Oct 5, 2011 - new broadband-dependent services. bT's launch of ... speed broadband far from uniform. satellite ...... Ka
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Busines s analysis for telecoms profes sionals
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in the balance
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he EU is once again threatening to come down hard on incumbent operators, this time on those that do not take concrete steps to invest sufficiently in next-generation fibre networks. A proposal to curb the amount incumbents can charge for access to their copper networks, unless they commit significant funds to roll out fibre, has left the old guard decrying the prospect as a tax on their legacy infrastructure. Something has to be done. Some incumbents have outlined sizeable fibre capital expenditure commitments (see Total Telecom Plus July/ August), but so far deployment outside of Asia—and in particular
It will prove a fine balance to keep everyone happy in the biggest European markets— is minimal. According to iDate, for example, the UK, Germany and Spain currently fall below 1% for fibre household penetration, while France and Italy reach around 2%. The need for widespread nextgeneration networks—both fixed and mobile—will become ever more imperative to meet the sharp rise of devices such as tablets (see p.8) and new broadband-dependent services. BT’s launch of cloud-based gaming last month (see Timeline) is a way to
news in brief
5 Timeline
It will prove a fine balance to stimulate global fibre network deployment and satisfy regulators, operators and customers
Ian Kemp Editor Total Telecom+
OCTOber 2011
test the water—and it hopes attract demand—for its nascent Infinity fibre-based service. But some incumbents suggest the threat of greater regulation could force them to pull back on their capex commitments. There is also suspicion from some quarters that the government-backed next-gen fibre networks emerging in some countries will take us full circle to the old monopoly models (p.17). Underlying all of this is the fear of governments and EU politicians that without sufficient investment we could be heading for a greater digital divide, with access to highspeed broadband far from uniform. Satellite operators point out that they have a role to play here: they have faster, more agile next-generation services in the pipeline and claim they will be the only viable alternative in some regions and markets (see p.13). Many incumbents would agree with that assessment given that they face long periods before they see returns on investment in fibre. Outside of their universal service obligations, operators see deployment of specific offerings as a question of assessing risk. Indeed they already have their work cut out to manage that risk, as they become increasingly exposed by opening up their networks to new partners and diversified services (p.10). It will prove a fine balance to keep regulators, operators and customers happy. n
A round-up of some of the major stories reported in our daily news service www.totaltele.com
DEVICE STRATEGIES
8 Tablets
Mobile operators are looking to tablets as an area of growth, but in the face of stiff competition they will need to prove they can add value.
business and finance
10 Risk management
Operators have risk assessment strategies and tools in place, but as they are forced to diversify they are in danger of not managing that risk across the organisation.
face-to-face
13 Satellites The future CEO of Inmarsat gives his views on the prospects for next-generation satellite services. Plus a look at the vital role of satellites to Save the Children.
network STRATEGIES
17 Next-generation networks
Could government moves to encourage investment in fibre bring markets back to monopoly models?
statisticS
19 Prime numbers Fibre penetration, service provider contracts and mobile equipment sales.
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timeline
A roundup of the major stories in telecoms in the past month, as reported in our daily news service www.totaltele.com
Business UK cloud service launches Virgin Media launched a cloud service for enterprises based on an hourly charge with no monthly contract. And BT announced a cloud-based gaming platform, accessible via TVs, PCs and other connected devices through the company’s broadband service.
Telenor restructures Norway’s Telenor announced a reorganisation, creating a Digital Services unit headed by Kristin Skogen Lund, and an Industrial Development unit lead by Hilde Tonne. A new Corporate Strategy and Regulatory Affairs unit will be headed by Morten Karlsen Sørby, while Berit Svendsen becomes CEO of Telenor Norway.
Broadcom buys NetLogic Wireless chip maker Broadcom acquired rival NetLogic Microsystems for $3.7 billion.
Handset makers support Isis HTC, LG, Motorola Mobility, RIM, Samsung and Sony Ericsson all agreed to make NFCenabled devices to support the Isis m-payments service being developed by AT&T Mobility, T-Mobile USA and Verizon Wireless in the US.
Smartphone joint venture Samsung Electronics, NTT DoCoMo and Fujitsu entered talks to set up a joint venture to develop chips for smartphones.
Galileo set for launch The first two spacecraft in the European Union’s Galileo satellite navigation system are due to launch on 20 October having passed a technical review.
compliant and will compete with NTT DoCoMo’s LTE offering.
France Telecom rebranding France Telecom will abandon its corporate brand in favour of the Orange name by next summer.
Zain’s Saudi deal collapses Bahrain’s Batelco and Saudi Arabia’s Kingdom Holding pulled out of the deal to acquire Zain’s 25% stake in Zain Saudi Arabia.
Telefonica rebrands in Brazil The Brazilian division of Telefonica will consolidate its services under the Vivo brand of its mobile arm by next March. The company also bought an additional 30% of Brazilian pay television company TVA, raising its stake to 49.99%.
Softbank plans next-gen PHS Softbank announced plans to launch a ‘4G’ personal handyphone system (PHS) service in Japan in November, offering speeds up to 100 Mbps. The service will be TD-LTE
AT&T deal opposition grows Seven US states joined the Justice Department’s antitrust lawsuit seeking to block AT&T’s proposed $39 billion acquisition of rival T-Mobile USA. But in
Google launches NFC services
New open-source platform The Linux Foundation and the LiMo Foundation announced a joint venture to create a new open-source software plaform. The first release of Tizen is planned for the first quarter of next year, and calls into question the future of Intel’s MeeGo platform currently developed by the Linux Foundation. October 2011 www.totaltele.com
NSN gets additional funding Nokia and Siemens said they would each invest a further E500 million in joint venture Nokia Siemens Networks.
Level 3 completes acquisition Level 3 completed the acquisition of Global Crossing for $1.9 billion. The newly-merged entity has infrastructure connecting 45 countries across three continents, and recorded pro forma 2010 revenues of $6.2 billion. Level 3 said it expects to lay off hundreds of workers, mostly in the US.
Tesco extends mobile services UK supermarket Tesco will launch mobile and Internet services in Hungary in a joint venture with Vodafone. Tesco already operates as an MVNO in the UK, the Republic of Ireland and Slovakia.
