Thursday, December 21, 2006
REGULATION://IP networks in the Netherlands and Germany
- Conversations with all market participants: January 2007, follow-ups in February/March 2007.
- Market research from Analysys et al: still on-going.
- Decision-making (or drafts): 07Q2.
Uncertainty persists. While KPN keeps working on its All-IP network, altnets are on the sidelines. KPN plans to launch VDSL service May 1.
Related news: in Germany the regulator just opened a consultation on IP-interconnection. It closes February 26, 2007.
Wednesday, December 20, 2006
REGULATION://France Telecom and the art of politics
Didier Lombard, CEO, threatens to divert investments to Asian manufacturers, should the EC finalize international roaming rate cuts.
Furthermore, if Asian companies are cheaper too, why not buy from them anyway?
BROADBAND://The truth about the Dutch lead
I'm afraid the Dutch are notorious for this characteristic. It's not just college kids addicted to free downloads.
Happy Holidays, Scrooge!
REGULATION://OPTA states VoIP is a telephony service
The Radar TV show exposed how KPN milks the call center cow, when it comes to dealing with complaints over this VoIP/BB product. Of course, KPN blamed its own success of having to add 20k subs a week, when technical glitches are unavoidable. KPN at first was reluctant to lower the 45 c/min rate for the call center, but has now (temporarily) lowered it to 1 c/min.
OPTA claims the service is a telephony product, and therefore should be subject to telco law, demanding that any conflicts should be submitted to the Arbitration Board ('Geschillencommissie') for Telecommunication. KPN has explicitly locked out this option in the InternetPlusBellen terms. OPTA requires KPN to alter these terms by January 5.
I am not sure why KPN has declined to be subject to the Arbitration Board for this product, but it seems to mirror US regulations, where 'telecommunications services' are treated differently from 'information services'.
KPN claims it is working with ISPs to set up a new Arbitration Board for 'internet services'.
WEB 2.0://Google moves Blogger out of beta
Google acquired Pyra Labs in February 2003 (no link on the Google site, but here), when it had 1m registered users for its Blogger service. In fact, I started this blog using Pyra's/Google's service in April 2003.
Monday, December 18, 2006
REGULATION://Fully-fledged Alternative for LLU v. Structural Separation
The important thing about this is that it is OPTA who will decide, not KPN. I believe KPN is trying to convince everyone of its reseller potential. I’m sure they have it, but I’m equally sure that KPN in reality isn’t serious about those efforts. I do not believe KPN would limit itself to service-based competition, i.e. competing on price alone. Also, KPN is trying to convey the message that there is nothing wrong with service-based competition.
It’s all about politics and creating some negotiating space. The same goes for those juicy statements of altnets, which unfortunately didn’t get any media exposure.
To name a few (not literal):
- Regulation should be abolished altogether (T-Mobile). Sound familiar? (hint: Deutsche Telekom).
- Selling MDF locations is not necessary for KPN’s All-IP network and it probably is illegal (ACT).
- KPN isn’t investing at all, they are not contributing to the general economy; all they do is relocate assets by selling certain ones (MDF locations) and buying back others (All-IP) (bbned).
- Should KPN be allowed to sell MDF locations, then we want to share in the proceeds (bbned).
By the way, I outlined here where we are right now. OPTA is due to publish the timing (sometime early 2007) of its findings this week: 1. Policy rules (‘Beleidsregels’) related to the closure of MDF locations. 2. A memorandum of findings (‘Nota van bevindingen’) related to a host of other matters, still to be resolved
What it comes down to, I believe is this.
- The All-IP network effectively means that LLU as we know it is coming to an end. This will happen in all markets, eventually, because fiber will be pushed deeper into networks and because everybody will switch over to IP.
- OPTA (or any other regulator) has to decide on a Fully-fledged Alternative (‘Volwaardig Alternatief’). If none is found, structural separation (to some degree) will be considered.
