to avoid significant congestion and waste.”
The company has proposed three specific changes. First, it wants to suspend the forced bulk move of its existing broadband customers onto a new copperbased service. Second it would like the government to drop the requirement to move 17,000 customers onto a new VoIP over copper service by the end of this year. Last, it doesn’t want to build new wholesale systems not consistent with the UFB-era industry structure.
POLITICAL REACTION: Communications minister Steven Joyce issued a statement saying he regarded Telecom NZ’s announcement as positive. He said: “A potential structural separation of Telecom would involve a number of complex regulatory issues to work through. I am encouraging Telecom to work with Crown Fibre Holdings (CFH) and the Ministry of Economic Development.” Joyce said the CFH process allowed potential partners to raise relevant regulatory issues and Telecom wasn't the only company to have done so.
On the other side of politics, the Labour opposition communications spokesperson Clare Curran was less impressed. She said: “The government needs to reveal whether parallel discussions have been held with Telecom about structural separation while a closed tender process is underway to roll out ultrafast broadband to 75% of New Zealanders.”
Curran said the government should not bail out a troubled telco or deliver profit to shareholders –
especially if they are not New Zealand-based. During the day the company’s share price reached NZ$1.92 – an all-time low. The shares ended the day down 1.5% at NZ$1.96 while the overall NZX 50 Index rose 0.4%.
S&P GOES NEGATIVE: While Standard & Poor’s confirmed its ‘A’ long-term and ‘A-1’ short-term corporate credit ratings on Telecom NZ. The ratings agency revised its long-term rating on TCNZ to negative, from stable.
In a statement Standard & Poor's credit analyst Paul Draffin said: “We consider TCNZ's vertically integrated business model to be a key driver of the group's strong business risk profile. Accordingly, any separation of the fixed-line access network will have a material negative impact on TCNZ's business risk profile.”
The statement went on to say: “A lowering of the long- and short-term ratings on TCNZ could occur in the next 12-to-18 months if:
• TCNZ agrees to structurally separate it copper access network from the rest of the group;
• The group's financial profile deteriorates, including fully adjusted debt to EBITDA increasing to
more than 2x on a sustained basis; or
• There is a significant shift in earnings mix to lower-quality earnings sources, such as information technology services.”
Sunday, May 23, 2010
New Zealand budget funding
There were few surprises when yesterday’s New Zealand budget allocated NZ$200 million of capital funding for ultra-fast broadband infrastructure during 2010-2011. This is not fresh money but forms part of the NZ$1.5 billion previously earmarked for the 10 year project which will see broadband rolled out around the country. The money adds to the NZ$248 million allocated last year bringing the sum committed to almost 30% of the expected total.
The government expects this sum to be ‘at least’ matched by private industry. In his budget speech New Zealand’s Finance Minister Bill English said: “Another major investment is the Government's ongoing investment in ultra-fast broadband infrastructure through Crown Fibre Holdings. Budget 2010 allocates a further $200 million of capital funding, in addition to the $248 million allocated last year, as part of a total expected investment of $1.5 billion. “This funding will enable Crown Fibre Holdings to start making substantial contract commitments with the private sector to start rolling out the new fibre network. A further $48 million has been allocated for ultra-fast broadband in schools.”
The government expects this sum to be ‘at least’ matched by private industry. In his budget speech New Zealand’s Finance Minister Bill English said: “Another major investment is the Government's ongoing investment in ultra-fast broadband infrastructure through Crown Fibre Holdings. Budget 2010 allocates a further $200 million of capital funding, in addition to the $248 million allocated last year, as part of a total expected investment of $1.5 billion. “This funding will enable Crown Fibre Holdings to start making substantial contract commitments with the private sector to start rolling out the new fibre network. A further $48 million has been allocated for ultra-fast broadband in schools.”
Friday, May 21, 2010
CommsDay Auckland Summit
NZ Commerce Commission telecom commissioner Dr. Ross Patterson and Chorus CEO Mark Ratcliffe have identified several key challenges for New Zealand’s transition to a fibre future, from uptake issues to resistance from a well-entrenched copper culture.
In their respective speeches at the CommsDay Auckland Summit, Patterson and Ratcliffe approached the state of New Zealand broadband from the very different perspectives of commercial stakeholder and regulator, but nevertheless touched on several of the same issues.