TeliaSonera awarded damages
Regional Internet bandwidth connected to the US n 2007 n 2008 n 2009 n 2010 n 2011 Share of international Internet bandwidth connected to the US
Google announced the commercial launch of its NFC mobile payments service Google Wallet in the US, running on Sprint Nextel’s network.
response a group of 100 House Republicans challenged the opposition to the deal.
80% 60%
FCC publishes neutrality rules
40% 20% 0%
Turkish company Cukurova was ordered to pay TeliaSonera US$932 million in damages following their conflict over control of operator Turkcell.
Africa
Asia
Latin America
Europe
The FCC formally published net neutrality rules due to take effect in November. Verizon promptly filed a lawsuit against the FCC, challenging the rules.
Source: TeleGeography
The development of regional networks, coupled with a need for diversification and greater resilience, has reduced the share of international capacity connected to the US for all regions except Latin America, according to a new study from TeleGeography. Countries including Turkey, the U.A.E., Kenya and Brazil are aiming to become regional Internet hubs, while traffic growth on intra-European routes exceeded growth on US-Europe routes between 2007 and 2011.
Avaya acquisition Avaya acquired unified communications company Sipera for an undisclosed sum. 5
timeline
NETWORKS LTE launches AT&T launched LTE services in five cities in the US, some nine months after rival Verizon. In Saudi Arabia, Etisalat-owned Mobily, STC and Zain all announced LTE launches based on the unpaired time division technology TD-LTE; Etisalat later launched LTE-FDD services in its home market in the United Arab Emirates. Telstra launched its commercial service in Australia; and Deutsche Telekom extended its service to eastern Germany.
France spectrum auction Orange, Bouygues Telecom, SFR and Free Mobile all won spectrum in the auction of 2.6GHz spectrum for LTE services in France. The operators paid a total of E936 million for the assets.
Bharti also won a licence to provide mobile services in Rwanda, taking its operations in Africa to 17 countries.
Australia outlines LTE auction Australia outlined its plans for auctioning LTE spectrum next year, enabling operators to bid for licences in the 700-MHz and 2.6-GHz bands via a single bid.
BT Openreach said it will launch a wholesale fibre-to-the-premises service in the UK in October.
Iraq mobile licence Iraq confirmed it will auction a third mobile licence by year end, with 40% allocated to a private operator and 35% to the public.
ZTE signed a deal to build a TDLTE network for Bharti Airtel in Kolkata in India.
M2M platform for EE
Italy spectrum auction
Colombia fibre network
Italy’s four main operators— Telecom Italia, Vodafone, Wind and 3 Italia—all won LTE sepctrum, netting the government E3.95 billion.
Colombia received bids for its national fibre network project. Telmex, Telefonica Moviles and Colombia Telecomunicaciones are among companies hoping to be allocated $415.8 million for a public-private partnership aiming to take Internet connections to 8.8 million by 2014.
Bharti expands in Africa India’s Bharti Airtel signed an agreement with Nokia Siemens Networks to deploy 3G networks in seven countries in Africa. 6
Steve Jobs 1955–2011 Steve Jobs, chairman, co-founder and former CEO of Apple died after a long battle with cancer. Jobs had stepped down from his role as CEO in August.
Nokia to cut more jobs Nokia announced plans to cut a further 3,500 jobs globally as it scales down and refocuses its manufacturing operations. Many of the losses will come from the closure of its plant in Cluj in Romania, and it brings the total number of job cuts announced this year to 10,500.
TD-LTE network for India
The European Union revealed proposals to reduce copper access prices in a bid to encourage incumbents to invest in new fibre-based broadband networks.
China Mobile and Clearwire announced a partnership to develop TD-LTE devices. And in Russia MTS and VimpelCom announced plans to jointly invest $2 billion by the end of 2012 to build LTE infrastructure.
people
BT wholesale fibre service
EC proposal to boost fibre
TD-LTE device partnerships
selected China’s ZTE to build a national gigabit passive optical network (GPON).
Everything Everywhere launched an M2M platform for enterprises in the UK, developed with MVNO enabler Transatel.
New CEO for Mobinil Former France Telecom executive Yves Gauthier was appointed the new CEO of Egypt’s Mobinil, replacing Hassan Kabbani.
Nokia gets new CTO Nokia appointed Henry Tirri as its new chief technology officer from his position as head of Nokia Research Centre, replacing Richard Green.
NSN appoints chairman Nokia Siemens Networks appointed Jesper Ovesen as executive chairman, replacing Olli-Pekka Kallasvuo who is stepping down.
Qualcomm shuffles executives Rostelecom backbone Russian national operator Rostelecom selected AlcatelLucent to increase the capacity of its optical backbone network stretching from Europe through Russia to the Middle East.
GPON network in Uruguay Uruguayan operator Antel has
Qualcomm named Steve Mollenkopf, who joined the company in 1994, as president and COO. Steve Altman, who spent six years as president and has been with the company 22 years, will become vice chairman. And Derek Aberle will replace Mollenkopf as executive vice president and group president.
