The Disruptive Power of Wholesale Approaches

8 Dec

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Steve Kamman’s blog Strong Views Lightly Held has come back to life. This is excellent news. Steve is both a top telecom market expert and a great disruptive thinker, a winning combination if you want to look at things a little differently. His latest blog post got my mind churning, connecting (as he often does) a number of previously unconnected dots in my mind.

The post is entitled US Wireless About to Get Interesting (and Ugly). I strongly encourage you to read it, but in a nutshell, Steve argues that DISH’s massive spectrum assets will be put to use to disrupt the US market in the very near future. Most interestingly though, Steve outlines one possible use of that spectrum that resonates a lot with me: building a wholesale wireless network centered around IoT rather than human communications.

Steve isn’t arguing that it should be solely able to deal with IoT (I think) but rather that it could be designed with IoT in mind from the get go, both from a technology standpoint and from a business model standpoint. One of the issues I raised in a number of speeches I made recently is that Cities are currently paying through the nose for sensor-based smart city applications because the network layer is sub-contracted to carriers who have no genuine interest in this market and are not adapting their pricing to its needs. While that might push Cities to consider alternatives (like deploying their own backbone fiber + wireless or even their own fiber to the home as a basis for smart city applications), the alternative Steve outlines could be a really interesting way of complementing that “self-reliance” scenario.

In fact, in combination with the recently announced Veniam products, a little Sigfox for low-level continuous data and deep fiber aggregation + wifi for upstream, you could totally see how cities could, with minimal investment, completely circumvent the traditional telecom ecosystem. Not to mention that, in the case of DISH, it could open up opportunities for traditional mobile telephony/data disruptors like Ting to expand their footprint and (possibly) make higher margins than with the current MVNO deals they’re getting. And there’s probably a way that open SIMs fit into this as well. If DISH was the first to fully embrace that in the US (T-Mobile is kinda there but not quite, as I understand it) the Verizons and AT&Ts could be in for a lot of trouble.

So, Steve, how do we make that pitch to Ergen ?

 

Photo: (cc) by Camilo Rueda López

Veniam Wants to Build a Smart City One WiFi Bus at a Time

3 Dec

Startup Veniam lands $4.9 million Series A round to build its WiFi for moving vehicles network to enable municipal WiFi for smart cities

Source: www.xconomy.com

This is something I’m going to have to dig into big time. I can see the potential, I find it interesting, and yet at the same time I fear that this will be seen as "sufficient" infrastructure by short sighted city executives. "Do we need to think about network infrastructure needs?" – "Of course not, we’ve got the bus thingy…" 

See on Scoop.itConnected World

An Example of Spin-Off

2 Dec

In the last few weeks, Thomas Langer and myself have been talking about structural separation via spin-off at length, and interestingly yesterday’s news gave us an illustration of what it might look like. I’ll let Thomas describe this to you in his own words:

Yesterday, one of Europe´s largest utilities, German e.on announced its plans to split into two publicly listed companies via a spin-off. This approach nicely corroborates our views of how fixed access spin offs could add value to the incumbent sector. Admittedly, market dynamics in the energy and communications markets are not comparable. Without going into the details of the motivation for the decision (excess capacity in the power generation market, repercussions of the decision by the German government to wind down nuclear power), a number of details of the proposed transaction highlight some of the aspects we discussed in our „Structural Separation“ study:

1. Even large European companies are considering spin-offs to release value for shareholders. The presentation to analysts mentions strategic, operational as well as financial benefits. These range from the creation of „more focused companies“, less complexity of organisational structures and a „better alignment between rewards and results“. Last , but not least the transaction „provides tow different and compelling investment opportunities.“

2. Interestingly, the spin-off will lead to structural separation between traditional power generation on the one side and green power and services on the other. Clearly this suggests that a shift in technology and a focus on service orientation both played a role.

3. The initial spin-off will take place in 2016, in less than two years. This illustrates that large organisations can execute a reorg. within a short time frame. Skeptics that look at structural separation in communications markets as too complicated should analyse this deal. It´s doable.

4. One slide of the presentation deck is entitled „Safguarding emloyees interests“. This corresponds ideally to our standpoint that a spin off must not be seen as a means for job cuts and larger downsizing. This would risk losing both internal support and consent of labour unions.

