THIRD PIPE://Amsterdam inspires FriscoNet

San Francisco released a feasibilty study regarding munifiber. A promising element is that the city had Dirk van der Woude come over to give them some advice. Dirk was involved in getting Citynet started in his hometown Amsterdam.

Recently he also pointed me to this Light Reading article, from which he took a number of quotes:

"threaten to overwhelm even their fattest broadband pipes"
"It's definitely a real problem; there's definitely a storm coming."
"Prepare your networks for the primetime on-demand wave."
"There's an absolute risk of people dropping basic video service for
Internet video."
"Thanks to these trends, some tech executives contended that the bandwidth
crisis may never actually end for cable operators."
"They're even weighing such previously unthinkable moves as building
fiber-to-the-home (FTTH) networks".

On the other hand, some respected research firms still dig in, doubting the demand side of the equation:

"We conclude that the new broadband divide would be best bridged using a
combination of VDSL and fixed wireless."
"Our main conclusion is that any decision to promote investment in higher
speed broadband on the grounds that it will accelerate economic growth cannot be
justified by evidence that such investment will have a measurable effect".

POST-LLU REGULATION://What about VDSL and Openreach in the Netherlands?

Coming back to OPTA's timeline note (summarized before and here also) and publication of the Analysys study, I can add a few remarks after having talked with OPTA and KPN. OPTA was rather candid about acknowledging that this would not exactly be what KPN presumably likes to hear at this stage. It looks like OPTA is backtracking, having been a little bit too generous for KPN. They should have awaited Analysys and competitor responses.

• OPTA will not enforce the Openreach model on KPN (to be announced mid February). This is what I 'read between the lines' talking to OPTA. There are two important factors behind this. Most of all, cable is hurting KPN much more than it (NTL/Virgin) does in the UK. In fact, it looks like there are only few countries where cable has this kind of strength (Belgium; Germany in due course, once the analogue/digital upgrade is done). In other words, only PTTs of Portugal and Spain et al could be at risk for having an Openreach kind of regulation. Second, KPN is mirroring Openreach as it is, judging its carrier portfolio (range of services and pricing).
• Late February really is the 'date' to watch. By then, OPTA will come up with some sort of Fully-fledged Alternative for LLU. Personally, I have a lot of sympathy for the Australian model, where 9 altnets have come together. Other than that, the situation appears pretty much deadlocked.
• KPN's official plan still is to launch VDSL services on May 1. Will OPTA block this?

REGULATION://Setback for KPN regarding closure of MDF locations

nwrjAs I have posted before, moving from FTTEx + ADSL2+ to FTTN + VDSL requires a Full Alternative to LLU. This is exactly what is happening in the Netherlands, where KPN is building its All-IP network. OPTA, the local regulator, today published a brief note on how it will proceed.

Back in October, OPTA was generous in recognizing that it should support KPN in moving forward, i.e. it planned to allow KPN to close many of its MDF locations. The trouble is, that is exactly where competitors' DSLAMs are colocated.

Today OPTA publishes the timeframe for how it will proceed. The note seems to include a big setback for KPN: OPTA will, for now, not proceed in making formal Policy Rules. It seems to acknowledge that SLU is not a Full Alternative to LLU. Things seem to be pretty much deadlocked.

The main points from today's note:

• Market analyses to be published 07Q2.
• The report from Analysys may be published (what does that mean?). The main conclusion is: SLU is not economically viable as an alternative to existing LLU players (unless such a network would be limited to 1000 street cabinets in the most densely populated areas).
• SLU + SDF backhaul doesn't seem to be a Full Alternative to MDF access. It appears that MDF access cannot be withdrawn (unclear is under which circumstances KPN would still be allowed to close any locations). OPTA is pondering what a Full Alternative could be and thinks it will publish the result late February.
• The NERA report on applicability of the British model (Openreach, equivalence) is to be published mid February.
• Making rules on jointly laying fiber has no priority.

NEWSPAPERS://Another free paper to hit the Dutch market

Tomorrow a new free daily will hit the Dutch market, simply called Dagblad De Pers ('Daily The Press'). Obviously, they couldn't claim the 'De Pers' name for being too generic.