HP changes ceo
Hewlett-Packard moved to change its leadership by removing president and CEO Leo Apotheker just under a year after he was appointed to the role. Former eBay chief executive Meg Whitman was named as his replacement. Whitman immediately backed the strategic decisions made in August under Apotheker’s leadership, including the possible spin-off of the company’s PC unit and the discontinuation of the mobile devices business. As part of the transformation away from hardware business, HP also in August announced the purchase of UK search technology company Autonomy for $10.25 billion. Whitman said her main task will be to improve the company’s operational performance. “Meg is a technology visionary with deep experience and recognised management capabilities,” said Ray Lane, who has moved from non-executive chairman to executive chairman of HP’s board. Whitman, who has been on the board at HP since January, was chief executive of eBay from 1998 to 2008. It is HP’s third change of leadership in six years after Carly Fiorina was removed in February 2005 and Mark Hurd was fired in August 2010. Apotheker, previously CEO of German business software company SAP, was appointed CEO of HP in October 2010. But he failed to meet promises to integrate the webOS mobile operating system—bought together with Palm for $1.2 billion in April last year—into the company’s product portfolio. “We continue to explore options to optimise the value of webOS software,” said Whitman. www.totaltele.com October 2011
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TA B L E T S
no CURE-ALL Mobile operators are looking to tablets as an area of future growth, but in the face of stiff competition they will need to prove they can add value for users. By nick Wood
i
t is almost two years since Apple in January 2010 unveiled its first iPad, yet mobile operators are still in the tentative stages of tapping into the fastgrowing consumer tablet segment. with electronics retailers fast making inroads into the sector, it is essential that operators demonstrate why they should be a tablet buyer’s first port of call. The inherent ability of tablets to bridge the gap between mobile phones and portable PCs is proving a lucrative new growth area for electronics retailers. And because they do not have to worry about generating mobile data revenues, retailers are happy to sell cheaper wifi-only tablets as well as offering high-end versions. “[retailers] are starting to be seen as the destination of choice for these wider connected devices,” warns Tim Delucasmith, vice president of marketing at wDs, a managed services firm specialising in technical support and mobile device management for both operators and handset makers. “Operators are not seen as the default destination.” new data from Abi research shows that wireless carriers accounted for just 13% of all media tablet sales globally in the second quarter. retail stores accounted for 43% of sales, tablets sold directly from manufacturers 35% and third-party online retail sources 9%. Amazon was the latest company to enter the fray when it last month announced its first tablet, the kindle fire. some analysts expect the tablet, priced at the low end of
Worldwide Revenues in $US Billions
Mobile broadband device growth n Tablets n netbooks n Mobile Internet Devices n PCs
16
Embedded Mobile Broadband Devices (not including smartphones)
2013
2015
Source: Infonetics Research
8
Worldwide sales of media tablets to end users by OS (thousands of units) 2010
2011
2012
2015
android
2,512
11,020
22,875
116,444
ios
14,685
46,697
69,025
148,674
179
476
490
197
microsoft
0
0
4,348
34,435
QnX
0
3,016
6,274
26,123
Webos
0
2,053
0
0
235
375
467
431
17,610
63,637
103,479
326,304
other operating systems 2011
a nearly 40% market share by 2016, eroding Apple’s dominant position. All the while other areas of the consumer electronics market are contracting. Gartner has cut its forecast for PC shipments twice this year citing weak consumer demand, while analysts at iDC say continuing smartphone growth in western europe failed to offset an overall year-on-year decline in second quarter mobile handset shipments. iHs isuppli meanwhile forecasts that netbook shipments will decline to 21.5 million units in 2011, down from 32 million in 2010, and fall further to 13.5 million units in 2015. Little wonder that many operators are pinning their hopes on the tablet sector. Tablets sit between the smartphone and netbook segments, but while there is some cannibalisation of the latter taking place they generally are not viewed as an outand-out replacement for either device. The majority of mature-market operators offer a choice of tablets. Among the latest announcements Japan’s nTT DoCoMo last month said it will sell samsung’s Galaxy Tab 10.1, and fujitsu’s waterproof Arrows tablet to its LTe customers. The operator will offer the devices with a choice of data plans: a flatrate tariff aimed at heavy data users, and two pre-pay tariffs. in south korea, sk Telecom, which already sells the iPad, also last month revealed plans to offer a samsung-made tablet that will run on its LTe network. buyers will have a choice of four data plans.
os
meeGo
8
0
the scale at $199, to enable the online retail giant to make significant inroads into the market. The wifi-only, Androidbased device will be integrated with Amazon services including its content store, Amazon Android Appstore, music and video streaming, and e-books. Amid the current climate of economic uncertainty and reduced consumer spending operators and retailers alike are searching for areas of product growth, and the popularity of the tablet market is a cause for optimism. Tablets also represent a new source of revenue for operators because they encourage users to communicate and consume content on the move. iHs isuppli in August raised its full-year tablet shipment forecast to 60 million from 58.9 million, with Apple’s iPad expected to account for 74% of that total. Looking further ahead to 2015, the research firm raised its outlook for tablet shipments to 275.3 million from 262.1 million. Gartner in september trimmed its fullyear tablet outlook, but still forecasts worldwide media tablet sales of 63.6 million units this year, representing growth north of 260% from 2010 when 17.6 million units were sold. it says Apple’s iOs will account for 73.4% of worldwide sales in 2011, down from 83% last year, while units running Google’s Android operating system will rise to 17.3% of sales from 14.3% last year (see table). Amazon’s tablets are widely expected to boost Android-based devices: Ovum, for example, expects Android tablets to take
total market
Source: Gartner (September 2011)
www.totaltele.com October 2011
DEVICE strategies
In the US, the big two operators AT&T and Verizon offer a variety of tablets developed by the likes of Apple, HTC, Samsung and Motorola. Verizon earlier this month began offering customers with the 3G version of Motorola’s Xoom tablet the opportunity to upgrade to the LTE version free of charge. But in markets where devices can be bought unlocked from an operator’s network there are plenty of SIM-only and micro SIM-only deals to choose from. As a result, operators are striving to show that they can add value for consumers. “We do compete directly with retailers [over tablets],” says Steve Finnemore, head of mobile Internet propositions at Orange. However, he insists operators have advantages. “We’re happy to provide ongoing support to our customers to make sure the product and the experience is the best that it can be,” he says. “It’s probably one advantage we have over retailers.” It is an advantage that Deluca-Smith at WDS believes operators need to exploit. “The industry needs to stop looking at customer care as a cost centre,” he says. Going forward operators will be required to provide support for myriad device types as more and more products are connected to the network. “This is a huge opportunity to deliver a great customer experience,” says Deluca-Smith. Yet pricing is a potential barrier to operators selling tablets in volume, with the 3G-enabled devices they offer topping the end of the scale. Some analysts balked at the $499 price tag attached to the entry-level version of Apple’s first iPad; Motorola’s high-end, Android-powered Xoom tablet was priced at around $700 when it went on sale earlier in 2011; and HTC’s Flyer—a more mid-range tablet— launched in the UK priced at £600. Hewlett-Packard experienced a huge spike in demand for its largely-ignored TouchPad tablet after it cut the price from $296 to $99 in August in a bid to clear inventories. Under former chief executive Leo Apotheker the company announced plans to stop making smartphones and tablets altogether, and new CEO Meg Whitman is due to decide on the future of its hardware business this month. October 2011 www.totaltele.com
