Monday, March 31, 2008

South Africa - undersea cables

Govt chooses its cable

Consensus has been reached between the departments of communications and public enterprises on which undersea telecommunications cable government will invest in.

Communications director-general Lyndall Shope-Mafole and public enterprises director-general Portia Molefe met last week under the “mediation” of Joel Netshitenzhe, head of policy co-ordination and advisory services in the presidency.

On Friday, Shope-Mafole revealed this meeting had resulted in a resolution on which cable government would back.

Click here
“We have agreed to propose to Cabinet that Nepad's Uhurunet and the African West Coast Cable be incorporated into one cable – Uhurunet – but as separate entities. This agreement still needs to be presented to Cabinet, but once that is done, we think it will be a happy ending for all of us,” she said.

Cable envy

Government's investment in an undersea cable has been the subject of much tension between the two departments and National Treasury.

Earlier this month, the Department of Public Enterprises revealed to Parliament's Portfolio Committee on Public Enterprises that treasury had declined R1.4 billion of its Infraco budget request. These funds were primarily required for investing in and construction of a state-initiated undersea cable.

At the time, National Treasury said it had declined the funding due to Infraco‘s private investor pulling out. However, an official added that government was interested in funding only a single cable initiative and hoped public enterprises would come to an agreement with the Department of Communications (DOC).

The DOC's support of the Uhurunet cable has also come under fire. During a presentation to Parliament's Portfolio Committee on Communications, DA communications spokesperson Dene Smuts accused the department of publishing landing guidelines that supported cronyism.

“Those guidelines are only obsessed with shareholding and that's crazy… This smacks of crony capitalism… Making a lot of money for people under the Nepad [Kigali] Protocol,” she said.

Back on track

Shope-Mafole says the new agreement between the departments brings government back to focusing on increasing the availability of international bandwidth and lowering the cost.

“After our initial discussions with Cabinet, we were focusing on the East Coast cable – which became Uhurunet. We invited the Department of Public Enterprises to our meetings, but they chose not to join. They then went and looked at their own cable,” she comments.

However, this situation had led to potential private investors in the cables questioning which cable would be better to invest in.

“These companies told us that it makes more sense if there is just one cable. We took this to our principal, the president, and suggested a meeting take place. Now we can focus on moving on this initiative,” she says.

Slovakia - fourth operator

Slovakia's telecom office launches tender for fourth mobile operator
see also Telecommunications Office of the Slovak Republic

Slovakia launched a tender for a fourth mobile network operator to provide high-speed Internet services, the country's telecommunication office said.

The winning bidder will be the one who offers the highest one-off payment which must exceed 30 million Slovak crowns, the office said.

Deadline for bids for the 20-year licence is on April 29, the office said in a release.

There are three international telecom groups operating on the Slovak market: Telefonica O2 Czech Republic's unit Telefonica O2 Slovakia, France Telecom's Orange Slovakia, and Deutsche Telekom AG's T-Mobile.

Telkom South Africa

Telkom Rejects Approach from Oger Telecom

South Africa's dominant landline operator, Telkom has announced that it has rejected a takeover offer from Dubai based Oger Telecoms as it is not in the interests of Telkom shareholders. Oger Telecoms is a subsidiary of Saudi Oger Ltd., a Saudi Arabian construction company founded by former Lebanese Prime Minister Rafik Hariri.

In its statement to the Johannesburg stock exchange, Telkom also announced plans to invest in the build of a fixed-wireless (voice and data) and a mobile data network. The timing, extent and implication of the roll-out of this network will be announced later.

The company also said that it is supportive of the BEE plans by its 50% subsidiary, Vodacom but refused to comment further until the final plans are announced.

China Telecom - results

Mobile Phones Cut China Telecom Profits

China Telecom Corp. said Monday that annual profits fell 13 percent last year as more customers switched to mobile phones.

Net profit in 2007 fell to 23.7 billion yuan ($3.4 billion), from 27.2 billion yuan in 2006, the nation's largest fixed-line operator said.

China Telecom said income from its voice business fell 7.9 percent from the year before as the number of its access lines in service fell 1.2 percent to 220 million, from 222.7 million in 2006.

However, overall revenues climbed 1.7 percent to 178.7 billion yuan ($25.5 billion) from 175.6 billion yuan.

China Telecom is gearing up for a "full services offering" to expand its non-fixed line broadband and wireless businesses as it struggles to compete with cell-phone rival China Mobile.

"Although the intensifying market competition is a serious challenge to us, the upcoming full services offering will bring enormous business opportunities," Wang Xiaochu, China Telecom's chairman, said in a statement.

The company saw declines in virtually every area of its traditional phone business. Revenue from local phone services, which comprised nearly 40 percent of total operating revenues, fell 9.8 percent. Upfront connection fees dropped 33.7 percent; installation fees fell 6 percent; income from monthly fees declined 12.5 percent; and revenue from long-distance phone services sank 6 percent, China Telecom said.

China Telecom also said it incurred 572 million yuan ($81.7 million) in losses due to damage caused by severe snow and ice storms in January and February, a figure not reflected in the 2007 financial figures.

Sunday, March 30, 2008

Australia - ongoing broadband debate

Fibre-free Conroy caught up in telco muddle

WHEN it comes to the promise of a new high-speed broadband network, Communications Minister Stephen Conroy is the man in the messy middle.

That's because he's caught between what Telstra believes is reasonable in terms of pricing and what the Australian Competition and Consumer Commission clearly thinks will be highly unreasonable.

At the New Agenda conference in Melbourne yesterday, Conroy took up his position literally, sitting between Telstra chairman Donald McGauchie and ACCC chairman Graeme Samuel, for what was a volatile debate. And a crucial one.

Kevin Rudd had already told the conference that broadband was a "fundamentally transforming technology of the future". The commitment to provide the new fibre network was certainly one of Labor's most effective and popular campaign promises, bolstering Labor's appeal that it was better placed to meet the challenges of the future. The catch once in government is establishing who pays for this and how much. Not to mention if and when it will be delivered to a long-suffering Australian public.

The earliest construction can begin will be by year's end in a process that will take four to five years. But before that is even possible, there's still the great price war to be fought over the next several months.

The Government is promising $4.7billion in public money to help pay for the proposed network. Telstra says it will put in $4.6 billion of its own money and use the government funds to extend the network into what otherwise would be uncommercial areas outside the big cities.

The basic dispute will be what Telstra will insist are the minimum necessary financial returns on its investment. Samuel will be just as determined to reject any charges he considers too high. And Conroy and his expert panel will have to decide how to play the inevitable difference.

This was always going to be a politically contentious issue given the effect of the decision on every Australian. Then there are Telstra's competitors, spearheaded by Optus, which are putting up their own proposal to build a fibre network. This is despite widespread scepticism in the market and the Government that the consortium's bid will prove realistic, particularly given the obstacles and the opposition from Telstra. The suspicion remains that it is more designed as an attempt to increase the political pressure over Telstra's pricing proposals.

But the really bad news for Conroy out of the conference debate was the spectacular demonstration of just how far apart the main players still are. The animosity wasn't too hard to pick. After all, none of those involved are shy, retiring types.

The minister initially tried to play the role of grand mediator and to focus the audience on the wonderful world of high-speed broadband that awaits the nation, including the radical difference it will make in areas such as education and health.

But the sniping from either side of him was sharp and the entrenched positions obvious.

Last year, Samuel effectively blocked the Howard government from doing a deal with Telstra on the prices Telstra wanted and a politically desperate Howard government was willing to accept.

"Thank God for Graeme Samuel," Conroy said at the time.

"I thought he was God, he certainly behaves like it," quipped McGauchie in response yesterday, voicing Telstra's familiar refrain that the regulator has far too much power in telecommunications.

"It has become characterised by regulatory overreach to the point of micro-managing the industry, inconsistent decision-making, distorted incentives, regulatory gaming ... and, most importantly, an infrastructure investment climate that distorts investment and stifles innovation," McGauchie declared firmly.

Far too firmly for Samuel, who didn't appreciate the description at all. "In every decision the commission makes, we have in mind the welfare of all Australians," he said, insisting that the long-term interests of Australian consumers were helped by competition. He pointed out that despite Telstra's propensity for taking legal action, the courts had repeatedly backed the judgments of the ACCC.

This led to some heated exchanges about who was suing who. Conroy joked about scenes from the British political satire Yes, Minister as he revealed that Telstra was suing him given that he had replaced the former target, Helen Coonan, as minister. Samuel commiserated with him about being sued. "So am I," he said. The ACCC chairman then made jokes about McGauchie admitting to the illegal activity of predatory pricing and said he had two people waiting up the back. McGauchie retorted that he would name Samuel as his co-defender, given that Telstra's absurdly low prices on some wholesale services were entirely the fault of the regulator.

Ravi Bhatia, chief executive from another smaller telecommunications company, Primus Australia, insisted that the regulation of Telstra had been "gentle and light-handed".

How could it be otherwise, Bhatia not so politely inquired, given Telstra's margins were so high and it was the most profitable telco in the world? McGauchie looked as if he would implode at such calumny.

Beneath the banter, the tone was deadly serious. Conroy understands exactly what is at stake, and not just for the country. If he can't get a fibre-to-the-node network ready to go by year's end, he will have a very, very unhappy Prime Minister who is able to cause him even more difficulties than even McGauchie or Samuel can.

It's one reason Conroy has been so careful to appoint an expert panel to advise him on the bids, with the winner to be announced in September. The ACCC will not be part of this panel but will provide a detailed report giving its views on the pricing proposals. This is unlikely to be relaxing bedtime reading for Conroy or McGauchie.

The key will be how the Government decides to handle the differences of opinion and to what extent it will be prepared to forgo a return on its own $4.7 billion investment to effectively improve Telstra's.

The political commitment from the Government is for speeds of at least 12megabits per second for 98 per cent of the population, a speed that is likely to increase with time.

