Thursday, June 28, 2007
It includes wVoIP (the CiceroPhone client - not UMA but SIP based) and seamless WiFi/GSM roaming (voice only, mind you). At home, calls will be routed via WiFi to the BB connection. Outside the home, mobile will be ordinary GSM calls (Lyse doesn't own a 2/3G network), and usage will be limited to certain handsets, I presume.
I think the offering is interesting for 3 reasons.
(1) Cicero's seamlessness is a cool piece of tech, that (2) allows Lyse to offer wVoIP (basically for cheaper calls when in range of a free hotspot), without having to team with a mobile operator. (3) Users only need a single number. I am not sure how this would work out for existing Lyse subscribers, who already have two numbers (one Lyse, one mobile). Perhaps they can now drop the Lyse number.
Wednesday, June 27, 2007
It was an interesting day, even if there wasn't so much really new. I enjoyed talking to telco and vendor officials, most notably Dirk 'Amsterdam' van der Woude.
Below I will summarize my take of the views on a number of trends (which I regularly write about on this blog):
- FTTH, VDSL/LLU/regulation 2.0, Web 2.0, SaaS, WIMAX
- Separation, co-op
- Owning the customer, advertising as a business model
- KPN, BT, Vodafone, Orange NL, Thus, 2 smaller Dutch MSOs (CAIW and Kabel Noord)
- Xconnect, Alcatel-Lucent, BroadSoft, Sonus, AlwaysON
- OPTA (the Dutch NRA)
- Analysys, Fitch
The perennial question: will 10 Mbps be enough? or 100 Mbps? Some statements (not precise quotations) included:
- There is no ceiling (KPN),
- even if the new services are as yet unspecified (Analysys).
- Why should the exponential increase stop now(BT)?
- KPN, through Nico Baken (senior strategist and professor at Delft University), proved to be among the most radical. By the way, when I asked Nico how he feels about KPN's current strategy, he responded somewhat in this manner: KPN is among the most respected telcos, and they allowed me to hire 12 PhD's to work on long-term strategies, in order to allow KPN to maintain its lead. Bravo Eelco Blok for gathering this team at the heart of KPN!
2. FTTH, NGA (access)
- We see no business case, except for greenfield operations (BT).
- FTTH is the endgame (OPTA, KPN).
- Build-outs in the Netherlands (7.0m households) are projected to go from 115k at present to 580k by 2009.
- Public/private partnerships (PPP) will emerge (KPN).
- Wireless will be the way to connect over the 'last few meters' (KPN).
- Within a few years, all munifiber in the Netherlands will be bought by either KPN or Cablecos (CAIW).
- 2 Infrastructures (copper/telco and coax/cableco) are not enough to ensure real competition (OPTA).
My comments here:
- KPN's Nico Baken was probably among the most impressive in his presentation. His visionary analysis underscores that KPN fundamentally believes in FTTH - as well as PPP!
- Dirk pointed me to a new development: KPN plans to connect 11k homes in the eastern town of Enschede and eventually the entire city (155k inhabitants) will be covered. "We will try to convince any doubters that copper access is not sufficient in tomorrow's world." I suspect that OPTA's 580k number (see above) does not include Enschede, which would take the number up to 735k. By the way, Dirk added a new overview (as of June) of fiber developments to the Citynet site.
- There was surprisingly little on VDSL. I feel that everybody present believes in FTTH, which makes VDSL a transitory if not outmoded technology before it is even launched.
- OPTA's acknowledgement of FTTH as the endgame is positive (in fact, it was aired before, most recently last week), but saying that 'two is not enough' is puzzling (to put it mildly). I would say: all we need is one (FTTH), which needs to be regulated. I feel that OPTA regards LLU and even bitstream access as a separate infrastructure.
- Now, if even KPN feels that PPP is the way to go, separation makes more and more sense to me. How about separating both the telco (KPN) and cableco ('Zesco') networks - which I feel could stimulate the two new network companies to build a nationwide FTTH network through some PPP/joint venture (with Reggefiber).
3. NGN (core)
- The 21CN project started out as a cost savings measure, but grew into a complete business transformation (BT).
- We offer NGN as part of our 'Business Transformation Partner' offering (Alca-Lu).