Operators are well-positioned to spread the cost of a tablet across the life-span of a service contract, but Deluca-Smith at WDS claims they “need to add more value than simply offering a subsidised device”. He also urges mobile operators to allow their customers to own more than one SIM card per subscription, so they can take out a data plan that would cover mobile Internet use on a tablet as well as a smartphone. “Multiple SIMs per subscription is achievable now, but operators in their infinite wisdom want to charge [customers] for additional SIM cards.” It is an attitude that Deluca-Smith believes has to change if operators are going to succeed in the tablet market. Finnemore insists that Orange is doing more to woo potential tablet buyers than merely offering a big subsidy and a data tariff. “We guarantee a product will work well on our network,” he says. “We have very close working relationships with all the players in the tablet industry from the component level up, which gives us a very broad view of the market.” He says that enables Orange to predict how a device will perform on its network with greater accuracy than an electronics retailer. Finnemore says the operator also sees an opportunity to sell tablets to its enterprise customers, along with managed services that would add value to its proposition and generate more revenues. “For a corporate customer we could be doing nothing more than testing it on their [company] network,” he says. “Or we could work with an app developer to get their business applications up and running on it.” Finnemore says the tablets the operator does not offer are almost as important as those it does. “We don’t offer a broad choice [of tablets], and in a way we’re very proud of that,” he says, revealing that there have been instances in the past where Orange has decided against providing a particular tablet. “Some [tablet makers] are just putting a [3G] module in it and expecting it to work,” he says. Indeed, the tablet market that has emerged over the past 18 months is one in which not all models are created equally. “The decision to range a product is very
Global tablet shipments (000s) 300,000
n iPad n Other Media Tablets
250,000 200,000 150,000 100,000 50,000 0
2010 2011 2012 2013 2014 2015 Source: IHS iSuppli
often a marketing-led decision,” says Deluca-Smith. “They say ‘we need something comparable to the iPad’, and it is rushed through as a strategic decision.” That can have negative consequences for an operator if the tablet does not live up to customers’ expectations. Deluca-Smith says WDS has had to advise its operator clients against selling devices it knows are bug-ridden. “We help buyers who want to range these devices [to] understand what they’re getting into,” he says. “We help them understand the TCO [total cost of ownership] of a device over a two-year period, including the propensity of the owner to call customer services.” Finnemore makes it clear that operators like Orange are still getting to grips with the tablet segment: “Tablets are still in their infancy,” he says. What is clear is that tablet sales continue to show strong growth. According to Infonetics the number of mobile broadband-enabled tablets sold worldwide in the second quarter of this year reached 14 million, an 80% rise compared to the first quarter (see chart). What’s more, IHS iSuppli predicts tablets will help to drive a 57.8% increase in shipments of all mobile broadband-enabled devices this year. Finnemore is confident that operators are well-placed to capitalise on the market. “A lot of people use tablets at home on WiFi, but people are also seeing the convenience of 3G when they’re out and about,” he says. Even though Finnemore sees tablets as a “natural progression” from notebook PCs, he says “most people still see a tablet as a big smartphone—and we’re the natural place to go and get one of those.” n 9
business & finance
risk management
risky business Operators have risk assessment strategies and tools in place, but as they are forced to diversify they are in danger of not managing risk across the organisation. By Alun Lewis
T
elecoms service providers still are failing to take an overarching view of risk assessment and management, leading to revenue losses and customer dissatisfaction. Rapid diversification, as service providers increasingly are driven to partner with application and content companies and open up their core infrastructure and systems, as well as growth into areas such as mobile money, M2M and cloud services, are increasing operators’ exposure to risk. Industry organisations are developing methodologies to try to unravel and quantify the many elements of risk and develop standardised models (see box). But by focusing on specific areas many operators are missing the big picture and the gaps that exist in their current risk management activities. “So far, the telecoms industry has only focused on a few narrowly specific risk issues such as QoE [quality of experience], revenue assurance, fraud and so on,” says
Eric Priezkalns, founder of revenue assurance blog TalkRA.com. “What is needed is a properly holistic approach that satisfies both internal and external stakeholders and that can map both ways between the general and the specific.” Part of the problem is that operators are not addressing risk management sufficiently at senior levels within the company. “Risk management is an increasingly tough topic that doesn’t, as yet, occupy as much bandwidth as it should in boardroom discussions,” says Tony Kalcina, executive director at OSS vendor Clarity. “Even though it’s going to be of critical importance as service providers reinvent themselves, it’s still seen more as a topic for specialist auditors, revenue assurance or business metrics functions. Compounding this further are the problems caused by siloed operations and the lack of in-house staff able to cope with the multiple dimensions involved in risk management.”
Working towards risk management standards Many different industry organisations are working towards developing standards and best practice for risk management. There is often considerable overlap and competition, but the International Organization for Standardization has also developed an overarching standard—ISO 30001—for general compliance, first published in late 2009. The Institute of Risk Management, the Risk and Insurance Management Society and the Committee of Sponsoring Organizations of the Treadway Commission (COSO) are all working at a generic level to develop standard methodologies to manage enterprise risk. Drilling down more specifically to IT and communications, ISACA (the organisation for information systems professionals), the Information Security Forum, the European Network and Information Security Agency (ENISA) and the TM Forum also are carrying out work. The TM Forum, which is focused specifically on the communications service provider market, has seen an explosive increase in the past year in both individual and corporate memberships of the various groups that make up its Revenue Management Initiative (RMI). “There’s been a real pent-up demand for solutions to manage risk more effectively and we now have around 2,000 companies signed up to the different groups under the initiative,” says Steve Cotton, head of revenue management at the TM Forum. Those groups focus individually on specific functions including asset management, business enablement, charging and billing, customer experience, data analytics, fraud management, revenue assurance, wholesale cost management and enterprise risk management activities. A diverse range of activities are being carried out under the overall RMI banner including cooperative catalyst projects involving both vendors and service providers to develop best practice operations and anticipate the impact of new challenges such as cloud services. “We’ve got to turn the traditional hierarchies on their side and see processes in end-to-end ways if we’re to resolve these diverse issues of risk and manage it in more standardised and efficient ways, both internally and across all the value chains that our industry supports,” says Cotton.
