The New Zealand Dialup vs. Broadband Landgrabs
The Internet era, from an ISP or Telco perspective, can be divided into
the dialup and broadband “landgrabs”. These are the times when the
providers attempt to grab as many customers as possible, sometimes with
loss-leading offers, with the intention of taking the profits in the
future. In New Zealand, the dialup landgrab started in the mid 90s and
peaked in 2004 as shown below.
The fascinating thing about the dialup landgrab was that the competitive playing field was relatively level.
Telecom NZ, the local loop owner, did not have any significant
advantage over the challengers. Sure, Telecom NZ had more money to spend
on building infrastructure and on marketing its services. However, the
cost of providing dialup access to customers was pretty much the same
for Telecom NZ and its competitors. And the margins for all players were
healthy. As a matter of fact, in one respect the playing field was
tilted against Telecom NZ as re-sellers could (ab-)use the old
interconnect agreements to generate revenue. This fact was used by a
number of free ISPs, such as ZFREE (TelstraClear) and i4free (Callplus).
Telecom NZ’s CDMA network: is the writing on the wall?
Telstra recently confirmed
its plans to shut down its CDMA network in Australia, in favor of its
new Next G W-CDMA based network. This is bad news for Telecom NZ
customers as they will no longer be able to roam to Australia. (Unless
they acquire dual mode CDMA/W-CDMA phones!)
This may not be the only bad news for Telecom however. It appears that
Telstra is not alone in re-thinking its CDMA strategy. According to GigaOM, “CDMA is losing friends faster than me losing my pounds”. Some examples of this:
- Three carriers in China (Unicom), India (Reliance), and Brazil (Vivo) are re-evaluating their CDMA strategies;
- Sprint announced last year that it will deploy mobile WiMAX as its 4G network instead of evolving its 3G CDMA network;
- Europe has, and always will be exclusively GSM/W-CDMA based;
- GSM/W-CDMA is making steady inroads into the US markets;
- Less than 18% (and declining) of the global market is based on CDMA;
- SonyEricsson has withdrawn from the CDMA handset market and Nokia has an extremely limited offering;
- New “sexy” phones (subjective, I know!) appears to be released
first, if not exclusively, for GSM. Recent high-profile example being
Vodafone Music: how to not sell music online
Both Vodafone NZ and Telecom NZ
have Music download services for their respective mobile networks.
However, Vodafone’s service in particular seems to be an example of how
to not sell music online.
Apple has been successful with its iTunes Music Store by:
- Keeping things simple
- Selling the music at reasonable prices
- Ensuring that the DRM (copy protection) is reasonable and unobtrusive.
You would have thought that mobile providers, like Vodafone, would learn
from Apple’s success and implement a well thought out and competitive
service. Unfortunately, this is not the case.
Vodafone buys IHUG!
Well, we have been speculating about IHUG being for sale for some time.
We have also speculated that Vodafone NZ will need fixed line broadband
to “complete their picture”. And today it happened. Vodafone NZ
announced this afternoon that it will acquire IHUG for $41 million.
We are, to say the least, relieved that IHUG did not become state owned after all! That would have been insane. :-)
Vodafone NZ acquiring wireline broadband capabilities is exactly in line with its revised global strategy. As we said yesterday, of the potential purchasers of IHUG, Vodafone NZ will have the greatest synergies. While triple play (voice+internet+video) was last year’s buzz word, quad play (voice+internet+video+wireless) is where it is at today. Video
intensive content for the home is by necessity (bandwidth!) going to be
delivered by fixed broadband (ADSL, ADSL2+, FTTH), while voice and
lightweight content is slowly making its way to wireless. It is these
(obvious) trends that Vodafone’s new strategy is aligning with.
This is a very smart move by Vodafone. We did not think that
Vodafone NZ was ready to take the fixed line plunge (with all its
issue), but we were wrong. Good on you Vodafone! Would not be surprised
if IHUG discontinues its just announced home line service however, and
replaces it with a Vodafone “ZuHause” bundle.
According to Vodafone, IHUG will be operated (at least initially) as a separate company.
We expect that the consolidation of the ISP market has just started. The
broadband land grab is in full swing and the big players want to
acquire customers in preparation for local loop unbundling. (When the
real fun starts.)
We will, of course, cover this further in the coming days.
Telco analyst Paul Budde’s views/press release can be found on Rod Drury’s blog.
Vodafone ZuHause, Woosh auf wiedersehen?
Last week the Commerce Commission
issued its final determination on Vodafone NZ’s application for a
ruling on interconnect with Telecom NZ’s PSTN stating that “Telecom and
Vodafone should exchange local calls at a reciprocal price of zero in
accordance with the ‘pure bill and keep’ pricing method”. So what does
this actually mean?
Well, it means that Vodafone will bring to the market a service that they first launched in Germany in 2005 under the name ZuHause,
or “AtHome” in English. The service offers free local and national
calling for a flat fee of €15 per month (approximately NZD 29) when the
user is at home.
Zune, to be or not to be
Is Zune going to be the next iPod killer or an also-ran when Microsoft launches
it later this year? Leaks from Apple are rare and few between. (But
sites like Mac Rumors and Think Secret
are doing a good job at digging out what is there!) However, a
substantial amount of details of the Zune and its capabilities are now
starting to trickle out of Redmond.
Here’s the rumor mill so far:
- Gizmodo yesterday posted the first real picture of the Zune. They also detailed some of its capabilities to be:
- 150 prototypes in existence today, all assigned a unique color scheme in order to be able to trace leaks;
- Headphones similar to the iPod, but they are magnetic and stick together to make them easier to manage;
- What looks to be an iPod style scroll wheel is not. It is a actually four buttons.
- The Zune is slightly larger than the 30G 5G iPod.
- Some kind of grip on the back to hold the Zune while watching videos in landscape mode.
- Magnetic mechanism on the back for the headphones;
- Plastic and semi-transparent case;
- UI has white text on colored backgrounds. Probably skinnable;
- Built in FM tuner;
- WiFi support for “borrowing” music from people close to you;
- Microsoft has launched their own comingzune.com viral marketing site.
Woosh: misleading or deluded?
Woosh has been hyping its future plans for IPTV (TV over IP protocol) in the media recently. In the NZ Herald Woosh chairman Rod Inglis states:
“It means Sky will be able to provide TV and video services on the Wimax network, which Woosh will ultimately provide.”
We think that Mr. Inglis must be smoking it. There must be a reason for customers to move to IPTV based services. They simply must be better.
They must be better in at least two ways: a better selection of content
(more channels) and a better experience (high definition, 5.1 sound,
etc). IPTV over WiMAX will provide neither.