May 012013
 
Thorsten Heins Blackberry CEO

“In five years I don’t think there’ll be a reason to have a tablet any more,” Blackberry CEO Thorsten Heins told Bloomberg TV while showing off his company’s new Q10 handset.

Predicting the end of the tablet computer is a very brave call – particularly from a man whose company’s market share has fallen 90% since the iPhone was released – but does it have any merit?

Thorsten’s view is the smartphone is the device most people rely on. Of the three ‘screens’ we use, the mobile phone is the one we rely on the most and it will be increasingly important as mobile payments, NFC and other technologies develop.

Blackberry’s position is exactly the opposite of Microsoft’s ‘three screens’ strategy with Windows 8 where the aim is to have the same system running on phones, tablets and personal computers.

Apple and Google have chosen to modify their systems, or even have totally different ones such as iOS and OSX, to suit different sized devices.

Supporting the Blackberry view is the famous survey by the now defunct Nortel Networks in 2008 that found one third of workers would rather lose their wallet than their mobile.

When that survey was carried out five years ago, smartphones really hadn’t made much of an impact in the marketplace as Nokia and Blackberry dominated the handset industry.

Today, with smartphones from Apple and Samsung dominating, there’s no doubt the mobile phone is even more important to the typical user. So maybe Thorsten and the Blackberry team are onto something.

Even if the smartphone does turn out to be most peoples’ main computer, it’s unlikely tablets like the iPad are going to fade away as the larger format is too handy for many uses.

Like most things in life it’s a matter of choosing the right tool for the job and in many cases a tablet, or a Personal Computer, is the better device.

What is clear though, is that Blackberry has to make some big bets to survive, so Thorsten’s talking big is quite understandable. You have to give him points for chutzpah.

Disclaimer: I was given a Blackberry Z10 to trial while travelling in Tasmania. I couldn’t figure out how to use it.

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Apr 212013
 
huawei-logo

Last Friday the Parliamentary Joint Committee on the National Broadband Committee met in Sydney, I’ll have a story on this in tomorrow’s Business Spectator.

An interesting exchange during the meeting was  between the committee’s chair Rob Oakeshott and Mike Quigley, the CEO of NBNCo.

Rob Oakeshott: “You have advice that either as a department or a statutory body that says there are certain companies that should not be involved with the National Broadband Network build? If so, is that advice still in place?”

Mike Quigley: “Well chair, we work very closely with the appropriate government agencies in this area, obviously there are things we can and things we can’t say, but we have a very close working relationship with those entities and we obviously take their advice on things we should and shouldn’t do.”

“Their advice is still in place and we’re following it.”

I’m going to be in Melbourne tomorrow attending the Australian Davos Committee’s China Forum where, among other luminaries, the Prime Minister and various key people in the Australian-Chinese relationship will be talking.

The company in question is Chinese communications vendor Huawei and their banning from Australian contracts adds an interesting dimension to the discussion on trade relations between the two countries.

Australia has followed the US lead in blocking the Chinese communication hardware company from key contracts like the NBN on security grounds and it’s hard to see how this doesn’t test the patience of the PRC.

We’ll see how this issue plays out as it’s one that seems to be largely overlooked when we discuss trade ties and relationships with Chinese companies.

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Mar 082013
 
how do local businesses make a return on investment

The news that energy companies have decided to drop direct door to door selling in the face of prosecution is the latest example of poor thought out performance metrics and managers unsuccessfully trying to shift risks out of their business.

Electricity and gas distributors Energy Australia and AGL embarked on a door-to-door sales campaign to gain more customers. Like most modern corporations, they don’t do this stuff themselves and engaged outsourcing companies who in turn took on commission salespeople to do the ground level selling selling.

It didn’t work well and in face of complaints, both companies had to back away from their campaigns after suffering legal and reputational damage.

The sad thing this has happened before, at the time of telecoms deregulation in the 1990s telcos did the same thing to grow their market share. Door to door sales teams fanned out across the suburbs to sign households up to telephone plans.

In one example, a company hired dozens of backpackers, bussed them to outlying suburbs and sent them out on the streets to sign up as many households as possible.

Initially the campaigns were a success with providers reporting increased signups, greater market share, fat executive bonuses and happy commission earning salespeople.

Then the complaints began.

Customers discovered they’d been lied to, or in some cases falsely signed up, as hungry salespeople did everything they could to get a commission.

At first the telcos thought they could throw the problem over the fence so they blamed the contractors. Eventually the damage became so great the telcos had to back down on their door to door selling as problems multiplied and consumer protection agencies expressed their irritation.

At the heart of the problems with this type of door to door selling is the mismatch of incentives – for managers, contractors and the teams going door to door in the suburbs.

