Report - INTUG meeting in Hong Kong May 2011
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1 Report - INTUG meeting in Hong Kong May 2011 Introduction The three days of the INTUG meeting in Hong Kong, from May 25-28, were filled with interesting discussions and contacts. While a complete breakdown of everything wouldn t be possible, we would like to give our members a snapshot of the highlights of our activities. Visit to Hong Kong Shanghai Banking Corp (HSBC) Meeting participants were treated to a visit to the Hong Kong Shanghai Banking Corp (HSBC), hosted by Matt Kantecki, Group and Head of Networks, and Keith Thompson, Head of Network Engineering and Infrastructure at the new HSBC Data Centre in Tseung Kwan O. The visit included a tour of one of the computer rooms in the Data Centre, which has won awards for its environmentally positive design. The visit revealed that HSBC is focusing on telecom expense management and on reducing carrier count (it currently has 40 carriers). However, telecoms expense management in particular is problematic, as HSBC have difficulties getting detailed invoices. Furthermore, HSBC would prefer a global ISP in order to provide a common customer Internet experience. Some comments on HSBC: The major concerns for HSBC are cost, security, online video distribution, application development, transportation of voice globally and service quality resilience. In this market, PCCW (ex HK Telecom) and Hutchison are effectively a duopoly, and HSBC is pushing OFTA to ensure diverse routing between them. Video is likely to drive up bandwidth demand exponentially. While bandwidth prices are going down, there are significant differences across the world. INTUG Hong Kong Meeting May
2 The impact of virtual desktops on HSBC s network will be enormous. This network is businesscritical and must be up and running all the time. To cut costs, HSBC is moving to softphones, as handsets on the desk have become too expensive. HSBC sees a need for improvement in application development: in particular, developers need to realise the users will not all be in the same place. Office of the Telecommunications Authority (OFTA), This interesting visit was hosted by Lawrence Kwan Shun-Ming, Head of the Regulatory Division; Raymond Ho Kun, Senior Regulatory Affairs Manager; and Jackie Siu Man-King, Regulatory Affairs Manager. OFTA is not yet a converged regulator, but will become the Office of the Communications Authority (OFCA), including media and broadcasting, in OFTA notes that the fixed market in Hong Kong is effectively saturated, at 3.5 million exchange lines. OFTA favours duplicated infrastructure, with the market competing on services. Regulation is almost entirely ex-post dealing with market conduct -- rather than ex-ante - anticipatory INTUG Hong Kong Meeting May
3 intervention-- and appeals are rapid. There is an in-building co-ordination team that addresses all disputes regarding in-building congestion. Some comments on OFTA and the market: Current speeds are possible thanks to extensive ADSL/fibre networks. But some areas in Kowloon and Stanley still have only 2Mbps/1Mbps. The NGN working group is currently reviewing whether regulations need to be revised. It will issue a report in October Mobile phone penetration has reached 190%, with 73% using smart phones. But customers often have questions and queries about mobile bills. Fixed to mobile number portability should become possible in the future. The business price is 12 to 32% cheaper compared to Copenhagen, London, NY, Shanghai, Singapore and Tokyo. Mobile data volumes have increased 14 times over two years. Mobile operators don t have the spectrum needed for the mobile data growth foreseen. Over the coming years, mobile TV is expected to cause an explosion in mobile data. OFTA is concerned about potential capacity and congestion problems in the future. LTE was launched in Hong Kong on 16 May 2011, at 42Mbps for HK$339 ( 30.5) per month, and 100Mbps for HK$399 ( 36) per month. Hong Kong is clearly competing with South Korea and Japan. OFTA is especially interested in advanced overseas economies; in Europe, for communications this means Scandinavia. The resulting discussion on international roaming brought the most surprising comment of the week. When discussing the European approach, someone from OFTA answered: "That is not truly international, but just intercity roaming"! A very different perspective from the European view, indeed. OFTA has published a lot of advice on the careful and considered use of mobile data services. Users face a lot of extra costs, especially for roaming. The question is, however, from which platform can roaming be tackled? INTUG Hong Kong Meeting May
