Telecoms Regulation

Not Neutrality

2011-03-29T11:45:00.007+01:00

Is it bad for consumers if ISPs to make it easier for them to reach selected websites? Even if this means that the ISP can offer lower prices and reach consumers who would otherwise not be able to afford a connection? Well Professor Thomas W Hazlett of George Mason University in Arlington, Virginia, thinks not. In his article in today's FT he argues that MetroPCS, with a market share a tenth of that of Verizon, could not conceivably have any market power to abuse and that their offering is a benign outcome of competition on the internet, not a threat to it.

MetroPCS offer a $40/month "Unlimited" package over 2G and, more recently 4G (LTE), which is substantially cheaper than rival offerings in the US, where similar packages cost as much as $120. As part of the deal, they provide access to a compressed YouTube stream that enables subscribers to enjoy this popular website, even though the 2G service does not otherwise support video streaming or VoIP. According to Hazlett this is a co-operative (not paid-for) arrangement between the ISP and Google, who own YouTube, though he would argue that even if it were a financial one, consumers clearly benefit and the the internet needs no "protection" from the FCC from innovations of this kind.

Westminster eForum “Building 21st Century Broadband” – Robert Sullivan, Broadband Delivery UK

2010-11-05T15:41:00.005Z

The opening talk at yesterday’s Westminster eForum meeting was given by Robert Sullivan, the relatively new head of Broadband Delivery UK, itself the quite new organisation charged by Government to facilitate the roll-out of superfast broadband in the UK.

He first addressed the objective as set out by Jeremy Hunt, Secretary of State for Culture, Media and Sport: “within this parliament we want Britain to have the best superfast broadband network in Europe.” This clearly begs the question what one means by “best” - Sullivan said BDUK was working on a definition and thought it would not be a single measure, such as headline speed. Instead it would be some sort of “scorecard” based on “outcomes”. They wanted a dialogue with stakeholders about this. If one were being sceptical one might think the target would be set in a way which pre-figured success.

Sullivan discussed the “Theoretical Exercises” that had examined the economics of providing superfast broadband in three challenging real-world areas – a paper is being written on this and will be out “soon”. But some particular points had already emerged:
• Delivering the USC is not a separate issue
• The cost of backhaul is a major factor in the economics
• Getting revenue to cover opex is difficult enough even if capex is 100% funded
• A mix of technology solutions is likely

The key obviously is getting a viable business case. Sullivan covered the three primary ways of doing this:

Reduce costs: duct and pole sharing as in Ofcom’s Wholesale Line Access review – BT reference offer due by January 2011; reuse of other utility infrastructure – electricity poles seems the most promising; reuse of public sector networks
Increase demand: through community engagement; demand registration (eg BT “Race to Infinity”); and increasing online activity by demonstrating benefits (Race Online 2010)
Public funding: £530m was secured through the Comprehensive Spending Review (ie taken from BBC); ERDF funding is available; other public sector bodies (eg councils, Devolved Administrations) might wish to contribute; and a variety of business models could be explored – gap funding, revenue share, public asset ownership.

The four Pilots announced – in North Yorkshire, Highlands & Islands, Cumbria and Herefordshire – will be funded to the tune of £5m to £10m each. These pilots will test the reuse of public sector networks and infrastructure sharing.
A BIS strategy paper is due in December.

In questioning, Sullivan explained that he thought the scorecard would be more about applications than headline speeds, and that performance requirements would follow from that. Tendering for pilots would be done locally through the usual open procedures – details are being worked out now, but they will not all be ready at the same time. Finally, we had the inevitable question about “fibre tax”, the rating system applied to fibre networks. To which we had the civil service answer of “ongoing round table discussions”, need for a level playing field etc etc.

So on the plus side there is some money available and pilots are soon to get under way. On the other hand. BDUK seem to be a classic civil service outfit, Sullivan has no telecoms experience and no real decisions have been made yet. It will still be for community groups to drive things forward.

Westminster eForum Building 21st century broadband

2010-11-04T17:31:00.002Z

Sub-titled "paying,laying and simulating demand", this WeF meeting today went over much of the common ground on "superfast broadband"- things do move forward but not exactly in leaps and bounds.

I'll be writing more detailed reviews of each session over the next couple of days, but to give an overview, here is my summary

"Same old barriers" - Robert Sullivan, Broadband Delivery UK: a classic civil servant session: we're reviewing what "best broadband in Europe means" ("When I use a word,' Humpty Dumpty said, in rather a scornful tone, `it means just what I choose it to mean); a strategy paper will be out "soon"; we must have a dialogue about all this. There were some real points too: eg backhaul is an issue.

"Delivering next generation infrastructure" - Liv Garfield, BT. Impressive roll-call of statistics, a sound grasp of reality, and no bullshit. But no solution to final third.

"Making rural broadband a reality": Charles Trotman, Country Land and Business Assocaition; "our members own half of Britain", "The Duke of Westminster's estate has not-spots in it" - perhaps the Duke could cough up a contribution to rural broadband himself !
Malcolm Corbett INCA; "patchwork quilt of initiatives" - INCA is stitching together (not stitching up, I trust)
Jonathan Freeman, Arqiva - surprise, a common radio network would be a good thing
Mark Falcon, Three - surprise,surprise, Three do a lot of mobile broadband.

"100Mbps Britain", Duncan Higgins, Virgin Media
Fast broadband is selling. VM broadband is fastest and most accurately advertised

NGA and 100Mbps demand
Martin Scottt, Analysys Mason: demand comes from multiple uses of known technology (eg HD, P2P), then from increased cloud computing and then who knows (Rumsfeld "unkhown unknowns")
Adrian Crook, Fibrecity: customers buying 100Mbps - offered on a "suck it and see" basis
Colin Browne, Consumer Panel: very anxious that the superfast broadband debate doesn't eclipse the 2Mbps Universal Service Commitment.
Antony Walker, BSG: customers view headline speeds as a proxy for quality of experience; industry needs to understand demand levels for business cases and network dinmensioning; public policy should not be driven just be headline speeds, but by opportunities for innovation and improved productivity

Delivering and laying the 21st century network: Ronan Dunne, Telefonica O2 UK.
Glossy presentation and corporate speak (eg "O2Learn") got in the way of a real message, but clearly there is an investment challenge, a need to revise business modela and a concern about inclusion.

"paying for the laying"
Tim Johnson, Point Topic: £530m not enough (no evidence though)
Andrew Riseley, Berwin Leighton Paisner: Australian Government is investing £26bn and structurally separating Telstra - but will it happen and will it work ?
Simon Loe, Alcatel-Lucent: understated presentation given all they are doing, but highlighted a key issue of how to capture benefits of eg TeleHealth within the business case.
Aidan Paul, Vtesse: usual complaint about ratings system and "fibre tax" - doesn't mean he's wrong though.

Watch this space for more over the coming days.

£530m for super-fast broadband

2010-10-21T12:12:00.003+01:00

In yesterday's Comprehensive Spending Review, despite the huges cuts elewhere, the government announced that the £530m earmarked for rural broadband will be safeguarded. Super-fast broadband will be trialled in the Highlands, North Yorkshire, Cumbria and Herefordshire. The money is being recycled from the BBC:
- £230m is left over from the Digital Switchover budget;
- and the BBC will contribute a further £150m in each of 2013-14 and 2014-15.

The recently announced project in Cornwall cost £132m - so how far will the money go ?

Previously we analysed the Labout Government £6/year "broadband tax"

Then we suggested that this figure looked close to the amount needed,but probably fell a little short. So on that basis the current amounts won't do the job.

However, there may be other ways forward. The costs for local initiatives tend to be less than BT; the fund might be used only for initial capex rather than full funding; and local community services may generate extra revenues that telcos could not capture.

We wait with interest further details from BDUK

Broadband Delivery UK explain more of their plans

2010-06-10T11:53:00.002+01:00

A new page has appeared on the BIS website, devoted to Broadband Delivery UK - http://www.bis.gov.uk/policies/business-sectors/telecommunications/broadband/bduk

Interesting snippets from this include:

- BDUK Chief Exec is Adrian Kamellard, reporting to Ed Vaizey (joint DCMS, BIS)
- 4 organisational goals for BDUK are defined, covering USC, "high speed connectivity", and use of public asssets
-BDUK is responsible for 3 "market testing" projects for superfast broadband
- BDUK are holding an "Industry Day" to make announcements about these projects on July 15th - if you want to go email martin.doyle@bis.gsi.gov.uk.

No news yet on how they will choose the trials.

Do Jeremy Hunt's forecasts for superfast UK broadband stack up?

2010-06-09T16:42:00.001+01:00

The Guardian’s Charles Arthur asked this question in his blog today - http://www.guardian.co.uk/technology/blog/2010/jun/08/superfast-broadband-jeremy-hunt-analysis .

Interestingly, it’s a topic we considered in regards to Stephen Carter’s £6 pa proposal back in July last year:
http://telecomsregulation.blogspot.com/2009/07/do-stephen-carters-numbers-add-up.html#links

Carter’s “Next Generation Fund” would have generated £163m pa. We concluded that, using the Analysys Mason study figures for FTTC costs, this would be close to the amount of subsidy needed to get BT to fibre the “final third”. But for FTTH it was nowhere near enough.

Creaming money off the BBC digital switchover fund (with dubious logic, and against the prevailing “savage cuts” philosophy) generates £250m pa apparently – but only until 2012. Our NGF calculation assumed 10 years of tax (or a 9.2 year payback), so there is a big shortfall from the £2.8bn cost the A-M report implies.

The way around this impasse is to do things more cheaply than BT would. The new Government has talked of “pilots” to examine other ways of doing things, and community groups generally believe that BT’s costs are much higher than theirs would be. Ofcom are pushing BT into duct sharing, but anyone who’s looked at this knows what a nightmare this would be in practice. The BBC guessed that other utilities (sic) might also be required to share ducts – but again this would be challenging, since they can’t even agree to dig the roads up at the same time. It will be interesting to see what these pilots are, and what they are planning to do.

This statement neither “details” not “clarifies” government policy, but simply raises a new set of questions.

So: “nice try, no cigar”.

Analysys Mason report on “NGA risk in the UK” – missing the moment

2010-05-25T11:37:00.001+01:00

Back in March, Analysys Mason (AM) published a report on behalf of HMG entitled “An assessment and practical guidance on next generation access (NGA) in the UK”
(available here http://www.communities.gov.uk/publications/communities/assessmentngafinalreport) . An assessment it may have been, but its approach and consequent guidance has been undermined by the recent election.

