Netbooks will make smartphones obsolete within 5 years

When people start estimating smartphone sales for the next few years, I am tempted to throw in my own personal prediction: the smartphone will be obsolete in 5 years time and completely replaced by new netbooks that provide an infinitely better experience than smartphones.

KPN may move beyond FTTH

Last week, I spoke with a couple of Ericsson people. They had a really cool slide of how market shares have moved for all vendors (Ericsson, NSN, Alcatel-Lucent, Huawei, ZTE, NEC, Cisco, Motorola, Nortel). The X and Y axis represented mobile and fixed sales. Each company was represented by three blobs, representing sales in 2006, 2007 and 2008. By their size and direction, one could tell who is moving where. Curiously, Cisco was regarded purely fixed (not counting the Starent takeover) and in LTE, Ericsson expects to see three winners: Ericsson, Huawei and some third party (I wonder who that could be).

When it came to LTE, they were perfectly clear about what it means: it is the third pipe that we have been talking about for a long time (but not recently). In Ericsson speak, mobile broadband (MBB) is not a complement, but a fully-fledged replacement to fixed NGA networks (helped by releases such as these: 500 Mbps, even if we should not get carried away). And make no mistake: we are talking laptop (or netbook) usage, not an inferior smartphone experience. Of course, MBB requires FTTS (site).

All this may be a blissing to KPN's indecisiveness regarding FTTC and FTTH.

On the side, new service development is notoriously slow, which may contribute to KPN's undecisiveness. One reason is (semi) governmental agencies' unwillingness to move online. A reason behind this, as was stressed in my newspaper this week, is the fact that health workers are paid by the hour. They are completely disincentivised to embrace e-health, because it threatens to make their work much more efficient.

Back to KPN. They bought a 41% stake in the FTTH start-up Reggefiber, and injected their own (few) FTTH projects into it. And now they are trialling both FTTH (through Reggefiber) and FTTC. By the end of the year, they want to decide their strategy going forward, based on these trials. (The Q3 release is due October 27.)

My prediction is: they will freeze the Reggefiber expansion (blaiming it on the financial markets) and move forward with FTTC. And this may be a smart move after all. The original FTTC targets were to bring fiber to 28k street cabinets. And perhaps some of these can also house LTE gear. At the same time, KPN's mobile sites will have to be fiberised as well (it is a well guarded secret how many actually already are).

It also becomes clear why KPN bought the Reggefiber stake: for the good old business reason of taking out a competitor. Remember Nielsen Media Research, once part of VNU, following the exact same strategy by buying start-ups that threatened Nielsen's monopoly on the US TV ratings market. They were never heard of again.

As a result, KPN may be the first operator in the world to actually move beyond FTTH. (So much for those who like to term FTTH not NGA but LGA: last-generation access.)

NBN Australia: Alcatel-Lucent's YouTube video

I wonder if Alcatel-Lucent has gotten the order yet ...

Newspaper 2.0

During our FTTH NL 2009 conference, I spoke with a journalist from the NRC newspaper, a 'quality' newspaper in the Netherlands. During my own presentation I claimed that dinosaurs take a long time to die, but in the end they actually do. Think PSTN, CATV, broadcast TV, newspapers. Of course, the man smirked at me 'so my newspaper is going to die'?

Ironically, the very same NRC edition that contained a review of our conference, also carried the news of The Independent closing down. And today, a local newspaper in Leeuwarden is in desperate need of EUR 100m.

Looking a little more closely at the chances of survival for newspapers, it is useful to distinguish between form, content and other services.

Form:

• Paper: clearly on its way out, with Amazon's Kindle going worldwide. Still, nice for specific locations (public transport, restaurants, etc.). In the long run: a typical dinosaur.
• E-reader: saves newspapers a lot in terms of paper, ink and distribution costs. But who is going to pay? There is some resemblance to the femtocell conundrum. Will the end user be willing to pay for a piece of hardware that saves his provider a lot of money?
• Netbook: if newspaper companies adjust their websites to the specs of a laptop or netbook, then they won't need to venture into the risky e-reader market. Instead, they could subsidise netbooks. If they make their websites fully for-pay only, they could make an offer to their subscribers: if you give up your print edition, we will give you a netbook and you can download our newspaper every day for a reduced subscription fee. If they score an MVNO deal, they could have the download process automated and performed daily (or even several times a day) over a 2G or 3G connection (cf. Amazon).