4 Spectrum Auctions Hong Kong raised $1.9B. ACMA, the regulator in Australia, went for a total welfare auction design, Indonesia organised an auction, but the winner has financial problems to roll out the network. Meeting with CIOConnect Hong Kong INTUG met Geoff McClelland, Technical Adviser to Jardine Matheson and member of CIO Connect Hong Kong, an Association of CIOs. The three major topics CIOs in Hong Kong are addressing today are mobilisation, social networking and cloud computing, all of which are driving innovation and all of which also operate in a context of Green ICT. IT is becoming business technology. It s no longer about alignment, it s about convergence. Some 40% of IT people already work in the business departments. Facebook, Twitter, Flicker, Blogs etc. are driving major traffic generation. Location-based services and social networks are now involved in front end selling. Suppliers now see that total customer value includes not only what customers buy, but also who they influence. Hence, the use of viral marketing and clusters around bloggers to leverage strong influencers. One result of cloud computing will be an increasing demand for ICT architects. Even if you outsource, you need an internal CIO/CTO to manage it. When you buy into a cloud, you buy into an architecture. If you use a network service, you use their traffic and net management. It can even be considered an ecosystem: if you choose to use Salesforce.com, you may have to take bad applications as well, because they are linked. Private clouds are difficult to implement. Amazon, for example, experienced a major outage during an upgrade. What s more, while you can build a global cloud service in about a minute, how resilient is it? You can implement a quick start-up application, but it is not necessarily cheaper. You also must be able to retrieve your data in escrow - in the event of a cloud provider failure. Clouds must offer privacy, resilience, SLAs: 99% availability equals 86+ hours of outage per year! The supplier must also have financial stability and a contractual exit strategy (for data). Look at the example of Amazon.com: its cloud services were tested seriously, used a lot -- and then crashed, with a loss of data. Choosing a cloud provider is an important choice, which will impact your business for years. INTUG Hong Kong Meeting May
5 Huawei Visit, Shenzhen, People's Republic of China Huawei is a privately owned company with an average employee age of 29 years. Its Shenzhen facility employs 30,000 staff, and the site includes social facilities and single employee housing. Huawei is the only company in the world in the top three globally for mobile, IP and fixed telephony. Our visit to Huawei s headquarters, manufacturing and R&D facilities was arranged by Charlie Cheng, Director of Government and Industry Relations. Our visit hosts were Zhang Chunxiang, Deputy Secretary General of Huawei s International Advisory Council, and Patrick Tong, Regional Representative of the Public Affairs Department. Telepresence with Shanghai Huawei is very involved with international standardisation. Because Internet Engineering Task Force Requests for Comments (IETF RFCs) are used, rather than Institute of Electrical and Electronics Engineers (IEEE), there are multiple interpretations. Enterprises are concerned about vendor lock-in, and there is a need for interoperability accreditation. Currently, equipment must instead be certified for different suppliers and telcos. Huawei sees a three-pronged challenge for telecom operators: bandwidth demand versus cost growth versus ARPU (average revenue per user). INTUG Hong Kong Meeting May
6 Huawei supports an Enterprise-to-Enterprise (E2E) ICT strategy. It foresees that WiMax and LTE will meet up, considering that 3GPP UMTS offers a natural migration to LTE while WiMax is cost effective for new operators In the next 10 years, voice will simply be a form of data. 70% of companies will use cloud services. There will be much more communication between machines. The integration of telecoms and IT will be complete. Therefore, telecom operators need to move into IT; there is no other solution. Some comment about Huawei The impressive Huawei Visitor block, which is dedicated to customer presentations, can accommodate 40 simultaneous delegations. Its large display area houses samples of a wide variety of technology, ranging from undersea fibre cable repeaters, to the latest 4G smart phones, to various innovative integrated devices, such as a combined fibre terminator and mobile access point (Vodafone FTTM broadband strategy - Fibre to the Mobile Mast). The visit also included a tour of the manufacturing and R&D facilities and of the entirely automated, robot-controlled, zero-manpower warehousing complex. A few more titbits Touch screens are making life easier for people in Hong Kong, allowing them to write Chinese characters on the screen. They can also use two separate numbers (private and corporate) on their smartphones. And fixed and mobile termination rates are the same. Huawei is the word for a gambling game in the Indonesian language. The HSBC data centre has a Weight Sensitive Access System. We were assured that it isn t to make visitors feel sensitive about their weight, but just to make you are not carrying someone on your way out. In rural areas of Indonesia, satellite communications are used, but it is expensive. And applications that can t support latency, e.g. process control, fail-safe mechanisms, machine-to-machine, etc. can t be used. INTUG Hong Kong Meeting May
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