The approach AM took was to create two dimensions: (1) three scenarios for the penetration of NGA across the country at 2012, 2015 and 2017; (2) three areas where the impact of not having NGA are highest – areas of highest “deprivation” (or social exclusion), “rurality” and “e-attitudes”. From this they produce areas classified as “priority”, “action probable” and “watching brief. This they do in commendable detail at the level of “lower super output areas” (LSOAs), producing many pretty maps of the country to illustrate their conclusions.

The problem however is that neither dimension is really solid.
The “base case” roll-out assumption has commercial plans (BT and Virgin) supplemented by the Next Generation Fund (Labour’s £6 pa tax) to subsidise up to 90% coverage. The “extended coverage” takes this up to 95%, on the basis of aggressive local initiatives (publicly funded). The third scenario is a “downside” case with no subsidy, reaching 70% population by 2017. In addition, they make some minor adjustments to take into account local initiatives, such as South Yorkshire Digital Region, but these affect only 2.5% of the LSOAs.

Clearly now, with the new Government’s focus on reducing the public sector deficit, and from the coalition partners’ manifestoes, there is little chance of public investment in such adventurous projects. Instead guidance on how that gap could be filled by community initiatives that require little public subsidy would have been helpful. Structured properly, these projects would be driven by local volunteers and use lower-cost local suppliers. This would be a better focus for a new NGA roll-out programme.

Similarly, the impact dimension is pretty soft. There is an unstated assumption that NGA is all about access to some sort of “socially valuable” services – e-government, training, education, even cheaper shopping. Yet the most likely driver of NGA take-up is television/video entertainment – broadcast, on-demand, YouTube, facebook etc, particularly once TV sets come with internet access built in (Sony has already launched one). Most other services are readily accessible at 2Mb/s. If government is concerned about citizens lacking access to important services, it should make sure they are available on the most widely available platform – the TV set.

The AM approach is to mash together Experian and CACI measures for social deprivation, mash them further with e-attitudes (ignoring obvious correlation effects) and overlay a fairly arbitrary “rurality” factor for good measure. It is not at all clear what that final index really represents and whether it forms a firm basis for the investment of several billion pounds of tax-payer money.

AM has as always produced a report which has admirable analytical detail. Sadly on this occasion they have missed the political sea-change and missed the opportunity to find ways of liberating local energies.

How to get your share of £2m from the Technology Strategy Board

2010-05-21T10:42:00.001+01:00

Yesterday, the Technology Strategy Board (TSB) explained how the competition for funding of “Network Services Demonstrators” is going to work. £2m is available to fund selected demonstrators which sit at the intersection of thinking about the economics of the network, the economics of content and services and access protection and empowerment. The TSB were deliberately but frustratingly vague about exactly what they wanted to sponsor, looking instead for innovative ideas. But some key points did come through:

• Although not precisely defined, it is clear that they are looking for perhaps 5 to 10 projects in total – so you get an idea of scale
• There must be a network facility ( a “site”) which is open to content owners and service providers, and which allows innovative ideas (including new business models) to be tested; it is NOT just about fibreing up a village
• There must be real users connected to it; real revenues may be generated, if required to test a business model for example, but these will be deducted from the costs being funded
• Out of scope would be anything which was primarily about network provisioning, anything without a network partner, lab/research prototypes and genuinely new technology- it is a “near market” funding.

The independent assessors will be looking for the added value coming from TSB funding (ie what would happen because of the funding that would not have happened otherwise), the impact of service enablers, a proof on principle business model and pretty specific plans for implementation (including, APIs, SLAs and various other abbreviations).

The ten questions on the application form cover:
• The business proposition – is it a viable market, is there a realistic future
• The benefits including wider spin-off benefits
• The technical approach and innovations, both commercial and scientific
• Risks and risk management
• Partners’ track records and experience
• Costs, revenues and added value

The TSB will fund 50% of eligible costs (including in-kind costs), and there are various restrictions on how that is shared and a limit to academic involvement. The deadline for submissions to Stage 1 of the procedure is noon on the 24th June. Further steps lead to a decision by 7th October and project commencement around December/January.

For more information go to the Innovate website: http://digitalbritain.innovateuk.org/

NetStrategics can help with the development of business cases and innovative business models and is keen to hear from anyone planning to submit a project to this competition.

PLUM CONSULTING FIND NO EVIDENCE THAT GOVTS CAN DRIVE BROADBAND TAKE-UP

2010-05-06T11:12:00.004+01:00

Plum Consulting presented the results of their research (commissioned by Vodafone), into the role of Governments using demand-side measures to support broadband take-up, to a meeting of the Broadband Stakeholder Group last night. They looked at broadband take-up in several countries - Europe, US and Korea – and age and educational factors, and identified substantial variations between them. However when they looked at specific government interventions – such as Spain spending €6bn in internet education – they found that the increase in take-up was indistinguishable from that which would have happened anyway. Increases in take-up in older groups was simply a “cohort effect”- people getting older.

One of the problems the researchers faced was that few of the interventions were structured to provide post-hoc review of their effect (particularly against the counter-factual of expected growth anyway). So Plum’s main recommendation was that if Government wanted to drive take-up it should conduct small scale trials, structured in a way to provide such sound information into their effectiveness.

In their view, the most significant factor in driving higher take-up was educational levels. Korea provided a good example of this where the older groups, who had been educated when Korea was relatively poor, showed below average take-up whilst the younger generations showed above average take-up.

Plum did explore the main causes and barriers to take-up. Broadband was seen by non-adopters as not relevant, expensive and complex. A positive “social infrastructure” – education, workplace usage, local language content – supported higher take-up.

Addressing these issues, Plum compared PC-based broadband with mobile broadband platforms such as iPad. They concluded that mobile broadband would drive greater take-up as it was application-led (improving relevance), much easier to use (no file structure, faster, easier updates) and could be supported by pre-pay options (getting round credit card issues). The reader might like to recall, however, that the research was commissioned by Vodafone.

In the Q&A session, some people questioned whether mobile was an appropriate platform for services like completing your tax return or accessing medical records. It seems clear that different platforms offer different advantages and that they will be used in different ways.

Whether putting Government services online would drive take-up was raised. The general view was that it would not, as closing down offline options would too badly disadvantage those groups of non-adopters who might specifically need those services.

I think a more significant effect would be internet on the TV set. The TV is almost universally adopted and easy to use; the fastest growth in internet applications requiring broadband is in iPlayer and other on-demand TV services, YouTube and Facebook – ie video-based services. So it seems inevitable that once TV sets with internet access built in become available - with a simplified browser replacing the EPG - that broadband take-up will accelerate dramatically. Current internet applications then in effect replace Teletext. Of course that might show up that the question was not what it appeared – it is not broadband take-up per se that is the concern, but use of online services to help Government reduce costs.

You can read Plum's account of the research from page 31 of the document at
http://www.plumconsulting.co.uk/pdfs/Plum_March09_Demand-side_measures_to_stimulate_Internet_and_broadband_take-up.pdf

COLLABORATION NATION - NEXT STEPS

2010-04-07T11:32:00.001+01:00

The “Collaboration Nation” conference organised by the Technology Strategy Board showcased the 84 feasibility studies chosen in the Digital Britain innovation competition, worth in total £2m. Further funding and support will be available for the next phases:

A DIGITAL TESTBED will enable innovators to test out their ideas, experimenting in a realistic setting and demonstrate the opportunities to potential investors. The TSB are planning for this to go live during the summer. I have to confess that I don’t really understand what this “testbed” actually is, but the picture on the screen looked like an impressive networks operations centre.

A new concept, NETWORK SERVICES DEMONSTRATORS sounded more the sort of thing that will appeal to community groups. There is another £2 million up for grabs in a new TSB competition starting on the 10th May. As well as looking at technical issues, the competition will be looking for innovation in business models. This could be a great differentiator for projects which deliver tailored community services.

Going further, with the DIGITAL BRITAIN projects (both those which went through feasibility and other new ones), there is another £18 million available in a competition beginning in July. The focus of this will be on collaborations which bring together industries and communities. There will also be another round of feasibility studies again next year.

Two other areas are also the subject of funded competitions. £8m is available for TRUSTED SERVICES SOLUTIONS in a competition starting on 10th May, and £5m for SMART METERS AND SMART GRIDS later the same month.

So over £30m allocated for innovation in this area – impressive in times of such financial crisis. I suppose there is a risk that these initiatives get cut after the election, but on the scale of things £30m doesn’t make much impact on the deficit.

Community broadband projects have been successful in the first round of feasibility studies. The well known Cybermoor project in Alston, and a neighbouring project in Weardale both got through and presented their work. 21Media from Lancaster University who worked with WrayComCom also got funding for a study into utility-like community networks providing a standardised infrastructure for multiple providers and service offerings. Aegis Systems were looking into low-cost backhaul using the 1800 MHz band, and Broadband Access Strategies LLP are building a review of cost-effective technologies for rural areas.

For more on these and other projects go to http://digitalbritain.innovateuk.org/

COLLABORATION NATION – DEPLOYMENT AND OPERATION OF DIGITAL INFRASTRUCTURE

2010-04-07T11:02:00.000+01:00

“Collaboration Nation” was the conference organised by the Technology Strategy Board to showcase the 84 projects chosen in the Digital Britain innovation competition, worth in total £2m. One of the afternoon strands focused on infrastructure issues, the most relevant to community broadband initiatives.

BATH LABS was the first presentation. Their project aimed to demonstrate NGA delivery to flats, hotels etc at speeds of 1Gbps using unused bandwidth in the existing internal terrestrial TV distribution system. They reckoned this gave faster installation and reduced costs. A major advantage is that the TV system will already have maintenance arrangements (usually high quality). The market is a sizeable niche, though the many and varied installation arrangements can make a one-size fits all solution difficult. Neat solution for valuable niche.

NEXUS ALPHA have developed a very low power computer and are looking to take that further to 0.5W to 3W in order to run solar powered WiFi. This would be ideal for remote regions, bringing web connectivity to otherwise unconnected communities, and for temporary systems in emergency or relief situations.

To my mind, the most interesting presentation for community broadband groups was from POWERLINE TECHNOLOGIES. They string fibre over the overhead electricity infrastructure. A head-end is then installed on the final pole, where the transformer is located (and which is already reinforced). This provides 200Mbps to an average of 8 homes over broadband powerline communications. The same system can also provide backhaul into 3G not-spots and smart-grid capability to the electricity company, thereby sharing the costs between more players. They aim to do a proof of concept trial in April, and are looking for community partners.

ZAP CORPORATION’S pitch was totally different. They have a method of IP packet inspection which enables them to insert targeted content (ads) into IPTV streams. A profiling engine allocates individuals to one of many sub-sectors, allowing ad agencies to select appropriate content to be delivered. There are some data privacy issues, though active consent and the fact that individuals’ information is not released to the ad agencies get around most of them. Clearly this is a coming service – time will tell whether this is the right technology.