- The outcome will be the result of (1) creativity on the part of OPTA and politics (see above), (2) market conditions. The latter are comprised of several items: cable reach; FTTH reach; scale economies on the side of altnets, necessary for replicating SDF backhaul; KPN’s lead over altnets, since KPN started building the All-IP network in 2004. Of course, at some point regulators could say (as they did in the US): it is time to end regulation; altnets have had their chance; now if they want to compete, they have to build their own networks, or negotiate a reseller deals with network operators.
- In markets such as the Netherlands full separation will probably not happen, for the simple reason that cable networks have very high reach (as is the case in Belgium, Switzerland, Portugal, etc.).
- Partial separation (Openreach is still part of BT, but at an arm’s length) is a possibility.
It remains to be seen if all market participants can work out a Fully-fledged Alternative; if not, splitting up KPN is unavoidable.
Thursday, December 14, 2006
REGULATION://OPTA announcement to be announced
- Next week: an announcement regarding the procedure.
- Early 2007: OPTA's follow-up to its Position Paper, consisting of two parts. 1. Policy rules regarding phasing out of MDF locations (Chapter 5). 2. Memorandum of findings regarding other matters.
Altnets better prepare for the closure of those MDF sites. The timing could vary, but fundamentally it looks like a big win for KPN.
Wednesday, December 13, 2006
INNOVATION://Mash-ups Australian style
Sometimes innovation seems to go at breakneck speed, as testified by those invaluable Google Alerts I receive every day.
Just to name a few wonderful new things (or at least mash-ups of existing services or technologies) - several of which are from Down Under.
- Cohda Wireless (Australia) demos WiFi supporting handovers at 200 mph. This could enable VoIP and multimedia over WiFi. Bigger hotspots to rival WiMAX (not mention good old HSDPA).
- CSIRO (Australia) demos new technology, reaching 6 Gbps at 250 meters.
- Vodafone Australia enhances its Lara platform for voice recognition by replacing proprietary software by Holly Connects’ ‘Holly Voice Platform’, which in turn uses technology from Nuance and Audium. Another good deal for Nuance and I believe a great way of improving the cellular experience.
- Zoom Technologies launched the Model 5800 Zoom VoIP Freedom ‘Chooser’: select your VoIP provider from a list of 25 SIP-based operators. This ATA also handles calls to the PSTN and calls coming in through WiFi (for cheap international cellular calls).
- Ingenio will bring pay-per-call ads to mobile phones, working with JumpTap.
- Gotuit Media launches SceneMaker: tagging videos on YouTube and Metacafe to enable deep video search. Web 2.0 meets video search. Our attention span is getting shorter. “For example, a user who finds a great joke within a 10-minute comedy video posted to another social video site will use SceneMaker to "VideoMark" just the 40 seconds of video that contains their favorite joke.”
- Photobucket adds mobile uploading.
- Mozilla only recently put out Firefox 2.0, and now there is Firefox 3.0 (beta).
- The Venice Project launches in private beta. First reactions aren’t very good for this new P2P video distribution platform.
Tuesday, December 12, 2006
FTTN://Alternative for LLU nearing
Below is what I found most interesting from all the recent paperwork (December 4). Source material is in Dutch only.
OPTA targeted late December for a Decision Paper, but I doubt they will be able to make this deadline. This must be a tough nut to crack, as opinions diverge widely. Could it lead to a blue print for next generation regulation, post LLU?
1 Rough outline of KPN’s All-IP network
KPN plans to close c. 1100 of its MDF locations (Man Distribution Frame, ‘nummercentrales’, home of LLU) and to extend fiber to c 28k street cabinets (home of SLU, subloop unbundling).
OPTA needs to find a ‘Full Alternative’ to LLU. It will consist of SLU, SDF backhaul and WBA (wholesale broadband access).
OPTA in its Position Paper gave heavy support to KPN’s plans.
2 Main arguments from market participants
2.1 General
It seems only natural that this would put some obligation onto competitors to also invest. Whether this is the case or not, LLU is coming to an end.
In general, altnets have large issues with OPTA’s position paper. Finding a Full Alternative to LLU is a complicated matter.