Telstra is, of course, threatening to just walk away and invest the money in other projects, including overseas, if it doesn't get the return on its investment. The Government could always call Telstra's bluff, but that would be risky.

What it means for the consumer is that Australia may finally have a high-speed broadband network but that the services won't come cheap.

"For too long, political indecision and conflicts have blocked the path to an improved broadband future," Conroy said. "The Rudd Government is clearing this path and making sure Australia in on track to reap the benefits of the broadband revolution." He'd better watch out for all the pitfalls on that path.

New Zealand - splitting Telecom NZ

Telecom split becomes official

A plan to split New Zealand's biggest public company, Telecom, into separate business units has been formally approved by Communications Minister David Cunliffe.

The decision, effective on Monday, will see Telecom divided into three divisions - Networks, Wholesaling and Retailing.

An independent oversight group will monitor the process.

It's hoped the move will increase competition and improve New Zealanders' access to a wider range of broadband services.

Telecom chief executive Paul Reynolds says the company's formal separation into distinct business units paves the way for a new era in telecommunications.

He says Telecom staff have hit the ground running, with a number of very large infrastructure investment projects in train which will deliver more choice and better products and services for telecommunications users.

Reynolds says a central feature of the separation, Telecom's commitment to accelerated rollout of a world-class fast broadband network, is already underway.

He says installation of the 3,600 roadside cabinets that are the building blocks of this network is happening now.

Other major investment programmes, such as the rollout of our new mobile network, are also proceeding, he says.

USA - video services regulation

Impact of State Video Services Legislation

The National Association of Telecommunications Officers and Advisors (NATOA) today released results of a preliminary survey it conducted among its members to obtain a snapshot of the impact state video services legislation has had to date on communities and subscribers. While state video franchising is still a relatively new concept, the survey posed questions regarding its effects on competition, rates and services, PEG (Public, Educational and Governmental) access, and consumer complaints. Responses came from 14 of the states which have adopted state video legislation. A total of 139 Local Franchising Authorities (LFAs), representing 10 million cable subscribers (15% of cable subscribers nationwide), participated in the survey.

The results of the survey indicate that incumbent cable providers are taking advantage of the change in law, with one third of respondents indicating that the incumbent had abandoned its local franchise for one issued by the state. New entrants are seeking only state franchises. In franchise areas affected by state legislation, 27% of participants report one new entrant, and 6% report more than one new entrant in operation. Thirty-five percent (35%) of LFAs report the new entrant has not built anything; 48% report the new entrant has built out to part of the community; while only 18% report that the new entrant is in the process of or has built out to the entire community.

As a result of these changes, NATOA was disappointed to learn that under state legislation thus far:

* Rates have not decreased according to 98% of those surveyed.
* Incumbent basic rates have increased $1.12 for analog and $1.51 for digital
* Most new entrants do not market a Basic Service Tier nor report rates, which makes consumer comparison shopping difficult at best.
* Consumer complaints remain high with 74% of respondents reporting the same level of complaints, except as they relate to the availability of choice of provider
* The majority of LFAs reported that on incumbent systems, the number of PEG (Public, Educational and Governmental) access channels has remained constant (97%) and that the technical quality has remained the consistent (89%). PEG channel positions on new entrant systems were reported as different from the incumbents by 39% with worse or poor technical quality reported by 36% on new entrant systems. PEG funding was the same for 44% of the LFAs, whereas funding increased for 12% and actually decreased for 22% of respondents.
* Overall, 82% of LFAs do not believe that state video legislation is having a positive impact on their community; 90% believe that PEG programming is not being treated in an equitable manner by new entrants; and 97% believe that customer service has not improved under state supervision.

“We were anxious to get this first snap shot and to set the bar against which future data can be collected and judged,” said NATOA Executive Director Libby Beaty. “Clearly, this legislation is very new in many places, and only time will tell whether, once implementation is complete, it will prove to have benefited consumers more than the corporations that sought the legislative changes. We are hopeful that it is the consumer who will win, but clearly it’s too soon to see those benefits yet. State legislation just out of the gate is not resulting in price reduction, the primary reason used to justify state over local regulation.”

USA - rural broadband

Deployment of Broadband To Rural America
see also US IIA Report

A 2008 survey of its members by the US Internet Industry Association, combined with information provided by affiliated telecom associations, finds robust levels of broadband deployment in the majority of states, and significant planned investments for expansion in the immediate future. Data collected to date supports five conclusions with respect to rural broadband: Deployment of broadband has been achieved at a remarkable pace given the land mass of America and the unusually high percentage of residents in rural areas. There remain substantial differences between rates of rural deployment of broadband and rates of adoption. Issues related to broadband deployment need to be separated from issues related to the adoption and use of these technologies. The remaining issues of deployment have been assisted by state and local mapping projects (such as those of California and Kentucky), which have helped to identify area where additional focus and investment are needed. More and better data is needed in order to make effective broadband policy. There are programs emerging that focus resources on the factors related to adoption, and these need to be strengthened. These conclusions will have a significant impact on public policy related to broadband: Regulation of the Internet, from open access to network neutrality, won't stimulate adoption of broadband. More and better data is needed. Federal programs should focus on supporting state and local efforts. Infrastructure investment will still be critical. The same needs for policy support exist in urban, suburban and rural areas.

Saturday, March 29, 2008

Bhutan - telecommunications

Bhutan, World's Newest Democracy, Gets Advanced Internet, Cell Phone Deployments

Democracy -- as well as state-of-the-art Internet and cell phone service -- are arriving more or less simultaneously this week to the Himalayan kingdom of Bhutan. The big question now is how they will impact the tiny kingdom's cherished state of Gross National Happiness.

A country of less than 700,000 inhabitants, squeezed between China and India, Bhutan formally embraced democracy this week as the political party loyal to Bhutan's 28-year-old King Jigme Khesar Namgyel Wangchuck, popularly called the Dragon King, won the nation's first election in its history.

The country has resisted change for a long time and only allowed television in 1999. Bhutan measures the happiness of its inhabitants, and many complained that TV disrupted its fundamental Gross National Happiness gauge. The introduction of television was followed by a crime wave, according to English journalists who visited Bhutan at the time.

Ericsson is supplying a WCDMA/HSPA network to bring modern cell phone service to the mountainous country. Ericsson said the network deployment for Bhutan Telecom will begin in the towns of Thimphu and Paro and then cover the nation. The network services will include high-speed Internet access, e-mail, video telephony, multimedia messaging, and various content-based services.

Bhutan Telecom has also contracted with AboveNet Communications UK to provision its IP Transit service. The system will replace much of an antiquated five-satellite network while introducing an infrastructure that is easily scalable for future growth.

AboveNet suggested that its service could promote development of call centers and IT parks in the country. Bhutan Telecom acquired a circuit to London to link with AboveNet's IP Transit network, enabling the telecommunications provider to establish the country's first DSL broadband Internet service last month.

In a statement, Leeland Pavey, AboveNet's VP of operations, said: "With remote countries such as Bhutan realizing the demand for high-speed and reliable connectivity, the development of fiber optic and carrier-class IP networks are proving fundamental in narrowing the communication bridge between distant parts of the world."

Media dispatches from Bhutan on Tuesday reported that the Bhutan United Party's candidate, Jigme Thinley, is expected to be named prime minister after his party swept the election results. A graduate of Pennsylvania State University's master's program in public administration, Thinley has long been an architect and promoter of Bhutan's campaign to promote happiness among its citizens.

Kenya - Safaricom

Safaricom share frenzy

Kenyans lined up in their thousands yesterday to subscribe to the eagerly awaited share sale of Safaricom, a mobile phone operator part-owned by Vodafone that is set to be the biggest listed company in east Africa.

The offer period for the company, which has been valued at $3.1bn, opened on schedule in spite of Safaricom's last-minute entanglement in a political dispute within Kenya's new power-sharing government.

The government's sale of a 25 per cent stake in the company has reignited Kenyans' love affair with the stock market, which began with another privatisation in April 2006, but lost some of its fizz last year. "The sense of euphoria is incredible. The country's gone share mad," said Aly Khan Satchu, a stock market analyst in Nairobi.

The company is due to list on the Nairobi exchange in June and up to 35 per cent of the shares will be made available to overseas investors. The level of demand will indicate how sentiment towards Kenya has been affected by the post-election unrest. Most overseas interest in the company is expected to come from fund managers specialising in Africa and other emerging markets. The international part of the offering is being managed by Morgan Stanley.

The government is selling 10bn shares at a base price of KSh5 a share and 65 per cent are set aside for domestic investors.

The government has a 60 per cent stake in the company and Vodafone owns 35 per cent via an entity called Vodafone Kenya. The remaining 5 per cent is held by Mobitelea Ventures.

This week Kenya's opposition party, frustrated by stalled negotiations over the naming of a coalition cabinet, called for the share offering to be delayed. It raised questions over Mobitelea and suggested that some politicians would be "unlawfully enriched" by the flotation, but did not provide any evidence.

GSM - security concerns

GSM mobile security on the ropes

The security of the most widely used standard in the world for transmitting mobile phone calls is dangerously flawed, putting privacy and data at risk, two researchers warned at the Black Hat conference in Europe on Friday.

Researchers David Hulton and Steve Muller showed at Black Hat in the U.S. last month how it was possible to break the encryption on a GSM (Global System for Mobile Communications) call in about 30 minutes using relatively inexpensive off-the-shelf equipment and software tools. The hack means they could listen in on phone calls from distances of up to 20 miles (32 kilometers) or farther away.

They're still refining their technique , which involves cracking the A5/1 stream cipher, an algorithm used to encrypt conversations. In about another month, they'll be able to crack about 95 percent of the traffic on GSM networks in 30 minutes or faster with more advanced hardware.