Both highlighted cutover and fibre adoption rates as very real hurdles. Patterson (right) picked up the example of Japan, with just 30% uptake of ultra-fast broadband despite 90% of households now being connected to fibre, and the incumbent now threatened with structural separation as a result. “‘Build it and they will come’ has not been shown to the case in Japan... clearly, the copperfibre transition raises interesting issues,” he said. Ratcliffe, meanwhile, warned that the challenges of cutover should not be underestimated, adding that many developers were still reluctant to run fibre to new properties in the face of the strength and diversity of existing copper services.
The commissioner’s own assessment of the current fibre market went into more detail on the state of play in copper. Patterson pointed out the strong growth in the ULL market – to 10% of all connections by the end of the March 2010 quarter – despite New Zealand’s late move to unbundling, and fears of FTTN cabinetisation cannibalising the addressable market. He also noted the imminent VDSL wholesale launch from Telecom.
Given this enduring popularity of DSL, Chorus is looking at ways to capture the copper market while still leaving the door open for fibre. According to Ratcliffe, the firm has developed a hybrid copper-fibre cabinet for greenfields that uses microducting to accommodate the different access demands of different customers. “You can pull the copper out of a microduct and blow fibre through it,” he said. “And the cabinet can provide both point to point and GPON.” This kind of fibre flexibility feature may provide some reassurance for Patterson, whose final point
was an argument for the competitive benefits of point-to-point over PON technologies. “Point-to-point provides the most open and flexible architecture, with the highest potential bandwidth and feature innovation, and the most flexible for competitive collaboration,” he asserted. “One of the big challenges is the danger that to save costs, a decision is made to adopt a PON architecture that cannot be unbundled effectively.”
“Some say that in five years’ time there will be some technology that is able to unbundle PON, but that’s a complete unknown; we would certainly say that the extra investment now is critical to get the competitive outcomes that the initiative was designed for.
In their respective speeches at the CommsDay Auckland Summit, Patterson and Ratcliffe approached the state of New Zealand broadband from the very different perspectives of commercial stakeholder and regulator, but nevertheless touched on several of the same issues.
Both highlighted cutover and fibre adoption rates as very real hurdles. Patterson (right) picked up the example of Japan, with just 30% uptake of ultra-fast broadband despite 90% of households now being connected to fibre, and the incumbent now threatened with structural separation as a result. “‘Build it and they will come’ has not been shown to the case in Japan... clearly, the copperfibre transition raises interesting issues,” he said. Ratcliffe, meanwhile, warned that the challenges of cutover should not be underestimated, adding that many developers were still reluctant to run fibre to new properties in the face of the strength and diversity of existing copper services.
The commissioner’s own assessment of the current fibre market went into more detail on the state of play in copper. Patterson pointed out the strong growth in the ULL market – to 10% of all connections by the end of the March 2010 quarter – despite New Zealand’s late move to unbundling, and fears of FTTN cabinetisation cannibalising the addressable market. He also noted the imminent VDSL wholesale launch from Telecom.
Given this enduring popularity of DSL, Chorus is looking at ways to capture the copper market while still leaving the door open for fibre. According to Ratcliffe, the firm has developed a hybrid copper-fibre cabinet for greenfields that uses microducting to accommodate the different access demands of different customers. “You can pull the copper out of a microduct and blow fibre through it,” he said. “And the cabinet can provide both point to point and GPON.” This kind of fibre flexibility feature may provide some reassurance for Patterson, whose final point
was an argument for the competitive benefits of point-to-point over PON technologies. “Point-to-point provides the most open and flexible architecture, with the highest potential bandwidth and feature innovation, and the most flexible for competitive collaboration,” he asserted. “One of the big challenges is the danger that to save costs, a decision is made to adopt a PON architecture that cannot be unbundled effectively.”
“Some say that in five years’ time there will be some technology that is able to unbundle PON, but that’s a complete unknown; we would certainly say that the extra investment now is critical to get the competitive outcomes that the initiative was designed for.
