From the “Grass is always greener” files.

The UK regulator, Ofcom, has released a report on consumer internet services. It turns out that the UK internet experience is not that different from what we see in Canada.

For example, according to the report,

UK consumers receive an average broadband speed of 3.6 megabits per second (Mbit/s), comprehensive new Ofcom research reveals today.

That’s less than the average maximum possible speed of 4.3 Mbit/s across the UK and significantly below advertised headline speeds.

Most consumers surveyed were reasonably happy with their broadband service, with only 9% expressing dissatisfaction overall. 93% of consumers were satisfied with their web browsing experience.

UK based Analysys Mason says that the Ofcom study shows that consumer demand for internet services is not far ahead of supply and people understand the limitations of what they are buying. According to their interpretation of the study, the customer satisfaction numbers indicate that consumers understand that speed is dependent on variables including how many people are online at any time.

There are of course ISPs that provide a materially better service than others, but the overall low level dissatisfaction would suggest that accusations of mis-selling have been somewhat over-hyped.

I especially enjoyed the closing paragraph of the Analysys Mason press release:

The telecoms industry is used to hearing tales of consumer dissatisfaction and of ‘pent-up’ demand for bandwidth – often from excitable bloggers, or from parties that have an obvious interest in promoting that view. Research often misinterprets long-term predictions of bandwidth usage as indicators of demand. What this survey shows above all else is that, so long as people are aware of what they are buying, supply to a large extent informs demand and that the two are in truth substantially aligned.

Good lessons for Canadians to keep in mind as we prepare to see the filings for the CRTC’s network management proceeding.

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internet, Ofcom, Analysys Mason

Let’s continue with a theme I raised on Friday.

Last week, as Videotron expanded the reach of its DOCSIS 3.0 ultra-high speed broadband [ pdf, 32KB], it also increased the download caps for its users of 30 and 50 Mbps internet services. It adds pressure to Canadian telephone companies to consider the massive investments (such as a Verizon-like FTTH approach) to compete with cable internet speeds.

In the past, I have called for all levels of government to create more favourable environments for increased broadband investment by all service providers. The most basic incentives would be for the public sector to liberalize access to public rights of way, support structures and vertical real estate such as towers.

Last week, Portugal went even further, setting up an €800M line of credit for operators to roll-out next-generation broadband networks. Governments have many levers that can help stimulate investment in next generation network equipment, including accelerated depreciation for certain classes of capital and matching funds for rural service improvements. Telecom service providers have a track record of being to move quickly to implement their infrastructure projects – much faster than roads, public transit, sewers and bridges.

As governments look for ways to stimulate various sectors of the economy, incentives for investment in digital infrastructure may be among the lowest cost, while delivering the highest returns and most sustainable benefits.

Despite the dire economic conditions, the year 2009 could be a banner year for telecom industry investment. Regarding just the wireless sector, I wrote in the current issue of Foxgroup Media Telecom Journal:

It has been encouraging to see recent announcements from new entrants and incumbents that there are substantial investments in wireless over the next 12 months; so much investment that it will tax the ability of Canadian workers to install all of the equipment.

Between Bell, TELUS and Videotron, more than 4000 cell sites will be built or enhanced this year.

In an interview with the Globe and Mail on Monday, TELUS CFO Bob McFarlane observed that while other sectors of the industry are lining up for government handouts,

This summer we had $4.3-billion extracted from the Canadian wireless industry to purchase spectrum due to a unique set of rules that, in my view, were counterproductive.

Of course, this “extraction” was actually a voluntary purchase of public assets, spectrum, by industry players.

Still, we need to think back to the original wave of 3G auctions. In the year 2000, immediately preceding the collapse of the technology industry, world governments raised about $145B in those spectrum auctions. The amount of money raised at auction equaled the sum of the annual revenues of the major equipment vendors. By June of 2000, Ericsson was already warning about the potential backlash. The chart at right is from a presentation I delivered in May 2001.

We need to consider the extent that capital investment in spectrum auctions impacts the ability of operators to build out their networks.

AWS wireless new entrant BMV Holdings received a major boost with the announcement this morning that the Ontario municipal pension fund, OMERS, has agreed to invest up to $50M in the venture.

Paul Renaud, President and CEO of OMERS Private Equity is quoted saying:

BMV and its investors made an astute purchase in Industry Canada’s wireless spectrum auction last summer and we believe the company has great potential in the Canadian wireless market. In addition, we are impressed by the leadership and experience of their management team and investment partners.

BMV says that it plans to launch “value-priced” services in select markets in Ontario and Quebec during 3Q 2009.

Alek Krstajic, BMV’s Chief Executive Officer, will be a speaker on our special AWS New Entrant panel at The 2009 Canadian Telecom Summit, taking place in June in Toronto.

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BMV, OMERS, AWS

On Monday, Peter Nowak wrote a preview piece about the Consumer Electronics Show, which opens today in Las Vegas.

In the Monday article, Peter observed that last year’s show saw participation by a number of first time exhibitors, including General Motors and content producers NBC Universal and Sony Pictures.

Some of the industry observers questioned why the content companies are there:

They are awkward at this point. They think they need to be there because of multiplatform potential and it’s largely exploratory. But what can you really buy from NBC Universal except movies online?

I wrote yesterday about disintermediation, which helps to understand why content owners, developers and producers might want to establish direct consumer relationships.

Studios going directly with consumers can cut out two layers of intermediaries: broadcasters and broadcast distributors (cablecos, DBS, telcos).

In an ultra high speed world, electronic information distribution looks very different.

The 2009 Canadian Telecom Summit will be looking at these kinds of issues (among many more concerns). Our theme this year is Embracing Transformation: Communications industries in flux.