10
In Accenture’s 2011 Global Risk Management Survey communications service providers (CSPs) identified the most important challenges over the next two years as developing risk metrics and improving risk measurement and modelling. While a majority of CSPs already use a combination of risk analytic tools, they are less likely than other sectors to measure political, legal and reputational risks. Assessing the level of risk is the first step towards putting a successful plan in place. “The spend on risk management in telecoms—including revenue assurance, fraud and margin management—is estimated to be around $700 million in 2011 and growing at around 4%–5% each year,” says Anandan Jayaraman, chief product and marketing officer at revenue management specialist Connectiva. “With the tight budgets that service providers have to operate under these days, it’s essential that some form of triage is carried out to focus on those risks that will have the most impact and that are resolvable through the intelligent use of tools and teams.” Jayaraman believes that it’s possible to break risks down into a 4x4 matrix according to frequency and impact. “There may be problems with calling rate plan configurations that are high frequency but have a relatively low impact on the overall business,” he says. “There may be relatively low frequency activities involving fraud, and here service providers can use tools to drill into the large data sets involved to find anomalous behaviours and carry out appropriate correlations to identify offenders. While you need to have operational teams focused on these issues, you also need more analytically minded teams with a broader remit to anticipate [unexpected] vulnerabilities.” This organisational issue is accentuated by the tensions within many service providers between the business development teams and those engineers and IT specialists tasked with keeping the network and systems operating securely and efficiently. www.totaltele.com October 2011
business & finance
The pressure to generate short-term returns can lead to increased risk in the longer term, unless appropriate disciplines are applied from the start and risk management is seen as a business enabler. This appropriate corporate responsibility is highlighted by Sergio Silvestre, CMO at business assurance company WeDo Technologies. “In most cases service providers already have the skills and people they need in-house: audit, revenue management and security teams,” he says. “What’s missing is an ability to look across these different functions and manage them in appropriate ways, and for this they need someone at board level to act as a chief risk officer. It’s important however that this role is formally separated from any executive financial role directly involving profitability so that they can take an unbiased view of holistic risk.” What’s more, it’s all too clear that these functional disconnects are multiplying as
new technologies, devices and services are introduced. Fabricio Martinez, senior consultant at mobile performance specialist Aircom, identifies offloading cellular traffic onto WiFi networks as the latest example of service providers not properly examining the risks involved. “Offload to WiFi and you can essentially ‘lose’ the customer and create multiple security vulnerabilities,” he says. “There’s often a lack of communication between different departments, even though they’re all ultimately involved in developing and delivering a new service. A radio or network engineer might meet all the predefined QoS KPIs, but the customer remains unhappy with their actual experience of the service leading to churn and a direct impact on revenues.” This lack of ability to recognise and manage risk across an organisation is echoed by Mohammad Sha, head of market strategy at Convergys. “While
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service providers are trying to deal with emergent sensitivities around things like Sarbanes Oxley and its implications for how they securely handle customer data… they’re collectively spending billions on spectrum licences and equipment and have to justify this financially to their shareholders by quickly launching new services. Managers within service providers have to be far more assertive in terms of examining the profits, margins and risks involved and the old ways of doing things are no longer sufficient.” However, there are some signs of a move towards end-to-end, cross-enterprise processes. “The number of RFPs and RFIs that we see focused on specific functional domains in the OSS/BSS space is constantly decreasing,” says Gordon Rawling, marketing director at Oracle. “This is good news in terms of reducing risks both in terms of revenues and the customer relationship.” n
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Q
Rupert Pearce Senior vice president Inmarsat Enterprises
How important are data services now to satellite communication operators? Around 70% of Inmarsat’s wholesale revenues today come from data services. The traditional end users of our services—maritime, aeronautical, government and media customers—are increasingly putting data communications at the heart of their operations and extending that strategy to encompass their satcoms usage at the edge of their networks. We see it, for example, in the development of the doctrine of netcentric warfare by modern defence forces, and in the provision of Internet access for ships’ crews, many of whom expect access to social media as part of their basic rights. In the maritime sector, many ships are in the process of becoming effectively floating nodes on a corporate network, and as such high-quality data communications is a crucial enabler. However, to some extent the distinction between voice and data communications is becoming artificial, as VoIP becomes more established as an alternative to switched circuit voice calls, and as many ‘voice-like’ communications shift to email, instant messaging, social networking activities and other forms of data communications.
Q
What is the significance of wholesale deals such as Inmarsat’s agreement to provide spectrum for LightSquared? The cooperative agreement between Inmarsat and LightSquared is unique to the North American environment. The allocation of L-band spectrum for mobile satellite services (MSS) was interwoven among several satellite operators and it needed cooperation of every operator to achieve sufficient frequency contiguity to support the FCC’s vision for 4G ATC [ancillary terrestrial component] services operating as part of a MSS/ATC network. However, the European Union has embarked upon a similar, innovative model across Europe in the S-band known as CGC [complementary ground component], but it is early days in terms of the actual deployment of satellites and ground systems. We are fortunate to be an awardee under the European process. We are interested at looking at whether this hybrid network model can proliferate elsewhere. October 2011 www.totaltele.com
Our global L-band spectrum holdings are very valuable in this context, but the S-band model can also be globalised if it is successful in Europe. Hybrid networks are strategically interesting to telecoms regulators and operators globally as the concept not only ensures maximum spectrum utilisation in bands allocated primarily to satellites services, but also, through the integration of satellite and terrestrial networks, offers the ability to extend next-generation terrestrial mobile technology more deeply (via satellite) to the margins of society, to serve the increasingly prevalent so-called “not spots” and to comply with applicable USO and rural coverage obligations.
Q
Will MSS remain the most significant part of your business? The core operations of Inmarsat are, and will always be, MSS. We are still, for instance, the only satellite operator to support the Global Maritime Distress & Safety System (GMDSS), on which seafarers trust their lives, and we remain committed to that. Our new Ka-band Global Xpress [high-speed broadband] service [is] expected to launch in 2013 [providing downlink speeds up to 50 Mbps].