Ah yes: The e.on share was up by more than 4% by midday yesterday while the German Dax was slightly down.

So, not a telecoms sector example and not perfectly mappable, but interesting to examine. And remember, the best example out there is New Zealand, and we’ve described it at length in one of our reports entitled Can the New Zealand NGA Model be Replicated?

Diffraction Analysis in Crosstalk

1 Dec

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Crosstalk is an Australian podcast on Telecom matters, and as one might expect, the Australian NBN is a frequent topic. Diffraction Analysis’ Benoît Felten is interviewed in the latest podcast, Doesn’t a 3030 Vision Need Fibre? Phil and Benoît discuss Structural Separation in the wake of the publication of our report Can Structural Separation Via Spin-Offs Help Europe Achieve its European Ambitions. Is Australia a good example of Structural Separation? (Spoiler: no) Could a classic Structural Separation model similar to that of New Zealand be implemented in Australia? And how future proof is the current “three networks” NBN plan exactly?

Photo: (CC) David Jenkins

DT didn’t shelf its variable rate plans…

28 Nov

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There was an interesting and animated discussion on twitter yesterday about the fact that journalists systematically present network congestion due to Online Service Providers as a given. The discussion led to talk about Deutsche Telekom’s pay what you eat plans announced last year, and their apparent shelving. But Pál Zarandy pointed me to this article which suggests that the plans haven’t been shelved.

Essentially, and even though the wording is all but clear, what this suggests is that consumers will either be able to buy expensive “flat rate” plans, or cheaper variable-rate plans, the ones that DT believes would help them leverage their market power to coerce Online Service Providers into paying for zero-rating their content (as shown in the video I posted yesterday).

Now as Dean Bubley repeatedly stresses, this has exactly zero chance of happening… as long as there is significant competition in the market. Now the bid for further consolidation in-market appears more clearly as a part of this mad plan. I still believe the chances of it actually being implemented are zero, unless a stupid policy maker (EU Parliament who voted a non-binding motion to structurally separate Google, I’m looking at you) actually buys the argument…

The Incumbents’ Net Discrimination Plan Exposed

27 Nov

I was just pointed to this fantastic German video that ‘unveils’ Deutsche Telekom’s plans with internet discrimination. It’s both funny (because it turns every creepy aspect of it into a ‘feature’, like “you will no longer be bothered by these thousands of services you could never figure out“) and scary, because from all I can gather in discussions with Incumbents across Europe and the US, this is exactly what they hope to achieve. Seriously worth watching.

Oh, and since I always insist on the lobbyists working for Big Telecom being exposed, the guys behind this are Internet activists, and you can find them on http://www.netzneutralitaet.cc/.

AT&T to FCC: We Aren’t Limiting FTTH to 2M Deal Pledge

27 Nov

Source: www.multichannel.com

The FCC has tried to call AT&T’s bluff on their blackmail attempt (the "we won’t deploy fiber if Net Neutrality is in place"). So far AT&T’s response has been feeble. At the end of the day, until Wall Street is informed of an FTTH investment plan, none of this is actually happening. 

See on Scoop.itConnected World

Falling in Love with Stockholm All Over Again

25 Nov

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Last week I spent two and a half days in Stockholm, doing interviews and meeting various public officials and private businesses with the aim of updating the White Paper we published in 2013 entitled Stockholm’s Stokab: A Blueprint for Ubiquitous Connectivity. When we published this back then, Smart City issues were just beginning to emerge, and while we did cover a number of broadband enabled initiatives by the City in the report, it simply wasn’t a major focus. One of my goals with these meetings was to assess how that situation had changed in the last few years.

I still need to digest a lot of the information I gathered, and I need to do some follow-up interviews as well, but one thing came across loud and clear in each and every one of these interviews: the Stockholmers get it. The City has recently rewritten its strategic vision document to include ICT in every aspect of its missions, and no matter who you meet in the City government, they understand this at the core of whatever it is they are responsable for.

Actual implementations are still limited when it comes to Smart City applications, but there are a number of pilot programs in place, some of them financed in part by the European Union to design and build (or retrofit) entire districts of the City with “smart” in mind. I was going there believing that despite its infrastructure assets, Stockholm was going to be managed just like every other city out there: with no central governance on ICT related projects.

