National Broadband Networks: Previewing In Australia, Coming To You Soon

The current Australian government was one of the first governments to articulate its vision of a national broadband network (NBN). But since its election in 2007, it has been locked in a struggle with the incumbent operator Telstra on the role it should have in the NBN and, if so, what this should be. For much of the past two years, the two parties seem to have been determined to not work together on an NBN, but then suddenly agreement was announced earlier in the week. How come?

The answer is, whichever way you look at it, neither could do without the other. For Telstra, the last thing it wants is a national network that competes directly with its own. In the cities this is no big deal, but in the rural areas (and there are a lot of these in Australia), this would have been economic madness for both. So Telstra needed a deal.

The same is true for the government. Over the past decade, the relationship between the government (of whatever party), the regulator (the Australian Competition & Consumer Commission [ACCC]), and Telstra has been fraught with acrimony. But if the government is to deliver an NBN to rural areas, the only workforce with the skills to install, operate, and maintain this is located in Telstra. So it needs Telstra support to make an NBN happen in practice.

What made the deal possible was a mix of things — the appointment of a new CEO at Telstra, a recognition in government and Telstra of their interdependence, the willingness to negotiate a deal, and an impending election that forced the hands of both. The result is a Heads of Agreement on a way forward. It is inevitably a compromise, but it is also a way out of the impasse that is good for both.

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South African Magic - Brought To You By ICT

The 2010 FIFA World Cup begins today in South Africa - not that you could miss it with the blanket coverage across all media outlets. The tournament covers 32 teams, 64 matches, in 10 stadia, watched by 3.7 million spectators, as well as a worldwide TV audience measured in the billions. As a football fan I will be captivated with the spectacle and gripped by the drama as it unfolds in what has been described as the biggest show on earth. Magic indeed.

But, although the FIFA World Cup is large, it is certainly not the biggest show on earth. That title, as a sporting event, undoubtably goes to the Olympic Games. A simple comparison of the numbers involved explains the diffences between the 2010 South Africa FIFA World Cup and the London 2012 Olympic Games - 776 footballers (32 teams x 23 players each) versus 14,000 athletes, 11 stadia versus 94 venues, 32 teams versus 205 countries, 3.7 million spectators versus 10 million, etc., etc. In short, the London 2012 Olympic Games will be an order of magnitude bigger.

Most of us enjoy the spectacle, whether it is the World Cup or the Olympic Games (or both in my case). But bringing this spectacle to the billions of us watching from afar, the spectators in the stadia, and the paticipants is as much an information and communcations technology (ICT) challenge as any other. For example, the Games Management System (GMS) that will orchestrate the participants, events, and scoring is a mix of information technology (IT) and communications platforms and infrastructure. For this reason, we are writing a series of articles on the lead up to London 2012 to illustrate what enterprises can learn from this huge sporting event. The point is that ICT is as critical to the Olympic Games as it is to all enterprises (large and small).

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Ericsson And Forrester Share A Bright Vision For The Communications Sector

I followed the Ericsson Capital Markets Day last week on the live webcast, and it was fascinating too, particularly their vision for the communications sector. They believe we are about to see a third and distinct phase in the development of the sector. First came fixed communications, which over the past 100 years has enabled 750 million buildings to connect. Second, (and still underway) is the mobile era that will enable 5 billion people to communicate. But over the next decade and a half will come a third stage where up to 50 billion things (cars, appliances, office machines, cargoes, etc.) will connect to the network using machine-to-machine (M2M) technologies. 

