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There will be 250 million mobile Internet subscribers by the end of 2009. A post on GigaOm goes into great depth about the state of wireless broadband. By September of this year EMEA (Europe, M. East, Africa) will have 60 million subscribers, North America 37 million, and Asia-Pacific will have 56 million mobile broadband users. All indicative of the reality that mobile broadband will be a key gateway for users to get onto the Internet.
These are all signs that the emerging wireless broadband network — regardless of the networking protocol is good for innovators and innovation. More entrepreneurs should be thinking about leveraging this wireless broadband platform in a more meaningful fashion. In developing and emerging markets, this could see technology helping people overcome everyday struggles and generate whole new sectors to economies.
The graphic below helps put the emergence of mobile broadband in context:
Click to view in High-Resolution
Regulators more willing to put telcos under the lens
Presently attempting to work through a large backlog of articles. The article that is the basis of this post continues to keep the spotlight on the regulatory changes being proposed for Telstra. Australia’s incumbent operator is squarely in the sights of Australian regulators:
Australia’s competition watchdog said imposing a tough structural separation regime on Telstra Corp. (TLS.AU) is the only way to guarantee an equal playing field during the transition to a planned multibillion dollar national broadband network but the company argues there’s no need for such a move.
This calls for looking at regulatory issues comes while Australia attempts to roll out the $43 billion NBN:
An earlier post outlined how regulators in Australia would require Telstra to agree to a functional separation of its network and retail operations. This post is an attempt to explain how a shifting regulatory environment is forcing major changes for Australia’s incumbent operator. Later this week, another post on Telstra will highlight a recent court verdict which forms the basis for why funtional separation is an unavoidable reality for network operators like FINTEL.
Leadership at telecom operators around the Pacific would be wise to look at the situation Telstra finds itself in down under. The Australian, reports on what can only be described as an implosion. Telstra finds itself battling government regulators, trying to piece together a functioning board of directors, selecting a successor
Telstra comes under attack on many fronts
for a very controversial CEO who has been sent packing, and in the latest development, likely prospect of a shareholder revolt.
Under the confrontational leadership style of CEO Sol Trujillo, the company has for years bristled at what they called burdensome government regulation. At times, this has resulted in Telstra carrying out a quite vocal campaign against Canberra. The aggressive stance of the company under the Trujillo-era culminated in the recent exclusion of Telstra’s bid to tender for construction of a national fiber network and the government opting to go the process under its aegis.
Unwired Fiji has selected Motorola to deploy its next-generation WiMAX network in Fiji. A very positive development. Coming in front of the July 17th announcement, it’s proof that operators are willing to invest in considerable upgrades that expand network coverage and increase performance.
From Communications Direct:
Motorola announced today that it has been selected by Uniwired Fiji to design and deploy an end-to-end 8012.16e-based WiMAX network to upgrade and provide increased capacity to the operator’s existing network for expansion of network coverage and capacity.
In the Philippines, The National Telecommunications Commission (NTC) has allowed Globe Telecom to ‘make permanent its mobile internet service for post-paid subscribers’. The company offers monthly subscriptions starting at PHP149 (USD3.1), giving ten hours of mobile internet. A low-priced introductory service option is critical for expanding Internet usage in the population.
Governments are reassessing regulations toward telecommunications as they look for investment in next-generation wireless networks. In Vietnam, significant reforms are being put in place, including provisions for foreign-ownership of network infrastructure. According to a Telegeography update:
… the country’s draft Bill of Law on Telecommunication has been put forward for discussion at the National Assembly Steering Committee. If passed, the bill will allow private companies to build network infrastructure for the first time and will open up the telecoms market to foreign investors, as part of Vietnam’s commitment to the World Trade Organisation (WTO).
In the Asia-Pacific region, there’s a great deal of activity that impacts the deployment of wireless networks and services. Again we see governments taking steps to change policies and increase investment in next-generation networks. A nation like Vietnam opening itself up to outside investment in telecom infrastructure is a sign of how old attitudes are making way for new pragmatism.
Telstra has received clear signal of change in policy direction from Canberra
Last week, an unprecedented $43 billion plan to build a next-generation national fibre network was announced by the Australian Government. The announcement is a change in direction by the Government, which is now seeking a public-private partnership to deploy a fibre-to-the-home network covering 90% of Australians in the next eight years. The paper also outlines new measures the Government and regulatory bodies will pursue to foster greater competition. The move has great implications for incumbent operator, Telstra, now facing a very different competition landscape and downward pressure on its stock price.
A key new addition to the toolkit of regulators is functional separation, where the incumbent operator (owner of the network) is required to create a separate network unit which handles essential network services to other providers and to the incumbent’s own retail units at the same prices and using the same non-price terms and conditions and processes.