For more on these and other projects go to http://digitalbritain.innovateuk.org/

COLLABORATION NATION – HIGH POTENTIAL PROJECTS

2010-04-02T11:00:00.000+01:00

“Collaboration Nation” was the conference organised by the Technology Strategy Board to showcase the 84 projects chosen in the Digital Britain innovation competition, worth in total £2m. I’ll write a few separate posts about different aspects of it – this first one covers the first session where four “high follow-on potential” projects were presented.

First up was GNODAL. They are developing a new generation of 10/40 Gbit Ethernet switches for use in NGA networks. Their switches virtually eliminate congestion, are scalable and have low power consumption, hence lower costs and carbon emissions. They are now looking to develop a 2Tbit testbed capable of delivering 100Mb/s per user to 20,000 homes. All very clever no doubt, but only exciting to techies.

RENAISSANCE SOUTHEND described how they were helping to regenerate Southend – famed for its creative industries, apparently - by building a wireless mesh network off the back of the council/school Gbit backbone network. More work is needed on the cost plan and business model evaluation, as well as an e-commerce element to the website front-end. A bit vague on what innovations are coming, and not that original otherwise.

PROVISION described their Stadia Casting project which provides wireless video and information feeds direct to smartphones for crowds at big events, like pop festivals or major sporting events. The idea is to provide people actually at the event with the same or better services as those watching on TV at home. Certainly needs doing, though smartphone screen may be a bit small – iPad perhaps.

ILLUMINA DIGITAL closed the session. They are working to improve the workflows of the UK TV content distribution platform. Currently this is a mish-mash of manual and digital processes – ultimately it will be an integrated digital system including features such as DRM. Good luck guys – it sounds like herding cats.

For more on these and other projects go to http://digitalbritain.innovateuk.org/
I’ll be posting more comments over the next couple of days.

VALUE PARTNERS PRESENTATION AT BSG – THE SERVICE AND APPLICATION PROVIDERS VIEW

2010-03-24T10:45:00.000Z

At yesterday’s well-attended BSG meeting, Value Partners (ex Spectrum Consulting) presented the results of their survey of service and application providers’ views on superfast broadband. People from BBC and Sky through mySpace and direct.gov were interviewed about how they saw things today, in a few months and over the longer term.

The basic conclusion was that it was the end user experience that mattered, and that access was not the only pinch point – the whole end-to-end service needed to work.
The current position was seen to be acceptable (for now) because expectations were low, and content providers could provide adaptive versions (eg text-only at busy times). But once TV sets have internet built in, and cloud computing takes off, expectations will rise and guaranteed quality of service becomes an issue. This could lead to a bandwidth crunch and even a “battle for bandwidth”.

Looking to the future, there were surprisingly few original ideas: HD everywhere, video meetings, enhanced collaboration – plus “something no-one has thought of”. Definitely a “build it and they will come” view – confident that any capacity will be fully used.

Surprisingly despite the importance of the end-to-end service, most service providers didn’t want to have to understand how the network worked, and didn’t talk to network providers very much. And they accepted that there would probably be a mix of capabilities for the foreseeable future.

The panel discussion was opened by Richard Cooper, responsible for IP distribution at the BBC. He explained how adaptive bit rate coped with the current network variability, and emphasised that customers would not put up with much buffering. HD iPLayer is available now, but demands a high powered PC as well as fast broadband, so is not used much. In the future he saw massively increased consumption of video, more devices especially IP on TV (they have Wii applications already), HD essential, and linear TV over IP – notably the Olympics. QoS vs neutrality issues are going to have to come to a head soon, with challenges for smaller players.

Ed Uzzell of Sony explained their vision of 90% devices connected by 2012, and saw an IPTV arms race between content providers and device manufacturers.

Mark Hewis of LoveFilm described the on-demand service they had launched with Sony. Customer expectations were the same as for broadcast TV – buffering not acceptable. He wanted ISPs to take the lead in explaining what the network could deliver – he’d rather know in advance that a particular location could not received the streamed version, because he could offer the customer the option of downloading it and playing it back in say 10 mins. Streaming games would driev huge demand with non-cacheable content.

The discussion afterwards dealt mainly with the relationships with content delivery networks and how that needed to improve. The BBC work had at it themselves, but despite their size, even they needed help and could not cover every ISP.

Pensioner in price cap shocker

2010-03-23T12:37:00.005Z

Ofcom has published its Review of the Wholesale Broadband Access Markets (WBA), updating a 2008 assessment. A lot has happened in the past two years, you might think. But not in the case of WBA. Last time around Ofcom, like a latter-day King Lear, split the moiety of the United Kingdom that has the good or bad fortune not to be Hull into three. Like Lear, Ofcom proposed a somewhat unequal distribution to its daughters, though one would hope that the consultation process will be a little more fit-for-purpose.

At any rate, unlike Lear, Ofcom does not seem to have changed its mind much in the intervening period about how the kingdom is to be divided. Back in 2008 16.4% (now 14.2%) of UK premises were in exchange areas served only by BT. Another 13.7% (now 13.8%) had two or three competing operators and the remaining 69.2% (71.3%) were blessed with four or more. And no doubt also "With shadowy forests and with champains rich'd, With plenteous rivers and wide-skirted meads".

What with all those forests, meads and stuff, it was clear to Ofcom that no regulatory intervention was needed there, then and now. Not so for the other two daughters, though. In 2008 Ofcom imposed general access and non-discrimination provisions on and obtaine voluntary commitments from BT to keep wholesale prices between a floor and a ceiling. The floor commitment ran out last summer and the ceiling goes this December.

Now, though, Ofcom is proposing to ease restrictions where there are 2-3 operators, in the hope that competition will pick up there. Meanwhile it will bear down harder on the one-operator daughter with a price cap, an obligation for prices to be oriented to cost and another for cost accounting to provide transparency. Presumably, in the matter of competition Ofcom is convinced that "nothing will come of nothing".

Of course the outcome for Ofcom's predecessor was far from happy. It remains to be seen whether Ofcom's discriminatory behaviour will also lead it to perish on some blasted heath, but that's a drama for another day.

Labour slowly getting faster

2010-03-22T17:33:00.004Z

There will be lots of cynicism about Gordon Brown's speech on getting superfast broadband to everyone in the UK - probably justifiably, but at least it's something. What Labour don't yet seem to be getting is the idea that it's not all about bunging cash at BT.

Jim Knight, the minister responsible for digital inclusion, accepted that the government had to intervene to ensure super-fast broadband reached remote areas of the country. But he told BBC Radio 5 live: "You offer incentives to the market to get to those areas that otherwise they're (HW: presumably meaning BT or Virgin) not going to be able to make a profit out of going to."

This ignores the prospect of community groups "doing it for themselves". Time to release the passion and innovation of the community, surely ?

Social TV Forum @ Olympia; The Future of TV & Social Media

2010-03-17T12:00:00.001Z

I visited the exhibition at this event, looking mainly for interactive TV initiatives with targeted advertising opportunities. I have to say there weren’t many.

About half the stands were for Social Media agencies – all excited at the prospect of taking your money to tell you how to do what you already do. OK, so I didn’t give them a fair chance to convince me that they had the single unique answer for turning social media into a money-spinner but, hey, life’s too short.

I did start to listen to a workshop speaker on ROI for social media. But when I realized I’d been sitting next to him on the train and had seen most of his presentation then, I wandered away. None of it was rocket science anyway. Neat presentational tool called Nudge though.

Of the stalls I talked to people at, the highlights were:
• Monterosa: assuming people are on their laptops while watching TV; allows
games based on program (eg who’s fired next?), plus chat and comments;
could use for product placement opportunities once allowed
• tv genius: web-style search function on STB simplifies search for VOD
content; works with …
• NDS: EPG design platform
• Comment technologies: white-label social networks

So not a lot really.

http://www.social-tv.net/

BSG cost model for fibre

2010-03-15T11:47:00.003Z

The BSG have appealed for information about fibre costs in order to review the A-M model produced in Sept 2008.

"We are particularly interested to get cost data from actual deployments by local and community projects and other new entrants that may have utilised new methods of deployment, to understand how the costs of deploying fibre may have changed since the report was first published".

At the Newark colloquium I attended, organised by Digital Dales, several people said that the A-M costs were way too high. I'd suggest that if anyone has evidence of this, then they send it to the BSG - contact Peter Shearman (Peter.Shearman@Intellectuk.org]

Broadband Delivery UK

2010-03-05T11:12:00.003Z

Stephen Timms announced yesterday the formation of a new body, called Broadband Delivery UK, to oversee the 2Mb/s broadband universal service obligation. Long on rhetoric and short on detail - who is on it, what are its terms of reference, what powers will it have- the statement is nonetheless interesting for its reference to a new Analysys Mason report (they must be doing well out of all this !) which describes which communities might be prioritised by the fund. More comments on this once I've read it !

Huw

Mobile World Congress, Barcelona, Feb 2010

2010-02-25T22:15:00.003Z

A few observations from meetings, exhibition and atmosphere at the 2010 Mobile World Congress.

Main themes

Similar themes and challenges to 2009 – where is the money going to come from and who is it going to go to?
Appstores, appstores and more appstores.
Not at all clear how operators in mature mobile markets are going to grow revenues in future.
Big difference in challenges faced by operators in mature vs less developed mobile markets.
A congress in transition –big players participating (or not) more on their own terms.

Network operators

- Common recognition of network capacity issues, plus an increasingly frantic search for cost reduction options – WiFi now reinvented as a low-cost offload; femtocells similarly positioning themselves as unit cost reducer. Being an integrated fixed & mobile operator therefore becomes a cost advantage

- Network spending continues to be slow; mobile operators looking to get more from existing assets and less capex. Possibly some signs of easing since Q4/09.

- 24 operators launched the Wholesale Application Community (WAC) “...to create an ecosystem for the development and distribution of mobile and internet applications irrespective of device or technology”. Trying to build on the OneAPI initiative.

- Not much LTE vs WiMax argument any more. Differences of view on speed of rollout of LTE in Europe. Early LTE deployments in Mid-East and parts of Asia-Pac.

- Operators caught between several rocks (capacity limits, new forms of competition, commoditisation, technology change, regulation of wholesale prices) and a hard place (tariffs with large, effectively “all-you-can-eat” data bundles)

Vendors

- Continued growth of Chinese vendors, now with good track records of delivery, not just price-based contract wins

- Continued revision of vendors’ visibility in the main Halls (very small direct presence from Cisco, IBM, none from HP). More use of surrounding hotels and pavilions.