We share this vision with Ericsson. Last year in a report titled New Business Models Emerge For Telcos we said there would be more change in the next decade than happened in the past century. We touched on the broadening of the definition of communications traffic, how communications will become intelligent, and the move to transaction pricing - all three echoed by Ericsson. In March this year, my colleague Michele Pelino set out our view on M2M in her report, The M2M Market Is A Blossoming Opportunity. I followed this up with a case study to illustrate how M2M technology is real today and not just about potential - see the report, Case Study: How Orange Business Services Is Building A New Machine-To-Machine Market 

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Elections, Elephants, Economies, And VW Recovery: We Told You So

In the UK we are now in the final days of the election campaign to choose the next government. This election has been unique. For the first time ever in the UK, there have been live TV debates between the leaders of the three major political parties. In all three 90-minute TV debates, the elephant in the room has been what to do about the huge public sector debt taken onboard in 2009 to rescue the banking system from collapse. Four and a half hours later and all three main parties avoided spelling out to the UK electorate the true scale of the challenge the election victor will inherit on Friday this week.

But the elephant in the room is not simply a political issue in the UK alone, it has a real economic impact as the citizens of Greece are discovering at the moment. In most European countries, the public sector accounts for around 40% of activity in an economy, and the amounts borrowed by governments during the financial crisis are around 10% of GDP. With such large public sectors, it is difficult for governments to borrow against the taxation revenues. In the case of Greece the cost of borrowing soared forcing the government to secure loans from the IMF and EU. With a weak economic recovery across Europe, and with similar market concerns regarding government debt in Portugal, Spain, Italy, and Ireland, it looks like more uncertainty for Europe in the coming months.

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Is Structural Separation The Ticking Time Bomb In Telecoms?

Last week Japan's government was reported to be revisiting plans to carve out the NTT access network and place it into a separate business - a process called structural separation. The access network covers the connection from a home or business to a service provider's street cabinet. Next month the government of Australia is expected to put forward legislation to impose structural separation on the incumbent Telstra. Structural separation was first implemented in the UK in 2006 when BT created Openreach, a move that was subsequently replicated in New Zealand.

Structural separation is an area we have covered in our research. Two years ago, we published a report called Access Structural Separation And Regulation Gain Traction where we offered advice to incumbent strategists. The advice was twofold: 1) Telco strategists need to understand the latest developments and formulate an appropriate response; and 2) they must adopt a new mindset and treat this conversation as an opportunity to negotiate a positive outcome - not a confrontation.

To most incumbents, the idea of structural separation is, of course, a complete anathema. But, as the examples of Japan and Australia show, it remains on the agenda of regulators and governments. So structural separation is, for incumbents, a bit like a ticking time bomb. Whether incumbents accept it as a concept or not they cannot ignore it, so they must have a strategy worked out in advance to deal with it. In short, the advice we gave in our report of the topic two years ago is as relevant today as it was when it was written.

But what do you think? I'd be happy to discuss further.

Bharti at last gains a foothold in Africa

Bharti Airtel is one of the fast-growing mobile players in India, and it has been looking to expand overseas for some time. It identified Africa as a target, and last year it tried (and failed) to merge with MTN of South Africa. This would have created the second largest mobile player in the world. But Bharti is nothing if not persistent.On Tuesday this week Bharti confirmed that it had acquired the African assets of Zain the Kuwaiti mobile company. As a result Bharti becomes the fifth largest mobile operator in the world.


So what? This deal means that Bharti is now a partcipant in what we have described as "the new scramble for Africa" alongside France Telecom, Vodafone and Etisalat. Because Africa is one of the last continent to embrace mobile communications, the potential benefit for Bharti and others is that those mobile operators who get in early can get carried along by the rapid growth phase and can build substantial businesses quickly. So this deal catapults Bharti into the mobile premier league.


But what is even more interesting is that Bharti is not just another mobile player -it has a unique business model as outlined in our report New Business Models Emerge For Telcos. Bharti describes itself as a services business, so it concentrates on providing service to customers and outsources all it's IT (to IBM) and networks (to Nokia and Ericsson) in return for a slice of the call revenues. So Bharti does not own its networks and IT stacks. It's reasonable to assume that it will replicate this approach in Africa, and, if it is successful, this will put pressure on the other mobile players to consider copying their unique business model.


