How telcos can improve their P/E ratios

In Today’s Issue: Online businesses crave telco capabilities (potentially…). Motorola rearranges the deckchairs. Nokia profits up 25%, but you wouldn’t want to see what went into that. Is Comes With Music a lossmaker? Nobody pays for the stuff anyway. Silverlight everywhere. And Moonlight. Is Microsoft IBM in 1993? 1,788 entries in the Android dev competition, but Google can’t keep a SIP server running. They can send a man to the moon… O2 users optimise radio network by whingeing. FTel+TeliaSonera=nightmare on Wall Street? Truphone gets a cash dump. UPS saves fuel with a platform. Pat Robertson, selfless crusader for your digital rights? AT&T fearmongering vs Andrew Odlyzko; there can only be one winner. Data centres in containers will eat the world. EBay finds giving away telephony is not a business. And there’s the day the YouTube died.

Ed Wray, CEO of Betfair, the world’s biggest betting exchange, came to last week’s Telco 2.0 Executive Brainstorm and told the assembled crowd of telcosians he would be delighted to pay a telco to solve his ‘digital logistics’ problems. Authentication is crucial to Betfair’s business, not just to prevent fraud but also to prevent Americans and the under-age from using the site, something which can lead to an executive jail problem. And telcos, he says, can provide it. At the moment, it’s costing him $22 to verify the identity of each new customer; with 1.5 million active customers, you could see how that might get expensive.

“There’s a tendency when building a platform business to do too much yourself - I come back to payments, I come back to authentication. People in this room can do this,” he said. A couple of telco execs came up to him afterwards to double check that he really was supporting the analysis on which the event was based.

In a keynote the day before, Sally Davies, CEO of BT Wholesale, described the 2-sided business model opportunity as “exciting and compelling”, but with many challenges in execution ahead. If there was a single theme of the conference, that was it; you couldn’t move for people who’d independently come to similar conclusions to those in the newly released the Voice & Messaging 2.0 and 2-Sided Business Model reports. The issue, of course, is how to disseminate these ideas more widely…

Much more analysis of last week’s Telco 2.0 event to come…

Continue reading "Ring! Ring! Hot News, 20th April 2008" »

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The week that the real Music 2.0 book launches, we were having a backchannel conversation on future business models for the content industry. We think there’s a strong parallel between music and telecoms — high fixed cost businesses trying to recover that value through products with zero marginal cost of production, and therefore a tendency towards zero as the marginal price.

The thought process therefore needs to be similar: What’s the fundamental value in music… or telephony?

Continue reading "Music 2.0 the Telco 2.0 way" »

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In Today’s Issue: 37% of Ultra-Mobile PCs to get WiMAX; Virtual PBXs could eat your business customers; low-cost telepresence like low-cost spaceflight, i.e. not very; MSFT buys callcentreco; Don Price on managed services; topology aware P2P; variable speed limits for the Net; price war rages; i-mode fails in Europe; huge telcos win huge telco auction; epic Aussie brawl over WiMAX; Sprint’s new core network - platform perfection or IMS infection?; Vodafone & MTN; French FTTH; Deutsche Telekom disaster; sickening “human skin” phones.

37% of ultra-mobile devices to fit WiMAX. So says Intel — but then again, how big will the market for ultra-mobile PCs really be? Time will tell…

Continue reading "Ring! Ring! Hot News, 25th March 2008" »

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The vision of our Voice & Messaging 2.0 project is coming ever closer in reality. Two pieces of news this week underline this; first, Sony extends in-game VoIP to more PlayStation Portables. (You’ll remember, of course, that earlier this week Sony filed patents on a PSPhone.). Second, IBM pours $1bn into unified comms. In this article we explore where the telco can fit in…

Continue reading "Voice Revolution Watch" »

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Please take part in a new survey from our good friends at Telecom TV on Trends in Mobile: here. It covers:
- Revenue & Cost Predictions for your home market
- Business Models & Investments
- Services & Applications
- Disruptions
- Industry Leaders

It’s deliberately short (10 mins). Telco 2.0 has designed some of the questions, so that it ties in with our broader Telco 2.0 research programme and we’ll be helping with the analysis. All participants get a free copy of the results, highlights of which will also be presented and discussed at the Telco 2.0 event on 16-17 April in London.