Their research has been motivated in part by the absence of a more secure encryption method despite years of warnings about GSM.

"Ultimately, we are hoping that the mobile operators actually initiate a move to secure their networks," Muller said. "They've had about 10 years, and they haven't done it. In my opinion, there is only one language that they speak: that's called revenue. As soon as they lose the revenue, they will actually change."

Since 1991 when GSM networks debuted, the integrity of their security has declined as researchers probed. In 1998, the A5/1 and the A5/2, a weaker stream cipher, were broken.

Commercial interception equipment is available now to eavesdrop on calls, which can cost up to $1 million. Hulton and Muller were game for a challenge and wanted to do it more cheaply.

For around $700, they bought a Universal Software Radio Peripheral, which can pick up any kind of frequency up to 3GHz. They modified the software to pick up GSM signals broadcast from base stations. They compared those with signals picked up by a Nokia 3310 phone, which had a software feature that allowed for a revealing peek inside how GSM works.

Hulton and Muller studied how a GSM phone authenticates with a base station and sets up an encrypted call. They then built a machine with lots of memory that uses Field-Programmable Gate Arrays, high-powered hardware used for intensive calculations, in order to crack the call's encryption.

And now they're planning to commercialize the technique, although Hulton said they will vet buyers. He said they haven't had any feedback from operators on their research.

Muller warned that faster attacks on GSM will likely emerge, making it more imperative that the mobile industry finds a solution.

"We started [this project] because everyone said we couldn't do it," Muller said. "Attacks will always get better, they'll never get worse."

Singapore - FTTH

Singapore Shortlists FTTH Firms
see also iDA web site

The Infocomm Development Authority of Singapore (IDA) has taken another important step toward deciding which companies will build and operate the island state's next-generation network by drawing up shortlists of bidders.

Singapore's plan is to hook up all its homes and businesses with fiber by 2015, with some homes getting the 1 Gbit/s access services from 2010, in a network rollout that could cost as much as US$2 billion.

To achieve its aims, the IDA has created a three-layered model: a "NetCo," to design, build, and operate the passive infrastructure; a "OpCo," to deploy network infrastructure (routers, switches) and act as a wholesaler of broadband capacity; and multiple retail service providers that will all use the same underlying physical infrastructure.

OpCo shortlist

The IDA's latest move has been to draw up a shortlist of 11 firms that have pre-qualified for the OpCo request for proposal (RFP) tender process, including Alcatel-Lucent, Deutsche Telekom AG, NTT West Corp., Nokia Siemens Networks, and Singapore Telecommunications Ltd. (SingTel). See the table below for the full list.

The OpCo RFP process is set to start some time during the second quarter of this year, with the IDA expecting to announce the winner in the first quarter of 2009.

NetCo shortlist

A shortlist of 10 NetCo consortium leaders was announced earlier this year, and the RFP process has already begun, with submissions due in by May 5. See the table below for the NetCo shortlist, which includes many of the same names as the NetCo list.

Singapore's government is providing a grant of 750 million Singaporean dollars (US$543 million) to the winning NetCo to help with the construction.

One of the shortlisted firms, City Telecom (HK) Ltd. , just announced it has teamed up with Singapore operators MobileOne Ltd. (M1) and StarHub Pte. Ltd. for its bid.

The winner of the NetCo bid is due to be announced in the third quarter of this year.

In his recent report on FTTH deployments and plans around the world, Heavy Reading chief analyst Graham Finnie noted that, considering its "strong commitment to technology deployment over many years" and its "dense, urbanized housing [that is] well suited to a fiber rollout," Singapore has been "surprisingly slow to encourage development of FTTH."

Finnie also noted that the government's proposed grant is "proportionately, the largest subsidy offered by any government for an FTTH network."

Despite Singapore's slow start, the Asia/Pacific region is already leading the way in FTTH developments, boasting a healthy majority of the world's fiber connections, though Europe is set to pick up the pace in the next five years.

Nigeria - largest market in Africa

Africa: Country Now Africa's Largest Telecom Market

Nigeria has been officially declared Africa's largest telecom market, due largely to convergent services deployed by operators in the industry.

The influential global telecom research group, Informa Telecom & Media, in its latest online issue stated that following the industry statistics released early in the year by the Nigerian Communications Commission (NCC) which places total active subscribers' base at 41.5 million "Nigeria has now officially taken the lead as Africa's largest telecommunications market."

Less than 10 years ago, the country barely had 400,000 active telephone lines and with just one state behemoth as monopoly, the state of affairs was chaotic. Former president Olusegun Obasanjo opened up the sector and the first GSM open bid introduced Africa's most populous nation to new entrants like ECONET Wireless of Zimbabwe, (now Celtel Nigeria) and MTN Nigeria Communications Ltd in 2001.

They were joined later by a local new player, Globacom Ltd. "With 41.5 million subscribers, it is now taking a position which was until December 2007 held by South Africa. The continent's most populous country isleading the way in West & Central Africa not only in terms of market numbers, but also with services.

With a regulatory regime which introduced universallicences in the market, services providers are using new business models to improve access to the internet as well as voice communications.

As a result, GSM operators are experiencing competition from companies using alternative technologies, for the benefit of theconsumers," the report stated.

In a way, the growth could be seen as a regulatory victory for the NCC which through a combination of licences has given operators free choice of technologies to drive their own vision and business plans. That freedom is now pushing the numbers and themarket.

In the relation to the Nigerian approach, "other countries in the region," the report noted, "are beginning to look into the opportunities of convergentor triple play services. France Telecom - Orange Group, with its eight operations in the region (including three launched in 2007) is keen to draw from its experience in Europe to deliver both fixed-line and mobile services".

The report is trailing the forthcoming annual West & Central Africa Com forum slated for Abuja on 18 - 19 June 2009. The Abuja event will extensively discussdevelopments in the region's telecom market drawing participation from across the Middle East & Africa,MEA and Europe.

South Korea - IP Television

Telecom Firms to Spend W1.6 Trillion in IPTV

Korean telecom firms are to invest around 1.57 trillion won ($15.8 billion) on Internet-protocol TV (IPTV) services this year, the Broadcasting and Communications Commission (BCC) reported Friday.

KT, the dominant telephone and broadband Internet service provider, alone plans to spend 1.3 trillion won, and LG Dacom and Hanarotelecom respectively allotted 146.4 billion won and 122.1 billion won for the Internet TV business.

A large part of the money will be used in expanding and improving Internet networks, the report said, since it is difficult to guarantee high quality for real-time TV broadcasting on existing networks. Purchasing TV content is another big expenditure, the report said.

``By enriching the content of its Mega TV service, KT will endeavor to narrow the information gap between rich and poor people,'' a company public relations officer said.

IPTV is a system where content is delivered to TVs by using broadband Internet lines and a set-top box, instead of using traditional TV antennas, cable boxes or satellite dishes. Users can select programs they want to watch and download material via the Internet at any time they want.

The service operators are also to provide real-time broadcasting of popular terrestrial channels by ``streaming'' the programs via the Internet network this year.

Hanaro Telecom has pioneered the field in South Korea since last year. The firm is expecting its IPTV service to make a profit from the first quarter of this year. Latecomers KT and LG Dacom have also been increasing their marketing activities by offering discounts for subscribers to their telephone and Internet services.

According to the report from the commission, the firms have said that they will spend 1.06 trillion won on improving networks, 113.7 billion won on platforms, 223 billion won on set-top boxes and another 180 billion won on purchasing content. The Electronics and Telecommunications Research Institute estimates IPTV will be a 540-billion won market this year, meaning it will take a few years for the firms to start making any profits.

Government agencies expect IPTV subscribers to reach 2 million this year and grow to 3.3 million by 2012. The commission, which was the Ministry of Information and Communications, is to introduce regulations for real-time broadcasting as early as this May. Telecom and TV firms have been engaged in a tug-of-war over the price of IPTV programming.

Cuba - telecommunications

Cuba will Expand Telecommunications Services
see also ETECSA

Cuba will begin a development program in the sector of telecommunications in the next years that will contribute to the increase and improvement of services to the population.

In a note published by the Granma and Juventud Rebelde newspapers on Friday, the Cuban Telecommunications Company S.A. (ETECSA) explains that these investments will be possible thanks to credits and technologies facilitated by friendly countries.

It points out that priority will be given to municipalities with low telephone density and settlements with more than 300 people that still do not have telephone service.

In addition, ETECSA announces that it will offer the mobile phone service to the population through personal contracts.

According to the note, ETECSA will soon announce the procedures that Cuban nationals should follow to obtain the ownership of mobile phone lines, which until now they have obtained indirectly, and also the beginning of the new contracts.

This service will be offered in convertible currency (CUC) in order to defray the development of cable connectivity and to facilitate the introduction of new services in national currency.

Friday, March 28, 2008

Mobile broadband - growth

Global Mobile Broadband Connections Increase Tenfold Over The Past Year

The GSM Association (GSMA), the global trade association for the mobile industry, today announced that there are now more than 32 million Mobile Broadband (HSPA*) connections worldwide compared with just over 3 million at the end of the first quarter of 2007. Mobile Broadband continues to gain momentum as more and more operators upgrade their 3G networks with HSPA technology in parallel with a wealth of advanced HSPA handsets on the market.

Recent figures from Wireless Intelligence, a comprehensive database covering the global mobile market, indicate that global Mobile Broadband connections have risen by more than 850 percent year-on-year (Q1 CY07 – Q1 CY08). Operators in Asia, Australia, Europe and North America are all reporting an increase in the uptake of HSPA handsets currently capable of accessing the Internet at speeds ranging from 1.8Mbps to 7.2Mbps.

“The uptake of mobile services such as music and video downloads as well as Internet access is rising in many countries as users are experiencing the benefits of high-speed Mobile Broadband,” said Rob Conway, CEO of the GSMA. “We are witnessing the creation of a virtuous circle in which Mobile Broadband is achieving greater and greater economies of scale, driving down the cost of handsets and equipment and enabling more and more people to enjoy easy access to media-rich services over the air.”