Landing a submarine cable is no small task (Source: SPIN presentation)
An Up-to-date primer on the state of submarine cable projects in the Pacific Region is titled Trans-Pacific Capacity: Possible New Price War? It includes a section that heavily references the South Pacific:
The latest construction wave began in 2006 and has been centered on the Asian and Pacific Regions. The current round of activity started with the Gondwana, Australia to New Caledonia system,Telstra’s Australia to Hawaii system and six new trans-Pacific cables. These new cables are the Trans Pacific Express, Asia American Gateway, FLAG’s Eagle, Next Generation Network, and the Unity cable projects (Source: TMC).
Out of these six projects, only one faces significant delay:
Growing demand for traffic in South Pacific, means that infrastructure needs have to be re-examined. You can read from a sample of previous Coconut Wireless posts on the issue here:
- update on the SPIN cable project
- upgrades to the Southern Cross Cable Network
- developments with the American Samoa-Hawaii (ASH) cable
- launch of the Gondwana cable connecting New Caledonia – Sydney
The literature on Internet affordability and accessibility in the Pacific is pretty clear on the explosive growth in IP traffic the region is set to undergo. But behind a statement like “demand for internet access will be 192% greater in the Solomons Island” is a more complicated picture of demand for internet services in the islands.
Consider the following chart of international voice calls from countries in the region:
This graph is from a report titled “Satellite services in the Pacific” compiled by Network Strategies, a consulting firm (Download the PDF of the full report here). It is a representation of the number of minutes used by people in the Pacific making international phone calls. Note the general upward trend, showing a growing demand for international service.
Since 2004, Fiji’s outgoing minutes have been in decline, something that can be attributed entirely to the proliferation of VOIP services like Skype.
What would this graph look like if projected out to 2009? The general decline in minutes used over traditional land-lines would continue downward as more voice traffic in Pacific countries is diverted the Internet.
As more users become fluent with VOIP offerings, telecom operators will face the same fate as those in other parts of the world:
Thanks to European broadband service providers treating voice as a loss leader to attract triple-play customers, local voice has become almost free in Europe, according to research conducted by Telegeography, a division of market research firm PriMetrica.
Source: GigaOM “In Europe, VOIP Grows and Grows“
Triple play refers to the provisioning of telephone service, broadband, and television over one network by a single provider. As landlines become less profitable for telecoms in Fiji, the providers will inevitably have to move toward providing voice services in the manner described above, as a loss leader for broadband internet and TV. Yet another reason to make sure regulatory policies ensure a competitive environment.
If this makes no sense to you yet, don’t worry as it’s causing sleepless nights for our existing telecoms. Right now, in high-rise offices all over capitals in the Pacific, people with Accounting degrees are examining spreadsheets very closely trying to figure what these shifts in traffic mean for future profitability.
Yet, no discussion of future possibilities for retail services and offerings can proceed without assessing the underlying need for cheaper backhaul facilities. The chart below is taken from a World Bank report (Download the PDF of the full report here):
Proposed Cable projects. click image to view in Hi-res. (Source: World Bank)
The chart shows three types of proposed networks: regional, sub-regional, and point-to-point. Point-to-point refers to connecting two countries directly. The World Bank does not have recommendations for many projects of these types, tending to throw its support for projects which solve the connectivity issue at the regional level. The few instances where they support sub-regional projects are for the Solomon Islands, Tonga, and Samoa to connect to the infrastructure in Fiji (Southern Cross Cable Network).
By far, the most promising project is the regional New Caledonia to French Polynesia project. Trying to connect the two French territories to each other would present opportunities for many other Pacific Island countries to jump onto a project which could bring significant additional bandwidth capability. But, with an estimated price tag of USD $250 million, this project will be a long time in getting past the planning stages (a big reason to hope for the success of efforts like O3B Networks).
The same World Bank report shows how countries in the region could share in the costs of deploying the NCFP cable:
NCFP costs and benefits shared by countries in the region. Click image to view in Hi-Res (Source: World Bank)
Under this scenario, all participant countries could benefit and help help shoulder the costs of the project. To become reality, significant policy and regulatory hurdles would have to be overcome to ensure all participant countries receive access to the cable.
On Wednesday, I had the chance to speak with representatives of O3b Networks via conference call. I talked to Nara Sihavong who is their Regional Director of Sales, Asia-Pacific. Also on the call were John Dick, from Regional Sales and Mike Serrano, Director of Marketing. Together, they updated me on what has been going on at O3b since the launch of operations in Sept. ‘08. They also briefed me on the company’s plans in the Pacific.