The survey is sponsored by Qualcomm CDMA Technologies. Note also, for each survey completed, TelecomTV will donate $1.00 to UNHCR’s Ninemillion.org (background here). The survey link is here.

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In Today’s Issue:: Flat-rate menaces US cellcos, mobile voice volume booms, COLT feels the pain, Voda/Orange mast-share, OFCOM after the fibre, mobile filth disappoints, DVD Jon turns on mobiles, Pakistan breaks the Internet, GSM crypto cracked, BlackBerry down again, Facebook loses traffic, microwave spectrum in demand, France resists Reding, pretty PDFs, and Sprint-Nextel goes all Telco 2.0…

It was the week of flat-rate: all US national mobile operators are now offering flat-rate calling plans, as well as flat-rate data plans. Some day this war’s gonna end. We knew T-Mobile USA’s UMTS rollout would boost competition; we just didn’t think it would happen quite that quickly. Broadband incentive problem, meet US MNOs; US MNOs, meet broadband incentive problem…as Telegeography points out, this is ugly news for the landline world as well.

Here we go; mobile voice minutes of use in Europe are expected to whizz past fixed any time now.

Continue reading "Ring! Ring! Hot News, 25th February 2008" »

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So everyone else has done their 3GSM…sorry…Mobile World Congress round-up posts; what did Telco 2.0 think was cool? As you’ll no doubt guess, it wasn’t the shiny gadgets that got us; even at MWC, the anti-shiny goggles all Telco 2.0 team members get issued still block them out. It was a very serious conference this year; we think it may have been the first to get serious about the kinds of communication and enterprise-focused activities that will eventually make serious money for carriers. We broke them down by themes…

Continue reading "Telco 2.0's Private Mobile World Congress" »

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Telco 2.0 comes to you from the Mobile World Congress … sorry … 3GSM this week; not only were we covering the news but we were part of it, but that’s another story.

A big theme in the news this week was mobile Linux; Orange joined the LiMo Foundation, the outfit Motorola ginned up to boost open-source operating systems on shiny gadgets. Azingo, an Indian software house that markets a LiMo-compliant Linux distribution and developer kit, was showing off some of the unexpected capabilities of the technology.

Specifically, using a Broadcom reference gadget running their system, they were successfully using Nokia S60 widgets on a device that was neither a Nokia nor a Symbian S60 platform; we’re not sure if this is fantastic or scary. Which one depends whether you work in the S60 or Maemo Linux groups at Nokia, presumably.

Continue reading "Ring! Ring! Hot News, 11th February 2008" »

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When you’re lost in the cycle of product development, marketing and customer support it’s sometimes hard to see the big picture of the forces reshaping the structure of the telecoms industry. In particular, telcos are in an unfolding position of co-opetition with what you might call ‘Big Tech’ — the IT technology, commerce and services giants. These increasingly overlap with telco functions. Many of these companies have platform business models. These create value for end users as well as upstream suppliers, and extracting revenue from joining the two sides together. Think Google, Amazon, Sun Microsystems or Salesforce.com. Companies like IBM specialise in construction and servicing of platforms, even if they don’t always feel the need to own them.

We strongly believe that telcos need to form a platform around their own unique assets. But what drives the economics of platforms, how should the telco platform be positioned against those IT platforms, and what lessons can telcos learn from them?

Mass-produced IT processes for a mass-production world

It’s often been suggested that various so-called network industries exhibit increasing returns to scale; whether or not you accept Metcalfe’s law, it’s empirically obvious that the Internet years’ most significant companies have been ones that made their first priority to build scale and volume. For all the above examples, their businesses are all centred on very large IT platforms and their economic models often involve selling at very low prices, or even giving services away, in order to pull in more volume.