- Surreal sight of a stand in the infrastructure Hall being taken up by Golla designer bags and phone holders. Maybe someone misunderstood “carriers”, or maybe a belated tribute to Alexander McQueen?

Devices and Operating Systems

- No real excitement on devices. All the action around showing off applications and appstores.

- Latest attempt by Microsoft to be a significant player. Announcement of Windows Phone 7 Series. Not much interest from rest of mobile value chain. More bark by Ballmer than bytes likely to be attracted to the platform.

- There’s a danger that Phone 7 Series will be neither fish (very open and developer-friendly) nor fowl (closed and proprietary and more profit-friendly)

- RIM the biggest visible presence (mainly populated by developers) of all the device manufacturers.

- Samsung launching its own appstore (Bada) – maybe concentrating on AsiaPac developers and market? Also a whole host of alphabet-soup phone ranges and product platforms (eg Monte, Corby, Chat, AMOLED, Wave). Samsung’s consumer electronic strengths, eg screen technology, very apparent, but exhibition was more cluttered than 2009. Maybe Samsung Bada could gain momentum in Asia-Pac?

- Qualcomm gaining more traction through the value chain (starting to stretch into enhanced multimedia, as well as “traditional” strengths like multi-access (HSPA/WiFi) chipsets

- Development of low-end phones for developing markets is becoming more apparent (eg ZTE)

Applications and developers

- Far wider range of applications than previous years. Hard to pick a lead focus of development (cf maps in 2009),

- A whole Hall dedicated to “AppPlanet” – the nearest thing to hype at this year’s event.

- Everyone but everyone touting their own appstore or app development platform.

- Not clear where the money is – RIM suggesting that business-focussed apps have customers willing to pay; Apple and Android more consumer-focussed as larger addressable market

- Big difference in takeup of data services on devices >$200 vs <$200. Maybe an opportunity at this lower end?

- Facebook to develop “Facebook Zero” for lower-end feature phones

- Far less technology development for operators – eg only six small booths on upper level of the technology Hall, last year was crammed. Maybe this is a confirmation of operators’ consolidation and tight spending

- One new feature was the presence of country booths promoting small/medium developers under the nation’s banner eg France, Belgium, South Korea, Ireland. Tea and sympathy in a small booth promoting the UK.

Low Carbon (not)

- Sustainability, low-carbon and green issues are still mainly token gestures

- Most of the vendors’ stands had rotating slide decks about all their acronyms and how they would do a great job for carriers. Each deck had a slide on how green it all was, but it was always the equivalent of a footnote; they may as well have said “our people are our biggest asset”.

- To be slightly more optimistic, there were a few booths around the place that were more dedicated to renewable sources, esp for base stations in developing world, to some extent also for battery recharging. For example, the Powermat wireless charging approach – not yet at the point of really using renewable energy for the charging, but at least getting rid of the multitude of chargers we plug in.

Big beasts in the jungle

- Google - keynote by Eric Schmidt: “Mobile First” is Google’s strategy. Message of “we come in peace”, wearing the sheep’s clothing of “surely openness is good for everyone”. Ironically a demo didn’t work because of connectivity shortage – maybe Google could have paid to have priority on a network for the duration of the demo? Android now shipping 60k devices per day. Maybe "Mobile First" means that Google plans to eat the lunch of the mobile operators before it takes on anyone else?

- Apple – maybe the first signs of some question marks over the Apple experience, eg lack of multitasking, lack of Flash, which could open up market gaps for other platforms

- Microsoft – hardly discussed by anyone. Developers, when asked open question, say they are developing for Apple/BlackBerry first, BlackBerry/Apple second, Android third.

- BlackBerry – major upgrade of visibility in the exhibition hall. Pushing hard to try and build lasting momentum in non-enterprise world

- Huawei/ZTE – a major fixture now at MWC

- Vodafone (representative of operators) – difference between prospects and requirements in developing vs mature markets; complaining strongly about Google’s tanks on lawn; supporter of WAC

Overall mood

- Sense of uncertainty and transition – power balances moving, business models changing rapidly as a result of impact of mobile applications

- No sense of any major meaningful announcements

- Very unBarcelona cold and wet weather, so less energy and buzz on the main avenue

BIS consulting on how to spend NextGen Fund

2010-01-27T10:01:00.003Z

Earlier this month, BIS announced its consultation on how to spend the money raised by the 50p/line Next Generation levy. The 23 questions in the consultation raise serious issues about conflict with free market approaches and chilling investment. The questions also cover the fixed/wireless debate, required speeds, open access, active and passive wholesale products and competitive effects, applications and services, and Government claw-back. In other words, pretty much everything exceot how to select the operators.

BT will be deploying teams of people to respond to this consultation, looking to get its hands on as much of the Fund as it can. No doubt it will argue that only they can provide a network which integrates with the commercially deployed fibre networks - or at least that economies of scale mean they can do it cheapest.

So how can Community Broadband initiatives ensure that they get a fair hearing ? Simple assertions that it is fairer or better will not suffice - what is needed is a thorough analysis and business case which demonstrates that this approach brings the greatest benefits.

Huw Williams
NetStrategics - analysis for telecoms strategy

Superfast broadband regulation will differ from first generation broadband

2009-12-01T09:42:00.000Z

At last week’s Westminster eForum conference on the future of Broadband in the UK, Stuart McIntosh, Ofcom’s Partner for Competition, explained how regulation for superfast broadband would be different from what we had seen before.

In the Telecoms Strategic Review, Ofcom was determined to press for infrastructure competition “at the deepest level possible”. It did this by encouraging Local Loop Unbundling, not least through massive reductions in the wholesale price. The higher levels of investment required necessarily led to a series of takeovers and mergers, and the result in the much-consolidated industry we see today. Ofcom argues that this has led to a much more competitive market, and that competition has led to greater investment.

For superfast broadband, however, they are taking a different view. Firstly, although there is no suggestion of regulatory “forbearance” for BT, Ofcom have said that wholesale prices can reflect risk. And because it sees the economics of fibre roll-out as being more challenging, Ofcom is putting more emphasis on “active” wholesale products , rather than “passive” ones – ie is expecting rather more service provider competition than infrastructure competition.

This leads to a series of interesting questions. How much margin will there be between the passive and active products (as this determines which is the better investment) ? What happens to the deployment of first generation LLU – are these now stranded assets ? If infrastructure competition was so successful first time round, but is not encouraged by favourable pricing this time, does this mean that we will get a less competitive market in superfast broadband ?

Speaking later, Andrew Heaney of TalkTalk insisted that unbundling was still the way to develop competition. It will be interesting to see to what extent he can persuade Ofcom of this.

But, anyway, to what extent will regulation will make a difference to BT’s FTTx investment. Isn’t it far more likely that BT would start blowing fibre very quickly indeed if it saw a big takeup of Virgin Media’s superfast broadband or saw the mobile operators bringing forward their LTE investments. However, neither of those yet seems to be happening in any market-changing way.

EU green light to state aid for rural broadband

2009-09-18T11:01:00.000+01:00

The European Commission has adopted Guidelines that will help Member States to accelerate and extend broadband deployment, allowing public support to foster investment in this strategic sector without creating undue distortions of competition.

Competition Commissioner Neelie Kroes said: “ The Guidelines will facilitate the widespread roll out of high speed and very high speed broadband networks, enhancing European competitiveness and helping to build a knowledge-based society in Europe."

The guidelines distinguish between “white areas” (rural and underserved area) where support for broadband network deployment is in line with existing Community policies and “black areas” where at least two broadband networks are present and where State Aid in not required. Typically, there are also “grey areas” where there is a need for a more detailed assessment.
Last month the EC gave the green light for plans by the Welsh Development Agency (WDA) to construct an open, carrier-neutral, fibre-optic network to wire up 14 Welsh business parks in North Wales.

NetStrategics can help planners work through the detailed conditions in the Guidelines – contact us on huw.williams@netstrategics.co.uk

£2m available for Digital Britain projects

2009-09-09T10:51:00.001+01:00

Funded by the Department for Business Innovation and Skills, the Technology Strategy Board (TSB) is planning to fund at least 80 projects on Digital Britain, with a total budget of £2 million. The TSB will fund 75% of feasibility studies proposed by SMEs, small or micro businesses, costing up to £33,000 of innovation in business models, applications, services and technologies.

But if you want to get your hands on this money, you’ll have to move fast – the closing date for proposals is noon on October 1st – and not a minute later.

Creditably, you only need a one page proposal, but you will need to make sure that is well written, concise and compelling, and that the market opportunity is clearly set out. Most importantly, you need to show how the proposal aligns with the scope of the programme:
· Economics of the network
· Economics of content and services
· Access, protection and enablement

One of the four priority areas which the TSB is particularly interested in is “Cost-effective deployment and operation of digital infrastructure”. This is looking for feasibility studies which offer ways of overcoming the cost barriers to next-generation infrastructure development, eg:
· Community initiatives to increase broadband access in a way that reduces costs of deployment
· Ways to reduce the amount of energy used to run telecoms networks
· Ways to reduce running costs of networks

The other priority areas are:
i. Enabling technologies for the internet: core functional technologies that help with areas such as meta-data management of content, revenue distribution and payment processing, quality of service control, personalisation and privacy, or management of data within the home
ii. Access to public service information: eg how to increase accessibility to and public engagement with online public services
iii. Applications and services - ”other”: eg new models for distributing and managing digital content, such as those based on metadata; trusted services models; personalised services and interfaces.

NetStrategics attended the BIS briefing session yesterday, and can help you pull together your proposals. Contact me at huw.williams@netstrategics.co.uk

Telecoms Regulation: Telecoms Regulation: Do Stephen Carter's numbers add up ?

2009-09-09T09:01:00.000+01:00

Telecoms Regulation: Telecoms Regulation: Do Stephen Carter's numbers add up ?

My reply to LIndsey was:

"Hi Lindsey,

Thanks for your query – it’s nice to know people read some of the stuff we write !

Interesting that you point out that 27.2m is probably a high figure. Actually I received today Ofcom’s latest market data (see attached). That gives a figure of 23.5m fixed residential lines and 9.5m business lines.

As you rightly suggest I made the simplification of number of premises = number of lines. It could in fact be higher or lower – premises without lines, and multi-line premises. With ADSL, I think we are seeing fewer of the latter. If you do make the simplifying assumption, then the actual figure doesn’t matter much as it is a factor in both the revenue side (N*£6) and in the cost side, and so drops out.

Of course this has all become a little academic, as there is no prospect of the £6 levy being in place before the election, and there is little sign that the Conservatives (who I guess must be odds-on favourites at present) would give this priority.