Door to Door Blues

At the coalface are the salesteams trudging around suburbs. In the 1990s telco boom they were largely made up of backpackers whose interests were to sign up as many customers as possible in order to fund the next stage of their travels.

Often, the telco or its contractor would only discover a sign up was the family dog or toddler long after the traveller was sunning themselves at Koh Phi Phi.

Using Indian students as the energy contractors were doing largely fixed some of the worst excesses of the 1990s but it didn’t address all of the problems

Management misalignment

Driving the rush for sign ups are usually poorly designed  management Key Perfomance Indicators – a dumb set of executive benchmarks rewards poor  behaviour and creates unforeseen risks. Particularly when those KPIs are focused on short term metrics.

Very quickly the risks in the short term focus become apparent and managers back off from these programs.

In this case it appears Energy Australia’s managers heeded the early warnings and backed off before the problem became too great, unlike the telcos who let the sales teams run rampant before reigning them.

What’s saddening about Energy Australia’s and AGL’s problems is they were totally forseeable and those who warned of the risks in a door-to-door customers acquisition strategy – and there were almost certainly some in these organisations – were overuled by enthusiastic executives aiming to bust their sales and market share metrics.

Sometimes we are condemned to repeat history repeatedly in business.

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Mar 062013
 
Cisco networking head office

“Last year’s mobile data traffic was nearly twelve times the size of the entire global Internet in 2000.”

That little factoid from Cisco’s 2013 Virtual Networking Index illustrates how the business world is evolving as various wireless, fibre and satellite communications technologies are delivering faster access to businesses and households.

Mobile data growth isn’t slowing; Cisco estimate global mobile data traffic was estimated at 885 petabytes a month and Cisco estimate it will grow fourteen fold over the next five years.

Speaking at the Australian Cisco Live Conference, Dr. Robert Pepper, Cisco Vice President of Global Technology Policy and Kevin Bloch, Chief Techincal Officer of  Cisco Australia and New Zealand, walked the local media through some of the Asia-Pacific results of Virtual Networking Index.

Dealing with these sort of data loads is going to challenge Telcos who were hit badly by the introduction of the smartphone and the demands it put on their cellphone networks.

A way to deal with the data load are heterogeneous networks, or HetNets, where phones automatically switch from the telcos’ cellphone systems to local wireless networks without the caller noticing.

The challenge with that is what’s in it for the private property owners whose networks the telcos will need to access for the HetNets to work.

One of the solutions in Dr Pepper’s opinion is to give business owners access to the rich data the telcos will be gathering on the customers using the HetNets.

This Big Data idea ties into PayPal’s view of future commerce and shows just how powerful pulling together disparate strands of information is going to be for businesses in the near future.

But many landlords and wireless network owners are going to want more than just access to the some of the telco data — we can also be sure that the phone companies are going to be careful about what customer data they share with their partners.

It may well be that we’ll see telcos providing free high capacity fibre connections and wireless networks into shopping malls, football stadiums, hotels and other high traffic locations so they can capture high value smartphone users.

One thing is for sure and that’s fibre connections are necessary to carry the data load.

Anyone who thinks the future of broadband lies in wireless networks has to understand that the connections to the base stations doesn’t magically happen — high speed fibre is essential to carry the signals.

Getting both the fibre and the wireless base stations is going to be one of the challenges for telcos and their data hungry customers over the next decade.

Paul travelled to the Cisco Live event in Melbourne courtesy of Cisco Systems.

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Mar 012013
 
the telco distribution box at the end of the street

In Technology Spectator today I write about how Australia is risking repeating the mistakes the colonies made with railway gauges on much more grand scale with telecommunications technologies.

With talk of re scoping the National Broadband Network project, despite being four years into a ten year undertaking, it’s important to understand just how foolish this would be an what a mess it will create.

To illustrate this, I’ve gone for a walk along a Sydney street on the Lower North Shore, this suburb is less than 5km from the city’s central business district.

The box at the end of the street

At the end of this typical suburban street is a big green box. This box is important as it contains the connections to the local telephone network and will house the distribution equipment for a fibre network regardless of how it’s installed.

the telco distribution box at the end of the street

Interestingly, just the presence of this box indicates there is already fibre in the neighbourhood, one aspect in the NBN debate that’s overlooked is that optical fibre is standard for telco backhaul and distribution networks.

The only reason fibre hasn’t already been rolled out to homes and businesses is the sunk cost of the copper cables. When it’s necessary to replace an entire copper system as in New York after Hurricane Sandy or in South Brisbane after the local phone exchange was sold, then fibre is what telcos will install as its cheaper to maintain.