Continue reading "Platform businesses: Competing with Big Tech" »

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We’re usually very keen on the notion of vertical separation in the telco industry. The idea is to chop the underlying network assets out of the telco in order to permit others to use them. This stops the telco locking out the competition by owning the access bottleneck. But there are many different options:

• structural separation, often used to describe almost any separation, transfers the network assets into a new organisational entity,
• operational separation does this and also places them under separate management control with their own profit-and-loss account, and
• ownership separation removes them from the telco entirely.

Within those categories, there are many more shades of detail. Julian Salanave, director of telecoms markets and strategies at IDATE, recently gave an excellent presentation [PDF] on the parallels between these and some other industries.

Continue reading "Separation, Success, and Failure" »

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We’ve been putting together a directory of all “2.0”-type players for our forthcoming Consumer Voice & Messaging 2.0 Report. One newcomer, Ribbit, is offering an early foretaste of what the future environment for developing voice and messaging services might look like.

Ribbit reckons it’s “Silicon Valley’s First Phone Company”. Silly us, we thought that was AT&T. So what is it? The actual product is a VoIP softswitch, available either as a standalone installation or a hosted service, which offers an unprecedentedly extensive collection of APIs for developers to work into their sizzling lashups. Then, there’s a Flash toolkit intended to let the front-end developers design interesting user interfaces to the system’s voice functions, whether on desktops, laptops, or mobile devices. All very Telco 2.0, really.

Perhaps the most impressive thing about Ribbit is that one of the existing applications for it integrates it into Salesforce.com, the hugely successful web-based sales/CRM system; you can’t get more platform-based, enterprise-focused, or two-sided than that. We’re sure there’s huge scope for creativity and user-driven innovation here; but there are some issues that worry us.

Continue reading "Ribbit! The amphibian of telco voice platforms" »

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We are busily beavering away on our latest research project, The 2-Sided Telecoms Market Opportunity, some of the findings of which we will be presenting at the CMO Forum at the Mobile World Congress in February. The final analysis will be a key input to our own Telco 2.0 event in April. As we’ve pointed out in previous posts, this report seeks to explore the opportunities for building a 2-sided (platform) business beyond advertising (the current area of industry focus).

As part of our research, we have been exploring a number of successful ‘platforms’ from outside Telecoms (Google, Amazon, Ebay, Monster, The London Stock Exchange, Betfair, Maersk), to understand what capabilities and strategies are required to build a successful 2-sided business model.

We have also been looking at existing platform efforts from telcos. One example of this is Vodafone’s Betavine.

Continue reading "Vodafone Betavine: Nice Platform...but Where's the Commercial Framework?" »

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This year, we’re focusing on seven themes in the industry; Investment and Market Valuations, Disruptive Threats, Two-Sided Business Models (a key theme in the forthcoming Platforms report), Adjacent Markets, Core Products and End-User Needs, and of course Regulation. So these news posts will be centred around these concerns.

Despite everything, it looks like Sprint is going ahead with the big WiMAX rollout; launch is scheduled for mid-April, and a gaggle of new contracts have been issued to hardware vendors like ZyXEL. The mob that is the Apple fanbase is working itself up over the thought that this year’s Macworld might see the launch of a WiMAX-capable device of some sort — apparently they’ve got ad banners reading “There’s something in the air”. There’s conclusive evidence for you.

However, it’s true that Sprint is looking at bundling WiMAX connectivity with devices, just as it wraps EV-DO data in the price of the Amazon Kindle (“In Amazon, book reads you!”), so perhaps there’s something in it. Meanwhile, China Mobile doesn’t want the iPhone.

Continue reading "Ring! Ring! Hot News, 14th January 2008" »

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BT strikes in the set-top box market; they’re the first to ship Xbox360 consoles as IPTV endpoints. And there’s more; BT Vision gets an “on-screen magazine” based on the same single platform. We’ve often said that the fixed-line world doesn’t get user equipment, and that this creates interesting opportunities; BT has just leapt right on it. See our case study on Iliad’s Freebox in the Broadband Business Models report.