The more I look into this stuff and the more I’m convinced that the Smart City killer is fragmentation of vision, resources and implementation. Stockholm doesn’t have everything right, they don’t even have everything in place, but they get it, and that vision is shared across the whole city administration and even amongst the population, entrepreneurs and social workers. They are paving the way to do it right. That in itself is impressive. And it’s working already: there are 150k newcomers to Stockholm every year that the city has to accomodate. You don’t get to deal with that kind of expansion without either creating a big urban mess (that’s what I see here in China) or being very very smart.

I have some work to do still to clearly articulate how they’re doing it right, and that will be published in the white paper revision in a couple of months.

But I just wanted to say that I’m falling in love with Stockholm all over again…

The false dichotomy of competition vs. investment

24 Nov

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I spent last week in Europe, in between Stockholm, Brussels and Paris and most of the topics I discussed, heard or addressed in public were in one way or another about policy. One thing that struck me is how the false dichotomy of competition vs. investment in the market is alive and well. We know where it comes from: mostly incumbent lobbying, with competitive operators sitting on the fence, not quite sure if they buy it, but not quite sure either whether they should disprove it.

What I found the most astonishing though is that every policy expert I spoke to (except ones clearly aligned with incumbents) or heard talk at the ECTA annual conference was adamantly clear that the dichotomy is false. Here are a few of the quotes I tweeted from the ECTA event :

 

 

The quote from Ofcom might be considered surprising when one looks at how the UK Regulator has worked with BT to institute an unseparated infrastructure monopoly there (and competitive operators are finally starting to get their act together in denouncing this) but it’s hard to contest that it’s true.

So here’s the conundrum: all of those who have looked into this market with even a modicum of independence know that the dichotomy is false. This includes regulators and most EU policy makers at the operational levels. Why then does it still pervade actual policy making and press coverage? How come the French government wants to reduce the number of mobile players in the market? How come the Dutch regulator refuses to open up cable networks despite evidence that it’s feasible and done elsewhere (I’ll come back to that one)? How come the first blog post of the incoming commissioner frames exactly that false dichotomy as a solution (see my response to that here) ?

The first and most likely answer is “lobbying”. Incumbent lobbying is massive, loud and targets just the right people. In particular, it targets the press, and the press is always after a “balanced view”, this false intellectual construction that dictates that no matter what the argument on one side is, the argument on the other side is at least equally valid. So it seems that in the higher echelons of regulatory and policy decision making, the ultimate decision makers listen to the press and the lobbyists, but not to their own people. That is sad, and I really feel for the people working in these organizations.

I mean, here we have virtually every independent expert in Europe saying that the single digital market will not be of any use if infrastructure investment is what we are after, and yet every sign and message of the new incoming commission, from Oettinger all the way up to Juncker himself is that we need to allow more consolidation in Europe and less players in each market.

What are we doing wrong? How can we collectively broadcast the message loud and clear that the dichotomy is false? That investment in the telecom sector will not be achieved through consolidation? Is our telecom policy destined to fatten dividends?

I don’t have the answers. At our own little level, we at Diffraction Analysis are pushing what we believe to be the right messages, backed by unbiased research. But we’re really small, and our ability to be heard is extremely limited. Someone last week commended us on our Structural Separation work, and added: “what’s the plan now? How do you put this on the agenda, and how does it play out if you manage to do it?”

The short answer is “I don’t know”. But I would clearly like to start a discussion about this, and I’d welcome any ideas and opinions from those who, like me, believe that some of our issues can be solved by policy, only a policy that is independent from the pervading incumbent’s worldview. Please let me know what you think about how things could be pushed forward in the right direction.

 

Photo: (cc) Mary Beth Griffo Rigby

Structural Separation Webinar Commentary

20 Nov

Our webinar on Nov. 18th hosted by the FTTH Council Europe was extremely successful, both in terms of attendance and in the level of engagement and quality of questions. The video has been uploaded, and is available here. The report is still available for purchase and goes in a lot more detail on these issues. It also analyses existing successes and failures in Structural Separation which was not touched upon during the webinar.

In the wake of the webinar, we have decided to offer in addition to the report the full Q&A document to anyone purchasing the report. We are also happy to throw in a one-hour person to person presentation / conversation for those who will purchase the report.

Please get in touch if the payment instructions on our webpage are not clear.