The number of networks now offering commercial Mobile Broadband services has also increased significantly over the past year. The GSMA recorded a 44 percent increase, between May 2007 and March 2008, in the number of Mobile Broadband (HSPA) enabled networks with 166 networks now available in more than 73 countries around the world.

Over the past 16 months there has also been a significant increase in the number of commercially available HSPA-enabled devices. The GSMA estimates the growth of HSPA devices to be more than 265 percent, with 128 devices available in January 2007 and more than 467 available in March 2008. Mobile Broadband (HSPA)-enabled devices include mobile handsets, notebook PCs, data cards, wireless routers and USB modems.

Supporting quotes from operators:

“AT&T was the first operator in the world to deploy HSDPA widely, and we’re excited to see the continued growth of the technology around the globe,” said Kris Rinne, Senior VP, Architecture and Planning at AT&T. “This year, AT&T will expand its HSPA coverage to 350 markets around the United States, making us a leader in wireless broadband coverage.”

“Telstra’s fully HSPA enabled Next G™ network’s faster speeds, better coverage, and more compelling services and content are a huge competitive advantage,” said Dr Hugh Bradlow, Chief Technology Officer of Telstra Corporation Ltd. “At the end of January 2008, Telstra had more than 3.5 million 3G subscribers and the majority of these are HSDPA subscribers using our Next G™ network. HSPA helped drive mobile data revenue growth of 46.1 per cent and wireless broadband revenue growth of 205 per cent in the first half of 2007/08.”

“As a new wireless broadband carrier, we evaluated HSPA and WiMax carefully,” said Ed Evans, CEO of Stelera Wireless. “The wide availability of HSPA network infrastructure and consumer devices today drove our technology selection. We believe the GSM carriers will continue to advance HSPA and keep us in front of other competing technologies. Our analysis indicated that WiMax just wasn’t ready and vendor choices were very limited at this time.”

“mobilkom austria has been at the forefront of Mobile Broadband technology and currently has more then 290,000 Mobile Broadband subscribers with two thirds equipped with HSPA-enabled devices, said Boris Nemsic, CEO of mobilkom austria and Telekom Austria Group. We launched HSPA commercially in January 2006 and by September 2006 all areas in Austria with a high population density were covered. Our overall population coverage for Mobile Broadband (EDGE, UMTS, HSDPA/HSUPA) is 99 percent.”

USA - Verizon open access

Verizon Wireless reveals open-network strategy

VZW appears to be taking all comers, but pricing is still a question

Verizon Wireless kicked off its developer program in New York today, revealing the first details of just how open-access will work on CDMA network. Verizon will maintain control over pricing plans for third -- party services and devices on its networks, but it appears surprisingly willing to give outsiders access to key elements of the network.

VZW executives outlined flexible plans for the introduction of outside devices and applications onto its network, some working in concert with existing Verizon Wireless pricing plans and services and others allowing a new service provider essentially to buy wholesale access to the network. All of these new devices and services will be the sole responsibility of the companies bringing them to market--they'll be in charge of their own retailing, distribution and marketing--but they can choose to work closely within the Verizon service structure or venture out on their own. Verizon will even give developers access to some of its more closely held network functions, such as GPS, MMS, SMS and even its VCast portal content, if the two parties can negotiate specific revenue-sharing deals.

As for the device specs themselves, Verizon is releasing them at the conference today and allowing developers to sign up for its program at the conference (for details on the program, see VZW's open development site). The most firm requirement is that any device accessing the voice network must have the FCC's E911 protocols embedded, allowing for emergency calling. This may make it hard for foreign vendors to try to simply port their devices onto the Verizon network. But for non-voice devices, VZW left the door open to almost any scenario: portable gaming consoles, connected vending machines, handheld credit card readers, and standalone digital music players.

CDMA Development Group executive director Perry LaForge, who spoke at the conference, said that the technical specs were very similar to the ones the CDG uses to approve new handsets and devices. In fact, Verizon's documentation draws heavily from the CDG's guidelines as well as that of standards bodies like the 3GPP2. The fact that VZW is using the same specs that most of the world's CDMA vendors are already using to design their products is encouraging since it places no additional restrictions on device makers beyond what they're accustomed to, LaForge said.

"People have asked me if this is the real deal, whether Verizon is just paying lip service to the idea of open access," LaForge said. "We think they realize it's in their best interests to open up as much as possible. They're really pushing it. I think they're serious."

The only question Verizon left open was that of pricing, both for certifying a device and the minute and data plans the devices would use. Verizon said that it expects that it will receive many new gadgets to certify and would charge a fee to defray the testing costs. As for the plans, if a device doesn't latch neatly onto one of the existing VZW voice and data packages, the service provider or device maker will have to negotiate a plan with Verizon. Whatever those negotiations may entail, it's unlikely that Verizon will give unlimited data access to its networks. It caps its own data plans to prevent individual users from hogging bandwidth with high-capacity applications like Slingbox, so it probably won't extend such privileges to a third party. It's also unclear whether Verizon could outright ban these offending applications from the network--something that might be very difficult to do, especially if these devices contain open operating systems such as Google's forthcoming Android.

Cuba - mobile telephones

Raul Castro: Cubans Can Have Cell Phones

President Raul Castro's government said Friday it is allowing cell phones for ordinary Cubans, a luxury previously reserved for those who worked for foreign firms or held key posts with the communist-run state.

It was the first official announcement of the lifting of a major restriction under the 76-year-old Castro, and marked the kind of small freedom many on the island have been hoping he would embrace since succeeding his older brother Fidel as president last month.

Some Cubans previously ineligible for cell phones had already gotten them by having foreigners sign contracts in their names, but mobile phones are not nearly as common in Cuba as elsewhere in Latin America or the world.

Telecommunications monopoly Empresa de Telecomunicaciones de Cuba S.A., or ETECSA said it would allow the general public to sign prepaid contracts in Cuban Convertible Pesos, which are geared toward tourists and foreigners and worth 24 times the regular pesos Cuban state employees are paid in.

The decree was published in a small black box on page 2 of the Communist Party newspaper Granma.

The government controls well over 90 percent of the economy and while the communist system ensures most Cubans have free housing, education and health care and receive ration cards that cover basic food needs, the average monthly state salary is just 408 Cuban pesos, a little less than $20.

A program in Convertible Pesos likely will ensure that cell phone service will be too expensive for many Cubans, but ETECSA's statement said doing so will allow it to improve telecommunication systems using cable technology and eventually expand the services it offers in regular pesos.

The statement promised further instructions in coming days about how the new plan will be implemented, and there were no lines of would-be customers mobbing ETECSA outlets as they opened for business.

ETECSA is a mixed enterprise that operates with foreign capital from the Italian communications firm Italcom.

Bahrain - consumer view

Consumer group hails reforms

The Telecommunications Consumer Advisory Group welcomed the proposed regulatory measures especially the award of third mobile operator and the provision of number portability for fixed and mobile services.

The group met for the third time this month. The meeting was chaired by Shaikha Haya bint Rashid Al Khalifa.

Telecommunications Regulatory Authority (TRA) general director Alan Horne presented in detail the results of the Strategic and Retail Market Review.

The group intends to submit a detailed response on the results of the Strategic and Retail Market Review.

Shaikha Haya gave an overview of the group's role in supporting TRA to create more consumer awareness among the public.

The group also formed the sub-group to initiate a plan to develop consumer guidelines, and to develop a comparative table of services and prices currently offered by the operators.

"It is noticeable that liberalising the telecommunications market is fruitful and beneficial to consumers in Bahrain, especially the reduction in international calls charges," said group vice-chairperson Dr Hassan Fakhroo.

"However, local calls from mobile and fixed line need a review, and the group will work to provide suggestions and feedback to the TRA aiming to provide solutions for better prices of local calls and any other issues of concern to consumers," he said.

Thursday, March 27, 2008

Telecommunications-media storm

In the Eye of the Telecom-Media Storm
see also report

As consumer demand for mobile broadband services reaches critical mass ... telecom operators can expect that 50 per cent of the European population will access the internet through broadband on their mobile phones by 2012, according to the seventh annual research report, "In the eye of the telecom-media storm." Published today by Exane BNP Paribas and Arthur D. Little, the report is based on 71 interviews with managers from leading telecom and media companies in 12 countries in Europe and the USA.

At this stage, mobile service providers have a job to do in catching up with consumer expectations regarding mobile broadband, and part of that work will lead to greater fixed-mobile network integration. Mobile operators will experience huge growth in mobile broadband traffic - as is already seen in some advanced countries like Austria.

Wireless technology is progressing fast, but it will not be able to bring the same performance at the same price as fixed networks. To cope with the fast-growing traffic and to make sure that customer devices are always connected to the best available network, mobile operators will be partnering with fixed-infrastructure providers. Arthur D. Little and Exane BNP Paribas forecast that 20 per cent of mobile broadband traffic could be carried through fixed networks. As such, in this upcoming "all-mobile" world, fixed infrastructure will remain key. Wireless providers can expect to enjoy re-accelerating revenue growth (2.6 per cent per year over 2007-2012), but the integration of fixed infrastructure into their networks will have a negative impact on their margins. Revenue streams from products that converge fixed and mobile broadband will increasingly be the focus of new product development for both mobile operators and fixed broadband providers.

New competition has arrived. In the 2007 Exane BNP Paribas report, "Caution - Work ahead", the authors expected that within the next two to three years, Internet players could compete with mobile operators. This year, the report concludes that telecoms providers are facing the tightening grip of fast-growing global Internet giants on Internet services and on the monetisation of online advertising, plus the increasing pressure from global hardware manufacturers who also want to develop revenue streams from Internet and content service. As such, operators will struggle with developing revenue streams from Internet services and advertising. The bulk of their revenues and profits will continue to come from connectivity.

