Paul Budde's View: State of Telecom Industry and Innovation in Australia.

In our ongoing series of interviews where we are interviewing CEOs, Media Personalities, Philanthropists and VCs, today we bring our interview with Paul Budde, Managing Director of Paul Budde Communication (trading as BuddeComm). Budde Comm is a leading global independent telecommunications research and consultancy company, which includes 45 national and international researchers in 15 countries, and operates from Bucketty, in the Lower Hunter Valley, Australia.

Paul is frequently interviewed on radio and television by current affairs and news programs, as well as by the leading national and international financial and business press. He is quoted in company prospectuses and his knowledge of the industry is a valuable resource at the governmental level.

He specialises in the strategic planning of converging markets and industries with services such as triple-play business models, video media, nextgen networks and IP, digital media, smart grids and value-added networks.

Let us explore what Paul has to say about the State of Telecom and Innovation in Australia. This is what he has to say in his interview with me.

• 3G role in access:
Q. Telstra has rolled out 3G broadband nationally via the NextG 3G 850 network. However, Vodafone and Optus have both announced their intention to complete competing network(s) using 3G 900 / 2100 technology before the end of 2008. Is this potentially more in the shape of rural and remote broadband in future than, say, the Opel Wimax initiative?
A. Mobile will follow a similar path to fixed telecom services. Over the next 5 –8 years 90% of traffic over the mobile network will be data-based for this you need better technologies from 3G HSDPA we will move to LTE (2012-2015). The key here will be affordability and this is still not the case. Hopefully, with more competition, we will start seeing some changes. However, these developments are totally separate from fixed broadband developments. All homes do need very fast broadband connections and separately individuals will need mobile broadband for their personal mobility applications.

• 3G 850 versus 3G 900:
Q. At a very simple level, do you believe that Vodafone/Optus plans to deploy 3G 900 blunts Telstra's NextG 850 to a significant degree? At an even simpler level, many prospective consumers must be asking themselves whether a 3G 850 handset is more or less likely to become a "pretty brick" than, say, a 3G 900/2100 handset when they travel overseas or wish to move carriers. Which way does the world seem to
be heading - 850/2100 or 900/2100?
A. While that observation is true, Telstra will soon install a large base - so that’s the advantage they have. However, if the competition can deliver more competitive handsets with more and cheaper applications utilizing the far more standardized 900 version then they will most certainly become the winner in metro areas. Telstra however, does also have a handset that allows for both standards to be used, so the jury is still out, It is highly unlikely that Telstra will sit still here.

• Wimax:
Q. With regard to Wimax and Opel, reports of the health of Opel as an initiative in the press vary, yet ironically there are signs of promise in other Wimax-related areas first with Internode's successful use of it as a rural access technology, and also with Kerry Stokes' acquisition of Unwired presumably in the belief that their metropolitan Wimax spectrum can support a viable business model. Who (if anyone), is right? Will Wimax live up to any of its hype in Australia at all? So far we've seen one successful application of Wimax - seemingly with 3G HSPA broadband coming on strong behind - will that be about it?
A. WiMAX is a niche application in the fixed broadband market and companies such as Internode do a great job with that in regional areas and Clever and BigAir do have good business applications.

Mobile WiMAX is still at least a year away in Australia and by that time it is again too little too late as 3G will then have been well entrenched and mobile data prices will have come down.

Once we start separating the mobile infrastructure from the services we will see new opportunities for WiMAX as their specific technological benefits can be embedded in infrastructure platforms which would allow application providers to utilize them in the (niche) applications they will develop.

• Reach-Extended (Annex L) DSL and FTTN:
Q. There was much discussion at the time of Telstra's decision not to proceed with reach-extended (Annex L)DSL. Recently Internode has announced their intention to deploy RE ADSL. Do you believe we can expect to see more of this? In light of the government's FTTN program, and keeping in mind the lengths of some of the non-metro (and even some metro) copper loops, can FTTN be fully effective without reaching extended
A. There is no silver bullet and we can’t deploy FttN/FttH overnight therefore we do need to take a stepping-stone approach and we do need to use all available technologies to progress us all to better and faster broadband The industry (FttH SIG) has urged the Minister to adopt this in his NBN plan. So Annex L needs to be considered seriously together with wireless and any other technology that can assist in regional deployments.

