Fiberevolution

As many of you savvy readers are probably aware by now, London based FTTB company Hyperoptic has secured a £50m funding from Quantum Strategic Partners, a structure owned by Soros Fund Management. The UK general and tech press are all talking about it: The Guardian, The Register, Think Broadband, etc.

This is great news for Hyperoptic. The company was initally funded solely by its founders Boris Ivanovic and Dana Tobak, but anyone with experience in FTTx payback knew that they had to find external cash sooner rather than later. This now gives them a much longer time horizon to develop on the network side and upsell on the services side.

It’s interesting to consider why they have secured the funding when other operations in Europe and even in the UK are still struggling to get funded. I suspect it’s down to three things:

• They didn’t wait for funding to get customers; by connecting buildings and customers in London, Hyperoptic demonstrated to potential funders the economics of their model, and that makes things a lot more reassuring for any funding outfit.

• From the start they targeted upmarket areas where unhappiness with BT and ability to pay combined to create a market opportunity. They also went for FTTB, which is the cheapest option to deliver speeds way faster than what FTTC or Cable can easily offer.

• They’re pragmatists. I’ve met with them only once (and spoken to a number of their people on various occasions) and these people aren’t visionaries. They’re not looking at what they do as a world changing revolution, more as catching up with what’s been done elsewhere. They’re cautious, but they know how to take decisions.

The exciting thing for those of us who have been lamenting the absence of funding for FTTx operations is that it means financiers get it, or at least some of them do. This is Soros though, and his views and choices carry significant weight. I don’t know if Quantum Strategic Partners is now looking for other similar projects to finance, but I suspect other funds will now be looking in this field with a different outlook. While Hyperoptic isn’t the first FTTx operation to be financed in this way, it is the first start-up in this field to do so as far as I’m aware, and that means a lot.

One interesting aspect of this is that Hyperoptic is purely private. It isn’t a PPP, it doesn’t rely on subsidies or public funding in any way. It might very well be that the signal this conveys doesn’t change much for municipalities and PPPs: public involvement is not always seen as a plus in the financial world (and that’s an understatement…)

Last week I had the opportunity to speak about Net Neutrality at two separate events organised for and around internet start-ups. The first was an informal gathering organised by the recently founded France Digitale, a structure devoted to carrying the voice of internet entrepreneurs to the French government (who seems to rarely understand the specifics of start-ups). The second was a broader and more formal event called Web2Day. It’s an annual gathering in Nantes, and even though I only really had half a day there, I loved every bit of it and will undoubtedly attend again.

Of particular interest to me was a panel on the collaborative economy, a euphemism for all those disruptive business models (from project financing to accomodation  booking) that circumvent the established aggregation structures like banks and hotel chains to address the end-user directly. I’m fascinated by the potential of these initiatives. On the panel in particular were Kiss Kiss Bank Bank and AirBnB, two emblematic examples of such collaborative initiatives.

The potential for disruption of these initiatives is hard to assess. Of course, they themselves think they are changing the world, and maybe they are, but at the same time they’re careful to stress that by and large they are not displacing existing business models as much as complimenting them (for example AirBnB insisted that the places where they see the most supply and demand are places where there’s very little accomodation to be found anyway because these places are saturated with demand.) At first I thought that was naïve or disingeneous, but at the same time I can’t really figure out how these currently grassroots initiatives may grow in the future.

A point about the disintermediation that I found interesting was the element of trust. Kiss Kiss Bank Bank for example insisted on the fact that very few of the projects the platform finances result in crooks taking the money and bailing, simply because most of the financing comes from people who know the entrepreneur personally. The interpersonal trust is an additional layer of stability into the system.

All this connects with the work of two of my favourite people: Robin Chase and her various carsharing endeavours, and Doc Searls and his Vendor Relationship Management approach. In fact, the latter is why The Intention Economy: When Customers Take Charge is on my to read list. I’ll tell you about it once I’ve read it.

I had a “wow!” moment this morning reviewing a presentation given by WiK’s Scott Marcus entitled State-of-the-Art Mobile Internet connectivity (thanks for Chris Marsden for pointing this out).

In particular, there’s one graph in there that blew my mind, I’m reproducing it here.