So I don’t see any nationwide roll-out any time soon. BT will go as far as it can, and CBN groups will try to pick up the slack. My interest is how one can make business cases for those trials work – I think the involvement of local councils who may be able to justify including other benefits may be the way to crack it.

Happy to talk more

Huw"

Telecoms Regulation: Do Stephen Carter's numbers add up ?

2009-09-09T09:00:00.000+01:00

Telecoms Regulation: Do Stephen Carter's numbers add up ?

Lindsey Annison sent me the following comments:

"Disclaimer: I am making no claims to being a mathematician or accountant, and like to keep things simple. ;o)

In your blog post about Carter's figures, you use Analysys Mason's figures of 27.2m. That is landlines IMHO not premises. I spent hours on the phone to ONS etc and was repeatedly told 20m homes and up to 5m max business premises. (This figure is very ahrd to determine as there are so many farms, SOHOs, home businesses etc apparently who could feature in both figures)

The AM figures imply at least 2.7m second/third lines but it would be VERY interesting to get the true number of multiple phone lines into single premises from BT et al.

If you repeat the figures using 20m, then it comes to £2bn to do the final third with FTTH and 36% take up. If each of those homes were paying, for sake of argument, £30/month eg £360 pa, the revenue generated in year 1 alone would be £2.6bn (by my maths). On a standard telco/infrastructure model, payback would be over 10 -15 years so I cannot begin to see how this can't be justified easily.

To continue, no-one in their right mind is going to go into a region/community and deploy fibre without passing every home/premises where at all possible. Lessons learnt from NTL!! So, whilst in year 1 take up may only be 36%, in rural communities such as ours, by year 2, you would have picked up the majority of users, except the digitally reluctant, and could possibly double the 36% without too much grief. That second wave of subscribers would only therefore need kerb/gatepost to home connections, with related costs approaching zero, particularly if the householder does that bit themselves as in the Nordics.

So, do you fancy expanding on the maths for FTTH and disproving that £28bn and showing just how feasible the final third is?

Regards
Lindsey"

Do Stephen Carter's numbers add up ?

2009-07-20T10:49:00.002+01:00

The Digital Britain report proposes an annual fixed line levy of £6 to fund the "final third" of fast broadband rollout. So we thought we'd look at how far that would go.

What will the last third cost to build ?
· Assume 27.2m fixed line homes.
· A report for the Broadband Stakeholder Group by Analysys Mason (fig 5.1) suggested that FTTC costs for last 16% of homes are £1175/home connected, with 36% take-up assumed= 27.2*16%*1175*36%= £1.8bn
· For next 17% homes (taking us to 33%, the last third), cost per home connected is £573, take-up assumed 36% again;
· = 27.2*17%*£573*36%= £1.0bn
· So total “last third” cost = £2.8bn

How much money is raised ?
The Universal Service Fund comes to £6 * 27.2m = £163m a year.

Does that add up ?
We have a choice of approaches.

a) We could assume that BT would contribute to the last third at the same level as the first two-thirds, with the Fund paying the rest. Taking the 2/3 cost (£400 ) as a break-even per home connected, that would make BT’s contribution to the last third = 33%*26m*£400 * 35% = £1.3bn., leaving £1.5bn to be covered by the levy. Payback = 9.2 years. Plausible, just about.

b) Alternatively you could say that BT would earn revenue on the last third that it would not otherwise have done. If we allow the levy for 10 years we get £1.6bn, leaving £1.2bn to find from 3.2m homes = £370/home connected over 10 years = £3/month. Again just about possible.

So overall one could say that £6 was a fairly well judged level for the levy. The problem might come if other groups take some of the levy for one-off ventures which don’t then get integrated. Or if the take-up assumption is too high.

Personally, I’d say this still looks a risky proposition.

Pole Tax, anyone?

2009-06-16T22:00:00.010+01:00

The Digital Britain final report emerged yesterday to muted fanfares. We summarise our initial take on the key points here as they relate to telecoms.

The overall tenor of the report might be described as modestly interventionist, with "industrial activism" and "modernisation" as recurring catch-phrases. However, there are few signs of grand projects and those we were expecting - universal broadband now (or soonish), next generation broadband later, re-jigging the funding of broadcasting - are all quite modest in scale and funded from bits and pieces here and there. Of course there is a sprinkling of Czars, including Martha Lane Fox of former Lastminute.com fame as Champion of Digital Inclusion, though the report stops short of crowning them as such. There are no Dragons or other professionally grumpy reality TV stars that we could find.

In relation to telecoms, we see the following main objectives spelled out in the report:

Preventing exclusion - skills, affordability, motivation;
Promoting access to current generation broadband (the broadband Universal Service Commitment);
Ensuring that next generation broadband reaches otherwise uneconomic areas (Next Generation Final Third project).

1. Preventing exclusion

Key proposals:

Home Access scheme - content and skills development for children, young people and their families - currently in pilot in Suffolk and Oldham - £300m budget - plus industry initiatives from Microsoft, UK online (DfES), second-hand computer schemes etc.
Digital Inclusion Programme - under the auspices of the Digital Inclusion Champion, backed by an Expert Task Force and in cahoots with the (already proposed) Digital Inclusion Consortium. It is not yet clear what they will do, other than "move toward" a National Plan for Digital Inclusion and, maybe, merge with various other bodies into a Digital Inclusion Agency at some later date.

Budget: not specified.

Winners:

The quangocracy, would-be Champions
The "corporate responsibility" industry
Digitally naive young people (if any)
The poor (maybe)

Losers:

The digitally reluctant.

2. Promoting access to current generation broadband (the broadband Universal Service Commitment)

Key proposals:

Revise universal service obligation (USO) legislation and license authorisations to extend them from narrowband to broadband
Establish a "delivery body" (Network Design and Procurement Group) with powers and technical expertise to procure not-spot solutions on a technology-neutral basis - CEO to be appointed by the end of October 2009
Twist the arms of the BBC Trust and BBC Executive to cough-up the money left over from under-spending on supporting elderly people and others as the switchover of TV broadcasting to digital proceeds
Pass the hat around interested corporations, local authorities, regional development agencies and the like to get additional funding and contributions in kind

Budget: £200m from the Digital Switchover Help Scheme underspend and Strategic Investment Fund combined. The rest not specified.

Winners:

Not-spotters
BT - will probably get most of what's going
Mobile operators - might get some at the margins
Virgin Media - might get some at the margins
Local self-help initiatives (e.g. rural/village wi-fi/Wi-Max ventures) and similar

Losers:

The elderly and confused
The TV-switchover-support industry
The BBC - but they have known since at least the first PSB Review that the money would probably be ring-fenced

3. Ensuring that next generation broadband reaches otherwise uneconomic areas (Next Generation Final Third project)

Key proposals:

Impose a 50p/month tax (the Next Generation Fund) on every copper line (including coax) to fund extension of high-speed broadband (FTTx, or equivalent) to the "final third" of the country that would otherwise be uneconomic to serve. Operators will be responsible for collecting it and remiting it to Ofcom
Allow operators to bid on a technology-neutral, reverse auction basis for tenders, which will be managed by the Network Design and Procurement Group (see above)
Amend the Communications Act 2003 to make the promotion of investment in communications infrastructure one of Ofcom’s principal duties alongside the promotion of competition

Winners:

Crofters, farmers, second homers, rural retreaters, owners of moats and anyone else in the final third
BT - will probably get most of what's going
Mobile operators - might get some subsidy at the margins and may benefit from some increased defections from fixed lines
Local self-help initiatives (e.g. rural/village wi-fi/Wi-Max ventures) and similar
Probably not Virgin Media, as relatively few of the final third areas seem likely to be sufficiently adjacent to their existing footprint

Losers:

Anyone with a copper line (including, it would appear, a hybrid fibre/coax or fibre/twisted pair FTTC one)

What about mobile?
Key proposals:

Existing 3G licences will be made indefinite
The Administrative Incentive Payments (AIP) structure (annual fees paid by spectum owners) will be adjusted to achieve greater fairness, though how is still to be determined
The 800Mhz "digital dividend" from shutting down analogue TV, together with the 3G expansion band will be auctioned off in 10Mhz blocks
Appointment of the Independent Spectrum Broker to manage the above (ISB - already in place - his report was published on 13th May 2009). It is proposed to implement his proposals.

It is envisaged that this will lead to mobile broadband download speeds of up to 100 Mbps being available in urban areas and 5-6Mbps elsewhere.

In conclusion

On the face of it the report might be accused of a lack of ambition, particularly in setting the universal service criterion as low as 2 Mbps and with a relatively leisurely progress towards high-speed broadband. Perhaps understandably in current economic circumstances, it avoids extravagant spending commitments, or almost any spending commitments, to the extent that we wonder whether even its modest ambitions are realistic given the amounts proposed, for example the 50p/week/line tax in relation to the billions said to be required for next generation broadband. However, we'll return to that topic in a forthcoming post!

Regulatory Holidays

2009-06-16T13:49:00.004+01:00

Well it's a timely discussion, despite the rain here in the UK, with the "Digital Britain" report due to be published today.

As I see it, there are two things to bear in mind here - the problem and the proposed solution.

First, the problem. FTTx networks are being installed in many places around the world by incumbent telcos, cable operators and newer challengers alike without any special regulatory inducement. The trouble is that it seems that the economics of FTTx make it unlikely to be profitable to cover the whole population. This cuts across political objectives such as regional policy and plays to a fear that sections of the population will be excluded from some as-yet-undefined, but essential, social and economic activities.

So the politicians and regulators must either appeal to a patriotic consensus, as seems to have happened in some Asian countries, such as South Korea, or they must provide incentives to the market to produce what they want.

As Andrew Sharpe suggests in his blog, "not interfering" looks unlikely to work, given the economic issues described above. For incumbent telcos, though, the holiday bargain they seek is freedom from downstream competition. In other words, in exchange for making an unprofitable, or marginally profitable, investment in their (upstream) network business, they get to avoid downstream competition for retail customers, enabling them, or so they hope, to extract monopoly profits for at least long enough to repay their investment.

But regulatory holidays, like real ones, are seldom as free from the normal constraints of life as we hope and may cost more than we plan. For those who would not otherwise get high-speed broadband, it might seem like a reasonable deal - monopoly service, probably at a regulated price, is better than no service. But to the rest of us, there is a clear risk that what is, at least here in the UK, a highly competitive and fast-moving industry might turn into a sluggish monopoly.

Of course one might try to draw a distinction between profitable and unprofitable areas and set the rules accordingly. But it seems inevitable that this would lead not only to lots of arguments about what and where is profitable, but also to the perverse result that monopoly high-speed broadband would be imposed in just those areas where there is least competition for the current generation of broadband.