Q
Will satcoms remain a service for a few vertical sectors such as maritime and aeronautical? Or do you ever see satcoms competing with mainstream mobile services (if so in which markets specifically)? No-one is likely ever be able to deploy a terrestrial network for the global maritime or aeronautical segments, so they will continue to be natural long-term segments for Inmarsat to serve with a mobile satellite solution. But even with land-based services, in many parts of the world mobile satellite communications can be innovative in terms of the service offering, ahead of terrestrial alternatives. For example, even in many parts of the developed world there is nothing that can compete with the service qualities of BGAN [Inmarsat’s 492-Kbps broadband global area network service]: its capability, its form and function, and the power of [the forthcoming] Global Xpress will be such that, for many users, it will be the first choice even in urban environments for years to come. 13
face to face
Developing countries may go straight to next-gen satcoms, just as some skipped fixed lines in favour of wireless networks
Having said that, the aggregate communications capacity offered by mobile satellite networks will never be able to keep pace with the capabilities of cutting edge, highly-focused, national terrestrial mobile networks. For that reason in the main we expect to provide our land-based services mainly at or beyond the edge of terrestrial networks, or for specialist communities such as government users, or the energy, media or aid/NGO communities. That’s why developments with ATC in North America and CGC in Europe are so interesting, because they seek to take the best of both worlds—satellite and terrestrial—and combine them into a single hybrid solution.
Q
How important will low data rate (M2M) telemetry services become to satcom What are the business advantages of the operator business models? (M2M services next band of services (Ka-band, S-band)? typically are very low-ARPU services and scale is widely seen as being key) Ka-band represents a major step forward for For some time, we have regarded M2M as a mobile satellite services, primarily in terms of very exciting area for business development. We the bandwidth available, which translates into made a strategic investment in our leading M2M revolutionary new service offerings and a distribution partner, SkyWave Mobile step-change in terms of overall network capacCommunications, in 2009, on the back of which ity. There is 2 Gigahertz of frequency available we will shortly be launching a new, cutting edge in the Ka-band, five times that of Ku-band, and service, IsatData Pro. that really transforms the global service offerThe M2M market is growing quickly, and ing. In addition, the frequency permits Ka-band there is a proliferation of terminals and service hardware to be both smaller, and therefore offerings for a vast range of market segments, lighter, and cheaper than Ku-band equivalents. For our high-end customers, in sectors such as including security, telemetry, asset/movement tracking and management, SCADA, smart grid maritime, defence and energy, Global Xpress is expected to offer a very compelling proposition, services and intelligent transport networks, with mobile satellite capability forming a meaningful and the product offering is dynamic enough to part of the overall network connectivity requireallow us to enter new, adjacent markets too. ment. Some segments have low satellite airtime The S-band’s potential, for us, is part of our ARPUs, and are more service-oriented rather global initiative to look at hybrid MSS/ ATC-CGC networks that allow satellite commu- than airtime related: other segments have much higher airtime ARPUs, where the airtime is a nications to leverage the scale and power of more significant part of the value proposition. terrestrial networks in a complementary way.
Q
Q
How important will Ka-band services be to emerging territories/countries in terms of delivering broadband services? At the heart of our forthcoming Ka-band Global Xpress service is mobility. We intend to harness the power of a fleet of interlocking satellites—the Inmarsat-5 satellites currently being constructed for us by Boeing—to deliver a global, seamless telecoms network. At the same time, we are seeing the beginning of the proliferation of next-generation, ultra highcapacity fixed consumer broadband by satellite (CBBS) offerings in Ka-band—in North America
14
(Viasat and Hughes), in Europe (Eutelsat and Avanti) and in the Middle East (Yahsat)—which are looking to compete head-on against terrestrial offerings such as fibre, cable and DSL. Emerging countries, particularly those without extensive fibre, cable or 4G wireless networks, will potentially benefit from the availability of Global Xpress and/or CBBS. We may even see some leapfrogging as developing countries go straight to next-generation satcoms such as Global Xpress or CBBS, just as some skipped fixed lines in favour of 3G or 4G wireless networks.
Q
What is the significance of your licence (and Solaris Mobile) to provide panEuropean mobile satellite services? Mobile TV services are faltering across Europe so is broadband Internet now the key? We regard the S-band opportunity in Europe as a high risk but potentially very exciting opportunity. The concept of a hybrid satellite/ terrestrial network operating across Europe could be very interesting in terms of delivering spectrum efficiency in the 2-GHz bands and proliferating next-generation telecoms technology across Europe on a consistent, interoperable www.totaltele.com October 2011
face to face
generation of BGAN services, providing a multi-user laptop-sized network hub supporting voice and data services, we continue to be highly relevant and valuable for vital support to disaster relief and reconstruction efforts in the field. It was following Hurricane Katrina that we Are disaster relief / aid services becom- saw a step-change in the way relief agencies began to integrate MSS into their contingency ing a more significant part of business? planning for emergencies: training staff in MSS offers a unique capability to support satcoms, and ensuring they had enough equipdisaster relief and aid efforts around the world. Whether a disaster occurs in a region without an ment and capacity for rapid response in times of emergency. We have certainly been encouraging existing terrestrial mobile communications and supporting the preparedness of our users in capability, or whether that capability is wiped this important sector. We seem to be experiencout by the disaster (or saturated by the unnatuing increased regularity of both natural disasters ral demands on that network during the and man-made emergencies in recent years— disaster), mobile satellite communications are including the Haiti and Chile earthquakes last often the only available telecoms service in an year and this year the New Zealand earthquake, emergency. For over 30 years, the resilience, the Japanese tsunami, the Philippines typhoon dependability and ubiquity of Inmarsat’s global mobile satellite network has played a leading role and the North African crises—to name but a few of the events where our emergency communicaboth in disaster response and reconstruction tions services were heavily deployed. programmes around the world. With our new
basis even into the most rural areas of the European Union. In terms of the service offering, we’re primarily focused on voice and broadband data services rather than mobile TV or digital radio services.
