Do monopolies have an interest in thwarting broadband plans?

In recent weeks, this site has focused a great deal on the situation with Telstra in Australia. It’s because this drama has so many dimensions worth analyzing. A key development was the court ruling against Telstra on the improper use of Optus client information. Telstra used information it had access to as wholesale service provider to assist its own retail unit in targetting Optus customers.

These smaller developments are contributing to what is going to be a very dramatic overhaul of telecommunications policy down under.

Optus Chief Paul O’Sullivan on why he thinks Telstra will try to delay roll-out of the new broadband network proposed by the Government:

“The incentives for Telstra to delay a roll-out of a new high-speed broadband network or to try to re-monopolise a high-speed broadband network remains,” he said.

“The fundamental drivers of most companies’ behaviour lie in their underlying economics and in their competitive position. In Telstra’s case that drives them to very notable characteristics.

“First of all, they have a very strong incentive to delay the roll-out of any competitive infrastructure which levels the playing field in services to the home.”

The news from Australia should only make us wary of FINTEL. Is the upcoming announcement in July merely rhetoric of change from their part, when all that’s really being done is securing FINTEL’s competitive position? As wholesale provider of bandwidth to Vodafone, Digicel, Kidanet, etc. they say that market forces and competition will drive down prices. But, looking at what the Optus CEO is saying and the court ruling on the improper use of customer information, it is becoming harder and harder to believe FINTEL.

As developments in Australia prove, without competition in the operation of the underlying network, pricing of services will remain high.

It’s a beautiful day in the neighborhood: Unwired Fiji’s WiMAX move and news from Asia-Pac

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.

Glimpses of July 17th Announcement

Two more months and then we'll know what the beast looks like

Until the announcement on July 17th of the 2nd round of telecom sector liberalisation, we are like the people in this picture, only able to  guess at the parts of the elephant. We have already seen what competition in mobile means, and on that day, we will be given the road map for how Internet will advance in Fiji.

So, as we attempt to piece together what the elephant looks like, let’s take a look at what Dionisia has for us over at FijiLive:

The deregulation of international access, scheduled for July 17 this year, is phase two of the process. It will mean that any domestic reseller of telecommunication services may directly source its international bandwidth needs without going through FINTEL, as was previously the case.

Her article was very informative and helps us get a better understanding of how FINTEL is positioning itself with regard to future competition and government regulation.  By getting out ahead of government calls for liberalisation of the international gateway they hope to avoid more serious measures that government might push.

WiMAX Deployment in India

GigaOm reports equipment manufacturers are gearing up to battle it out over a substantial contract to deploy WIMAX networks in India:

WiMAX, despite losing attention and mindshare in the U.S., seems to be thriving across the planet. Business Standard, an Indian newspaper, reports that Huawei, Telsima and Alvarion are three of the companies shortlisted for the $1 billion WiMAX network being built by BSNL, the state-owned Indian telecom company.

via State of WiMAX: Will Huawei Win It All?.

WiMAX Facts:

• Global WiMAX subscriptions will reach more than 85 million by the end of 2013, according to In-Stat.
• According to Infonetics Research, the total WiMAX equipment and device market in the fourth quarter of 2008 was about $275 million.
• In 2008, the number of fixed and mobile WiMAX subscribers hit 3.9 million.
• Total global deployments are around 460 in more than 135 countries,  including fixed, portable and mobile networks

Sources: In-Stat, Infonetics Research, WiMAX Forum (via GigaOm)

Creating a policy toolkit for S. Pacific Regulators

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.

O3b announces pricing structure for Pacific Islands

Start-up satellite broadband provider O3b Networks expects to unveil an initial pricing plan for Pacific islands next week.  Greg Wyler, CEO, plans to announce a megabit-per-second pricing structure for Pacific Island countries at a meeting of the International Telecommunication Union from Feb 17-20, in Tonga:

Mr Wyler said the company’s preliminary assessment is that an island would pay around US$600 per megabit per second of throughput, plus an initial activation fee for the ground equipment of about US$350,000, for orders placed by May 2009. (Source: Pacnews)

I had the good fortune to see Greg Wyler, CEO of O3b, speak at PTC ‘09.  He described O3b’s plan for the Pacific Islands and it sounded pretty awesome as anyone addressing the needs of the Pacific Islands, is instantly my hero.