I posted before on this paper. The main characteristics are:

• Vis-à-vis existing freebies (Metro and Telegraaf's Spits): De Pers will be a 'quality' paper with more extensive distribution, i.e. not exclusively on public transportation (railway stations), but at 'retail, petrol and office' as well. In fact, my employer will allow the De Pers guys to drop of a bunch of papers every day. It seems that the people over at Telegraaf and Metro are pretty nervous over the new entrant. Metro has just made a smart move: they secured a deal with retailer Super de Boer (300 locations), which will extend their circulation to 535k (from 430k). On the other hand, Metro lost the exclusive right to distribute through railway stations, and it is rumoured that De Pers has already moved in at a cost of 1.2m EUR/annum.
• Vis-à-vis subscription papers: De Pers obviously has the advantage of having an advertising-based business model, but it has a substantial number of negatives: no door-to-door distribution, no weekend edition, no brand recognition (even worse: despite its ambition to be a 'quality' newspaper, being free puts it in the low quality Metro/Spits market). Originally, entrepreneur Marcel Boekhoorn (who made his fortune buying Telfort for EUR 25m and selling it to KPN for almost a billion) planned the paper as a joint venture with PcM (which publishes a set of quality newspapers, including NRC, Trouw and Volkskrant, combined circulation 720k). PcM changed its mind (Boekhoorn is now trying to squeeze some funds from PcM for exiting discussions at a late stage), but now appears to be interested in starting its own free paper.

BROADBAND://KPN: We don't do that anymore

I reported before on KPN's efforts to raise ARPU on its low tier internet service. Last week De Telegraaf (the nation's largest newspaper, circulation 836k) quoted a whistle blower: "Staff that play games on their computers, read private customer emails, keep incoming calls on expensive toll numbers on hold longer than necessary and send customers from pillar to post. (..) and all this with management support."

KPN's comment: "Things went wrong in the past, but this is over now."

M&A://Why Amazon.com should buy bol.com

Bol.com is among the largest online retailers based in the Netherlands. During 2006 it grew revenues by 50% to EUR 107m. The site, once part of Bertelsmann, is owned by publisher Georg van Holtzbrinck and publisher/retailer Weltbild.

Bol.com is building a new site for the 2007 Holiday season and fully embraces web 2.0 (recommendations, allowing users to build user groups focusing on themes, writers etc.).

Amazon.com is headed for a 23.6% sales growth over 2006. Its international sales, which it doesn't break down on a country-by-country basis, is pretty stable around the mid-to-high 20s and will contribute about $4.8bn to total 2006 sales of $10.5bn. Amazon has international sites in Canada, the UK, Germany, Japan, France and China.

Why would bol.com be interesting to Amazon?

• First, bol.com is doing very well. It would add to Amazon's overall growth, even though it is small. Including bol.com on a pro forma basis would enhance Amazon's 2006 sales growth to 23.9% from the current estimate of 23.6%. A nice addition.
• Second, eBay's acquisition of local competitor Marktplaats.nl shows that the Netherlands is an interesting market. Bol.com would add infrastructure and local presence. Right now, Dutch shoppers mostly go to the large international sites (including Marktplaats/eBay), or to Amazon.de/-co.uk at best.
• Third, Amazon would not (immediately) have to rebrand the site, which would risk alienating users. Amazon's launch of Endless.com suggests it is ready for a multi-brand strategy.

M&A://Will Comcast by CLECs?

The Wall Street Journal picks up cablecos' interest in the SME market. It is suggested that organic growth is coming down. I would add that buying cable assets (Cablevision, Insight, RCN) includes the risk of clashing with regulators over reaching more than 30% of US households.

My take on this:

• Reaching the desired 20% share of the SME market will not be that easy to get at. Competing on price is the way to go, and telcos are not going to let this happen hands down.
• No end to pricing pressure. Another lucrative market (after SMS and international roaming in the wireless segment) is under attack: business services. Prices could converge to consumer-service levels.
• Why not expand by buying assets? Comcast could target CLECs that focus on the SME market (Cbeyond, Deltacom, NuVox, One Communications, PAETEC/US LEC, Tele-Pacific), including resellers (Granite Telecomms). It would be about their customer bases, that can be transfered to the Comcast network. Add a topping of fiber backhaul and metro assets.

M&A://Will Vodafone team up for expansion?

Singapore Telecomms could have been a Vodafone partner for Asian expansion, comparable to Telkom SA in Africa. But with SingTel expressing plans of its own and controlling shareholder Temasek teaming up with Qatar Telecom, this option seems to vaporise.

The latter move suggests Vodafone could team up with a cash-rich Arab operator (even if Vodafone itself isn't exactly poor).

WIMAX://Monks need no wires

Now here's a new launch: WiMAX is coming to Mount Athos. Where else would you start your nationwide roll-out? Monks may need no women, but they sure do need to communicate.

A blessed plan of the Greek incumbent, OTE.

Aperto is to supply base stations, which just got a nice award.