"We believe that mobile broadband offers large opportunities for value creation at all levels of the value chain, but while telecom operators have traditionally occupied a prime spot in the value chain, they face fast-moving competition from sophisticated global giants coming from the Internet and hardware worlds", says Jean-Luc Cyrot, co-author of the report and director in Arthur D. Little's TIME Practice. In order to create opportunities for growth in an "all-IP" environment, telecom operators cannot avoid collaboration with these global giants.

Towards market consolidation. Domestic consolidation will continue in 2008, especially amongst fixed providers. As a result, the report forecasts that the number of fixed and mobile network operators in each of the European markets will fall progressively from seven to four - on average. In particular, sub-scale broadband providers will be under mounting pressure as a result of the move to triple-play, fibre and mobile broadband competition.

Beyond local market consolidation, a wider-ranging pan-European consolidation could be on the cards. The report outlines two scenarios for the sector: the "Access Specialisation" scenario, which could benefit small, aggressive providers, and a scenario of "Pan-European Consolidation," which would see larger operators scoop up the smaller providers. According to Antoine Pradayrol, author of the report and Head of the Telecom team at Exane BNP Paribas in London, "It is increasingly clear that larger multi-country operators have an advantage in negotiating with Internet giants and device manufacturers. This could become a very powerful rationale for pan-European consolidation of telecom operators".

Japan - rural broadband

Japan Panel Seeks Combination of Wired, Wireless Telecom Networks

A Japanese advisory panel asked the government Wednesday to install wired and wireless networks in combination to improve the availability of broadband telecommunications services at rural areas.

A combination of fiber-optic cables, mobile phone relay stations and communications satellites would be useful in overcoming telecom service gaps between urban and rural areas at lower costs, the panel said.

The Japanese government plans to complete broadband networks across the country by the end of March 2011. But progress has been slow due to massive investment needed in rural areas.

The panel also proposed promoting the use of small mobile phone relay stations in order to eliminate out-of-service areas.

The public and private sectors need to spend a maximum 1.2 trillion yen to implement the recommended measures, the panel said.

Based on the recommendations, the government will compile detailed action plans in June.

Montserrat - a new regulatory authority

Telecommunications regulatory body for Montserrat

Chief Minister Dr Lowell Lewis announced during his 2008 budget presentation on Tuesday evening that a new Telecommunications Bill has been drafted and will be presented to the legislative council in the coming months.
Chief Minister Dr Lowell Lewis announced during his 2008 budget presentation on Tuesday evening that a new Telecommunications Bill has been drafted and will be presented to the legislative council in the coming months.

BRADES, Montserrat, March 27, 2008 - A telecommunications regulatory authority is in the works for the British overseas territory of Montserrat.

Chief Minister Dr Lowell Lewis announced during his 2008 budget presentation on Tuesday evening that a new Telecommunications Bill has been drafted and will be presented to the legislative council in the coming months.

The legislation will set out the rules governing telecommunications services.

Dr Lewis said the country was moving too slowing in "making the advancements needed at competitive rates".

"The Bill will establish a telecommunications regulatory authority within a public utilities commission and sets out the protocols for license and spectrum management," he said."

"The overall strategy will consider how government encourages and supports the development of businesses involved in this sector to enable cutting edge technologies to be introduced here in Montserrat."

The Chief Minister however made it clear that the move was not intended to push Cable and Wireless, the island's only telecommunications service provider out of the market.

Africa - undersea cables

Eassy cable project starts construction

Construction on the fibre-optics East African Submarine Cable System (Eassy) project, which would connect 21 African countries to each other and the rest of the world with high-quality Internet and international communications services started on Thursday.

The cable would be installed by Alcatel-Lucent along the sea-bed off Africa's east coast. It was expected to be operational by the first half of 2010.

"We are pleased to work with the Eassy Consortium in laying this new cable that will expand communications capabilities and help reduce the digital divide in the region," said Alcatel-Lucent submarine network activity president Etienne Lafougère.

The supply contract for installation of the cable was now in force. The funds were provided by the consortium of 25 telecommunications operators, of which 19 were African companies.

The operators of the system were Bharti Airtel Limited of India, Botswana Telecommunications Corporation, British Telecommunications, Dalkom of Somalia, Djibouti Telecom SA, Etisalat of the United Arab Emirates, France Telecom, Mauritius Telecom, MTN of South Africa, Neotel of South Africa, Saudi Telecom Company, Comores Telecom, Sudan Telecom Company, Tanzania Telecommunications Company, Telecom Malagasy, Telecommunicacões de Mocambique, Telkom Kenya, Telkom SA Vodacom of South Africa, Zambia Telecommunications Company, Zanzibar Telecom, Uganda Telecom, U-Com Burundi SA, Office National Des Telecommunications of Lesotho, Lesotho Telecommunications Authority, and Gilat Satcom Nigeria.

Five major development finance institutions, namely the International Finance Corporation (IFC), the African Development Bank, the Agence Française de Développement, KfW of Germany, and the European Investment Bank, were partnering to provide the project's long-term loan financing of $70,7-million, with $18,2-million coming from IFC.

The $247,1-million balance of the project cost, would be provided by the Eassy consortium members.

"This is a very important milestone toward implementation of the Eassy cable, which will transform the telecommunications landscape in the region. It will provide Internet and other communications access for 250 million Africans and substantially reduce costs for consumers and businesses," said IFC director for global information and communication technologies Mohsen Khalil.

The cable would run 10 000 km from Africa's southern tip, around the African horn, and into the Red Sea, connecting South Africa, Mozambique, Madagascar, Tanzania, Kenya, Somalia, Djibouti, and Sudan.

The IFC indicated that consumers along Africa's east coast typically paid between $200 and $300 a month for Internet access via satellite.

These prices created a barrier to usage and restricted economic activity and growth. Once the Eassy cable was in place, prices for international connectivity were expected to drop by two-thirds at the outset, and the number of subscribers would increase rapidly.

Because the project would give open access to service providers, prices would fall further as volume and competition increased. This was expected to stimulate the development of new knowledge-based industries, call-centers, and similar ventures. Educational and health activities in the region would also benefit from access to low-cost Internet.

In a separate initiative, the World Bank was assisting with the implementation of regional distribution networks to connect landlocked countries in East Africa to each other and the Eassy cable, helping maximise access.

Another 13 adjoining countries would also be linked to the system as terrestrial backbone networks were completed through the broader World Bank initiative, and these included Botswana, Burundi, the Central African Republic, the Democratic Republic of Congo, Chad, Ethiopia, Lesotho, Malawi, Rwanda, Swaziland, Uganda, Zambia, and Zimbabwe.

Poland - advertising

Advertisements for telecommunications services under scrutiny

The chairman of the Office of Competition and Consumer Protection (UOKiK) has taken legal action against two Polish mobile network operators, Polkomtel and PTK Centertel, and two telecommunications operators, Aster and Tele 2, Gazeta Prawna reported.
The aim of the proceedings is to examine if the imprecise phrases used in their commercials and advertisements constitute violation of consumers’ right to access to reliable and comprehensive information on available products and services.
If the suspicions of UOKiK are confirmed, its chairman will be in a position to demand that the companies cease their illegal actions and fine them 10% of their 2007 revenues.

Bahrain - access to infrastructure

New fixed-line operators 'are facing hurdles'

Despite fixed-line telephones having been liberalised since 2004, new market players are still facing obstacles, according to Telecommunications Regulatory Authority (TRA) general director Alan Horne. Now the TRA has launched a public consultation exercise on draft guidelines for infrastructure deployment to help further promote competition and choices in the fixed-line market.

"Until now new market players have faced obstacles in deploying country-wide alternative cable networks," said Mr Horne.

"Effective access to public and private properties to deploy telecommunications infrastructure is identified as a key element for fair and sustainable competition in the telecommunications market.

"As such TRA, supported by the Second National Telecommunications Plan, is working to remove the barriers for infrastructure deployment, in order to enable all appropriately licenced telecommunications operators the facility of installing their own physical networks.

"This will promote investment in infrastructure and will lead to the provision of more choice for consumers in the telecommunications market," he added.

The draft document provides all licenced operators of public telecommunications networks and other concerned parties the necessary guidelines, specifications, and conditions for the design, deployment, operation and protection of telecommunications network infrastructure in public and private property.

As part of its role to promote effective and fair competition among licenced operators, TRA has already set up a Telecommunications Technical Office, which now provides the interface to interact on behalf of the industry with the Central Planning Unit of the Works Ministry for the planning and deployment of any new telecommunications infrastructure.

"The guidelines in the consultation document will enable fixed line operators to lay their networks under fair and transparent processes and procedures," said TRA's telecommunications access and infrastructure manager Adel Al Showaikh.

Wednesday, March 26, 2008

Afghanistan - Taliban and cell towers

Cell Phone Shutdown Angers Afghans

Taliban attacks on telecom towers have prompted cell phone companies to shut down service across southern Afghanistan at night, angering a quarter million customers who have no other telephones.

Even some Taliban fighters now regret the disruptions and are demanding that service be restored by the companies.

The communication blackout follows a campaign by the Taliban, which said the U.S. and NATO were using the fighters' cell phone signals to track them at night and launch pinpoint attacks.

About 10 towers have been attacked since the warning late last month — seven of them seriously — causing almost $2 million in damage, the telecom ministry said. Afghanistan's four major mobile phone companies began cutting nighttime service across the south soon after.

The speed with which the companies acted shows how little influence the government has in remote areas and how just a few attacks can cripple a basic service and a booming, profitable industry. The shutdown could also stifle international investment in the country during a time of rising violence.

But the cutoff is proving extremely unpopular among Afghan citizens. Even some Taliban fighters are asking that the towers be switched back on, said Afghanistan's telecommunications minister, A. Sangin.