Content:

• News: AP, AFP and Reuters aren't going away. Newspapers, relying on printing syndicated news from these sources alone, are on their way out.
• Background stories, in-depth reporting, interviews: here is where a newspaper's value is, I believe.

Other services:

• Non-content: My NRC newspaper is venturing into community services that are especially appealing to its rather well-defined demographic: trips, books, CDs. Perhaps these services reduce churn somewhat, but I doubt they add much value.
• Content: Since newspapers are in the content industry, they could become portals for customised content by adding related content from a variety of sources. They could add books, blogs etc. to their daily newspaper download to the subsidised netbooks or e-readers.
• Other: newspapers have a billing relation and a more or less well-defined reader demographic, which in theory positions them to become MVNOs or even RSPs on broadband networks.

2009 Nobel Prize in Physics celebrates fiber optics

The fiber community can be happy. From Nobel Foundation's press release, on this year's Nobel Prize in Physics:

This year's Nobel Prize in Physics is awarded for two scientific achievements that have helped to shape the foundations of today’s networked societies. They have created many practical innovations for everyday life and provided new tools for scientific exploration. In 1966, Charles K. Kao made a discovery that led to a breakthrough in fiber optics. He carefully calculated how to transmit light over long distances via optical glass fibers. With a fiber of purest glass it would be possible to transmit light signals over 100 kilometers, compared to only 20 meters for the fibers available in the 1960s. Kao's enthusiasm inspired other researchers to share his vision of the future potential of fiber optics. The first ultrapure fiber was successfully fabricated just four years later, in 1970.

Today optical fibers make up the circulatory system that nourishes our communication society. These low-loss glass fibers facilitate global broadband communication such as the Internet. Light flows in thin threads of glass, and it carries almost all of the telephony and data traffic in each and every direction. Text, music, images and video can be transferred around the globe in a split second.

If we were to unravel all of the glass fibers that wind around the globe, we would get a single thread over one billion kilometers long – which is enough to encircle the globe more than 25 000 times – and is increasing by thousands of kilometers every hour.

WBA and innovation at the center of FTTH developments

We had our first FTTH NL conference last Thursday, and I am happy to say that it was a big success. We will likely put on a second edition next September. You can still find the program here (and for those of you who attended, you can download the presentations).

There was a clear distinction between those who looked at FTTH indepth by the nature of their business (Reggefiber, Emtelle, FTTH Council), and those who followed the latest mantra (it's not about the network, it's about the services) - taken one step further by KPN who claim that it's not about services either - it's about whatever you can imagine you want to do with it.

At the same time, three out of a total of eleven speakers had to do their utmost to make a connection to FTTH. But this provided the topic with extremely valuable context and perspective.

• Tele2 NL, focusing on VDSL2 for now, but an FTTH trial wil be conducted in 2010. And: it was acknowledged that VDSL2 is an interim strategy.
• UPC, FTTH's nemesis, however had an interesting quote: "Should we need to do FTTH in 10, 20 or 30 years, we will."
• Ams-IX doesn't directly feel the effect of FTTH, because uptake is a very gradual process. Interestingly, community services (local traffic kept on-net and hence off the Internet) will grow its share of total traffic.

Our regulatory session (with Opta and a lawyer for alternative operators) focused on WBA. Opta has chosen not to regulate this service (the bitstream wholesale service that ISPs buy from operators) in order to stimulate newcomers to become an operator themselves. Opta claims that this worked well in the DSL world. I cannot quite see this - it's a stagnant market with just three unbundlers, and in an FTTH context it still isn't flying yet. Our Bird & Bird lawyer drew the obvious conclusion: we need WBA regulation in order to allow newcomers to enter the market. It is the first step on the ladder of investment. Once they have gained a market presence, they can move on and become an operator.

One thing he also pointed to was equal time-to-market, which isn't satisfactorily regulated at this point for ODF access (wholesale service bought by operators from the network owner).

On the whole however he did identify a certain 'investment run', with Reggefiber kickstarting the market, KPN buying into it and now Tele2 doing VDSL and cablecos doing Docsis 3.0.

Rabobank's Henk Doorenspleet had a very smooth and appealing presentation. He appeared to be quite worried over government funding, because he quite directly notices that this is preventing private financiers to enter the market.

Personally, I was happy to see a favorite topic of mine being taken up several times: where does innovation arise?