PS: we’re trying out a new format for Ring! Ring!…

Continue reading "Ring! Ring! Hot News, 7th January 2008" »

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Telco 2.0 Strategy

Structural separation? We don’t need no stinkin’ separation! So says Belgacom…

Telco 2.0 Comment: They built a VDSL network, and now their competitors want to play. Belgacom of course claims they took the risk and therefore should reap the rewards; but the biggest competitor is the company that laid the fibre already everywhere else, and now wants to offer unbundled service in the rest of the country. Will profits come from pleasing customers, or regulators?

Continue reading "Ring! Ring! Hot News, 17th December" »

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We recently gave readers of this blog a summary of the key highlights from the Advertising and Marketing Summit at the Telco 2.0 Executive Brainstorm in October, run in partnership with the GSMA. This post seeks to build on the last one and give further insight into why Advertising should be interesting to operators: not because it will fill the gap created by declining voice and messaging revenues alone, but because it represents an entrée into other lucrative areas.

Let’s look at what was covered at the Advertising and Marketing Summit in a bit more detail:

Customers: “Why aren’t you doing more?”

We kicked off the day with three potential customers of Telco advertising services:

1. Nick Strauss, Senior Planner, Mather Advertising - ‘The Brand’
2. Sunil Gunderia, VP Mobile EMEA, Walt Disney Internet Group - ‘The Content Provider’
3. Richard Wheaton, Managing Director, Neo@Ogilvy - ‘The Media Buyer’

Continue reading "Advertising: The Telco Trojan Horse" »

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IBM and The Economist’s annual survey of top telecoms executives is out; it reinforces the messages we’ve been trying to convey in this blog and via the Telco 2.0 Initiative as a whole.

69% of IBM/EIU respondents thought that “business model transformation” was the most important source of value, compared to 34% in 2002. 72% of those people specified “collaboration with external partners” - and that certainly isn’t the first time you’ve seen that here - as a “critical initiative”.

Compare this result from our Broadband Business Models 2.0 report; when we asked our (rather larger) sample of telecoms types about the best commercial approach to delivering video, this is what we got:

Continue reading "IBM/Economist CEO Survey Supports Telco 2.0 messages" »

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It’s been all across the tech news and blogosphere: Verizon Wireless has announced that they’re moving to a, well, less closed, network attachment model. For those whose job isn’t to surf the web, the summary is that pace certification testing by Verizon’s labs, and an unknown amount of bizdev negotiation, you can attach any device you like to the Verizon Wireless network. If you had to sum up Verizon’s strategy to date, it would be “Execute!”. They’ve simply done a great job of merging Airtouch, GTE and other properties; building out more coverage than the opposition; keeping an adequate level of handset and content innovation; and generally not screwing up.

The key details of the new offer — price, process and terms — remain hidden behind the PR fog. So what’s the unique Telco 2.0 slant on the news? When the market leader switches strategy, it’s not some short-term panic over Apple, Google, WiMax or spectrum auctions. It’s part of the deeper structural shifts in progress. So as we’re in the final assembly stage of our shiny new Broadband Business Models 2.0 report, here’s what’s on our minds about the future of connected devices:

Continue reading "Verizon Wireless' volte-face: Virtue or Vice?" »

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Liberty Global Inc, Europe’s largest cable-TV company, presented at the Telco 2.0 event last month to answer the question of whether or not TV was dead (“Will Video Kill the Telecoms Star?”). Despite the slightly alarming information that TV viewing in the UK, for example has been static or declining since 2001, Liberty’s Managing Director of Corporate Development, Andrea Salvato (i/c global M&A), concluded that there is life in it yet.

