As featured on TM Forum’s the Insider Blog
Something strange is happening in countries leading the way with national broadband network (NBN) rollouts – very few customers seem interested in taking up the service.
Shocking statistics coming out of Singapore indicate that despite more than 83% of buildings being fiber-enabled there is only an 8% take-up rate. In parts of Australia where the NBN has been fired up it’s even less at 1%. Even the most diehard skeptics would not have forecast such pathetic numbers and it will certainly raise eyebrows in countries considering similar capital-intensive projects.
So why do the public and businesses seem so lethargic at jumping onto then high-speed highway to paradise? According to Frost & Sullivan VP for ICT, Andrew Milroy, speaking at the Amdocs Insights Forum in Sydney recently, it’s the marketing message that is all wrong.
The concentration on speed as the key advantage is over-shadowing the value of applications being offered by service providers. Reported in Communications Day, Milroy stated, “in a lot of the high penetration countries, what we find in South Korea (with 58% take-up), or Hong Kong (45%), is that the offerings that the service providers are putting forward – and the new retail service providers that have emerged when these networks appear – what they do is focus on application functionality.”
It seems that the new retail players trying to access the Singapore and Australian markets with niche products and services are either not being recognized because they don’t possess the big marketing clout of the major players already in these markets or they simply don’t have what the public wants. In Singapore, where almost anybody can register as a retail service provider (RSP), a consumer only needs to subscribe to a service and plug in a ‘box’ to their termination point in the house. But more RSPs means more bills and many have become accustomed to acquiring bundled services from multi-play service providers such as SingTel and Starhub.
Those services are currently being provided via ADSL and cable and as long as they are working OK, and video is not stuttering, the consumers don’t seem to be bothered about extra speed. Another major reason for low adoption in Singapore is most likely that fiber termination is still not available to many households, mainly high-rise apartments where the majority of the population lives, because of delays in completing the in-building wiring.
The once perceived as equitable two player rollout model, with one company responsible for the passive network and the other the active, does not appear to be working, even in such a tightly regulated environment. Finger pointing is rife.
This is not to say that NBN rollouts are all proving difficult. Informa Telecoms & Media has released new figures revealing that the High Speed Broadband (HSBB) network being built by Telekom Malaysia is comfortably outpacing other NBNs being deployed in the region, including rival Singapore's NGNBN as well as those being rolled out in Australia and New Zealand.
According to Informa, the HSBB - a 70/30 joint-venture between Telekom Malaysia and the government - had 310,000 subscribers by end-April and had passed over 1.2 million premises in the country, with the network set to be completed both on time and under budget.
"There is no doubt that Malaysia's decision to stick with the incumbent, Telekom Malaysia, in deploying its next-generation broadband networks is definitely bearing fruit at the moment," says Tony Brown, Senior Analyst at Informa Telecoms & Media. Nonetheless, Brown says that, although keeping Telekom Malaysia as the key component of the HSBB deployment has facilitated a faster NBN rollout, the government's decision not to create an independent wholesale network access operator, as is being done in Australia, could be a negative in the longer term.
Those of us that have lived through the de-monopolization era (or deregulation as it was incorrectly termed), will understand exactly what Brown is referring to. Producing another monopoly, whether a new entity or an incumbent, may be the fastest and cheapest way to get an NBN up and running but when free-market forces come into play and RSPs start complaining about unfair competition, the whole ugly cycle will likely repeat itself.
Who knows what the right model is, and what is the right model for this new digital services age? Presumably, time will tell, but one wonders whether we have, as an industry, learned anything at all from past experience.