Should SLU be unfeasible, then WBA is the only viable offering. This implies service-based competition and the remonopolisation of the local loop. Arguably, it also implies mere price-competition. This would sort of copy the US model, where open access to broadband networks and new build-outs was abolished – altnets had had their chance, after 8 years or so of regulation. This seems to be T-Mobile NL’s point of view – no wonder, since its parent company is aiming for just this type of market structure (a duopoly).
Analysys currently looks into the options for replicating KPN’s fiber network to SLU locations. It comes as no surprise then that altnets cry foul. They want this market analyses to be finished first, before KPN would be allowed to continue the roll-out for its All-IP network which has already started. Also, legal support for closing of MDF locations in the first place is questioned.
In the meantime, KPN is extending its lead, heaving started work on the new network in 2004. It has fiber to many street cabinets in place, or at least empty ducts. It has VDSL trials going on and intends to launch VDSL service may 1, 2007.
2.2 Specific
The most striking elements:
KPN: different take on FTTH, compared to statements made to investors. They seem to take it seriously, all of a sudden.
ACT: conservative approach to MDF accesses. Personally I do support progress – i.e. allowing KPN to move on and build a better and cheaper network.
Bbned: states that KPN isn’t really investing at all and claims some of the proceeds of the planned real estate sales.
T-Mobile: copying its parent’s views.
3 Details from each operator or operator group
3.1 KPN:
1. KPN stresses that it is no longer a monopolist in the local loop. There are fiber (Amsterdam, Lisse and Nuenen) and wireless (UMTS/HSDPA, WiMAX) alternatives.
2. Such alternatives should exempt KPN from providing SLU services in certain towns.
3. KPN will launch (activate) its VDSL network from May 1, 2007 and says that the date should not be dependent on OPTA’s upcoming ruling.
4. KPN disagrees with OPTA over the phasing-out period of MDF locations. OPTA is looking at a period of 5 years after, the same as the 5 year pay-back period for investments from altnets. KPN feels limited by this approach and is looking for a 2 year period between announcement of closure and closure itself.
5. KPN wants to get out of line-sharing obligations for a lack of demand. Full unbundling is much more popular.
My comments to this:
1. Obviously, KPN downplays those local loop alternatives when it communicates to investors and analysts. This way, KPN hurts its credibility.
2. Sounds fair, but misses the point. OPTA doesn’t seem to be willing to move to a US style model (duopoly).
3. I doubt whether OPTA will let KPN go ahead launching its VDSL network. I suppose OPTA will put its foot down on this one.
4. Nice try. A tough nut to crack fro OPTA. I think KPN suspects altnets may make small strategic investments at the last minute, thereby buying an extra 5 years of time before the MDF can be closed.
5. KPN seems to have a point, but if altnets desire the product, I do not see it being phased-out.
3.2 ACT (Association of Competitive Telecom Operators), i.e. bbned (Telecom Italia), BT, Colt, Orange (France Telecom), Priority (UPC/Liberty Global), Verizon and Versatel (Tele2):
1. MDF locations. ACT objects to he planned closure of MDF-locations. Keeping them open will not hinder the All-IP roll-out. In case there is a Full Alternative and KPN should want to close an MDF location and force out competitors, it must have moved out itself first at least 1 year earlier (in order to prevent that KPN changes its mind and decides to stay). Fiber to MDF locations should be depreciated over a period of 10-15 years.
2. SDF backhaul. It has not yet been proven that altnets can realistically roll-out an alternative network to street cabinets. OPTA unjustly doesn’t consider the case where SDF backhaul is found unrealistic, as ACT thinks. KPN being so far ahead in its build-out limits the chance for SDF backhaul being realistic. Even if SDF backhaul is realistic, KPN should still be forced to offer SDF backhaul as a wholesale service.
3. Subloop. Duplicasting the subloop is not realistic.
4. SLU. SDF-colocation is too expensive to be profitable because altnets have no real estate to sell, as KPN does, and because there are too few customers per location.