Q
Mobile satellite comms are often the only available service in an emergency
Satellites in disaster situations: how services are helping Save the Children On 11 March this year an 8.9 magnitude earthquake struck Japan triggering a tsunami that caused widespread destruction and loss of lives. Two days later Charlie Mason, logistics manager, humanitarian department, at Save the Children, arrived with the task of getting the charity’s operations in the country back up and running. “There was massive destruction and damage,” he says. “The biggest immediate concern was the risk of aftershocks and a second tsunami.” Mason needed to be able to communicate rapidly with staff to warn them of the potential continuing dangers and to coordinate offices, vehicles, accommodation and supplies. In addition to the physical devastation, which meant that communications centres in some regions were effectively wiped out, rolling powercuts around the country were knocking out remaining mobile towers and DSL services. In such conditions satellite communications played a vital role in coordinating the charity’s work as it embarked on welfare and recreational activities for the many affected children. Save the Children uses different satellite handsets and services in different regions depending on coverage, and in Japan Iridium handsets—which Mason describes as “massive, clunky rubberised bricks”—were crucial. “They are fantastic if you are in a post-disaster environment,” he says. Data services are also important in such situations to access email and the Internet, as well as to provide live video streaming for media outlets. Save the Children often uses Inmarsat’s BGAN (Broadband Global Area Network) service, for example, to connect to the Internet via laptops using portable terminals. The service, which provides speeds of 492 kilobits per second, requires line-of-sight to the satellite, and that can be a problem for both data and voice services points out Mason: the charity often works in extreme, remote conditions and obstacles such as mountains, trees and buildings can affect signals. Satellite voice quality is changeable, he says, and with geostationary services—such as BGAN—it is dependent on the latitude of the location; the closer to the equator the stronger the signal. And while Iridium is a global system, picking up the nearest satellite, it can leave blank spots if there is not a satellite immediately overhead, he says.
Mason says as a result it is important to know the footprint area for given services and to have multiple service providers. “Satellites are far from infallible,” he says. “A diversity of stock and assets means built-in redundancy.” Because of costs the charity aims to move to mainstream GSM and DSL networks when they become available. “The costs are coming down, but [satellite communications] are still a significant proportion of operating costs” in relief situations, says Mason. Nevertheless, it is essential that disaster teams have guaranteed 24/7 backup communications and satellites provide that, he adds. Mason assessed logistics in the disaster region and nine of the affected cities he surveyed were completely destroyed. After just two weeks, more and more centres were coming back on line with communications. But other regions are not as sophisticated or safe as Japan, requiring a different mix of comms solutions. In the Horn of Africa, where Save the Children continues to carry out relief work in the face of severe drought and famine, the cost of running extensive satellite services would be “astronomical” says Mason, given that the organisation is working across a far greater number of locations and offices. VHF radio is used a lot in such locations, with back-up satellite services to ensure redundancy. GSM mobile services are becoming more prevalent, says Mason, but in remote areas there is little coverage. In volatile countries such as Somalia it is a particular problem because any communications blackout could be extremely hazardous to staff. “Signal coverage maps cover large cities and roads but not much else,” says Mason. “We are a long way off having extensive mobile coverage in continents like Africa so satellite communications remain important.” Certainly, satellite communications have played a vital role in helping Save the Children to carry out its work to improve the lives of children who suffered as a direct result of the disaster in Japan, supporting them back to school and towards normal lives once again. Should you wish to contribute to the vital work being carried out by Save the Children please visit www.savethechildren.org.uk/
World Vendor Awards 2012 Rewarding the architects of the communications industry
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playinG MOnOPOLIES Could the imperative for governments to encourage investment in next-generation fibre networks bring some markets full circle to monopoly models? By mary lennighan
T
he re-entry of governments into telecoms markets worldwide is a cause for concern for some as incumbent telcos shy away from perceived risky investments in next-generation access network infrastructure. At broadband world forum in Paris last month, there were suggestions that government-backed next-generation network rollout will create a new breed of telecoms monopoly. Meanwhile, the debate over investment in fibre-to-thehome (fTTH) in certain markets continued, as in the background niche players move to exploit the gaps left by both incumbents and governments. One question from the floor to a telco panel at bbwf regarding the danger of returning to monopoly situations in some countries was met with stony silence, before one panellist proffered an opinion: “The market has changed,” said edmundo Poggio, director, regulatory affairs, at Telecom Argentina. Ten years ago investment was top of the agenda, but now the market is chasing revenues, and as such governments are re-entering the market, he explained. for example, the Argentine
seeking to promote competition in telecommunications infrastructure’,” he said. but for others, competition does not necessarily have to be facilities-based. singapore’s next-generation nationwide broadband network has been commercially live for a year and “the service providers [using it to deliver services] are in double-digits now,” said Anil nihalani, commercial team at nucleus Connect, the starHub-owned company that runs the active layer of the network and facilitates access. singTel, starHub and M1 offer services on the network to the residential market, and there are also players offering corporate and niche services. The network has “several tens of thousands” of end-users, nihalani said. it has taken singaporeans some time to get on board with the super-high speeds offered by the nbn, partly because singapore already has fibre broadband penetration of 80%-90%. but elsewhere in the world, the picture is very different. fTTH subscriptions number around 70 million worldwide, but outside of south east Asia and scandinavia “the rest of the planet is dark,” said wolfgang spahn,
‘It is uncomfortable to be told by executives in China our approach would not find favour there’ government’s five-year Argentina Conectada plan will see it invest $2 billion to extend fibre to small communities. but not everyone is happy about renewed government involvement, particularly if reaching under-served markets is not the prime motivation. “in Australia the [next-generation broadband network] nbn will not only be government-owned but will be a fixed-line monopoly,” warned Malcolm Turnbull, shadow communications minister. “it is very uncomfortable to sit with telecoms executives in China and be told that the nbn approach would not find favour in their country because, and i quote, ‘we are October 2011 www.totaltele.com
CTO of keymile. He, like many bbwf speakers, believes the answer lies in operators themselves sharing the fixed layer of the network to allow a greater chance of return on investment and to lower entry barriers for smaller operators. “fair sharing of the burden and the benefit is very important,” he insisted. “Co-investment could be a solution,” agreed roland Montagne, head of telecoms at iDate, which provided figures on the european fibre market for the fTTH Council. The Council ranks countries with more than 200,000 households and with household fibre penetration of more than 1%. The uk, Germany and spain
still fall below that threshold, while france and italy are barely clinging to the bottom of the table with penetration at around the 2% mark (see table p.19). The reluctance of operators to invest in fTTH in the major european economies is cause for concern for neelie kroes, european digital agenda commissioner. “unfortunately…telecoms companies are hesitant to commit significant funds to fibre rollout,” kroes said earlier this month, at the same time proposing a reduction in the price european telcos are allowed to charge for access to their copper networks in a bid to force greater fibre investment. she also proposed making available €9.2 billion to support broadband infrastructure and digital public services for the period 2014-2020; €6.4 billion of the total is earmarked for infrastructure. some markets are seeing the emergence of “new incumbents” keen to fill the broadband coverage gaps. for example, italy’s wavemax runs a wiMAXbased fixed broadband replacement service in the Marche region, bringing high-speed (7 Mbps) services to some for the first time. “in most [italian] markets there is no fibre to the home,” and with no cable TV there is also no cable internet to compete with DsL, says Alessandro frizzoni, CTO of wavemax. some 7%–8% of the population have no means of broadband: “That’s why the opportunity arose for wiMAX in italy.” wiMAX-based solutions are seeing strong growth in Jordan too, explained Patrick farajian, chairman and CeO of Lebanon-based isP sodetel. DsL remains dominant, but wiMAX has captured a 30% share of the Jordanian market. George williamson, director, strategic network design, at Openreach, said bT is looking at unusual ways of bringing connectivity to rural and underserved areas. for example, the company is looking at using TV white spaces spectrum to serve areas such as the mountains of scotland, he said. n 17
ECTA Regulatory Conference 2011 28-30th November Brussels Marriott Hotel, Brussels
Speakers and Moderators include:
“The annual meeting for Europe’s regulatory policy makers”
Neelie Kroes
Topics to be covered include:
Vice President and Commissioner for the Digital Agenda, European Commision
Joaquín Almunia Vice-President and Commissioner for Competition, European Commission
Will the market and technology deliver or does Europe need policy and/or financial stimulus to achieve world-class broadband services?