ITU Ministerial Forum in Tonga, Feb 17-20: "Connecting the Unconnected"
O3b launched operations in September of 2008 with Google, HSBC, and Liberty Global as primary investors. Initial focus of the company’s sales and marketing efforts has been on African countries. However, O3b’s overarching mission is to provide improved connectivity for emerging economies, the “other 3 billion”. They have been quick out of the gate, signing agreements with several operators & ISPs, including the Microcom, the largest ISP in the Democratic Republic of Congo.
Coconut Wireless has covered O3b Networks here, here, and here. O3b’s presence at PTC ‘09 in Honolulu was the kick-off of its efforts in the Pacific. It was at PTC ‘09 where they revealed details of their plans to offer improved connectivity to the Pacfic Islands.
The recent ITU meeting in Tonga was part of this effort and the O3b team met with Ministerial level delegates to pave the way for further talks in Pacific Island nations. Nara then spent a week in Fiji, where he held meetings and discussions with the telecom operators.
He reports an enthusiastic response from the operators and adds that he sees the business development units within these companies moving with an urgency that reveals their understanding of what increased competition means for market dynamics.
Nara Sihavong
O3b also met with the members of the Communication Ministry and outlined to them the kind of support and guarantees government would have to come forward with in order to get services underway in Fiji. For ministers in the region, O3b offers a new pathway to building up ICT sectors which can become generators of employment and income.
As a provider of backhaul service, O3b would not provide direct service to customers in the region. Instead, they are looking for agreements with ILECs, CLECs, mobile providers and ISPs. For remote areas not currently served, O3b would be interested in talking to entrepreneurs interesting in building ISPs.
When agreements are in place, O3b will work with existing operators in Fiji, like FINTEL, Vodafone, TFL, and Digicel. O3b is also in similar discussion with operators in other Pacific countries. Any provider who signs on with O3b gains superior quality connectivity to the international infrastructure, something that is only possible now through two very expensive options, the Southern Cross Cable Network or GEO satellite service providers.
With O3b, at the national level, governments do not have to wait for undersea cables. A look at the following map of the region will show how O3b is mapping all the islands for service:
Proposed coverage for Pacific Islands (Please click image to view in Hi-res)
They can leap frog that process that can take years, take a look at what O3b can do and create a congruent domestic and international network to inter-connect all their remote islands:
How O3b works: A diagram of QuickStart and QuickVar Solutions
O3b would provide the backhaul service and the telecoms would deploy wireless (WiMAX or LTE) or cable networks to reach customers. Signing service agreements with O3b would mean realizing huge cost savings, which hopefully is the incentive that the incumbent telecom operators need to ensure wider propagation of services at much lower costs.
View Slideshow with company info:
PowerPoint available for download here (approx. 3 MB)
3.5m fixed terminal for Tier 1 service
The savings are significant. Telecoms in the Pacific currently pay in the range of $3,000-$6,000/mbps, where O3b can provide superior service at a fraction of that cost: $600/mbps for QuickStart.
O3b is a Medium Earth Orbit (MEO) operator meaning much smaller satellite dishes are required. This is because the satellites will orbit about 8,000 km above earth, as opposed to the 36,000 km of existing Geostationary (GEO) platforms. This is an important distinction because it means significantly lower costs for ground equipment. The shorter distance that the signal has to travel to reach a satellite in MEO orbit is what allows for low-latency connections. As MEO technology becomes more widespread and cheaper, even greater savings could be realized. Learn more about what MEO and GEO mean.
A large part of our conversation revolved around the regulatory picture in the S. Pacific. With the ADB and World Bank pushing for liberalization of telecommunications in the region, there is for the first time considerable pressure to change the status quo, which has protected monopolies and the high prices and poor service they offer.
According to Nara, O3b’s technology offering necessitates a re-examination of plans for coping with future infrastructure needs. This moment presents an opportunity for telecom operators, regulatory bodies, and those at the ministerial level to look at their long-term planning and reformulate their outlook for the next 5 and 10 years.
O3b Service can help ISPs and mobile providers address their needs
There are early signs of misunderstandings that can take place. As the people who have to ensure successful implementation of liberalization efforts, regulatory bodies have a key role to play. In Papua new Guinea, regulators require fees for licensing satellite operators to provide service. This is a deviation from normal practice and could be a hindrance to O3b’s entrance into the PNG market.
The challenge is on for all stakeholders in the Pacific to be creative in getting the most out of this technology. In my early posts on Ensuring Universal Access (Part I, Part II), I outlined how next generation wireless deployments should allow for ‘piggybacking’ for schools and emergency services. For this to be realized, this is something that regulators need to demand of operators.
John remarked that the game-changing technology is an example of how innovation is being used to overcome a real problem. Low-cost satellite offers the potential to deploy ubiquitous Internet coverage, dramatically altering the landscape of what is possible for the economies of these countries. This is something not true of submarine cable projects, which can languish on the drawing board for years without any real progress.