- NGN implies cost savings, but at first a 'hump' will appear in capex and opex spend (Alca-Lu, BT). BT sees costs at a low in 2013, when the hump is coming to an end and normal growth is resumed (at a level less than half of what it is now).
- BT established BT 21C Global Venture as a way to leverage its know-how that it is acquiring, doing the 21CN project (BT).
- Apart from cost savings, NGN is all about new services (BT, Alca-Lu) for which SOA must be adopted (BT).
- Telecom New Zealand wants to be a service provider and is less interested in being a network operator (Alca-Lu).
- Altnets lack scale for NGN projects (Orange NL).
- SOA and SaaS will be recurring themes for telcos,
- As well as separation. One could say that separation (and Saas) are ways of taking outsourcing to the extreme.
- I wonder how the BT 21C Global venture fits into the IT services market. Do they have customers yet?
- I will pound on one of my favorite subjects once more: why on earth do we see so few co-ops?
4. New services
- Future services will include HDTV, social networking, software apps and Web 2.0. Many may not be really new but subsititutes. "New services are as yet unspecified", and business models are unclear (Analysys).
- Many new services, such as triple play, aren't really new. Blending however (like on-screen caller notification) is what we will be seeing a lot of (Alca-Lu).
- In offering IPTV, we focus on interactivity, not on exclusive content. We will offer "what is relevant for our customers" (KPN).
- We aim at personalisation (Vodafone).
- Data may actually make up for much of mobile growth decline, but IPTV will not do the same for fixed operators (Fitch).
- "The customer experience needs vast improvement." (Fitch)
- Somebody mentioned that it is all about "owning the customer". I couldn't agree more. That is also why I question KPN's representation of WLR, which I believe distorts their net line loss numbers. Sure, WLR still adds to wholesale revenues, but the customer relationship is gone.
- I wasn't terribly impressed with KPN's IPTV ('Mine') presentation. The service will be (re)launched after the summer, but not as a premium service anymore. The UI didn't look very fancy. The feedback they had so far (the low key launch was done in May 2006) must be a long shot at what they overambitiously describe as "what is relevant for our customers".
- Blending sounds like mash-ups, in Web 2.0 terms.
- Selling to Google or KPN is one business model, and otherwise it seems to be advertising. Sure, budgets move online and can be targeted a lot better, but in the end online advertising will prove to be a cyclical market. The Broadband Incentive Problem kind of raises the same issue: in the long run, things need to be paid for, preferably in a usage based (not flat-fee) model.
- I spoke to Orange NL and other people, who all seem to believe that T-Mobile will not dispose of the Wanadoo BB unit of Orange NL, once the acquisition is worked out. I always assumed that T-Mobile would be a mobile-only play (outside their home markets in Germany and Eastern Europe) in the US, the Netherlands, Austria, the Czech Republic. But who knows they will embrace the convergence story.
- On the side, if T-Mobile do embrace a convergence model, selling T-Mobile USA must come into play again (remember the cablecos work with Sprint and the satellite companies teamed with Clearwire, so teaming with a fixed or WiMAX operator seems hard).
- I am getting pretty fed up with people saying that the end user is not interested in technology - to the point that I start to feel that people are increasingly familiar with alphabet soup.
- On the side, WiMAX was touted by someone in the audience as a technology capable of bypassing cellular networks in large cities. I do not wish to be overskeptical about new technologies, but I think we have to be realistic. It is an emerging technology, especially 16e (there are many 16d deployments underway, including Vodafone's Malta plans). Handset range will be a major issue. At first, the technology was supposed to deliver 70-120 Mbps over a distance of 50 km. Now, 16d seems to deliver perhaps 10 Mbps over 5 km (in a NLOS situation). Imagine what the performance will be for 16e, assuming the kind of usage we see in cellular networks today. And then I haven't mentioned building the network, from construction, backhaul and interconnect up to marketing ...
- Not to end on a sour note: Xconnect is a very interesting story. Peering is a whole new way of saving costs (and enabling new services). In fact, it is like OTC trading. Actually, I included peering in my own overview of efficiency measures (including such seemingly unrelated things like DWDM, CDN, P2P, MPEG-4 and AJAX) at my Tiscali Wholesale presentation two weeks ago. Mail me for that presentation.