There are, of course, alternative solutions, such as allowing the incumbent to pass on more of the costs where they are higher, setting up a universal service fund and allowing operators to bid for subsidies, or even taking on the whole project, as is happening in Australia with the National Broadband Network.

Note: this post was published earlier in substantially the same form as a comment on a LinkedIn article. It is re-posted here for the benefit of anyone who is not a member of LinkedIn, and of its Telecom and Media Regulation and Public Affairs group.

Mobile Skype Update 2: Walking Slowly Backwards

2009-06-03T16:16:00.004+01:00

According to a report in Total Telecom, T-Mobile Deutschland is now offering to charge its customers EUR9.55 per month to use Skype on their iPhone or other mobile device. This is instead of banning such a transgression outright. According to Total Telecom:

'A Deutsche Telekom spokesman said the company has to make "significant investment" in its networks and the number of available Internet protocol, or IP, addressees to offer its customers the option to use VoIP within its mobile network in Germany. However, the spokesman declined to elaborate further on the details of this necessary investment.'

Ironically, it would seem, one of the reasons that operators are moving towards all-IP networks and new generations of technology such as LTE is that this will reduce the costs of carrying voice calls. In this instance it appears that either the costs of carrying VoIP are higher, or that T-mo is looking to recoup revenues it might have received had the calls been made over its GSM network.

NGA projects still looking for the money

2009-05-15T12:09:00.003+01:00

The Next Gen Roadshow at Basingstoke this week, organised by the Community Broadband Network, was another excellent set of presentations about the exciting NGA developments around the country, featuring the Gateshead, Fibrespeed Wales, Bradley and eHampshire projects.

But even amongst the audience of committed enthusiasts for NGA, for whom it can sometimes seem more like a religious quest than a commercial activity, some notes of caution were being sounded by those whose role it would be to convince investors to loosen their purse-strings. It seemed to be fairly generally accepted that standard commercial business cases would not fly without some other funding, so looking for justifications has become the name of the game.

Ed Vaizey, the Shadow Minister for Culture, wanted to “encourage” local community initiatives, and was not happy with the Digital Britain proposal of only a 2Mb/s USO, but he was far less keen on any central government involvement. It appears that an incoming Tory government would be even less likely to fund NGA development than the current one in these straitened times.

There are still some “build it and they will come” technology enthusiasts around, but there were also some very much more practical suggestions as to how to fund the investment:

Local authority-led projects could use the “externalities” of savings elsewhere – eg on transport, in the NHS etc – to add extra benefits into the case; avoiding the problem of budget silos is the main challenge here
Looking to the examples of the US and Australia where even in these free-market conditions, state funding looks to be favoured
“MUSCOs” (multi-utility service companies) could be a way of reducing the highest cost element, the civil engineering, by sharing it across several services
new business models which change the relationship between end user and content provider (the so-called JON model, which aggregates patchwork developments)
integrating NGA into wider local planning decisions on infrastructure
requiring property developers to install NGA on all new build plans, or at least to install open access ducts
bringing communities together to have an ownership and interest in the local services (ie increasing take-up and penetration)
or even, as in Bradley, use local farmers to dig up the roads more cheaply (the “Bradnet” speaker seemed to be suggesting a protection racket with the electricity company – “our tractors do seem to be damaging your overhead lines a lot, so why not build a new underground duct” !!).

Adroit Economics shared their views on developing the business case in a way that gets through the bureaucratic process. But each case will still be a challenge, and will need some fairly fancy footwork to show a positive result.

Mobile Skype Update

2009-04-27T18:30:00.004+01:00

The antipathy of some mobile operators to their customers using VoIP services like Skype over their networks (see our earlier post) looks set to heat up further. UK operator 3 has announced that from May 1st 2009 it will offer Skype-to-Skype calls and instant messages for free over its data network. It is not clear from the announcement whether users will be able to make calls to and from the public telephone network (i.e. involving normal telephone numbers), for which they would presumably pay Skype, rather than 3, though other commentators have suggested that this will not be possible.

Perhaps more importantly, 3 plan to make the service available over the summer to anyone with a compatible and unlocked 3G phone - in other words to users of competing networks. Presumably the thinking is that once a user has a 3 SIM card in their phone, it will be easy to persuade them to take additional paid-for services. Despite 3's claim that "Skype is only available for free with 3 because we don’t think you should have to pay for mobile phone calls anymore." - an unusual sentiment for a mobile phone company - this would probably include paid-for calls, since this is likely to be the only way to reach people who don't have a Skype account, or are not online.

It will be interesting to see how people use this new service. One option would be to put the £1.99 SIM from 3 into a spare, or second-hand, phone for separate Skype use, to avoid having to swap SIM cards. This would be less promising as a basis for enticing Skype-only customers into taking other services. Of course another option for someone with a reasonably high-spec phone is to use a service like Fring, that runs as an application on the phone and enables Skype or other VoIP calls to be made over mobile or WiFi networks without changing the SIM card.

CARTER HAS A CHALLENGE ON HIS HANDS AS GLOVES COME OFF IN DIGITAL BRITAIN DEBATE

2009-04-06T14:32:00.003+01:00

Lord Carter has received over 200 responses to his interim report on Digital Britain, and now faces the challenge of reconciling many different views and standpoints without recourse to primary legislation and without legal challenge. Responses come from across the spectrum (apologies !) of the business, with the creative industries (“poets”) outscoring the telecommunications industry (“plumbers”) on the list of respondents published on the DCMS site.

I reckon these responses break down as:

Commercial telcos/ suppliers
12 responses; BT, O2, Vodafone not listed, presumably confidential responses

Creative industries – commercial
13 responses; similarly the main broadcasters (BBC, ITV, 4) not listed

Communications Industry groups
18 responses, including engineering groups

Councils/RDA/Community groups
14 responses; surprisingly several Community Broadband Network groups are not listed; includes Upper Deverills Parish Council !

Creative industries - industry groups
34 responses - the most active group; wide range of organisations covering film, TV, print, radio, libraries

Public interest organizations
3 concerned about rights, 1 about security and 1 child protection

Unions/political parties
5 unions and the Green Party

College/research groups
3 responses

Individuals
14 including two responses from academics and two from MPs

Others
7 responses; eg British Space Centre

At a macro level this represents a lot of different standpoints at different places in the value chain – a nightmare to resolve. But even within distinct parts of the market there are deeply entrenched views. Here are a few comments on those responses I’ve managed to get through so far – contact me if you want more.

“PLUMBERS”
No way are Vodafone and O2 going to give up spectrum without a fight. Despite the best endeavours of the ever-charming Kip Meek from BSG, this one looks like going to the wire. In its tussles with the regulator and Government, BT eventually learned that short-term wins often translated into longer-term problems – this penny has not dropped for these guys yet.

BSkyB wants Virgin Media to open up its network by offering wholesale products, are against public subsidies for USO and want duct sharing. BT will have pointed out the practical difficulties of duct sharing and will be wary of a USO fund (they’ve played that sort of game before). Virgin also favour a market-led approach, but “keep your hands off our network”. The Number (118 118) are more concerned about service provider competition, good wholesale products and Voice over Broadband.

“POETS”
Here the Channel 4/PSB issue is a key focus of debate. Sky and Guardian Media Group (GMG) want controls on the BBC and a market-led approach to PSB. Five is trying to hang on in there with the idea of linear TV and its PSB role (keeping its C4 arguments behind the scenes). The NUJ wants the spectrum released from the Digital Dividend to be earmarked for the PSB. The Beeb’s response is not on the DCMS site, but SamKnows reports that they are keen on playing a “central role” in partnership with other media players, opening up iPlayer for other broadcasters.

Carter’s proposal for a Rights Agency gets a lot of attention. There is almost uniform agreement that piracy is bad, that protecting rights is essential to ensure investment in creative industries. The Design and Artists Copyright Society is concerned that small players will lose out. The “Alliance against IP Theft” ( a collection of 21 organisations mainly focused on the film industry and video games) want a clear role for the Agency (focused on illegal downloading), but for commercial issues to remain managed by the private sector. Even the Premier League get in on the act, demanding protection for their IPR and looking for the Rights Agency to be given clear direction.

GMG also raise the issue of value disappearing to search engines and other aggregators and want Carter to help them keep control of some of this.

COMMUNITY GROUPS
The views of community groups on network issues are more consistent: “we must have superfast broadband”; a “digital divide” or “two-speed Britain” is a bad thing; “the broadband USO does not go far/fast enough”; and “BT won’t do it, so Government should fund it as a means of economic recovery”. Digital Birmingham argue for public investment in duct; eHampshire want support for local community networks and for Building Regulations to insist on fibre installation in new homes; the RDAs suggest public sector procurement as a way forward; and Upper Deverills Parish Council are using all their influence to press for a faster USO.

THE FREE-THINKERS
There are enthusiasts for 4G and internet radio, concern over the problems of migrating to DAB, and demands for better funding of talent development. The Green Party want mobile base station sharing to reduce energy use and spectrum allocation which allows energy-efficient solutions.

So best of luck Lord Carter – there’s no way to please everyone. Personally, as a “plumber”, I find the “poets” arguments generally self-serving, idealistic and uncommercial, when sharing value with those building the networks has to be the only way forward. However, as the media likes nothing more than talking about itself, I’m sure that’s what we’ll be hearing most about in the coming months.

Banning Mobile Skype

2009-04-03T17:06:00.015+01:00

T-Mobile has reportedly threatened to disconnect users of the iPhone in Germany and four other European countries where it has a distribution deal with Apple for the “Jesus phone” if they download and use the Skype application. This is not the first time that T-Mobile have encountered adverse publicity for blocking, or attempting to block, the use of VoIP by users of their service. However, in this case the application only works over the iPhone's connection to local WiFi networks and not via T-Mobile's data service. The operator's suggestion that there may be issues of technical compatibility seems rather unconvincing and is denied by Skype, making the bad publicity worse still.

It is entirely understandable that mobile operators should be concerned about customers whose expensive handsets they have subsidised rendering that investment worthless by avoiding paying for calls. A top-of-the-range iPhone sells on eBay (Skype's parent company) for around $630, though presumably an operator would pay somewhat less and European mobile operators such as O2 in the UK are prepared to give their subscribers one of these for free, in exchange for a hefty £44+ per month subscription. Apple's deal with their franchised network operators unusually involves them getting a share of network revenues and perhaps it is for this reason that they have ensured that the Skype application is limited to calling over WiFi, rather than over 3G or other mobile data networks.