• FTTN, access technologies and competition mashup:
Q. The government has stated the objective of starting the FTTN rollout before the end of 2008 and completing it in 2011. Given the rapid changes we've discussed above in access technologies and competition, are we likely to finish in 2011 with a significantly altered plan to what we started with in 2008? By this, I mean, will/should the rollout "evolve" in order to properly reflect and take advantage of the changes that seem certain to take place over that timeframe? (.. and are you willing to hazard any "crystal ball" guesses at the type of changes that might take place!?)
A. The end goal should be FttH and the Minister has accepted that (this could take 5-10 years in metro areas). FttN and other technologies can assist and the FttN step is feasible to approx 90% of the population, beyond that other technologies are needed and/or a hell of a lot more money to link the next 10% to FttN.

• Kyoto, its effect and opportunities:
Q. Given Australia's signing of Kyoto and the seeming likelihood of requirements for quite steep reductions in greenhouse gas emissions in future, do you see telecommunications having a key role once more in combating Australia's transport "tyranny of distance" in light of this new challenge? For example:
Reducing the need for physical travel (some of us can remember how Telstra's then
incredibly expensive teleconferencing facilities were booked out during the 1989 airline pilot's dispute). Are CO2 emission reductions a kind of "killer app" for telepresence that the field seems to have been waiting for?
Optimized use of IT resources through "network computing" models. i.e. It's much more
efficient to manage compute demand and energy usage centrally (e.g. like Google's suite of services, or more arguably MS Live hosting) rather than in individual little IT "islands" as we do today - provided the Internet is fast and reliable enough. There is the example of countries with cheap electricity and/or low cooling requirements (such as Iceland in recent days) nominating themselves to host such operations.

A. The Minister has asked the industry to look at opportunities to link the NBN initiative to the development of smart utility grids. For that reason, the industry has developed the Smart Grid Australia Alliance. This is a whole-of-government approach (bringing together the Dept of Energy, Broadband, Environment and Climate Change and a whole-of-industry approach (IT, telco, utilities, vendors). This initiative will be launched at a BuddeComm Roundtable in Sydney on April 24th.

The key elements are how can the ICT industry assist in reducing CO2 emissions, save energy and provide an efficient and effective energy infrastructure in which also the end-user can play an interactive role (smart meters).

• What do you think of the digital revolution that is breaking the conventional business model for media houses?
It is the death of the old media, more customers will be attracted to new media, and less advertising money for traditional media. Change or perish

• What are your thoughts on Microsoft's bid on Yahoo and if that succeeds what changes do you see in Australia. Esp. in context to Channel 7’s tie-up with Yahoo and Channel 9's ties with MSN?
I can’t see synergy it is simply taking a competitor out. Seven doesn’t know what it is doing with its hopscotch: Yahoo7, Engin, Unwired, Tivo, what the hell are they doing ??

• Telstra has Sensis in its portfolio (dominant in local business search and classified ads with the Trading Post) and a 50% holding in Foxtel. Do you think Telstra is similar to Google in Australia and is positioning itself as a media company?
No way, Telstra is an engineering company, not a marketing company will never ever be able to challenge true marketing companies such as Google.

• Do you think Telstra is the major player for the future growth of Australia in a digital economy?
Absolutely they are the infrastructure providers for the digital revolution without them there is little we can do You can already see what impact they have by slowing things down, they are a critical element. Currently, they are using their monopoly to boycott progress, but hopefully, the Minister will change that.

How is the government trying to resolve the FTTN conflict between Telstra, ACCC and G9 consortium?
We will wait and see (June 2008 we know more)

• Why do you think that we have not created many world-class companies in technology-based business except, medical science based) as compared to other OECD countries?
We are followers, not leaders, we are farmers and miners and not traders we don’t as a nation have that business culture on top of that on the global scale we are small

• Why do you think Australia has struggled to produce world-class telecom and software products in Australia? Why aren't many companies developing IP/Products in Australia? How can that be remedied?
Get rid of the monopoly and let those IT companies freely develop their services over the infrastructure and innovation and competition will flow.

• What do you think the government (federal and state) should do to improve the culture of innovation and the telecom industry?
Functional separation of Telstra and stimulating whole-of-government approach in e-health, education, smart grids, etc

Thanks, Paul for sharing your thoughts. We look forward to hearing from you in future. All the best.

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