Fiberevolution

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.

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.

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.

One of the most interesting features of this week’s alternative NBN plan published by the Australian opposition (see my article Australia’s NBN becomes a political football on Telecom TV) is this notion of “on-demand FTTP”.

On paper, there’s a lot to be said for this concept. Basically, the operator (public or private) deploys Fiber to the Node, but a consumer can pay to get Fiber to the Premises if they really want it. This feature is not unique to the alternative NBN proposal, it’s also being trialled by BT in the UK as highlighted in this article. What’s interesting about the concept is that in theory it addresses the demand issue. In a nutshell, we’ll deliver “better broadband” to you for free, but if you really want “kick-ass broadband”, you can pay extra to get it.

Except it’s a technically absurd concept, for two reasons:

• firstly, because the costs of FTTP deployment that are commonly considered (say around €1000 per home in dense urban areas) are mass deployment costs. These costs can be met when you send teams on the field to connect every home. If you send teams on the field to connect one home, the costs are much much higher. Just look at how much large businesses are paying to connect their premises: it’s in the tens of thousands of euros. Presumably, there’s a comfortable margin built into that price, but it still gives a sense of what the real cost would be.

• secondly, and very ironically, both BT and the Australian NBN chose point to multipoint architectures. That means that if a customer was to ask for an FTTP connection in a given area, the whole active equipment chain from the customer’s ONT to the splitter to the OLT would have to be activated for a single customer. The costs of that are absolutely prohibitive.

And I won’t even mention the network management absurdity of maintaining two parallel infrastructures, one of which only serves a very small number of customers.

On-demand FTTP is a fallacy. It will either never materialize or be priced in such a way as to convince customers not to take it. The reason it’s being put forward is purely as a marketing argument for BT and the Australian opposition to be able to say “those that really want it will be able to get it”.

Not unless they’re filthy rich, they won’t…

Photo Credit: On Tap by Benoît Felten

During Mobile World congress, Telefonica Executive Chariman Alierta made an impassioned speech asking for the European market to be more like the US when it comes to telecoms. Here is a quoted segment of his speech:

“But we’re behind. It’s not normal that the main concern is that there should be three or four operators in Austria, for example. In the United States, there are three big operators, the same as in China. Here in Europe we have 160.“

Of course, I know exactly where it is that Mr. Alierta wants to go with this. But just for the record, this is what the situation is in the US:

Policy makers and consumers should be very, very careful what they wish for. The fact that the US market has not managed to foster competition should not be seen as an example of a healthy market, it should be seen as an example of regulatory capture. The fact that Mr Alierta takes China as an example is perhaps even more telling. We should not wish for our telecom landscape to look anything like that of the US (let alone China).

The challenge for the US now is to get out of a situation that has seen the recreation of a wireline monopoly. Only regulation can undo that situation. Susan Crawford in the above video throws her hat in the ring for FCC chair. I don’t know how likely it is that she would be nominated, I don’t know enough of US politics. If she does land the job, I certainly don’t envy her that job one bit. But if I was a US citizen, I would make it know loud and clear that I support her for the job.

The debate on net neutrality has been heated these last few months, with various initiatives both at policy levels and ISP levels highlighting the need to clarify how internet traffic is carried so that journalists and members of the public can form an opinion on these issues for themselves. A while ago, I was asked by Google to write a paper aiming to do just that. It was released yesterday under the title There’s no economic imperative to reconsider an open internet.

I’m quite proud about this. Working on this paper gave me the opportunity to really explore the net discrimination arguments and examine their worth. My conclusions are expressed in the title: there is no big issue related to the cost of traffic management, even as the traffic itself increases. I hope you find the paper interesting, and feel free to spread it around.

Not long, that’s how long.

Stefan Stanislawski writes a really interesting blog post over at Fibernomics.com entitled Typical major telco shareholders hold the stock less than a year – is this really the right type of capital to fund fibre?

Stefan details the average duration of investors holding on free float shares for major European incumbents. On average, it’s less than a year. Stefan argues that as policy makers seem convinced still that incumbents are the solution to get fiber deployed, that reality itself might make it impossible. Such short term dealings are not aligned with the requirements of infrastructure investment.

Very interesting read.

Photo Credit: Wall Street by jpellgen

During the SKL event in Brussels last week my presentation was filmed, and it’s been edited in a great way (I think). You can see it here:

Benoit Felten, Diffraction Analysis

The other presentations from the same day can be viewed here.

Excellent short summary of Ventura’s excellent report on funding.