Plain old telephone lines

Walking down the street we find the first example are those who are going to be stuck with the old copper network under a fibre to the node solution.

an old telephone pole shows the poor standard of Aussie comms

What’s notable about that pole is its shocking state – in itself it illustrates just how Australia’s telecommunications networks have been allowed to run down with the underinvestment of the last twenty years.

There’s a very chance the householders connected to those phone lines won’t be able to sustain a reliable  ADSL or FTTN connection because of the state of the wires.

Remember, this pole isn’t in some remote part of rural Australia, should you be brave enough to climb it you’d have a wonderful view of the Sydney Harbour Bridge, North Sydney and the city. Its state illustrates that underinvestment is just as much a problem in the suburbs as it is in the bush.

Using the Pay-TV network

One the alternatives being touted is using the Pay TV network cables – know as Hybre Fiber Coaxial, or HFC – to carry the broadband signal.

poor quality HFC Pay TV cable connection

Here’s an example of the Foxtel installations. the poor work quality stands out immediately. The connection on the left is notable for its rain catching properties which doesn’t bode well for what’s happening to the coax cables in the duct lurking beneath the footpath.

As an aside, the sort of poor quality workmanship found in the cable rollout is another risk to the NBN as it appears NBNCo is repeating Telstra’s mistake of screwing the installation contractors into the ground on their rates. The result is really low quality work which won’t stand the test of time.

Making HFC even less useful is the fact that most Australian properties can’t connect to it.

In one of the best of examples of the drooling incompetence of Australia’s political ‘elite’, the 1990s Keating government managed to engineer a situation where the two cable companies rolled out their networks to the same places – 30% of the country got two networks while the rest received nothing.

The real problem though with the HFC network is that most Australians who can get it haven’t bothered – take up rates in the areas cable is available struggle to hit 50%. So an Abbot government would actually have to pay to connect households to a service they’ve never wanted.

Probably the cruellest part of all with the HFC proposal is the coax network itself is approaching the end of its life and most will be replaced with fibre within a decade. So we’re not saving a cent, just kicking costs down the road.

Apartment living

Even if you lived in that thirty percent of the country that did get pay-TV cable along their street, you were out of luck if you lived in an apartment or townhouse as few strata committees were interested in paying Foxtel install cables and Optus was never interested in MDUs – Multi Dwelling Units in telco-speak.

townhouses-connected-to-telco

A little way down the street from the houses photographed above are a group of town houses. Under the current NBN plans, this complex will get fibre. Under the coalition’s it will be stuck with copper.

The worst case scenario is a “fibre to the basement” solution where the fibre is run into the building’s distribution frame and then it’s up to the owners to make the connection using the existing copper phone lines.

In many cases it will never happen as strata managers and committees would keep putting it off, or they’d choose the lowest cost option which would exacerbate the poor work of the overworked NBN contractors.

Tower living

Next door to those townhouses is an eight story apartment block. These people risk being the biggest losers in the new telco environment.

apartment-tower

The problem for tower block dwellers is the low quality of the buildings and the lack of space for fibre telco risers. Under the fibre to the premises proposal some of these blocks are going to pose serious challenges to NBNCo.

Should the fibre to the basement proposal go ahead, many of the notoriously penny pinching owners corporations won’t complete the installation.

It’s highly likely that many Australian apartment dwellers are going to find themselves on wireless or LTE (mobile phone) connections for the foreseeable future as both the telco policies and poor building standards are going to deny them access to high speed fibre. This is going to have financial consequences for many landlords.

The risk for businesses

Most Australian businesses which occupy office buildings or industrial estates and they are going to be affected in the same way as apartment dwellers. The solution proposed by the coalition is that they should pay for their own fibre connections. Some will, many won’t and we’ll end up with another set of connections in our commercial districts.

One street, five networks

So just on one suburban street we could have people connecting through the old copper network, the HFC pay TV network, fibre to the basement, wireless and direct fibre for those who can afford it.

This is madness.

What’s even greater madness is that we’re four years into the National Broadband Network project and we’re talking about changing the scope for what’s been billed as one of the biggest infrastructure projects in Australian history.

Praying the luck continues

The Technology Spectator starts off with a comparison to the railway gauge madness of the 1850s. There’s an interesting parallel today.

Two weeks ago, the Australian Financial Review reported that millions had been spent on lawyers and consultant fees on Sydney’s North Western railway yet no work has been done.

On the same day, Business Insider published a story on the extensions to New York’s Long Island Railroad.

Around the world governments from New York to Nairobi are getting on with building infrastructure. In the meantime Australia struggles with building tram lines.

When we do decide to build a major project we get four years into it and decide to change our minds.

The nation dodged a bullet despite having made bad choices with roads and railways in the nineteenth and twentieth Centuries. Australia prospered despite those poor decisions.

If we can’t get telecommunications right then we better hope the luck continues through the 21st Century.

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