Thursday, May 20, 2010
Vodafone NZ signs backhaul deal with Telecom NZ
Wellington’s The Dominion Post reports Vodafone has signed a NZ$150 million deal which will see Telecom NZ provide internet backhaul. The deal was mentioned, without naming the customer, earlier this month when Telecom NZ CEO announced the company’s third-quarter financial results.
Vodafone is already a customer with Telecom NZ, FX Networks, TelstraClear and Vector. Last week the company was revealed by Axia Netmedia as the mystery partner working with the Canadian company as it bids for the New Zealand government’s NZ$1.5 billion ultrafast broadband project. At the time of that announcement it said if Axia was successful it would use that company’s fibre backhaul.
Telecom Network Operator News compiled by iToolsOnline
Vodafone is already a customer with Telecom NZ, FX Networks, TelstraClear and Vector. Last week the company was revealed by Axia Netmedia as the mystery partner working with the Canadian company as it bids for the New Zealand government’s NZ$1.5 billion ultrafast broadband project. At the time of that announcement it said if Axia was successful it would use that company’s fibre backhaul.
Telecom Network Operator News compiled by iToolsOnline
Friday, January 1, 2010
Telecom New Zealand could be split into two listed companies
Telecom New Zealand could be split into two listed companies giving shareholders exposure to the fortunes of both Telecom's retail business and its fibre business, chief executive Paul Reynolds has suggested this morning at an investor briefing in Sydney.
Reynolds introduced a de-merger as a new alternative to achieve the structural separation Telecom believes is inevitably required if it is to participate in the government's $1.35 billion ultra-fast broadband project.
Speculation on how Telecom would split itself has centred so far on the partial or total sale of Telecom's Chorus unit, either in a trade sale or by being nationalised.
A fourth option for Telecom is non-participation in the UFB project and to go it alone and compete with the new operator, Reynolds said, although such a business would be weighed down by what he described as having gone from one of the least regulated to the "the most heavily regulated" telecommunications market in the world.
Reynolds said a partial sale of Chorus was "unlikely to deliver sufficient value", given the current political and regulatory climate, which has radically weakened Telecom's market position and future outlook as telecommunications infrastructure moves from Telecom's copper-dominated network to very high-speed fibre.
A full sale of Chorus was a possibility, "but we think it might cost a bit more," Reynolds said. "It requires a significant lift in the value of the demerged business."
The advantages of a de-merger option might be to attract a better regulatory outcome for both businesses while allowing shareholders a bet on which of the two was the better long term proposition.
"Which of these businesses will be more successful?" said Reynolds.
"Who knows? Shareholders would remain invested in both and de-risked from some of the uncertainty in the future."
Telecom shares were trading 0.5 per cent higher this morning at $1.91, having found support in the last day as the country's largest listed stock and contributor to the NZX50 Index plumbed historic lows in the uncertainty created by the conversion of regulatory issues and the UFB project.
Reynolds introduced a de-merger as a new alternative to achieve the structural separation Telecom believes is inevitably required if it is to participate in the government's $1.35 billion ultra-fast broadband project.
Speculation on how Telecom would split itself has centred so far on the partial or total sale of Telecom's Chorus unit, either in a trade sale or by being nationalised.
A fourth option for Telecom is non-participation in the UFB project and to go it alone and compete with the new operator, Reynolds said, although such a business would be weighed down by what he described as having gone from one of the least regulated to the "the most heavily regulated" telecommunications market in the world.
Reynolds said a partial sale of Chorus was "unlikely to deliver sufficient value", given the current political and regulatory climate, which has radically weakened Telecom's market position and future outlook as telecommunications infrastructure moves from Telecom's copper-dominated network to very high-speed fibre.
A full sale of Chorus was a possibility, "but we think it might cost a bit more," Reynolds said. "It requires a significant lift in the value of the demerged business."
The advantages of a de-merger option might be to attract a better regulatory outcome for both businesses while allowing shareholders a bet on which of the two was the better long term proposition.
"Which of these businesses will be more successful?" said Reynolds.
"Who knows? Shareholders would remain invested in both and de-risked from some of the uncertainty in the future."
Telecom shares were trading 0.5 per cent higher this morning at $1.91, having found support in the last day as the country's largest listed stock and contributor to the NZX50 Index plumbed historic lows in the uncertainty created by the conversion of regulatory issues and the UFB project.
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