5. KPN should not be allowed to start offering retail services, because altnets would need 2 years after they can start offering SLU services. Time-to-market for new services should be equal for all parties. KPN is way ahead, having started work in 2004.
6. KPN should not be allowed to be be the sole wholesaler in the Netherlands.
7. Even if SLU, SDF-backhaul and WBA are realistic, they should still be regulated.
8. KPN should be more clear about the status of pilots and define an ending date in order to distinguish from a first roll-out.
3.3 Bbned:
The Telecom Italia subsidiary makes 2 general remarks: (1) It has no confidence in self-regulating markets because KPN proved an unreliable party in the past. (2) As part of ACT, bbned agrees with ACT’s position, except for one issue (virtual unbundling).
Bbned proposes a 15 year depreciation period.
KPN isn’t really investing at all; they are reallocating funds from MDF locations (which is where altnets have their operations) by selling buildings and reinvesting in the All-IP network (which is so far unregulated). Furthermore bbned argues altnets should share in the proceeds from the sale of those buildings, for at least 20% (being their collective market share).
Altnets face being behind considerably, compared to KPN’s build-out and demands a hault of at least 12 months before KPN can start offering VDSL services. Also, KPN should stop adding fiber to local loops. OPTA should have forced KPN to allow altnets to join in the digging work. KPN can put fiber through empty ducts to street cabinets, but it is not known how many street cabinte scan be connected this way without opening up the streets. KPN should not be allowed to sell any assets before the Full Alternative is finalised.
WBA should have a floor price, in order not to disincentive market participants to invest in infrastructure.
Should bbned plan to build-out a FTTC (fiber to the street cabinets), with adjacent street cabinets, it will take no less than 23 years.
3.4 Tele2-Versatel:
The company is part of ACT and only adds some remarks.
3.5 Orange:
Same.
3.6 Eurofiber (= Reggefiber):
The plans will remonopolise the DSL market into KPN’s hands. MDF access and LLU will end, whereas SDF access and SLU are unrealistic business cases (no economies of scale; SDF and SLU aren’t free KPN services, while they do not constitute wholesale services for altnets) and therefore no full alternative. WBA reduces altnets to simple resellers.
Questions include: can MDF locations be kept open? can VDSL and ADSL services be provided side by side?
3.7 Essent:
Has no real comments and agrees with OPTA’s views.
3.8 Vodafone:
Claims that the roll-out of All-IP should be haulted until there is a clear migration path. All market analyses should first be finalised. Damage has already been done.
Any LLU alternative should be cost-neutral to KPN, thereby transfering All-IP advantages to all market participants.
Those who wish to take wholesale services from KPN (thereby retreating to competition at the service level), should be given proper bitstream access and tariffs.
Vodafone agrees that the Openreach/equivalance case should be examined. As this may not be enough to create a level playing field, structural separation (of the access network) should also be looked into.
3.9 T-Mobile (Deutsche Telekom):
T-Mobile is a broadband competitor and claims that OPTA doesn’t provide a level playing field with altnets, which are protected by regulations. Therefore, OPTA should consider ending access obligations altogether.
Monday, December 11, 2006
FTTH://Munifiber still underestimated
Many references can be found floating around to the well respected expert Dr
Cioffi. He (rightly) projected a long time ago the potential of ADSL. He is now
quoted as having said that copper telephone wires have a Gbps potential. The
source is one article:
http://arstechnica.com/news.ars/post/20061010-7952.html
And specifically one headline: More bandwidth than fiber?
One of Dr.
Cioffi's presentations of DSM contains a slide that argues that copper actually
has more available bandwidth than fiber; it just needs to be better used. He
points out that a bundle of 50 Cat 3 twisted-pair wires (the kind that might be
used in the last segment of the phone network) has 10Gbps of available bandwidth
to distribute to the fifty homes at the end of those wires. By contrast, fiber
to the home has only 2.5Gbps to distribute to its homes.