Thankfully for the mobile operators, their immediate predicament is scarcely dire. For one thing, the customers with whom the risk is greatest, those whose handset is heavily subsidised, have (like O2's well-heeled, or gadget-crazy, £44+ per month set) already committed to pay for their minutes whether they use them or not. Even pre-pay customers, who will have paid nearly £400 for a 16Mb 3G iPhone, are likely to find it more convenient to make their calls in the normal way over the GSM network. Perhaps it is for this reason that some mobile operators, such as Vodafone in the UK, have apparently so far refrained from blocking or forbidding the use of VoIP over their networks. Others, such as Huchison's 3 UK have come to commercial terms with Skype and made a virtue of it. Even those who use a VoIP application that has not been blessed and taxed by the operator, such as Fring or Gizmo, may find themselves paying a not-insignificant amount to their operator for the data connection.

Nevertheless, as mobile data becomes cheaper and faster and as the VoIP applications become slicker and better-integrated with the phone's basic functions such as call buttons and directories, very large amounts of currently profitable revenue from both voice calls and text messages are at stake for the mobile operators. This is underlined by over a million downloads of the iPhone Skype application in its first two days - making it the number one download from the App Store in 40 or so countries around the world, including Germany, according to Skype.

T-Mo is not alone in blocking the use of Skype and other VoIp services on their networks through technological and contractual means. So do all the other mobile networks in Germany and their French counterparts do the same, as does AT&T in the US, raising calls for regulatory intervention and not just from the likes of Skype. The VON Coalition, for example, a pressure group which includes, amongst others, BT, Microsoft, Intel, Cisco and Google (and, at least as recently as last year, T-Mobile USA), reportedly argues that

"Blocking of voice applications on mobile devices, such as the announcement of T-Mobile to block Skype on iPhones in Germany, is highly detrimental for consumer welfare in Europe".

The VON Coalition describes itself as:

"Member supported coalition of service and software providers and equipment manufacturers organized to advocate and educate policy makers and regulators the viewpoint that the IP Telephony industry should remain as free of governmental regulation as possible."

Never mind the potential irony of such a body calling for regulatory assistance, the tenor of arguments so far advanced is that of net neutrality, or as Robert Miller (Skype's General Counsel) puts it:

"Skype passionately believes that consumers should be entitled to access an open Internet on a variety of devices and on fixed and mobile connections to the Internet."

Unfortunately for them, network neutrality seems to have failed to ignite the same degree of emotional intensity in Europe as it has in the US - perhaps because Europeans believe that if their ISP restricts their access to information or applications unreasonably they can always switch to another one. And, as Miller wistfully points out, current EU legislation in front of the national Parliaments would not help much, requiring no more than that service providers inform their customers first if they are going to restrict traffic in this kind of way.

Whilst the network neutrality debate is probably not yet over in Europe, it might be worth considering whether there are other red rags to the regulatory bull here. This would very probably turn on whether each national regulator deemed that the network operators had Significant Market Power (SMP) in the relevant market (and there might be some debate about which market that would be) and, if so, whether blocking or forbidding access to VoIP services is an abuse of that power.

One problem is that the most likely Market, as defined within the Framework, is Access and Call Origination on Mobile Networks, which was deleted from the list as part of the 2007 reforms, meaning that it is not a requirement for national regulators to carry out regular reviews of the extent of SMP and of the remedies they should apply. It does not mean that EU and national regulators will not take action, though, as has recently happened with the prices charged for calls when one is outside the country in which one's phone service is registered. But action would most likely only happen if regulators are spurred on by public concern and lobbying.

Network operators, for their part, are likely to argue (again) that the loss of profits they make from calls and texts would lead to them cutting back on investment and force them to raise prices, forcing vulnerable consumers off the network.

The glass-half-full view would be that the regulators are (implicitly) right and market forces will not allow what consumers want and technology allows to be blocked by suppliers for very long. After all, T-Mobile's earlier apparent démarche in the UK and the indignation surrounding this latest incident suggest that using restrictive contract clauses and network blocking to strong-arm customers away from using VoIP has about as much chance of longer-term success as the record companies have of stopping illegal copying and downloads of music tracks by brandishing copyright laws.

Pay-back for Functional Separation?

2009-03-23T13:21:00.012Z

The end of last week saw the publication of three long-awaited and weighty consultations on the future regulation of voice telephone services over fixed networks. The headline summaries where this seismic event was reported in the press centre around BT becoming free to bundle telephone services with broadband and TV. But we see plenty more issues lurking below the surface.

In essence, following the 2005 Telecoms Strategic Review (TSR) the deal struck by BT with its regulator, Ofcom, was that in exchange for BT undertaking to semi-detach its copper local access network (now Openreach), Ofcom would not force BT to separate this activity completely and would allow BT some unspecified degree of extra freedom in the retail (direct to consumers and businesses) market.

Well, so far Openreach is up and running and has been steadily moving towards providing fully equivalent treatment to other communications providers (CPs) and to the rest of BT in relation to local loop services, including taking responsibility for Local Loop Unbundling (LLU), which enables CPs to rent BT's access lines and to connect them directly to their own networks instead of to BT's.

But there has been little in the way of relaxation of the rules. The main reason for this is that Ofcom can, under EU Law, only make changes of that kind following a thorough and objective review process. In principle, of course, this makes it pretty meaningless to include it in a deal. So either the review process is not as thorough and objective as it might be, or the market has changed anyway (the previous review was done in 2003), or (Ofcom's preferred explanation) functional separation has been a rip-roaring success in promoting competition.

So what about the other two consultations? Well, a handy safeguard for a regulator withdrawing regulation from a retail market is to keep a steady eye on the upstream market. In other words, a vertically-integrated firm like BT that sells both to end customers and to its competitors for those customers must not be allowed to hamstring those competitors with unfair practices when it sells to them. Hence the reviews of wholesale narrowband markets and of the charges that BT makes for those wholesale network services. In general, Ofcom sees increasing competition there also and proposes significant relaxation of the controls.

Brief summaries of what is proposed in the consultations below (usual devil-in-the-detail caveats apply):

Retail market review:

BT no longer has Significant Market Power (SMP) in retail calls or lines
Except ISDN, but who cares about that?
So no more retail price caps
And BT is free to bundle telephony with broadband, IPTV, or whatever.

Comment: This looks on the face of it like Ofcom straightforwardly delivering its side of the bargain. But Ofcom is a regulator, remember, so it's not quite that simple. In particular, Ofcom reminds us that the question of universal service remains separate from that of remedying the effects of market power. Which it is in principle, but in practice the existing retail controls were concentrated on the bottom 80% of the market and anyway the justification for universal service obligations is that the market (i.e. competition) is failing to deliver what the regulator wishes it would do for some portion of the population.

Wholesale market review:

BT no longer has SMP in the transit and local-transit markets (which are now to be considered all one thing)
But it does have SMP in call origination and termination and all CPs with access networks have bottleneck SMP in termination
BT will no longer be required to offer Carrier Pre-Selection (CPS) or Wholesale Line Rental (WLR) in line with detailed and prescribed Functional Specifications. We think this could come as a bit of shock to some customers of those services!

Comment: The transit market is about carrying calls from one network to another. Local transit is where this involves a local exchange - one to which local lines are connected. This is the telephone network equivalent of motorways and major roads, where competition can most easily take root, because the traffic is already bulked up.

By contrast, collecting calls from and distributing them to local lines (call origination and termination) is less amenable to competition and, in practical terms, if you call me, your phone company will ultimately have no option but to pay my phone company to connect the call to me - a bottleneck, whether my phone company is large or small.

Of the various ways that have been devised for getting around the problem of getting competition into local networks, CPS and WLR are relatively cheap and easy for anyone wishing to offer a competing service to adopt. They involve using the incumbent operator's, in this case BT's, network to originate calls and provide line rental, respectively. CPS was only introduced in the UK in 2000 and did not really start to be a usable proposition for two or three years after that and WLR got going even more recently. However, Ofcom prefers LLU, because it drives competition deeper into the network, to borrow one of their favourite phrases. CPs have to invest more money and expertise to get it to work and they have more scope to make their service different and perhaps margin to compete on price. Since Ofcom find that CPS and WLR are mature services, they propose that detailed prescription is no longer warranted at the wholesale level.

Does this mean that the significant numbers of CPs still relying on CPS and WLR will find their business models obsolete overnight? We doubt it. For one thing BT has undertaken to provide equivalent products using its 21CN next generation network and Ofcom regards these new services (including Wholesale Voice Connect - WVC - which provides the equivalent of CPS and WLR, together with call termination) as being adequate replacements. It is also probably preferable for BT to keep its networks gainfully loaded with traffic, as CPS and WLR will tend to do and LLU will not. Perhaps most importantly, it might be regarded as a Litmus test of Openreach's independence that it should continue to meet demand from its customers without being obliged by the regulator to do so.

Network charge control (NCC) review:

Price caps retained for call origination and termination, interconnect services (links, tie cables, work done and all that) and PPP (product management and planning), though the latter is RPI+0 to RPI+6.5, which is both pretty wide and a bit of victory for BT, on the face of it, since Ofcom and the OLOs have had a bit of a thing about this rather nebulous and overhead-ish category since whenever and Ofcom have had a new prod at it.
No price caps on local-tandem and single transit (ST) - double + transit, involving several network hops, was already uncapped from last time around. So ST has gone from RPI-11.5 to nothing in one go, it seems - not exactly steady-hand-on-the-tiller stuff, some might argue.

Comment: This pretty much follows from the findings of the wholesale market review. However, a key linkage that remains to be made is with Ofcom's Mobile Sector Assessment (MSA), which will encompass potential changes to the charges made for terminating calls on mobile networks.

Mobile World Congress 2009

2009-02-27T12:06:00.002Z

A few observations from meetings, exhibition and atmosphere at the 2009 Mobile World Congress in Barcelona.

Main themes

Less hype, fewer people, less money, less WiMax, more of the same.

Networks

- Network spending in slowdown; mobile operators looking to get more from existing assets and less capex.

- More agreement on that the roadmap from 3G through HSPA and its Revisions, then on to LTE (maybe initiall for hotspots, rather like initial 3G). Much less talk of WiMax as an alternative to LTE in mature mobile markets.

- Although the direction towards LTE has larger consensus, there is also agreement that capex limitations will push its implementation out further

- Telstra in Australia making a big play of running 3G over 850MHz, so giving greater coverage, and upgrading rapidly through the gears of HSPA

- Good explanation by Telstra of cost comparison between LTE and GPRS (LTE is approx 2% cost/bit of GPRS). Also a possible new measure of base station efficiency: kilograms per square metre per bit per second!