That dissenting view shows how decisions made by the top-ranking Taliban leadership can have negative consequences for lower-ranking fighters in the field, the minister said.

Taliban spokesman Zabiullah Mujahid hinted in a telephone interview that the group could change its tactics.

"We see that some people are having problems, so we might change the times that the networks are shut down in the coming days," Mujahid said.

That the Taliban could dictate when the country's mobile phone networks operate shows the weakness of the central government and the international forces that operate here, said Mohammad Qassim Akhgar, a political analyst in Kabul.

"After the Taliban announcement, they were aware of the situation, and still they couldn't provide security for the towers," Akhgar said. "Maybe destroying a few towers will not have any effect on the government, but the news or the message that comes out of this is very big, and all to the benefit of the Taliban."

All four of the major phone companies — Roshan, AWCC, Areeba and Etisalat — declined to comment.

Sangin said the government is not overly worried about the Taliban threat because Afghans are becoming increasingly angered by the shutdown. He said seven destroyed towers, and three others with minor damage, out of the 2,000 now in the country was "not a big thing," though he added that the towers cost from $150,000 to $300,000 each.

"Our view of the people targeting the telecom infrastructure is that it's not a fight against the foreign troops, it's not a fight against the government, it's actually targeting the people, because the result of such activities is that the people will suffer," Sangin said. "We believe the people will stand up and provide protection for the telecom towers."

Haji Jan Ahmed Aqa, a 45-year-old farmer from the remote and dangerous Zhari district of Kandahar province, said the loss of cell phone communication at night is a big problem.

"What do we do if someone is sick?" he asked. "How can you agree to this Taliban demand? Maybe next the Taliban will say they have a problem in the daytime, and they'll shut down the network at daytime as well."

Afghanistan's cell phone industry has seen explosive growth since towers first appeared in late 2002, Sangin said. The country now has 5.4 million cell phone users and the industry has invested more than $1 billion. Sangin said he expects another $500 million in investments over the next two years.

Attacks on towers have taken place across the south, where the Taliban is most active. Companies have shut down service primarily in Helmand, Kandahar and Zabul provinces.

An official with knowledge of the situation said about 10 percent of the country's towers were being turned off at night, affecting up to 300,000 people. He spoke on condition he not be identified because he wasn't authorized to release that information.

The shutdown, Sangin noted, is causing problems both for civilians and for militants.

"In these provinces I've actually received reports where the Taliban has gone to some towers and told the companies not to shut them down, and keep them running," said Sangin. "I get the feeling that they are already regretting their decision to shut down the services."

Simon Baker, a Moscow-based analyst with the telecommunication firm IDC, said that despite the attacks, the outlook for the telecom industry in Afghanistan is still "pretty good," given the country's large untapped user base.

"There are substantial amounts of capital behind it. I think people will try to find a solution to this," Baker said. "Major international players will take the longer term view."

Sangin said the Taliban's stated reason for wanting the networks shut down — because the U.S. and NATO can track militants' movements — doesn't make sense, because the fighters could simply turn their phones off or remove the batteries. He said the military has other ways to track the militants.

U.S. Ambassador William Wood told reporters last month that the threat could cause investors to hesitate.

"I don't think that it's a serious threat because the Taliban relies on cell phones, too," Wood said. "But you can see how that would be a problem for a private investor."

Sangin, the telecommunications minister, said the Taliban closed down a cell tower in Ghazni province about four months ago, but that villagers demanded it reopen.

"The people said please ... repair the infrastructure and we will guarantee the security of the tower," Sangin said. "We believe that if the Taliban continue with these kinds of activities the hatred will increase against them, and as a result we are awaiting a change in their policy."

South Korea - locked in customers

Mobile Providers to Lift Lock-In on SIM Cards

The nation's two largest telecom providers SK Telecom and KTF will lift the "lock-in" function on SIM cards in handsets for third-generation mobile service subscribers. Subscribers to 3G services like SK's T Live and KTF's SHOW will no longer have to go through an authentication and opening process all over again when they want to change mobile phones from March 27 and will be able to start using a new handset immediately if they take the SIM card out of the old handset and put it in a new one.

Customers also can choose which handset they want to use according to their outfit and occasion. If the batteries are exhausted, they can borrow their friend's cell phone and put their SIM card in the borrowed phone to use it for a short while. The sharing of SIM cards, however, will be limited in the early stage to handsets linked to the same service provider. Those who want to share their card among phones linked to different carriers will have to wait until the second half of this year.

Subscribers to LG Telecom will not benefit from the lift of the lock-in function, since their service provider uses American code division multiple access method, unlike SK and KTF, which employ the European method.

China - 41.6 per cent mobile teledensity

MII: China's Handset Penetration Reaches 41.6%

China added 9.46 million mobile phone users in February to reach 565 million handset users by the end of the month, according to Ministry of Industry and Information (MII) data released on March 24. China lost 1.76 million fixed-line users to reach 362 million in the same period. Handset users sent out 116.26 billion SMS messages in the first two months of 2008 for a year-on-year increase of 33.2 percent. China's mobile phone penetration rate has reached 41.6 percent, according to IIM data.

The nation's telecom industry revenue increased 10.1 percent year-on-year to reach RMB122.03 billion in February.

Prada - deisgner phone

LG's Prada Phone Turns One Year Old

LG Electronics has marked the first anniversary of the release of its Prada Phone, the high-end mobile phone developed in partnership with Italian luxury fashion label Prada. The phone has sold some 800,000 units worldwide, including 250,000 in Korea, generating W100 billion (US$1=W1,014) in operating profit.

When they cooperate with luxury fashion brands to develop premium phones, handset makers are usually looking to strengthen their brand image rather than increase their profits. But the Prada Phone is significant -- it has succeeded in enhancing both.

In December 2005, LG Electronics marketing executive Ma Chang-min waited for three hours in front of the Prada headquarters in Milan, Italy to meet a Prada executive, only to be told, to his disappointment, that the Italian company had little interest in developing a mobile phone with LG.

But Ma didn't give up. Unlike other companies which had asked Prada to simply design a phone, Ma suggested the two sides put their heads together to develop a totally new phone, the likes of which the world had never seen before.

In order to pique consumer curiosity, the company employed a "mystique" marketing strategy, providing as little information about the product as possible. To that end, it adopted a "three no's" policy -- no showcases, no TV commercials and no discounts.

First, instead of holding a product showcase, LG only told the press when it would release the phone -- and only when it was asked. Second, it didn't create any TV commercials, but placed ads only in newspapers and upscale magazines. Third, it offered no tantalizing price reductions at all.

"We have maintained the release price of W880,000 since it was released a year ago," an LG executive said. "Some sales agencies give discounts to their regular customers, but that's at their discretion; LG does not offer any reductions."

The company also changed its sales network and the way it displayed the product. It limited the number of retailers carrying the phone to 20 stylish Prada shops worldwide and 300 department stores. It had the phone displayed in a transparent box separate from other products when sold through wireless agents. The intention was to literally set the phone apart from other products and increase curiosity by not allowing consumers to touch it -- thus fueling their willingness to purchase.

The company also provides enhanced after-sales service for the Prada phone. If the phone breaks within a year after purchase, LG pays up to W200,000 in repair compensation regardless of whose fault it is.

An LG Electronics executive said, "The Prada Phone is a product for those 30 percent of consumers who want to belong to the upper five percent. We will maintain our 'mystique' marketing strategy."

USA - merger approval of Sirius and XM

Justice Dept. Approves XM-Sirius Merger

The Justice Department on Monday approved Sirius Satellite Radio Inc.'s proposed $5 billion buyout of rival XM Satellite Radio Holdings Inc., saying the deal was unlikely to hurt competition or consumers.

The transaction was approved without conditions, despite opposition from consumer groups and an intense lobbying campaign by the land-based radio industry.

The combination still requires approval from the Federal Communications Commission, which prohibited a merger when it first granted satellite radio operating licenses in 1997.

The Justice Department, in a statement explaining its decision, said the combination of the companies won't hurt competition because the companies are not competing today. Customers must buy equipment that is exclusive to either XM or Sirius, and subscribers rarely switch providers.

"People just don't do that," Assistant Attorney General Thomas Barnett said in a conference call with reporters.

The government also appeared to endorse a central argument the companies used in pushing for their merger: that ample competition is provided by other forms of audio entertainment, including "high-definition" radio, Internet-based radio stations and even devices like Apple Inc.'s iPod.

"The likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term," the Justice Department said.

The buyout received shareholder approval in November. The companies said the merger will save hundreds of millions of dollars in operating costs - savings that will ultimately benefit their customers. The Justice Department also noted that argument in its approval.

The FCC had no comment on the decision Monday. In the past, FCC Chairman Kevin Martin has said any approval faced a "high hurdle."

Martin said last week that agency staff was "drafting various options" in preparation for a final recommendation. The five-member commission could vote against the deal, approve it or approve it with conditions. The agency could require the companies to freeze prices or make part of their satellite spectrum available for public-interest obligations.

Both XM and Sirius declined to comment on the decision on Monday.

Sen. Herb Kohl, D-Wis., chairman of the Senate Judiciary Committee's subcommittee on antitrust, said in a statement that the merger would create a satellite radio monopoly and asked the FCC to block it.

"We are particularly disturbed by this decision, given the Justice Department's record in recent years of failing to oppose numerous mergers which reduced competition in key industries, resulting in the Justice Department not bringing a single contested merger case in nearly four years," he said.

The companies have pledged that the combined firm will offer listeners more pricing options and greater choice and flexibility in the channel lineups they receive. If the deal is approved, the companies have said they would offer pricing plans ranging from $6.99 per month, for 50 channels offered by one service, up to $16.99 a month, where subscribers would keep their existing service plus choose channels offered by the other service.