But wait a minute:
what does Mr Cioffi say here? He compares a PON architecture of fiber (shared
medium for lets say 50 homes) with the aggregate potential bandwidth of 50
twisted wires point-2-point to the same homes. In the most ideal circumstances
VDSL2+ can achieve 100 Mbps up and 100 Mbps down to a home. 50 x 2 x 100 = 10 Gbps…to be compared with PON aggregated for these 50 homes. It is easy to spot what the spin has been. What is amazing how easily it has been adopted and
quoted.
On the other side are specifically Verizon (FiOS) and Iliad (Paris). The case for FTTH is defended very well in this article. It's in Dutch, but the argument is straightforward: copper and coax and their upgrades simply will not do in a few years time. Of note is a quote from Eelco Blok of KPN:
All-IP is a necessary step toward a full fiber network.
In the Netherlands Dick Wessels is a force to be reckoned with. Through his ventures (Volker Wessels, Reggeborgh and Reggefiber) he controls a large part of the (muni)fiber efforts in the country. For Dutch readers, this series of articles is worth a read.
The KPN quote above is remarkable when contrasted to KPN's ususal drone, exemplified at the latest quarterly results by referring to the 'net line loss' metric (PSTN/ISDN line loss - VoIP adds - 'ADSL only' adds; the latter not being published independently; KPN are right now trying to sort of win-back such subs by promoting ADSL to mobile-only subs). Net line loss improved to 140k (from 165k in Q2). KPN was quick to point out that line loss therefore had bottomed. However, with all the munifiber coming to market in 2007 this seems unlikely. Also, last week OPTA (regulator) published 9 responses to its Position Paper, itself a response to KPN All-IP network proposal. KPN can be quoted from their responses:
UMTS, HSDPA and WiMAX are import developments related to increasing local loop competition. Private and public initiatives around munifiber, as in Amsterdam, Lisse and Nuenen, also contribute to increasing local loop competition.
In short, when talking to investors KPN downplays the advent of FTTH (munifiber), but when talking to OPTA they are more open and do appear to fear the munifiber threat. Also, simply taking over Reggefiber at some point will be made impossible; having acquired many small ISPs, KPN's market share is simply to high.
I will try to cover the responses on the OPTA site this week, as they are in Dutch only.
Friday, December 08, 2006
PLACE SHIFTING://Orange joins Vodafone Germany and 3G UK
Hutch 3G UK got a lot of attention (justly) for its new X-series, which uses Orb Networks' technology. Vodafone Germany earlier teamed with Orb for 'Vodafone-Mein PC'.
Personally, I feel this is a pretty useful application, just like video/TV over wireless (with Sling, preferably). It seems an extension of photo/video sharing in the PC-world, but without the limitations (not just the stuff that you uploaded to Flickr or any other site - and mobile!).
Tariffing however could prove a limitation.
UPDATE: Ann Willey of Orb Networks mails me the following:
"Just wanted people to know that Orb Networks is the architect and provider of technology that makes Orange's Mon PC possible. We worked with Nokia and Orange to offer the new service."
ADVERTISING ACCOUNT://Scandal over Wal-Mart review
What happened earlier? The review ended up a big win for DraftFCB, a newly formed shop at the plagued Interpublic group. The AdAge site had two articles describing how the deal happened. (It's a paid site, but I just happened to have saved them over here.)
The hookup is sure to go down as one of the most talked-about account shifts in
ad history, up there with IBM's 1994 consolidation at Ogilvy, a move that saw
Big Blue jettison 80 other shops.
Chemistry between Wal-Mart's Julie Roehm and DraftFCB's Howard Draft was instrumental to bringing the deal to DraftFCB. (Never mind Howard's Aston Martin didn't want to cooperate in delivering a thrilling experience to Julie.) Now Ms. Roehm is fired and Wal-Mart is reopening the review. DraftFCB may not participate (other Interpublic shops are allowed, as is Carat).
I wonder what could have happened. Two quotes from the articles:
"And we spent a lot of time with Howard Draft, which is educational and
entertaining."