For many Pacific countries who have been contemplating spending many millions to get undersea fiber connections , the dream of high-speed connectivity is a step closer to reality. With O3b, they can pursue fiber-like connectivity at a fraction of the cost, allowing them to invest in other projects critical to social and economic development.
Getting from here, to where we need to be...
For several weeks now, I have been parsing through websites and academic papers trying to understand the available literature 
on telecommunication policy. An earlier post on O3b referenced the International Telecommunication Union meeting in Tonga.
One of the outcomes from this meeting was a direction for ‘officials to work toward establishing a shared regulator resource centre at the earliest possible date.’
From its founding, this has been exactly the goal for this blog, to be a resource for everyone in the region to better understand how ICT and telecommunications liberalization impacts the lives of those living in the Pacific.
In true Pacific fashion, island nations have shown up late for the telecommunications liberalization party. This is regrettable, but it presents us with the opportunity to study how liberalization has fared in other countries in the world. In the literature on development, this is referred to as the benefit of being a latecomer.
Of course, it’s only a benefit if we learn the right lessons, make the appropriate comparisons, and take the necessary steps to avoid pitfalls faced by other nations who attempted to bring about change to their telecommunications sector.
Read about telecommunications policy and failures of liberalization in South Africa, as well as challenges faced by small economies, particularly relevant for the small island states of the Pacific.
There is an overwhelming amount of information that is available on this topic from online sources.
Click above image to view table of contents for ITU's ICT Regulation Toolkit
The plan is to have this become the first in a series of posts that will examine issues of telecommunications policy pertaining to liberalization and regulation.
To get a better understanding, it’s helpful for us to develop a road map to better put into perspective the many issues of concern. For our needs, the framework of analysis is offered in Section 2.4 of the ICT Regulation Toolkit, which outlines responsibilities of a good regulatory body:
- implementating the authorization framework that provides opportunities for new companies and investors to establish ICT businesses. Simple authorization procedures tend to maximize new entry (see Module 3);
- regulating competition (including tariffs) involving the effective enforcement of fair and equitable competitive market principles, restraining the power of dominant suppliers and leveling the playing field for new entrants (see Module 2);
- interconnecting networks and facilities. Normally transparent rules are established for interconnecting all types of traditional and new communications networks and associated cost-based payments (see Module 2)
- implementing universal service/access mechanisms to ensure the widespread (and affordable) diffusion of ICT (see Module 4);
- managing the radio spectrum effectively to facilitate new entrants and new technologies, which is particularly relevant to new broadband wireless opportunities such as Wi-Fi and WiMAX (see Module 5); and
- minimizing the burden and costs of regulation and contract enforcement (see Module 7)
Future posts on policy will be oriented around these modules. You can also expect more emphasis on academic articles that focus on small economies, since that is where the most apt comparisons to Pacific nations can be made.
I’ve written previously about O3b Networks, a satellite start-up that promises to deliver IP backhaul services to the developing world. I had a good fortune to speak with their CEO, Director of Asia-Pacific Sales, and Head of Ground Networks at the recent PTC conference in Honolulu.
Satellite technology, in a new configuration, promises to release the 3rd world from the shackles placed on them by domestic telecom monopolies.
They have just announced the signing of a new contract with Quark Communications in Guyana. An excerpt from their press release:
“With less than 1% penetration of broadband Internet usage in Guyana, we feel we have a moral obligation to provide all Guyanese Internet access for educational, commercial, and medical purposes,” said Brian Yong, CEO and Founder of Quark Communications. “The problem has traditionally been that it is very expensive to connect into the global communications infrastructure. With O3b, we now have access to ‘fibre like’ connectivity at an affordable price.”
Though emphasis of this blog is on Fiji and the Pacific Islands, it helps to bear in mind that a wide range of countries in the Global South face essentially the same issues when it comes to access to international telecommunications. O3b’s presence helps ISPs in these countries to get access to high-speed backhaul facilities for a fraction of the price. Where the only alternative is to lay expensive fiber-optic cable to establish international access, O3b offers hope. Fiber projects come with price tags starting at $300 million, an impossibility for small nations dealing when looking at their spending priorities.
O3b is not tackling this problem with unproven technology. They are relying on existing satellite technology (see graphic below) deployed in a very different constellation to achieve a coverage area for majority world/developing countries in entirety. Some technical specifications:
Courtesy of O3b Networks
Additional online resources for O3b:
A Link to a short clip where you can hear a National Public Radio program feature on O3b in Africa
Diagram of O3b satellite constellation, a key difference from providers of the past (Video provided by O3b):
You can find press releases, media coverage, and the most current company information on the O3b Networks website.
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