Source: Mobidia / Informa (2013)

This shows the proportion of mobile data traffic that is offloaded to private wifi networks (in blue) or public wifi networks (in light blue). Basically, only a quarter to a third of the data traffic consumed by mobile devices is actually delivered over mobile networks (except in Japan and India where it’s half).

Wow.

Take that, “we’ll only need mobile networks in the future” posse…

After the FTTH Council Europe Real-estate and FTTH webinar (the replay of which can be found here), I was sent this picture by a contact in Lebanon. It’s good to see that – especially in emerging markets – the perception of the added value of fiber for new developments exists.

I already published a humorous video on the Australian Coalition’s NBN plan last week, but this one is even better. Why don’t we get this kind of humour in France ?

The tech press has been abuzz last week when it was first leaked and later announced that Deutsche Telekom would soon apply data caps to their wireline broadband offers (see this Fierce Telecom article for details.) Unlike AT&T style caps, heavy users will not be charged overage, they will be throttled to service levels marginally higher than what we’d get in the days of dial-up.

The company, as is often the case with these stories, claims that this is to avoid the cost of bandwidth hogs spilling over to the general public’s subscriptions. It’s not.

Caps serve no purpose in managing traffic flows, as Diffraction Analysis clearly demonstrated in our study last year entitled Do Data Caps Punish the Wrong Users. In fact, that’s even been admitted semi-officially by the head of the US Cable lobbying association. Data Caps serve no purpose other than to create a very strong disincentive for customers to consume video “over the top”. The fact that DTs own video-on-demand service will not count as part of the monthly traffic allowance is to be expected, and is a clear giveaway.

DT is playing foul, but that is also to be expected: this is just a new front in the war against Net Neutrality. Since operators, incumbents in particular, can’t get a clear go-ahead on the ability to throttle online service providers to their hearts’ content or to make them pay a toll for delivering traffic to end-users who have already paid for the right to access that content, they’re creating barriers on the side of the end-users to make their own service offerings unfairly competitive.

The real question is what happens next: will DT lobby the government and regulator to apply the same caps to their wholesale bitstream offers ? I suspect they will, just as it happened in Canada. Otherwise, other operators in the market will start advertising no-capping policies, and if they’re smart they’ll even start partnering with online content providers to drive the difference (for more on that see Diffraction Analysis’ latest report Building the Optimal NGA Service Portfolio). That could mean loss of market share for DT.

Is the German market truly competitive ? Guess we’ll know soon enough.

Photo Credits: Gaffel Kolsch by Generallysceptical (CC)

The replay for the FTTH Benefits for Real-Estate Webinar is up on Vimeo. You can find it here:

Video Webinar 18 April 2013 – The Positive Effects of FTTH for Real Estate Projects from paftthcouncileu on Vimeo.

I’ve also uploaded the slides on slideshare if you’re interested, they’re here.

I have written a fair bunch recently about Net Neutrality, and I’ll be writing some more, because this is by no means an issue that’s going anywhere in the near future. Meanwhile though, I wanted to relay an example of a blatant neutrality breach that really stunned me. It was reported by Zachary Henkel on his blog last month in an article entitled ISP Advertisement Injection.

I encourage you to read it, but here’s the story in a nutshell: connecting through a wi-fi network, Henkel noticed some really intrusive advertising banners. He thought it was malware at first, but after extensive testing on multiple computers, he realised that it was the ISP superimposing advertising over his normal surfing.

In France recently we’ve seen an ISP deleting adverts, and sadly some people were in support of that, because they think they’re already subjected to too much advertising. But this is really the same thing at core: it’s the company that sells you internet access deciding what you should see or not see of the internet.

Now if that doesn’t make you scared…

Last week I was interviewed by Phil Dobbie on the Australian Telecom Podcast Crosstalk about the viability of on-demand FTTP. The whole show addresses issues of copper pull-through with an AAAC representative and on-demand FTTP as seen from the UK perspective as well as my own comments on the issue.

It’s not every day I see comedy that not only mentions but actually addresses fiber related topics, so I’m not going to let this one pass!

This is the fabled Australian comic duo Clarke and Dawe on the Opposition’s NBN plan.