• At the active layer? This is the traditional ISP view, who feel they need to unbundle copper of fiber. So they need to be an operator. However, there is only limited (economic) space in each PoP to justify this model for more than 2 or 3 players.
• At the services layer, but on-net? This is the view of Genexis. It has a drawback: WBA isn't regulated. So what you see now is that KPN and cablecos are starting to make innovation happen themselves and seem to be trying to keep RSP's out of the market.
• At the services layer, but OTT? This is the Google, Skype, iTunes model. A lack of QoS and security is a drawback, that is however pushed to the background by network upgrades and the rise of CDN's.

Any suggestions, ideas, views here?

ECI Telecom trials DSM L3

Short follow-up on this post (DSM increase's xDSL's reach). DSM L3 is trialed by ECI Telecom at 3 European telcos to extend the reach and performance of VDSL. This could be a way to deploy VDSL2 from the Central Office, where existing ADSL2+ DSLAMs can simply be replaced, instead of from the cabinet. Effectively, with DSM you don't need to do FTTC to extend fiber from the CO to the cabinet.

The strategy pits Tele2 (VDSL2 from the CO) against KPN (VDSL2 from the street cabinet). Tele2 obviously has a much cheaper strategy and can truely regard it a solid interim strategy before starting to unbundle FTTH.

New milestone at Ams-IX: the 700 Gb/s barrier

Service innnovation on FTTH: institutions need help migrating online

Today I visited the Glasdag 2009 conference put together by Glasvezel.nu (the website devoted to community and other efforts towards FTTH in the Netherlands) and SBNA (the non-profit behind a number of such initiatives in the city of Amersfoort). The conference was aimed at volunteers interested in launching FTTH initiatives in their home towns. Speakers included Kees Rovers (the driving force behind the Nuenen and Eindhoven FTTH networks built by OnsNet) and Jan Griffioen (Reggefiber).

The conference was opened by an Amersfoort city council member, who hailed the social and economic benefits of these networks. He also hinted at the 'option value', quoting history: when the telephone was first invented, its main purpose was to inform people that a telegram was on its way.

Kees Rovers first gave his 7 key elements to successful network deployment:

1. Business case. Make sure you have one, including funding. A high take rate is essential. Remember that fiber is cheap; it costs only EUR 1,000, which is negligible when compared to your home's value.
2. Community sense. Everybody needs to be in.
3. Triple play. This will make the network finance itself.
4. Communication. Forget fiber speak. Keep that 75 year old granny in mind when talking about your plans. Focus on telephone and television services.
5. Local services. This is something the cableco can't replicate. Think of the local soccer club, even marriages taking place in the local church.
6. Customer service. Remember that people hate call centers.
7. Reliable network.

Jan Griffioen outlined Reggefiber's long-term strategy. Connecting every Dutch home in the next 10-15 years is core to that strategy. The consumer-facing brand is Glashart. Today, he was able to add one more network to Reggefiber current c. 35 projects: the Kattenbroek area in Amersfoort.

A few things stood out. First, if any demographic needs to converted to the Fiber Religion, it's .... women. It was practically a men-only conference.

Second, Kees Rovers conspicuously de-emphasised fiber in order to put services in the spotlight. This is all fine and dandy, but it must be kept in mind that he is now involved with KPN's 2x5 trial towns, and that half of these are around VDSL, not FTTH. But obviously, on the whole he is quite right. If the end-user is to be converted (remember: a high take-up rate is needed for the business model to work), then it must be basic and understandable services to convince them to sign up. Many city workers and departments come to mind here: doctors, soccer clubs, church, library, school, hospitals, local broadcasters, city hall, etc.

What really stood out was that all these grassroots initiatives really appear to grasp this issue. But was even more striking, was Kees Rover's observation on how to get it done. Don't count on any organisation here to take care of this issue and migrate their services online themselves. It will never happen this way. That's just not how people are. They need to be forced, one way or another.

One final word: this movement is behind taking a lot of traffic off the internet. It's all local traffic. It has been reported before that local traffic can make up as much as 50% of traffic on FTTH networks.

DSM increases xDSL's reach

In this podcast at Cnet, John 'copper' Cioffi talks a little bit about DSM (dynamic spectrum management), a software solution for noise cancellation on DSL lines, sold through Assia. It delivers a reach increase of 25-30%, enlarging customer reach by up to 50%, according to him. Apparently, he is betting the farm on copper, delivering up to 100 Mbps over a maximum of 1 km.

At around the 17th minute, he also talks about VDSL2 and ADSL2+.