Greg Wyler at PTC '09 in Honolulu

O3b arrives on the scene just as other satellite companies like Intelsat are raising prices in the Pacific claiming the only alternative is stopping service to the islands.

Any news from O3b is good news for the Pacific islands.  Here’s some details on the satellites and the scheduled 2010 launch:

… based in the British tax haven Jersey Channel Islands, has contracted with manufacturer Thales Alenia Space of France and Italy to build an initial eight 700-kilogram O3b satellites to be launched together in late 2010 aboard a Sea Launch Co. rocket.

Launching satellites is no small task and there have been several quite prominent failures at what O3b is attempting to accomplish.  With the way technology is becoming so widespread in the world, the timing could be right for O3b.

We can only hold our breath in anticipation of the launch of the satellites in the latter half of 2010. On behalf of everyone who recognizes that O3b’s success means real competition for internet services in Fiji, we wish them well!

Policy Panel @ PTC ‘09

This turned out to be a very informative panel

Rob Frieden, Professor, Pennsylvannia State University: The Spin on Broadband Statistics.

Conclusion: benchmarks and statistics matter.  Measuring broadband penetration in the US is highly contentious.  Be suspicious of statistics like, “77% of al US zipcodes have a choice of at least 4 broadband providers”.  Reality is very different from what’s been presented by the outgoing Bush administration.

Heaher Hudson, Professor, University of San Francisco: Dr. Hudson is a tireless advocate of the right of people in small countries to good connectivity.  She points out that internet subscribers are less than 4 per 100 in small Pacific Island states, well-below the norm in advanced capitalist countries.  Listen to her discussion of how Skype Out rates to these countries is an indicator of the terrible state of connectivity in these countries.

I have to say that I do not totally agree with her assessment.  Skype Out rates in the other direction (periphery to core) are the more typical 2 cents a minute.

Francis Pereira, Professor, University of Southern California: By 2015, the advanced Asian countries promise 100 mbps into the home.

Singapore’s government initiatives include TradeNet, Singapore One Broadbad Network, economic incentices to ME’s to conduct e-commerce.

S’pore and Hong Kong offer good case studies because they are both large ports.  Very early on, they began to use technology to attract and hold shipping business.  Singapore’s TradeNet processes 99% of all trade declarations used by 2400 companies, at an estimated annual savings of $2.8 billion.

This is just one example from the presentation of how govt. initiatives drove the development of software and internet usage.

Laurie Sherman, Consultant

Indian Telco Offers Free Netbook with Wireless Contract

Increasing PC penetration in emerging economies looks to be within real reach with announcement from India. One of the largest telcos there, Reliance, is offering a free netbook computer for customers who sign up for a two-year wireless internet agreement. Read the story from GigaOm here:

This application of the wireless industry business model (subscription) to the computing business means that we may finally see computer penetration go up in emerging economies. It is not easy for people to buy expensive computers in the emerging economies, but these smaller netbooks that can be attached to a keyboard, mouse and a monitor can help overcome those barriers.

New Satellite Venture could be lifeline for Internet in the Pacific

     

The recent round of deregulation brings promise (Digicel launches in two weeks), but the internet is still an area of uncertainty because the monopoly license on the sole internet gateway (Southern Cross Cable) has not been challenged.  And more importantly, FINTEL seems to have been able to hold off efforts to deregulate in this area because it is on the hook to the network owner C&W, soon to be acquired by AT&T. 

FINTEL is well aware that to challenge their dominant status, govt. would have to pry control of the gateway from them–at an estimated price tag of $300 million, that is out of reach of Fiji Govt. finances.

Additionally, investing in a competing new cable running to say American Samoa, Hawaii, or New Caledonia would come at a price of about $100 million, which is also out of reach.

 

Annnouncement this week of Google’s investment in a new satellite business venture that seeks to provide broadband internet access at low and reduced rates to Africa, Latin American, and Asian countries offers a great deal of promise to Pacific Island countries. 

While the O3B website does not list the Pacific as an area where they will operate, we can only cross our fingers that when they launch their satellites in 2010, the Pacific will be part of the coverage.  The concept of satellite-based 3G wireless internet backhaul to get ISPs up and running in developing countries is extremely exciting and offers hope to the 3 billion people who still do not have internet access.

See also my previous post on how regulators can enforce ‘functional separation’, which would have to be done in Fiji to pry loose Fintel’s grip on internet backhaul in Fiji.

Next post: How mobile usage might affect the move toward expanding internet infrastructure in Fiji.