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M2M - back again but it's different this time.

Machine-to-machine (M2M) communications is back - judging by the number of press announcements released by various players. The Vodafone/Verizon Wireless/nPhase announcement at Mobile World Congress in Barcelona illustrates the point. Forrester is on to the M2M case too. Earlier this month my colleague Michele Pelino published a paper titled The M2M Market Is A Blossoming Opportunity. We have also published a case study on the topic too - see the Forrester paper titled Case Study:How Orange Business Services Is Building a Machine-To-Machine Market. The two reports were planned to complement each other, explaining the big picture and giving a practical illustration of how Orange Business Services is addressing the M2M opportunity.


Of course, those of you with long memories will recall that we have been here before. In our view M2M initially failed to take off because the ecosystem was not in place to enable solutions to be put together easily. But this time it is different - AT&T, Telenor, and Telefonica are all active in the M2M market in addition to Vodafone and Orange Business Services. But what about you - what do you think. I'd be happy to hear your take and discuss further.

Tata and Huawei: New-style competitors and change agents in the ICT ecosystem

I recently attended the Tata Communications Analyst event in central London, and fascinating it was too. Tata Communications is a domestic Indian, South African and International communications service provider comprising the former businesses known as VSNL, Teleglobe, Tyco, Neotel and DishnetDSL. All were acquired in the past few years. Tata Communications is part of the Tata IT and Communications division (ITC) that also includes Tata Consultancy Services (TCS - the systems integration, applications, and outsourcing business) which in turn is part of the Tata Group conglomerate.


So what? What makes Tata Communications interesting is they are part of the ITC division alongside TCS. If anything symbolizes the fusing of IT and communications into ICT (Information and Communications Technology) over the past decade in one business then this is it. This is important because the traditional telecoms cascade supply-chain is being replaced by an integrated ecosystem (see Forrester research Farewell to the Traditional Telecom Ecosystem). As a consequence Tata can play multiple roles (rather than predominantly one as is the case for many of their rivals) and so is a new type of player. 


But Tata are not alone. Late last year I spent some time with Huawei - the Chinese Network Equipment Provider (NEP)- at their EMEA H.Q. in Germany. Apart from posting spectacular revenue growth figures (in contrast to their established western-based NEP rivals) it is also busy creating a systems integration business too. They have seen the parallel growth of the IT Services sector and have decided they want a slice of this pie too. With the resources and determination they have it would take a brave person to bet against them succeeding.

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Reflections on MWC: Its all about networking and knowledge sharing

According to the GSM Association, 49,000 people attended the annual Mobile World Congress (MWC) in cold wet Barcelona last week. The weather was not a metaphor for the event which has maintained its glitz even though it is no longer a showcase for all devices new. Sure there were plenty of cool handsets on view, but this indicates how the mobile sector has matured into something different - a theme we will pick-up in research to be published shortly.

But what MWC has really become is one great big networking event, and Forrester was there in the thick of it.  Personally met with senior executives from Alcatel-Lucent, Orange Business Services, Cisco, HP, Amdocs, Telefonica, Wipro, Tieto, Oracle, Comptel and Convergys; and had the opportunity to hear what Nokia Siemens Networks (NSN) and Motorola had to say in my 2 days at the event. Other Forrester colleagues had equally full agendas, as is the way at MWC. As ever these interactions were as much about explaining our take on developments as hearing announcements (of which there were many).

From these meetings, podium presentations, and a deluge of press releases, four things stand out to me. They are:

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Duct sharing - whatever next! The changing face of wholesale communications

The deregulation of the UK communications market began in 1984 and heralded the start of the competitive era. This week the UK regulator Ofcom removed one of the last vestiges of the monopoly era by requiring BT to open it's ducts to allow wholesale rivals to lay fiber cables in them if they wished to do so. This change was supported by the incumbent BT, which just goes to show how far the industry has changed since the dawn of deregulation!

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