Gunnar Hökmark MEP
Which business and regulatory models have proved successful in stimulating fibre investment and competition in ultrabroadband? Does Europe need to attract money from outside the sector to cover the cost of fibre investments?
Magdalena Gaj
What is the cost of “non-Europe”? What can Europe do to deliver a more unified regulatory system to support European and global business?
Chris Fonteijn
As content becomes an increasingly important part of the telecoms proposition, do regulators need to change their approach to market analysis and remedies? Should access to content be regulated?
Vice-Chair, Group of the European People’s Party, European Parliament Deputy Minister, Undersecretary of State, Ministry of Infrastructure, Polish Presidency BEREC 2011 Chair and Chairman of Netherlands Competition Authority (NMa)
Robert Madelin
Director General, DG Information Society, European Commission
What lessons can the EU learn from existing national online copyright enforcement schemes? What implications will the new radio spectrum policy programme have on wireless deployment? What lessons can we learn from national experiences of allocating the digital dividend?
Monique Goyens
Could a structural solution solve the roaming problem or will retail regulation be needed for the long term?
Ed Richards
How will technological developments such as smart TV and cloud computing influence the regulatory landscape?
Director General, BEUC Chief Executive, Ofcom
To register and for further details go to:
www.ectaportal.com/regulatory2011
For more information please contact: Sara Russell at
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eastern europe leads fiBre rollout Europe had 10.2 million fibre-to-the-home/building (FTTH/B) subscribers at the end of June, surpassing North America with 9.5 million connections, according to the FTTH Council Europe based on data from iDate. Russia accounted for more than half of the European total with 5.15 million subscribers. Eastern European countries are driving the overall growth, with Lithuania still leading the ranking with 26.6% of households subscribing to FTTH/B. The research ranks countries with more than 200,000 households and fibre penetration of more than 1%. While France and Italy have around 1% penetration, Germany, Spain and the UK fall below the benchmark. Globally, Asia leads the way with 46 million connections by mid-2011. penetration, ftth / fttB + lan Lithuania norway Sweden Slovenia Russia Bulgaria Slovakia latvia Denmark Estonia Hungary Portugal netherlands Finland Czech Republic Ukraine France Italy Turkey Romania 0%
10% 15% 20% % of households
25%
7.5 trillion
mobile text, picture and video messages sent worldwide this year, up from 6.7 trillion last year. (Ovum)
serVice proViders missinG out on asia
According to a new report from Ovum the total value of deals announced by telecoms service providers in the second half of 2010 was us$16.86 billion. Market leader bT Global services took 25% of the total contract value of the deals announced. but Ovum says service providers should look for a greater focus on Asia-Pacific, where only 3% of the total value originated.
$840 billion
n FTTH subscribers n FTTB+LAn subscribers
5%
editorial
30%
total global mobile backhaul operational costs 2011-2016 (Juniper Research)
IPTV subscribers worldwide by the end of June 2011 (Point Topic)
moBile eQuipment reVenues rise
infonetics research says total mobile equipment market revenues for the second quarter of 2011 rose 25.2% compared to the quarter a year earlier, led by GsM, w-CDMA, wiMAX and LTe deployments. LTe equipment spending passed wiMAX for the first time in the second quarter, with the global LTe market standing at about us$0.6 billion and wiMAX at us$0.5 billion. infonetics forecasts spending on mobile infrastructure during the period 2011 to 2015 will reach a cumulative total of nearly us$250 billion. October 2011 www.totaltele.com
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smartphones driVe moBile GroWth Wireless Intelligence forecasts mobile connections will reach 6.07 billion by the end of this year, with the Asia-Pacific region accounting for a half of the total. It says the industry will have added the last 1 billion connections in just 16 months since July 2010, while the global mobile penetration rate will reach 86%, up from 74% at the 5 billion connections point. China and India will account for almost two-thirds of the AsiaPacific total, with each on track to reach 1 billion connections early next year. Africa is set to overtake the Americas in the fourth quarter as the second-largest regional market on 648 million connections (11% of the total), while Eastern Europe will overtake Western Europe. GSM is expected to account for 73% of global connections in Q4, followed by WCDMA/ HSPA (16%) and CDMA (9%). Other technologies, including LTE, will account for the remaining 2%. GloBal moBile connections Q4 2011 connections (millions) Asia-Pacific 3,019 africa 648 americas 627 eastern europe 541 Western europe 539 us/canada 367 middle east 330 World 6,071
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Source: FTTH Council Europe / iDate
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% total 50% 11% 10% 9% 9% 6% 5% 100%
yoy Growth % 17% 18% 11% 6% 3% 9% 11% 13%
largest market China (961m) nigeria (99m) Brazil (236m) Russia (231m) Germany (112m) US (340m) Iran (82m)
Source: Wireless Intelligence
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