Despite the consumer-friendly promises, most consumer groups have opposed the proposed merger.

"If this is what our competition cops do, we might as well close shop and save taxpayers a few hundred million dollars because they're not doing their jobs," said Gene Kimmelman, the Washington lobbyist for Consumers Union, nonprofit publisher of Consumer Reports magazine.

Shares of both companies rose following the news. XM Satellite shares were up 15 percent in afternoon trading while Sirius was up 8.6 percent.

Motorola - hiving off handset manufacturing

Motorola to split into two companies

Motorola Inc said on Wednesday it would split into two publicly traded entities to separate its loss-making handset division from its other businesses, sending its shares up more than 10 percent.

The move, which comes amid an intensifying proxy battle against activist investor Carl Icahn, would take the form of a tax-free distribution to Motorola's shareholders and is expected to be completed in 2009, the company said.

Motorola has been losing handset market share and is now ranked third in the world. The two entities it plans to split into are Mobile Devices, and Broadband & Mobility Solutions. The latter consists of its network equipment, enterprise and public safety businesses.

It said the creation of two companies would improve flexibility, increase management focus and provide more targeted investment opportunities for shareholders.

Motorola Chief Executive Greg Brown said in a statement that the company has started a global search for a new CEO for the mobile devices business.

The move comes after Motorola said in late January that it was conducting a strategic review of its business that could lead to a separation of the handset business.

The company is engaged in a proxy battle with Icahn, its second-largest shareholder. Icahn has proposed a slate of four directors to the board and is suing Motorola to force it to hand over documents related to its mobile devices business.

Motorola said on Wednesday there was no assurance the planned split, which is subject to further financial, tax and legal analysis, would occur.

Its shares rose to as much as $10.82 before settling at around $10.32 in premarket trading, still up 5.7 percent from their close on Tuesday at $9.76 on the New York Stock Exchange.

Kenya - ownership of Safaricom

Lobby asks Treasury to reveal Mobitelea owners ahead of IPO

The Government was Tuesday asked to make public ownership of a company with a 10 percent shareholding of Safaricom before the mobile phone firm issues its shares to the public.

Ownership of Mobitelea Ventures Limited has remained mysterious since last year when the Parliamentary Public Investment Committee questioned the transfer of Safaricom shares to it.

Vodafone Kenya Ltd, a subsidiary of Vodafone Group PLC of UK, transferred the shareholding to Mobitelea. The House watchdog team described the move as grand corruption.

The Government is yet to react to the report.

Vodafone Group PLC had acquired 30 per cent shareholding in Safaricom from Telkom Kenya, which owned Safaricom Kenya Limited before entering into a strategic partnership with the UK company.

Since the Government announced it will sell 25 per cent shares of its stake in Safaricom to the public through the IPO, concerns have been raised over ownership of Mobitelea Ventures Limited.

On Tuesday, African Centre for Open Governance - AfriCOG asked the Government to freeze the Safaricom shares transferred to Mobitelea until the issue of how the whole transaction was done is made clear.

In a paid up advert in one of the local dailies, AfriCOG boss Gladwell Otieno said the issue must first be made clear to the members of the public before they start buying the Safaricom IPO’s on Friday.

Efforts to get a comment from Treasury were fruitless.

“The matter is very sensitive and neither the minister nor the permanent secretary is in,” a secretary at Treasury told Nation.

She explained that Finance minister Amos Kimunya and his PS Mr Joseph Kinyua were in day-long meeting.

She referred the Nation to their public relations officer who was also not in at the time. But a secretary at the PRO’s office said her boss will be available Wednesday to answer the questions.

In their advert, AfriCOG queried the rush to dispose of the Safaricom shares.

“Why is there so much pressure to proceed with the Safaricom IPO during the deepest crisis Kenya has ever experienced?” they asked.

Tuesday, March 25, 2008

India - 3G

A step ahead for 3G

The Department of Telecom’s (DoT) draft policy has reportedly proposed that third generation (3G) telecom services be opened to existing and new operators through an auction, allowing them to bid for a maximum of 10 MHz of spectrum in two tranches of 5 MHz each.

The proposed policy departs from Trai’s September 2006 recommendation that existing operators get priority in spectrum allocation for 3G services.

The existing telecom (2G) players have argued that 3G services are in some ways an extension of 2G services and, therefore, they should get some priority and be allowed to evolve into 3G players. While it may be true that 3G is a vastly improved version of 2G network, it does not automatically give 2G players a pre-emptive right over 3G spectrum.

The auction based pricing of 3G — as opposed to a fixed below-market fee for 2G, which is rationalised as necessary for making telecom services affordable — means that 3G would have to focus on value added services, for which it is better suited.

Meanwhile, 2G would largely remain an affordable voice and low end value-added service. This makes 3G a service distinct from 2G, as business models would have to be different. Given that, it is only logical that the auction be thrown open to everyone.

In such a situation it also makes sense to offer spectrum in blocks of 5MHz and a maximum of 10MHz, as opposed to 5MHz recommended by TRAI. Existing operators already have the start-up spectrum and can manage with 5MHz of 3G spectrum. A new operator, on the other hand, will need a start-up spectrum as well and, therefore, would have the leverage to bid for up to 10MHz of spectrum.

The condition that new players would have to acquire a unified access service licence for Rs 1,651 crore to be eligible for bidding creates a level playing field. The policy continues to reserve one slot for state-owned players, but they will have to pay the bid amount if successful, or match the highest bid in case they fail to secure a licence.

This is a more equitable way of reserving a slot for PSU players than giving spectrum for free. The stiff rollout obligations would discourage spectrum hoarding. DoT should quickly freeze the policy and get 3G rolling through a well-designed auction.

Palestine - reform and liberalisation

Introducing Competition in the Palestinian Telecommunications Sector
see also Full Report

The recently published World Bank Telecommunications Sector Report, entitled “Introducing Competition in the Palestinian Telecommunications Sector,” highlights key issues in the Palestinian telecommunications sector, and suggests possible recommendations for policy and regulatory reform. The report was prepared in close consultation and cooperation with all stakeholders, taking into account disparate points of view. Its recommendations are in line with visions and policy directions of the Palestinian Authority, with the goal of benefiting Palestinian people by reducing prices and improving quality and reliability of services. The report endorses and supports Palestine's own policy of introduction of competition, as formulated by MTIT. The policies of favoring competition in this industry have proven effective across the world, including in post war, distressed and low income environments.

The Palestinian telecommunications sector is characterized by the presence of a private regulated monopoly, unauthorized competition, and overall weak governance and regulation. Increasing competition and efficiency in the telecommunications sector will have far reaching effects throughout on the Palestinian economy. It will reduce the cost of doing business in all sectors and help raise government tax revenues. In addition, by developing the capacity to regulate the largest monopoly in WBG and spur competition in the telecommunications market, the PA will develop its ability to provide a better regulatory environment for the entire economy.

The sector legal framework is defined by Telecommunications Law 3/1996 and by regulatory provisions under the Oslo Agreement. The agreement affects the interim relationship between Israeli and Palestinian companies, attributing rights and obligations to Palestinian and Israeli operators in the territory of the West Bank and Gaza, and defining the role of the Palestinian government in the sector. The PalTel group, which includes companies in all main sectors of the telecommunications and information technology (IT) market, is the dominant operator. Unauthorized competition exists in the mobile market, where Israeli operators, authorized under the Oslo Agreement to offer services to the settlers, cover a large part of the territory of the West Bank. PalTel’s market dominance, and the problems related to unauthorized competition, could be mitigated by the entry of a second mobile operator. The Ministry of Information Technologies and Telecommunications (MTIT) has awarded a mobile license to Wataniya. There is in principal an agreement at Ministerial level on the release of the frequencies for Wataniya. However at the time of this note’s publication they have not yet been released. The entry of competitive mobile and data operators would strengthen considerably the market and improve its key indicators. The data market segment is also characterized by a combination market dominance and unauthorized competition, but MTIT is in the process of awarding data licenses. Overall regulatory capacity is weak, governance and accounting standards have room for improvement.

The complex nature of the regulatory relationship between the PA and GOI has given rise to several areas of concern. In addition to the unauthorized competition in mobile and data, the Palestinian Authority (PA) raises the following main issues: (a) Palestinian operators are compelled to route international communications through a licensed Israeli operator; which increases costs (b) the lack of a direct long-distance connection linking the West Bank with the Gaza strip; and (c) difficulties in obtaining permits from the Israeli authorities to build infrastructure in large parts of the country. The note illustrates the different viewpoints on these contentious issues, assesses the actual nature of the constraints, and offers possible solutions.

In terms of policy recommendations, the following five actions are recommended:

(a) Introduce full competition through Israel speeding the release of the frequencies for the second licensed mobile operator and allocating frequencies for new wireless operators and MTIT tackling Paltel’s monopoly position. Internationally, full competition has been proven to be the best policy to stimulate market growth and reduce prices. This is also the case in low-income and highly distressed (civil war, post conflict) environments. To enable effective competition, the following measures are crucial:

(i) Enabling effective competition in the mobile sector, by Israel releasing frequencies for Wataniya
(ii) Implementing the policy announced by MTIT to introduce competition in the data sector by issuing new competitive licenses.
(iii) Regulating and monitoring anticompetitive behavior and the concentration of monopoly power in PalTel;
(iv) Addressing and agreeing on distribution of frequencies crucial for the attribution of wireless data licenses (e.g., Wi-Max).