Here’s our take on it:

Continue reading "Liberty Global Inc: Is TV Dead?" »

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Yesterday we were running through four case studies from our new Broadband Business Models 2.0 Report looking at how the content aggregation and distribution businesses interact with one another. The four products we picked on are Joost, Iliad’s Free service, Sky Anytime and BT Vision, but of course we’ve been following many others. We’re seeing some common themes, plus some ideas of our own, that we thought we’d share with you:

Continue reading "Triple play, go away!" »

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The Telco 2.0 team has been travelling a lot recently - spreading the gospel and testing response. For example, some of us were in Dallas last week for the TM Forum’s Management World Americas event, a big show of 1500 people that has traditionally catered for the OSS/BSS industry. The TM Forum is growing in stature fast as its software standards are increasingly being adopted by the cable and media industries as well as telco.

We were invited to sit on a keynote panel on the first day to talk about ‘Telco 2.0’, along with IBM and Oracle’s global communications sector leaders and BT’s CIO. We then took part in a closed-doors session for operators only - CIOs/CTOs from most of the biggest players in the market. Finally a ‘masterclass’ the following day, looking at ‘the future of telecoms’. In the sessions we tested a new definition of ‘Telco 2.0’ (see slides below) which we’ve been working up over the last few months (esp. following the summer research programme on business models). It seems to be going down very well: “new and progressive” is a common refrain. “We’re doing some of this already, but you’ve clarified the commercial rationale and described a coherent end goal.”

Our focus has been to try to make it very SIMPLE without being simplistic. We’ve found that there is a growing number of people (vendors, trade bodies, pundits, senior industry execs) saying similar things, but we are all using different (and incomplete) ways of saying it. We are starting from different points, or drilling down too quickly into our different domains of expertise.

Continue reading "Standardising the Definition of 'Telco 2.0'" »

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Following our earlier post on the ‘Future of Broadband’ keynote presentation given at the Telco 2.0 event last month, we’ve responded below to a sample of the questions we captured in real-time from the participants via our ‘Mindshare’ collaborative technology.

We’ve grouped them into 7 sections (Retail, Wholesale, Regulation, User Proposition, Business Models, Infrastructure, Other Industries). (Note: More detailed reports and summaries from the rest of the Telco 2.0 event brainstorming will be available privately to event participants in the next few days).

1. Retail pricing and packaging

Q: Why is Korea going back to metered? Goes against the theory of the carrot…
A: Transit and network capacity upgrades ultimately do cost money, and low-use price-sensitive users aren’t going to cross-subsidise the others. Also usage patterns diverge over time (compared to dial-up’s massive spike of 2-3 hours online at a constant low bitrate) making one-size-fits-all pricing ever less attractive.

Q: Given that devices will need to be open to any network, who will subsidise the price to the end user? … The current subsidy models in some markets are responsible for putting technology into the customer’s pockets that they otherwise would not be able to afford — cf the popularity of Nokia N95 for example.
A: Not true. An artificial bundling of a credit scheme, device and service can be picked apart. Plenty of other expensive consumer electronics are sold on credit or hire purchase.

Q: Some hotels (e.g. Marriott) already have FREE WiFi as competitive differentiator…
A: So wouldn’t they like some more revenue from mobile operators to allow direct roaming, and also for the operators to avoid having to buy spectrum and backhaul for all that EV-DO traffic?

Continue reading "Q&A on 'Future of Broadband' analysis" »

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It’s one thing to exhort business model change and write about platforms and better telephony and Telco 2.0 all day; but what about the financial results? So, here’s a chart we made earlier. It shows the change in the share prices of 6 major telcos over the last 24 months; from top to bottom, MTN, AT&T, BT, Vodafone, Sprint-Nextel, and Deutsche Telekom. You may recall that we did a similar exercise back in November, 2006; our conclusions back then are borne out by the results.

It should be pretty clear that they fall into two groups; the Group of Success and the Group of Stagnation. If you were feeling dramatic, you could even borrow a soccer term and call the latter the Group of Death, the one in which the teams are most evenly matched; no-one is safe.