REGULATION://Extending fiber deeper into the network challenges LLU

Deutsche Telekom is switching back to ADSL2+, apparently to have wider coverage for IPTV (T-Home). VDSL roll-out is haulted and stays at 10 cities (original target: 50).

Big changes are ahead in the European telecom sector. DT cites regulatory uncertainty for haulting the VDSL deployments.

Upgrades to ADSL2+ left the competitive landscape, based on LLU, unchanged, but VDSL and FTTH have created different environments. I believe Europe will support the survival of 'inter-copper' competition, but now it has to come up with an alternative to LLU. This is a hot topic in Germany, but even more so in the Netherlands, where OPTA has to come up with a fully-fledged alternative to LLU. Watch out for this to happen in Q2. OPTA will host an analyst meeting in The Hague next Friday (Jan 19).

So now operators have a choice:

• ADSL2+, with fiber not extending beyond the exchange. This is the case at BT, which sees no business case for FTTN/FTTC, let alone FTTH. This makes the UK an attractive market for LLU-based competition.
• FTTN + VDSL: KPN, Belgacom, DT (now haulted), TI. This renders LLU-based competition quite uncertain at the moment. Will regulaors find a fully-fledged alternative, and/or will altnets be prepared to step up their investment program to keep track with the incumbent?
• FTTH: FT (at least partly, further decisions in 2008). FT is responding to both Iliad and neuf cegetel (and Verizon), by making the network future-proof.
• A mixture of all: Most notably at Swisscom and Telefonica, but I suppose in many other countries too. FTTH is probably pretty common now for new builds.

HARDWARE://Implications from Apple

Apple introduced the iPhone (with Cingular), Apple TV and AirPort Extreme. I am sure they will be widely covered in the blogosphere; I will be short.

Here are my questions and remarks:

• Will the user interface (touch-screen, one button) really work well?
• Why is the deal with Cingular exclusive and multi-year? (The Verizon Wireless/YouTube deal is exclusive for only a limited period of time.) What did Cingular/AT&T offer to get this deal from Apple?
• The iPhone seems an expensive gadget (for now?), therefore addressing a limited market - unless Cingular offers a big subsidy. Apple did the same for Mac and iPod, so that is OK. What puzzles me is that the 8 GB product is a full $100 more expensive than the 4 GB handset.
• What will the Cingular service plan look like, especially the data part? Will they go the Hutchison/X-Series way?
• It lacks UMTS (for now?). Apple seem to be commiting to the GSM-world anyway.
• It has a 2 MP camera, which I personally consider too limited for competing against standalone digital cameras.
• How will the iPod hold up against the iPhone?
• Has a deal been worked out with Linksys/Cisco for the use of the iPhone brand?
• Who will be partners in Europe and Asia?
• Apple follows the divide-and-conquer road, allowing both Yahoo! (push email, search) and Google (Talk, Maps, search) on the iPhone. Skype is a notable absent (but now there is iSkoot - Symbian only, but that will change and could include the Apple OS?), but Jajah has stated that it will be compatible.
• Will there be any truth in Eliot Van Buskirk's rather compelling case against iTunes?
• The AirPort uses the hip draft-11n standard.
• Apple TV ($300) must hurt Sling Media's new SlingCatcher (which will be cheaper at < $200), as well as Orb (free).

UPDATE (Jan 11):

• UI: see David Pogue in the New York Times
• Price points already include Cingular subsidies, so it seems.
• Cisco is suing over the iPhone name.
• It looks like it will be a closed system: no downloads of any VoIP clients (Jajah needs no dwonload).

UPDATE (Jan 22):

• iSupply calculates the cost of the $500 handset at $246. The 4GB NAND flash memory costs $35, the 8 GB costs $70.
• Telefonica's O2 is rumoured to be a partner in Europe.
• The draft 11n standard gained support at the IEEE, but full ratification is not expected until April 2008.

THIRD PIPE://Benefiting from having less or better legacy infrastructure

TeleGeography reports Electropaulo plans a PLC (BPL) trial, after three years of testing. During that period, data rates increased to 200 Mbps from 45.

Some remarks:

• Third pipes are coming to life. J-COM and StarHub are doing pre-DOCSIS 3.0. BPL and DOCSIS are forcing VDSL services upon telcos - or FTTH, for that matter.
• In some cases, non-western operators seem to have the advantage of not having too much legacy infrastructure.

ECOMMERCE://Amazon launches new brand

Amazon.com added a new store (in beta, though), this one devoted to shoes and handbags (there already is a shoes section on the main site).

What is striking about this one is the new brand name: Endless.com. This looks like a first and could be related to the brand values of suppliers, who may wish to not get behind the Amazon brand.