Ad Age: You mentioned before that Howard Draft is, among other things,
entertaining. I hear you got to take a ride in his Aston Martin. Can you tell me
about that? Ms. Roehm: He does have an Aston Martin, and I got to go down and
sit in it because I'm a car nut. We were out and he asked if I wanted to drive
it around the block. I said, "Wow, could I?" So I got in and it didn't start. He
had to have it towed. Ad Age: You obviously didn't hold the engine problem
against him. Ms. Roehm: I can assure you I had nothing to do with it.
Thursday, December 07, 2006
SPONSORED SEARCH://Google and News Corp expand ties
The deal includes search and sponsored search, video technology (for a UGC portal) and communications (a customised Gmail version, supplying @sky.com addresses). These services are available to Sky broadband subs.
My takes on this:
First, apparently there are warm relations between Google and News Corp, opening the door to further expansion.
- Google could be the preferred partner for similar deals at DirecTV, Sky Italia and others, once they start offering broadband.
- More News Corp properties could be included going forward, most notably offline properties. As Google is already testing ad serving to magazines and newspapers, the News Corp print subsidiaries could come aboard.
- Interactive TV could also be included.
- The press release even mentions mobile advertising as a possibility. Will Sky copy what NTL did, acquiring Virgin UK, or what Comcast did, partnering with Sprint? Sky recently successfully ended a mobile TV trial with Qualcomm (MediaFLO), so there is another option for a deal. Currently, Sky already supplies content (including Premier League) to Vodafone UK.
- Also, Sky is looking into broadband expansion into Ireland.
Second, it reminds me of Yahoo!'s access deals with Verizon, AT&T, Rogers and BT (except of course, Yahoo! aggregates a whole lot of content with it). Google and Yahoo! are clearly fighting to win partners. Of interest is that Vodafone UK works with both Google (sponsored search) and Yahoo! (display ads), as does eBay (Yahoo! in the US, Google elsewhere). It comes as somewhat of a surprise to me that News Corp doesn't join this divide & conquer strategy.
Wednesday, December 06, 2006
VOIP://Munivoip in Taipei
It looks like a small step to include on-net calls for citizens. It will be interesting to see how this develops.
Tuesday, December 05, 2006
CONSOLIDATION://Hoovering spreads to France
Recently they bought three IT firms: first Neocles (IT services) and Diwan (network integrator) and now Silicomp (integration).
ISP://How to raise ARPU from low-cost ISPs
This appeared to be KPN's strategy of its Het Net subbrand. It was exposed at a TV show covering consumer products and services. It's a low-cost brand, and therefore doesn't qualify for excellent customer service, as does XS4ALL.
The InternetPlusBellen double play causes a flurry of complaints, but KPN has no intention of dropping the fee. They are extending the staffing though.
YEAR IN REVIEW://Xirrus earns award
Its WiFi solution doubles the range and is upgradeable to the new 802.11n standard.
Monday, December 04, 2006
REBALANCING://Coming to mobile and cable markets
Owners Warburg and Cinven plan to merge Multikabel with Casema and Kabelcom to form the Dutch #2 MSO after UPC.
At first sight, the price rise is modest: the basic offering rises by 30 cents (2%) to 15.75 EUR/mo. Compare that to Comcast, which is preparing traditional price rises of up to 6% (at much higher levels too). However, Multikabel takes out the digital channels, for which subs now need to pay a separate fee of 1.95 EUR/mo. This adds up to a 15% rise!
One way to look at it is to say this is a way of rebalancing tariffs. PTTs moved to lower per-minute charges, only to raise subscriptions. And recently Hutch launched the X-Series, pursuading subs to take on an extra fee in exchange for 'unlimited' VoIP calls (and lots more).
PREDICTIONS://19 Pioneers according to the WEF
My shortlist out of this longlist:
BridgePort: convergence software
Cicero: wVoIP
comScore: internet analytics
HelloSoft: (w)VoIP
IceMobile: mobile entertainment
MobiTV: mobile TV aggregator
Mozilla Corp: Firefox browser
Ruckus Wireless: in-home WiFi for home-networking
Sling Media: place-shifting technology
Technorati: blog search and analytics
Truphone: wVoIP