MTN’s go-go performance should come as no surprise; they count as the world experts on emerging markets mobile and are also quite innovative. (The anomalous downward spike was from a plane crash involving senior executive staff.) They are following a “Telco 1.0” strategy of vertical integration because that is precisely what the market requires. Forget “horizontalisation” and clashes with the consumer electronics and IT giants; in many markets MTN is one of the largest electricity generators, just to be able to operate its networks. Just as Henry Ford once owned the rubber plantations, all emerging industries require entrepreneurs to facilitate a whole supply chain as well as often to work on demand creation. Nokia sends trucks round India demonstrating its services. These immature markets form natural barriers to entry.

AT&T has been able to reconstitute its old monopoly over large parts of the US. It’s a Telco 1.0 where there naturally should be none. So far, so good — but a change of party in power and some populist corporate bashing could present shareholders with significant political risk. Could AT&T survive with its current cost and product structure if Unbundling 2.0 came to the USA?

BT’s advanced business model and technical strategy have been repeatedly praised on this blog. Most notably, they’ve played a perfect combination of defence (against the regulator to protect their legacy cashflows) whilst restructuring the business in ways that wean the retail and services side off monopoly rents of the copper access network. The shareholders get the cream without the company’s culture getting fat.

On the other hand, Vodafone, DT and Sprint are all in the business of being just another really big telco; even if they are all beginning to think about how to get out of it. All three remain highly reliant on voice minute margins in fiercely competitive markets.

But surely, however far we go with Telco 2.0, we’ll never catch up with Google? Will we?

Continue reading "Platforms = success in Web 2.0 and Telco 2.0?" »

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One of the most interesting companies that took part in October’s Telco 2.0 Executive Brainstorm is VoiceSage, a small Irish firm that develops innovative enterprise applications using telco services. This was a major theme of the event - if you want MySpace for monkeys on LG Prada phones, or the nth twist on music downloads, you’ll be fine asking Vodafone or Sprint, but if you ask anyone who gets Telco 2.0, they’re probably working on something for business users.

There is a very good reason for this; compared to telecoms, most of the trades that conventional wisdom thinks will provide growth and margin in the future are tiny. Telcos could completely crush the ad business - eat every ad agency in the world - and notice only a minor blip in their revenues. The telecoms industry could take over Hollywood and barely feel the bump, like some grey-suited monster lumbering over the Los Angeles canyons. For an encore, they could crush their way up the coast to San Francisco and eat the computer game industry. And it still might not be enough.

Continue reading "VoiceSage and the business of...business" »

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For the 800+ experts around the world who took part in our broadband business models survey, the summary results presentation will be sent out next Monday. We’ll be exploring in depth all the issues raised from the survey (and the Executive Brainstorm) on this blog.

In the meantime, here’s a sneak preview of the survey results:

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Our good friend Keith McMahon blogs on Playlouder, a British company which plans to offer unlimited, DRM-free music downloads to its customers who buy their DSL service. Naturally, there’s a premium associated with the music, which is the core of the business.

Now, interestingly enough, Playlouder describes itself as a “Media Service Provider” rather than “just” an ISP, which tends to confirm that their content business is part of their solution for the famous broadband incentive problem. The economic value created by widespread Internet use mostly happened after always-on broadband became available and cheap. Flat-rate broadband gives the user every incentive to use as much of it as possible; but the network operator has no corresponding incentive to create more capacity. Therefore, usage tends to increase until the network becomes congested.

Certainly, Playlouder expects their customers to run the copper hot downloading all that music; but they’re paying for it, and presumably Playlouder’s sums assume that the content charge covers the extra traffic, the licensing costs, and some margin. What they are offering, then, is connectivity plus. When we carried out a survey of industry experts recently, the idea of offering inclusive content as a way of managing costs was very popular; you can learn more in our Broadband Business Models 2.0 report when it comes out in December.

Continue reading "MSP: ISP plus Content" »

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Alcatel-Lucent is one of the major sponsors of the Telco 2.0 Future Broadband Business Models study, and was a Platinum sponsor of the Telco 2.0 Executive Brainstorm, two weeks ago in London. We asked Martine Lapierre, Vice President Marketing Programs, and one of our panelists at the event, to sum up the potential of IPTV to support new business models, rather than just emulating existing broadcast services.