As usual, the site appears highly customer centric (great search, free overnight shipping, free return shipping, 110% price guarantee, 24 hr customer support). Free returns could be bad for margins especially when shoes are concerned (but as we know, Amazon is in the volume business). Still, wouldn't it be smarter to limit some of these excellent customer services to Amazon Prime subscribers?

On the side: it seems that Riya's Like.com (image search, for now devoted to jewelry, clothing, and ... shoes and handbags!) would be a nice add-on to the site.

2007: extending 2006 trends

Here are some thoughts on 2007, mainly as simple extensions of 2006 developments.

Telecom:
- 2006 was the year of the seeds of WiMAX (more of a supplement than a replacement) and wVoIP (to rebalance mobile pricing toward flat-fees)
- My personal favorite: Google’ efficient power supply
- Third world countries profit from the lack of legacy systems, as witnessed by WiMAX, 3G and NGN builds
- Regulation: international roaming cuts to be effective; NMa on Tiscali/KPN; one EU regulator; the rise of VDSL/FTTP (NL, D) will pressure regulators and altnets alike
- Structural separation: to happen in Ireland, Denmark, New-Zealand
- Standards, technology: 802.11n ratification, UWB certification (and a mobile handset from SKT/Staccato), CDMA Rev C, TVoW
- Auctions (spectrum, licenses): UK (WiMAX/mobile TV/UMTS), Russia (3G), Montenegro (2G/3G), Kosovo (2G/3G), Macedonia (2G/3G), France (UMTS), China (3G), Kuwait (2G/3G), Saudi Arabia (2G/3G), Chile (3G), Nigeria (3G), Cyprus (WiMAX), Italy (WiMAX), Finland (mobile TV)
- Operator launches: Etisalat in Egypt, eMobile in Japan, Vodafone BB in the UK; WiMAX from Sprint and many others; more FTTH (focus on symmetrical BB)
- Service launches: X-Series (Hutch), IPTV (KPN), TVoW, wVoIP, WiMAX; mobile and fixed operators converging by moving toward triple/quad plays
- MVNOs: many to come to market (Spain, France)
- Subbrands: telcos will copy KPN’s sucessful strategy
- For sale: Hutch 3G, Hutch Essar, Tiscali UK, FastWeb?, TDC mobile assets, PT, directories of Windstream, Endemol (Telefonica), debitel DK/FR/NL/Slovenia, TIM Brasil (TI), TIM Hellas (TPG/Apax), Alltel, Leap?
- Buyers include PE, China Mobile, Vodafone; and professional hooverers KPN, BT, FT; more ICT takeovers
- Corporate: strategy update from DT
- IPO: NextWave (from OTC to Nasdaq) and Clearwire; Oger Telecom?; Idea Cellular
- Mobile: tariffing (homezones, personalisation, flat rates) aimed at FMS, reducing churn and stimulating data/3G usage; more applications, as diverse as Disney Mobile, Nokia’s new software-based N-Gage, KPN’s AyWorld and payments/banking; advertising-based services (Blyk MVNO in the UK)
- Applications: will an operator buy an applications provider?
- The dogs of 2006: Sprint Nextel, DT, FT, TI, Telecom New Zealand

Internet:
- 2006 was the year of: video, Web 2.0 (UGC, social networks, sharing), virtual life
- Terry Semel will leave Yahoo!, Susan Decker to take over, replacement for SD at Audience unit
- Google market share is likely to peak
- eBay could start paying dividends
- Jon Miller (formerly AOL), Dan Rosensweig (formerly Yahoo!), Lloyd Braun (formerly Yahoo!) and Ross Levinsohn (formerly News Corp) are looking for jobs
- AOL could be sold
- Yahoo! could score more telco/cableco deals
- More offline deals (mobile, print, TV, radio)
- The dogs of 2006: Yahoo!, eBay, Amazon.com, Cnet, Overstock.com

Media:
- 2006 was the year of: broadband video, VoD, place-shifting
- Regulation: the US could drop the 30% audience limit on MSOs
- EMI and Warner Music are likely to merge finally; Vivendi will sell its 20% NBC Universal stake to GE
- RCN is still up for sale
- The education units of Thomson Corp and Wolters Kluwer will be sold
- Launches: a new free, ad-funded high-quality newspaper, delivered daily door-to-door in the Netherlands
- #3 movies (i.e. 2nd sequels): Spiderman, Bourne, Shrek, Pirates, Ocean’s
- Ad accounts under review: Wal-Mart, Heineken, Philips
- The dogs of 2006: Viacom, Lagardere, XM, Sirius