(b) Promote technical cooperation between Israeli and Palestinian technical teams, to mitigate the existing issues. The existing conflict hurt the work of the Joint Technical Committee (JTC) and the implementation of the provisions under the telecommunications sections of the Oslo Agreement. The structured negotiations mechanism of the JTC (which deals with mutual coordination of frequencies use, interference problems, diverse international issues, and other sensitive subjects of mutual importance), should be supported and encouraged. Issues include allowing Palestinian telecommunications firms smoothly import equipment and emplace necessary infrastructure in all areas in the West Bank & Gaza, including Area C. Given the demographics and the geography of the area covered, it is practically difficult to create hard boundaries to prevent complete access to the Palestinian market by Israel operators not licensed by MTIT. While operators not licensed by MTIT should refrain from marketing directly their services in the Palestinian territories, nevertheless, it is recommended to pursue market-based practical arrangements to ensure a fair and level playing field among all operators in the West Bank and Gaza territory, such as revenue sharing arrangements with the licensed operators to formalize any spill-over entry and compensate for paid license fees.

(c) Strengthen MTIT’s institutional, regulatory and enforcement capacity and create a regulatory unit within MTIT, which will be transferred to an independent telecommunications regulatory authority at a future date. New regulations are under preparation and MTIT has published draft interconnection guidelines. MTIT is working on a new telecommunications law which aims to introduce a telecommunications regulatory authority. MTIT is exploring ways to create a regulatory unit within the MTIT to regulate the sector as needed until the telecommunications regulatory authority is established. Serious capacity building is needed for establishing and operating such a unit. MTIT needs additional resources to tackle the regulatory priorities that any ministry faces during the introduction of competition, including other aspects of interconnection regulation (e.g., dispute resolution; interconnection costing); enforcement; licensing; spectrum management and monitoring; number portability. There is also a need to train regulatory experts. A top priority is the introduction of a body of competition law and regulation, and the presence of regulatory tools to monitor and sanction anticompetitive behavior.

(d) Improve tax collection and governance. Effective competition between telecommunications operators can provide strong and reliable short-term and long-term fiscal gains. A more transparent system for generating and collecting tax revenues is needed. Improvements in tax collection, as well as an agreement on how to tax the revenues generated by Israeli operators serving Arab customers in the West Bank, is desirable.

(e) Increase the overall transparency and improve the governance of the sector. This includes: determining the exact legal status of the various subsidiaries of PalTel group; clarifying the priority between rights under the licenses and government guidelines and implementing industrial cost accounting.

Greece - OTE

Hellenic Telecom Union Fears Job Losses Under Deutsche Telekom

OME-OTE, the union group representing 16,000 workers at Hellenic Telecommunications Organization SA, said it's concerned that jobs will be cut at the former phone monopoly after Deutsche Telekom AG bought a stake.

Assurances by Chief Executive Officer Panagis Vourloumis over the weekend that Greek law protects jobs at the company are unconvincing, Panagiotis Koutras, OME-OTE president, said in a phone interview today.

``It's words,'' said Koutras. ``There's no agreement anywhere and if you look at what Deutsche Telekom did with its employees in Germany, I don't think anyone can be convinced by these words.''

Deutsche Telekom, Europe's biggest telephone company, last week agreed to buy a 20 percent stake in Hellenic Telecom for 2.5 billion euros ($4 billion) from Marfin Investment Group SA. The Bonn-based company, which reported a surprise loss last month on costs to eliminate jobs, is seeking growth opportunities as clients cancel fixed lines in Germany and U.S. mobile competition heats up.

The deal is conditional on Greek government approval for Deutsche Telekom to raise its stake beyond 20 percent and get management control. The Greek state, which owns 28 percent of Hellenic Telecom, won't let its holding fall below 20 percent, Greek Economy Minister George Alogoskoufis said in an interview with Flash Radio on March 21.

OME-OTE held a rally outside the company's Athens headquarters this morning, the first of planned protests this week. Unionists prevented staff from entering the building until about 10 a.m. before dispersing, said a company spokeswoman, who declined to be named. The group has said it will strike for three days from March 26.

The General Confederation of Greek Workers, the umbrella group for about 2 million non-government workers, warned of ``a storm of protests and industrial action'' if the stake sale proceeds, according to an emailed statement today.

Hellenic Telecom must remain under the control of the Greek state, Koutras said. Alogoskoufis, who met with union representatives last week, wasn't clear on whether management would remain under Greek control.

``He implied the Germans would have the day-to-day running, while issues of major importance will be held together with the Greek state,'' Koutras said.

In statements to Eleftherotypia newspaper yesterday, Alogoskoufis said he aimed at joint management of Hellenic Telecom, in which both Deutsche Telekom and the Greek state would play a role.

Telecom Italia

Telecom Italia CEO looks to cut labour, other costs

Telecom Italia is embarking on a review of its working practices in an attempt to cut costs, according to chief executive Franco Bernabe.

Bernabe wants the company to be a 'lean organisation', and will look to reduce the group's labour costs as part of a broader rationalisation, he told the Financial Times.

Telecom Italia published a three-year strategic plan in early March.

Monday, March 24, 2008

Uganda - abuse of dominance

Are Country's Telecoms Muzzling New Entrants?

With Uganda's four telecom operators engaged in a bare knuckles fight for supremacy, interconnection, a salient feature in the cost of service continues to keep the costs of communication high in Uganda.

In true capitalist tendency, uganda telecom, MTN and Celtel are aloof about the cost of interconnectivity, a situation the new players are quietly crying foul about.

Interconnection refers to the commercial arrangements under which service providers connect their equipment, networks and services to each other in order to allow their customers to access services and networks of other services providers.

In Uganda's case, it refers to the agreement that is in place between the major providers uganda telecom, MTN, Celtel and Warid that allows the four players to connect their equipment to each other to enable every mobile phone user to make a call/send sms successfully across any one of these networks.

Since the entry of Warid Telecom on the Uganda telecommunications landscape, the interconnectivity issue has occupied talk among ICT enthusiasts, cell phone users, sector watchers and experts on the sector.

Clients are wondering whether the incumbent telecoms are using their dominant positions in the way they are pricing inter-connectivity rates.

It is widely believed that the incumbent players are confronting competition by unfairly pricing inter-connectivity.

During the debate that led to the opening up of the telecoms sector, the incumbents questioned the move saying bringing new competition into the sector was "premature".

Like any liberalised sector of Uganda's economy, the telecommunications regulator, Uganda Communications Commission (UCC) has left the players to determine the amount of inter-connection fees they charge each other, but that is how far they go.

With a combined subscriber base of about 4.5 million users, observers are wondering whether those numbers are not being used as a tool to stifle competition.

Observers of the sector say interconnection rates are high yet the situation is not helped by the fact that UCC has no control over what MTN, Celtel and uganda telecom charge each other or will charge new players.

In the eyes of one of the new players, what is charged as inter-connection fees should be fixed by UCC and not left to the whims of the dominant players, who already have on their books the 4.5 million subscribers.

"Interconnection rates are very high; my feeling is that they should be fixed. By determining that rate, UCC would be coming in to regulate it otherwise if you leave it to others to use it to their advantage, the sector gets shackled," he says.

A top executive for one of the new telecoms told East African Business Week that there is little they can do at the moment but it seems the three incumbents are "quasi-monopolies standing in the way of free and fair competition".

"Even if a new player comes in with a state-of-the-art service, it makes it very hard to break into the market," say the new players. Those in favour of a fixed rate argue that mobile penetration will remain low because the sector gets 'shackled' as a result.

"Interconnection is within UCC's grip and it is useless to leave it to players," observes another official. "It could lead to collusion."

In mobile telephony, interconnection aims to provide the consumers/users with the widest possible choices of quality service at the most competitive prices and gives policy makers and regulators opportunities to foster and enhance universal service/access initiatives.

It also requires network operators and service providers to perform their competitive/complementary activities in an orderly manner and with due regard to public interest.

As it is now, there are those who believe the existing interconnection policy stifles competition, kills innovation, reduces penetration and customers/users get cheated as a result.

"There should be a ceiling to the cost of interconnection," Mr. Joseph Walusimbi, Warid Telecom's head of marketing said.

According to a study that was carried out by the Common Market for Eastern and Southern Africa (COMESA), one of the challenges of interconnection is the presence of operators that are monopolistic or dominant.

One observer has gone ahead to accuse Uganda's regulator UCC of promoting monopolistic tendencies claiming it has abdicated some of its functions.

But both the industry regulator and the ICT ministry are reluctant to get involved in interconnection and infrastructure sharing agreements preferring that the various companies handle it at a purely business level.

"The issue is purely and largely a business decision," the ICT minister, Dr. Ham Mulira told East African Business Week.

Although UCC does not get involved in the interconnection agreements between the different telecom companies, the agreements and their tariff structure reached upon by the telecoms are deposited with UCC.

Mr. Patrick Mwesigwa, the director technology and licensing at UCC told East African Business Week recently that the regulator could only come in as a last resort if and when there are complications in reaching an interconnection agreement.

Usually the costs of interconnect account for nearly half of a phone call.

So why are phone calls within any particular network charged almost the same as those to others across networks?

MTN's Chief Operations Officer, Mr. Erik van Veen says that while the charges for calls within the network should be cheaper, the mathematics of the game does not allow accross the board.

In essence, the telecom operators work it out in a way that they lose a bit from charging the same tariff for calls across networks and make up for it on calls within the network.

For example, calls within the MTN network, cost about Ush320 ($0.18) and an average of Ush400 ($0.23) across network. If MTN wished, it could afford to charge Ush144 for calls within its network minus interconnection charges and Ush480 ($0.28) for calls across to other networks after factoring in interconnection charges.

The Ush480 ($0.28) to call across the network would be a disincentive for callers to talk, thus affecting company margins.

"We lose a bit here and gain a bit there," van Veen said.

Although the interconnection rates are commercially agreed bilaterally, they are considered confidential.

The game is so complicated that even new comers Warid Telecom at best is charging Ush299 ($0.17) for calls within and outside its network at peak time.

Of the total cost of a call going off one network to another, between Ush160 to Ush180 is charged as interconnection fees.

So when a call is made off one network to another, the Ush180 is factored into the total cost for the call.