One of the important insights to come from the Telco 2.0 Future Broadband Business Models survey, and a recurring theme of the Brainstorm event, was the need to give more consideration to end users as a critical telecom asset, and not just as a profit centre. Survey respondents certainly believe broadband service providers should focus on revenue opportunities from partners who want to reach and do business with this customer asset.

We believe that broadband service providers can keep their customers brand-loyal by packaging third party services in a way which addresses end user demands for convenience and simplicity. They can attract upstream revenue by providing meaningful customer intelligence to these third parties (advertisers, government organizations, content providers), who can in turn make their marketing targeted and relevant to end users.

One of the strategies operators are employing to realize this vision is the deployment of IPTV services to households around the world.

Why? IPTV services give broadband service providers the following:

1. A touch point within the customers’ home network — strengthening the broadband service provider’s relationship with that all-important customer asset.
2. Ownership and management of a back-end channel capable of providing very rich customer behaviour and intelligence, which can be monetized.
3. The ability to broker engagement between a number of 3rd parties and consumers through the most-watched screen in the household today.
4. An anchor to evolve towards more sophisticated ad insertion, ad-sponsored distribution, and other models of content distribution.

The survey — sponsored in part by Alcatel-Lucent — will finally close at midnight tonight GMT. Last chance to complete it if you want a free copy of the summary results!

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We continue to be fascinated by the presentation by Roy Gradwell, Director of Connected Real Estate Ltd, at the Telco 2.0 Digital Cities session. We think the ideas he floated deserve a much wider audience. He presented a new option for financing network build-outs, different from existing vertically integrated models (e.g. Verizon FiOS) or Muni/open models (e.g. Amsterdam’s Citynet).

What interests us most is that it provides a practical framework for realising Malcolm Matson’s open access vision of the future, where networks are funded and owned by long-term low-risk investors and any service provider can ride on top. This is called an OPLAN (Open Public Local Access Network), and implies both the end-user access and metro backhaul are part of the same open network. It’s an intellectually attractive proposition. The trouble is finding the route from “here” to “there”.

Some of the biggest problems with municipal fibre deployments are down to the fact that it’s a big, expensive, monolithic project. The up-front cost is hefty, and its repayment means you have to be very sure there will be enough demand to pay it back. It’s difficult to trial the idea of muni-fibre (or any other kind of metro-fibre rollout) without making a huge investment and therefore taking a big risk. This is the “anchor tenant” problem Dave Hughes, Director of BT’s Wireless Broadband division, mentioned during the session. Other speakers noted how hard it was to co-ordinate the purchase of connectivity across multiple public services given their varying contract commitments and buying cycles.

Plus, if you’re the city government, you can run into problems in the courts - in some places you might get sued by an incumbent telco, and in the European Union quite a few cities have run into trouble with the legislation on state aid to industry.

On the other hand, as Roy points out, for enterprise and government users the bottleneck is between the LAN and the WAN; and in the UK, there’s been hardly any metropolitan area network investment since the end of the cable boom in 1996.

The principle doesn’t need too much stretching to cover residential users either - after all, there’s not much difference between a LAN-wired office block, a LAN-wired factory, or a LAN-wired block of flats from this point of view, and getting fibre reasonably close to the home is the precondition of fibre-to-the-X, VDSL, WiMAX, and the like.

Nobody wants to build a metro backhaul network without access network customers; but nobody wants to build an access network without a plentiful supply of cheap metro backhaul. And few are willing to risk doing both. So, what is to be done?

Continue reading "New Ideas for Incremental Muni-Fibre and Metro-Fibre" »

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On the Digital Cities track at Telco 2.0 today, Dave Hughes, BT’s boss of wireless access networks, was talking about
the importance of pragmatism and the difficulties metro-WLANs face in cities that don’t have an American grid plan.

It’s well known that there have been a succession of metro-WLAN deployments that have gone bad; the sector’s icon, the Google-championed San Francisco deployment, is currently stalled after EarthLink pulled out. And Hughes offered a quick review of dozens of press reports on failed projects. Typically, they launch in a burst of hacker idealism and city-booster hype, but soon discover that radio engineering is actually quite hard, a point IT people seem to have to learn the hard way.