- Telstra now claims SMS as less than 50% of data traffic

- China Mobile pushing their TD-SCMA by trying to stress the importance of a roadmap of unpaired spectrum (on towards TD-LT(E))

- Femtocells still something of a religion, led by faith rather than (yet by) reason

Vendors

- Blood on the carpet – a real sense of space and fewer people in the main exhibition hall for vendors

- Chinese (Huawei, ZTE) even more of a presence than ever before. This makes life awfully difficult for western-based vendors. A quick Porter five-field analysis shows that the combination of intense industry (vendor) competition and strong customer (mobile operator) power puts great pressure on vendors’ volumes and commercial terms

- Some vendors deciding to save cost and focus their activities via their pavilions, without taking up stand space in the halls (eg Cisco, HP)

Devices and Operating Systems

- All the consumer devices still in the shadow of the iPhone – which wasn’t even there. Samsung (again) had a well set-out exhibition stand by theme (highdef multimedia, camera, music, comms)

- Nokia starting to take a pop at BlackBerry (eg “BlackBerry tax” [the RIM relay]) to mask its own lagging in push email

- Microsoft saying (again) it’s about to come good in mobile. A slight irony that it is promoting itself as the platform of choice (slightly less ironic that a lot of appdev stands said “we’ve got our app working first on Windows Mobile, because that is easiest)

- MS promoting Windows Mobile 6.5, partly in holding pattern till WM7

- MS said that RIM’s and Apple’s vulnerability was the integrated nature of their hardware and software, and that the “open” Microsoft approach allowed more and more rapid innovation of device formfactor, price and features

- MS claiming that Linux Mobile isn’t really “free”: you incur costs for extra elements of the OS stack, eg photography, instant messaging. These make it more expensive than paying the WM royalty (“which is less than the cost of the glass on the device”)

- Market for devices is more sustainable at the moment at>$200 ex-factory cost. This is growing a lot faster than cheaper featurephones

- Qualcomm and Nokia have buried the hatchet on patent suits.

- Hyundai entering the featurephone market?? They had a stand. Maybe their satnav had broken down on the way to the Frankfurt Motor Show?

Applications

- Lots more booths with map-based applications (mainly GPS, rather than network-based)

- More space (or maybe it seemed like that) with developers and providers of network optimising solutions and products, eg radioplanning, network management, sitebuild – ie reducing networks’ capex and opex

- A sense that a lot of developers are at the same financial stage as last year

- The nearest thing to hype at this year’s event was: if you haven’t got an AppStore of your own, you’re in the wrong gang (at least for this year).

Overall mood

- Very quiet on the Monday. More energy on the Tuesday, mainly in the developers’ halls

- No sense of any major meaningful announcements

- Could be some challenges next year for GSMA to persuade sponsors and booth-holders to stump up as much money

- Very pleasant weather, so a relaxed atmosphere on the main outside areas

Broadband Speed - Disappointment Guaranteed?

2009-02-24T16:48:00.001Z

An interesting post by Darren Waters, editor of the BBC News website's technology index. He has been monitoring his experience of broadband speeds on his Virgin Media "super highspeed" broadband service. For most applications the actual speed (ie how big the file is divided by how long it takes to arrive) is a lot lower than the headline speed of 50Mb/sec.

http://www.bbc.co.uk/blogs/technology/2009/02/speed_diary_day_five.html

The blog shows that the advertised headline speed is fairly irrelevant to the actual experience of an average customer, even when the provider can actually deliver such speeds reliably within the confines of their own network.

The limitations, especially in the newly designed cable broadband networks, are not at the access layer of the network (the wire from the local network node to the home). They are out in the internet world beyond.

It just goes to show that messages about headline speeds can only disappoint. Maybe it's time for Virgin Media to change their marketing, rather than fiddling further with their technology.

Digital Britain - interim report

2009-02-23T14:32:00.002Z

Putting the Carter before the horse ?

Lord Carter’s interim report makes a good start at identifying action areas and key issues across the huge and varied arena of communications and broadcasting markets in the UK. But NetStrategics believes he has a long way to go before he can substantiate any real ways forward which will win general support – not to mention suitable funding ! There is more than a whiff of sanctimonious attitudes to digital inclusion and the UK content industry – the market should be encouraged to tackle these issues itself, and overall the report puts the cart of intellectual neatness before the horse of market complexity.

For a detailed critique of Carter's proposed 23 actions, please email me at huw.williams@netstrategics.co.uk

The Future of Communications

2009-01-23T10:19:00.012Z

Telecommunications are traditionally a good lead indicator for the economy, and yet a recent poll published by BT suggests that broadband, mobile and home phones make up three of the top four things people would hang onto in a downturn.Whether or not this reflects a fundamental shift in cultural attitudes in a 24/7 connected society, the communications industry is faced with some seismic changes in technology, regulation and markets. It is far from clear how it will emerge beyond the current business cycle, but investment payback cycles in this industry can be measured in decades and some big bets are being placed by operators and their suppliers now.

So we recently got together with SAMI Consulting (St Andrews Management Institute), specialists in scenario planning, or “future-proofing”, as they would say. Together we mapped out some scenarios based on the world in 2015, which we summarise below.

The many interlocking trends and developments boiled down to two main dimensions of uncertainty: investment intensity (the amount of investment, or financial incentive to invest) and network fragmentation (how far networks and the industry nationally and globally continue to consolidate and work together).

Some trends seemed to us to be pretty inescapable, for example the move towards higher speeds of mobile and fixed broadband – we felt that 24Mbps+ would be pretty universal in the richer countries and many of the poorer ones too, whether the business case stacks up right now or no, just because there seems to be such a head of steam behind it. We couldn’t see a halt to the spread of pro-competitive regulation, with the European model and variants of it the dominant pattern. We also felt that the big infrastructure investments (particularly access networks) would gravitate towards the utility model, with regulation ensuring steady, if unspectacular, returns, though who would making the investments and reaping the rewards was less clear.

That still left many factors that seemed to us to be important, but uncertain. For example, will the arms race with the spammers, spitters, phishers, fraudsters, terrorists and other malware merchants escalate costs and disaffect people with the networked world? Would privacy issues lead to all kinds of fire breaks and fire walls, or even to activities moving off net? Would the content industries (music, film, sport, TV) get their acts together and evolve business models that enable them to be profitable and to drive consumer network use? What are the limits of advertising as a money source?

All this coalesced, with a bit of expert technical help, into four distinct stories for how the industry moves through and beyond the current recession and into the next business cycle around seven years from now. We’ll be picking up some of the themes in future posts, but if you would like to learn more about the scenarios, and what they mean for your business, please drop us a line .

Tiscali closes IPTV service - or services ?

2009-01-07T12:29:00.003Z

Slow take-up of its IPTV service in Italy has forced Tiscali to close it down. Its difficult financial position and failure to agree a deal with BSkyB on its UK operations will no doubt have contributed to the decision.

So what is the future for Tiscali's UK IPTV service, based on the venerable HomeChoice offering it acquired back in 2006 ? Competition from Sky, Virgin Media and even BT Vision makes its prospects look rather bleak - maybe the HomeChoice guys would fancy buying it out again.

But what everyone must also be wondering is whether the lack of enthusiasm for IPTV in Italy will be replicated here. The answer will depend on how innovative the providers can be - simply copying Sky+ services will not be enough. How about "theme nights" - a package of Rocky movies and Muhammed Ali documentaries, or a ChickLit movies?

Huw

Virgin launches 50Mb/s service – first real test of NGA demand

2008-12-19T10:31:00.001Z

Virgin Media has launched the first 50Mb broadband service in the UK, bringing the much-heralded world of Next Generation Access nearer. At around nine times the average headline broadband speed in the UK and over twice the previous highest 24Mb/s service, the launch of the 50Mb service offers the first chance to assess whether there really is demand for such ultra-high speed services. Clearly wedded to a “build it and they will come” strategy, Virgin Media are trusting that the early demand for their 10Mb/s and 20Mb/s services will translate into profitable demand for the even faster service.

But even Virgin seem to be struggling to imagine what customers will use such high speed services for. They suggest that shared accommodation of students would find it useful, that video-rich entertainment and social networking websites will require it or homes needing multiple HDTV channels. But surely that’s not enough to support such an expensive solution. And in a recession is £51/month (over £600 a year) really going to sell (when there are already early signs of people downgrading service), especially when you still have to pay for movie and sport content on top ?

The 50Mb is based on an upgraded network with current 10Mb and 20Mb users being moved onto the new "DOCSIS3" network, freeing up capacity for increased traffic on the existing DOCSIS 1.0 network. Quite what that means for the cost equation is debatable, but with luck it may be possible to regard this as an incremental spend and justify a business case on that basis.

Roll-out to the 12.6 million homes covered by Virgin Media's fibre optic network is expected to be complete during the Summer of 2009. So at the very least Virgin Media have put down a marker which may spur others to respond.

KPN moves closer towards FTTH

2008-11-24T18:28:00.006Z

Back in May, KPN announced that, subject to regulatgory approval, it would take a 41% shareholding in Reggefiber, the open-access fibre network provider in Holland. This signalled that KPN was considering a move to an FTTH strategy - an investment that it is suggested could reach €6-7 billion over 5-7 years.

That regulatory approval is now likely to be granted, according to local newspaper Trouw, paving the way for investment in an FTTH network that covers the vast majority of the Netherlands.

Reggefiber, founded in 2005, is a stakeholder in several local initiatives (such as OnsNet and AlmeerNet) and also operates its own network, Glashart, which is currently present in 15 different Dutch communities. In Q3 2008, the company claimed to have connected about 150,000 homes.

So what lessons does this give us about the UK position ?

Firstly, it is essential to recognise that the competitive dynamics in the Netherlands are very different from the UK - cable TV is a near ubiquitous player, community-based services are well advanced, and Reggefiber itself was building a position. KPN are faced with a challenge way beyond anything that BT is likely to be looking at for some time.

Also the population densities are such that the cost equation will look more promising than in the UK, apart from green field sites like Ebbsfleet.

So the main learning will be around the demand side. Will extensive deployment of FTTH actually stimulate the wide range of novel services proponents often claim, and thereby provide more confidence to the business case ? Or will we be looking at something more like the 3G debacle - lots of money spent on providing the same thing cheaper ?

Huw Williams

Next Generation Access - a perfect storm

2008-11-21T11:19:00.000Z

There are a huge number of things going on in the area of NGA currently:

- Ofcom’s consultation on “Delivering Super-fast Broadband”
- The related Ofcom statement on “Next Generation New Build”, with its extension to Ethernet Active Line Access (EALA)
- The Broadband Stakeholder study into NGA costs

- The Caio report and its recommendations on NGA, especially what government and Ofcom should (and should not) do.
- Lord Carter’s forthcoming report on Digital Britain
- EU policy consultation on regulated access to NGA

Go to NetStrategics website to see our assessment of these issues - http://www.netstrategics.co.uk/

Huw Williams