Fiberevolution

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)

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.

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.

On March 22nd, The Australian published an editorial I wrote on the French FTTH policy model. This came about because in recent weeks the Australian NBN has been under a lot of criticism and announcements on the French FTTH plans have been used in the political sparring there. Sadly, as if often the case with these things, the reports were incomplete or downright erroneous, which may be par for the course in political debate, but is very frustrating when you’re close to the action and see so much misreported.

The Op-Ed is called Competition central to French fast broadband and since it’s behind a paywall, you can find the full text on Google News here.

I thought this was worth a little commentary for my readers in Oz and those that think that publishing an Op-Ed in a conservative newspaper necessarily means I’m espousing the views of the conservatives on this issue.

I’m not. Neither am I espousing labour’s views. I find it hard enough to think in black and white about French politics, so don’t count on me to take sides on what is essentially a political view of an infrastructure project on the other side of the world from me.

That being said, I stand by every word in that Op-Ed. I aimed to describe – as dispassionately as possible – what has been decided for the French FTTH deployment and what remains to be done. This is hopefully what I did.

The fact that there are other models than the Australian model for FTTH deployment shouldn’t really come as a surprise to anyone. That does not per se invalidate the current Australian NBN approach. But just me writing that doesn’t magically make the NBN perfect and exempt from rational criticism either. I would add also that the French model I describe in this Op-Ed isn’t inherently better than any other (even if it’s clearly more aligned with the political views of the conservatives in Australia), and (as an analyst) I’m not certain it’s going to work.

Political rhetoric works in absolutes. That’s completely at odds with what I consider to be the job of an analyst, which is to weigh pros and cons, examine approaches and situations in shades of gray to extract what may work and what won’t as well as what may be replicable elsewhere. If anyone is interested in actual facts, then I’m their man, and that was the deal about this Op-Ed. I’ll leave the interpretation in an Australian context to those who understand the Australian market and politics better than I do (and enjoy fisticuffs).

Photo Credits: Sydney Opera House by Kurtis Garbutt

As some of you may know, US incumbents and cable operators have been lobbying fiercely in the last few years to forbid local governments by law of investing in broadband infrastructure. This morning, one such bill which was to be voted by the Georgia legislature was repealed. I wanted to publish the comic strip that the opponents to the bill have been circulating, because I find it marvelous and sadly closer to reality than the caricatures suggest. The even sadder thing is that while this is a victory for those who believe that the destiny of communities cannot be left in the hands of a for-profit duopoly, this is the second time this law has been put up to the vote in Georgia, and it’s likely to rear its ugly head again next year, and to rear its head in many other states as well. 18 US States (if I’m not counting wrong) already have such bans in place.

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

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

“The rich are getting gouged and poor are very often left out…”

Must see if you want to understand the reality of the US broadband market.