But there’s worse; what about the economics?

Continue reading "BT Wireless@Telco 2.0; Getting away from "Why-Fi"" »

Posted at 10:43 AM | Link to this article | 1 comment

One of the less-discussed points about the joy of muni-fibre, and for that matter commercial FTTH, is what happens in the next hop. At the moment, the last mile is the slowest hop, in terms of data rate. The backbone is usually considered to be OK, thanks to the dark fibre phenomenon, technical improvements such as DWDM, and the fact it’s easier to lay more fibre in one dig next to the highway than ten thousand digs in the city centre. Especially in L2TP/bitstream markets, the sector from the aggregation point to the ISP’s gateway router is more of a problem, but this is usually a matter of ex-incumbent pricing rather than a real shortage.

But if the access network gets replaced by fibre, what then? ISP engineers deal daily in interconnects up to Gigabit Ethernet, but if 40Gbits Granny’s in town, there’s going to be a quantum leap in demand at the next hop after the fibre access ring. In fact, it’s worse than that; Granny is a special case, but a town’s worth of 100Mbits/s Mums means you’ll rapidly reach genuinely huge demands on the pipe out to the backbone. For that matter, you wouldn’t need that many to strain your friendly local IX.

That’s the sort of thing you have to think about when you’re sitting next to Ad Ketelaars of Eindhoven’s munifibre deployment, while Chris Schoettle of Akamai is presenting. Shoettle, unsurprisingly, thinks CDNs are great, and so do we; but there’s better than that. He makes an important point about distance and speed - quite simply, going from less than 100 to 500-1000 miles’ worth of speed-of-light latency means that a file you could be pulling down at 44Mbits/s (if you have fibre) instead arrives around 4Mbits/s. If you’re constrained by the local loop, you’re unlikely to notice the difference; once the speeds go up, though, you certainly will.

No wonder, then, that Eindhoven is keen to get not just CDN capacity in their backyard, but another IX somewhere in southern Holland or Belgium to take some of the load off AMS-IX. Screaming-fast local loops will force us to invest in content-delivery networking and related problems.

Posted at 02:32 PM | Link to this article | Add a comment

CDRs - Call Detail Records, the database entities that permit telcos to bill their users - are getting a bad press at the moment with the latest revelations about US networks’ willingness to let the NSA dig through their databases without getting warrants or accepting any other quaint legal restrictions.

But at Telco 2.0 yesterday, we heard how CDRs might actually empower the users in a Telco 2.0 future. Keith Wallington of mobile SIP insurgents Truphone suggested that “in the future, this will be bigger than mobile number portability”. Wallington proposed the ability to have calls routed intelligently depending on your preferences and the patterns of use revealed by network data. And this brings us right to his point.

If all your contextual services depend on the contrail of signalling data you leave behind in the operator network, the ability to take that information with you when you churn is going to be crucial. Perhaps we need a right to claim our data; however, the really important point is as always the practical implementation of such a thing, just as it was with number portability.

So, of course, are the legal and privacy problems; the incentives for the operator to implement a platform for interesting contextual services are all about the clever things the operator could do with the data, but the strongest protections for user privacy essentially rule this out. If the user data, for example, was encrypted with a key the user controlled, the user could grant access to it for each service they wanted. But the operators will insist on being able to analyse the data themselves; or they probably won’t do it.

Posted at 09:57 AM | Link to this article | Add a comment

In preparing for the plenary brainstorm next week we’ve come across a couple of useful items. The first is a report just out by Bain for Liberty Global on the European Video Content Market (99 pages here, but summarised for you below). The second are some recent ‘strategic presentations’ by BT (‘Generating Revenue in the New World’) and Accenture (‘The First Trillion Tridgets’) given at a public conference a few weeks ago - both available here.

The latter demonstrate a couple of things. Firstly that BT definitely kno