Analysis Mason on the NBS

bealtine

http://www.analysysmason.com/About-Us/News/Newsletter/Broadband-intervention--the-growing-challenge-for-regulators-and-governments-/

Broadband intervention – the growing challenge for regulators and governments

Patrick Kidney, Senior Manager

24 February 2009

Governments and regulators must manage the minefield of market distortion and technology neutrality if broadband intervention schemes are to succeed

Late last year, the Irish government signed a EUR79.8 million contract with mobile operator 3 to deliver broadband to areas in Ireland where broadband services are not available. Interventions such as this have become necessary, to ensure equality of access to what is recognised as an important driver of the modern economy.

Governments worldwide are investing or considering investing in broadband, and Analysys Mason has provided advice for governments and regulators in Ireland, the UK, Europe and South-East Asia over the last decade. During this period, the challenges and complexity of intervention design have increased, as markets and services have evolved.

The inclusion of EUR6 billion of broadband investment in Barack Obama’s economic stimulation package is perhaps the most high profile indicator of intervention in recent times, but initiatives are well underway across the developed world.

While the direct benefits can be hard to isolate and quantify, there is unanimity across stakeholders and commentators – including many business representative bodies, economic development agencies and local government – that provision of good broadband connectivity is essential to the sustainability of businesses everywhere, regardless of sector.

This has been backed up by international research:

* in the US, a study by the Brookings Institute (2007) found that for every 1% increase in broadband penetration in any state, there was an improvement of 0.2 – 0.3% in employment
* an EU study commissioned by the DG Information Society and Media found that greater availability of broadband connections could create more than two million jobs by 2015.
* the Australian Telecommunications User Group, points out in a study that between 1998 and 2002 employment in communities with broadband grew one percentage point faster annually than communities without.

But why is intervention necessary?

Investment in broadband networks usually aims to maximise potential subscribers, and, therefore, revenues. Investment is therefore concentrated on areas with larger exchanges, more businesses and denser residential populations. It is also these areas that attract new entrants and competition, providing consumers with more choice and cheaper services. Inevitably, some areas are less commerically viable, and remain underserved – creating a digital divide. It is these areas that require government intervention.

But when public funding is used, it is important to minimise any market distortion, and to minimise any displacement of investment that would otherwise have taken place. This challenge for governments has increased with the development of telecoms markets and the entry of many competitors, as well as the evolution of next-generation networks, and the convergence of mobile and fixed broadband.

For example, when Analysys Mason worked with the Northern Ireland government six years ago, the market was relatively simple with a small number of players, and ‘broadband’ considered to be 512kbit/s, delivered in the main through xDSL technologies and cable.

The recent award of the National Broadband Scheme in the Republic of Ireland was a different matter. The scheme is being applied to a developed market with many broadband providers, using a range of fixed and wireless technologies. The scheme design incorporated the principles of technology neutrality and the provision of equivalent wholesale products for all retail products. The scheme also includes mechanisms for setting tariffs, upgrading the services, demand stimulation and monitoring of the quality of service.

As broadband evolves, governments and regulators will have to look increasingly carefully at their intervention designs – buliding them around principles of technology neutrality and minimising market distortion – to ensure that delivering a fair and equitable digital society, also delivers a fair and equitable market for suppliers.
Contact

Patrick Kidney

Senior Manager

clohamon

bealtine wrote: »

The recent award of the National Broadband Scheme in the Republic of Ireland was a different matter. The scheme is being applied to a developed market with many broadband providers, using a range of fixed and wireless technologies. The scheme design incorporated the principles of technology neutrality and the provision of equivalent wholesale products for all retail products. The scheme also includes mechanisms for setting tariffs, upgrading the services, demand stimulation and monitoring of the quality of service.

Self-serving cant ; including an obligatory Barack Obama reference.

When working for a client with little technical capability the consultant will either introduce complexity or increase complexity, thus ensuring themselves a future income stream.

Don't be surprised if Analysys Mason are awarded an NBS monitoring contract.

Sponge Bob

clohamon wrote: »

stream.

Don't be surprised if Analysys Mason are awarded an NBS monitoring contract.

They were , all €400k worth of it . It is in fact THE NBS monitoring contract .

bealtine

bealtine wrote: »

The scheme design incorporated the principles of technology neutrality and the provision of equivalent wholesale products for all retail products. The scheme also includes mechanisms for setting tariffs, upgrading the services, demand stimulation and monitoring of the quality of service.

Technology neutral...how on earth can a 3g delivered scheme ever be technology neutral? What dream world do they live in?

Analysis Mason reports call out 3g technology correctly as "adopt mobile broadband as a complement to DSL- or cable-based services". So clearly it will never replace these obviously superior technologies.

Furthermore:
“Mobile broadband will be the key growth driver in Europe during the next five years,” argues Matt Hatton, Principal Analyst and author of the report. “As growth in voice service revenue stagnates, mobile broadband provides operators with an opportunity to tap into a valuable new revenue stream – and they can not afford to miss out.”

“The key development in the mobile broadband market during the next five years will be the growing proportion of casual users,” says Hatton. “

So mobile broadband is good for surfing a few web pages and extracting more money from consumers. These are hardly the innovative services required to provide stable high quality broadband to rural areas.
Currently Ireland has the ignominious distinction of having one of the highest ARPU s in the EU "because we talk more", of course that has nothing to do with the fact that the tariffs are amongst the highest in the world.

The whole marketing of 3g technologies has been very slick and successful, however this marketing neatly sidesteps the realities of mobile technologies: they were designed for primarily voice usage the data part was an afterthought.
No 3g technology will deliver anything near the quoted headline speeds and to think otherwise is delusional.
Once the cross subsidisation of data from SMS and voice sources is removed from the equation the realities of providing the data service are laid clear.
SMS is essentially a free service and the 3g operators bill handsomely for it.

More transparency is required on the true costs of providing a data service over 3g.