Thursday, June 21, 2007
- Sprint Nextel: having several networks (iDEN for P2T, CDMA for voice and data) already, it is ready to add WiMAX (for 4G) to the mix. The iDEN networks needs investments for maintaining a certain quality level, while the CDMA network is being upgraded continuously (Rev A, B, C). The company appears to be looking for a partner in WiMAX. Will all networks converge one day?
- Deutsche Telekom: outside Germany and Eastern Europe (where it owns PTTs), the company has a mobile-only strategy (with WiFi). However, buying Orange NL would add an LLU operator. OK, that can be sold on, but to whom?
- France Telecom: selling Orange NL makes sense, given weak market positions in both wireless and LLU. However, the company owns many wireless operators and yesterday added Austria. So far, triple play offerings are limited to France, Poland, the UK and Spain (as well as fixed/BB in several smaller countries). What about the mobile-only operations, like Austria - will they add LLL or BB?
Keep in mind that Google is the perennial enemy to both. Microsoft on the other hand is carefully treated as an equally beleaguered colleague, rather than as a competitor.
The recent animosities by no means endanger a Yahoo!/eBay merger:
- Google was ready to invade eBay's Live event, which made eBay pull away from AdWords. Instead, eBay could be a bigger Yahoo! partner.
- Google attacked Microsoft over Vista's desktop search. The case was settled.
- Yahoo!'s problems keep any merger speculation alive, particularly with Microsoft.
- Now the Times of London reports that News Corp floated the idea of swapping MySpace for a 30% Yahoo! stake. I believe the implied MySpace valuation must be too high for Yahoo!, which proved quite frugal when approaching Facebook. Also, I believe that Yahoo! needs to be a 'content neutral' aggregator, not a News Corp vehicle.
- However, the eBay/MySpace talks are still ongoing.
- Yahoo! has not responded to Ron Burkle's try to involve Yahoo! in a counter offer for Dow Jones, News Corp's much desired prey.
In other words, I think Yahoo! is carefully aiming for eBay. At the same time, News Corp must be kept at an arm's length.
Tuesday, June 19, 2007
Assuming that the numbers are alright, the population covered would grow by 86k v. 155k in the original 5 towns, or by over 50%.
The network will consist of 15k km of fiber backhaul, 426 exchanges (to cover 3m households with ADSL2+) and WiMAX (for regional areas).
End-user pricing should come in the range of 35-60 AUD/mo, depending on speed. In 2009 the maximum speed should be 12 Mbps, which is subsequently to be raised. The network should cover 99% of the population. The other 1% is eligible for a 2750 AUD/household subsidy.
I find this a remarkable move. First, the G9 consortium (around Optus - also), as well as Telstra, is vying for building a FTTN/VDSL network. Second, an ADSL2+/WiMAX looks like combining 'old' technology (ADSL2+) with unproven and possibly inferior (to LTE) technology (WiMAX), as Telstra is eager to point out.
For reference, read Alan Kohler's case for FTTH (as opposed to FTTN) and Grahame Lynch's case for a merger of the G9 consortium members, which nicely fits my view on how to beat the incumbent.
Should the parties involved fail to reach an agreement, then OPTA has set itself a deadline for publishing a market analysis and proposed rulings by October 15.
I've written many times before about this extremely important topic. KPN is building its 'All-IP' network (including a nice headstart), which includes the closure of MDF-locations (of which there are 1300) and the extension of fiber to the street cabinet (of which there are 24k) level (FTTC). The consequenses include:
- Heavy investments for KPN, to be financed from the sale of the related real estate, coupled with opex savings.
- The ability to offer VDSL2 services for IPTV (and triple play). So far, the 'Mine' (IPTV) product is barely marketed, obviously because very few households are located near enough to an MDF (for top ADSL2+ bandwidth) or are covered by VDSL2 pilots.
- Competitor DSLAMs will be rendered worthless, unless the MDF locations would be kept open after all. However, that in turn would cause interference problems (between KPN's VDSL and any altnet's ADSL services) and it would also give KPN a big advantage (VDSL v. ADSL performance).
Therefore, the closure of MDF locations signals the end of LLU. Sub-loop unbundling (SLU) is the obvious successor, but not economically feasible (according to Analysys). In other words, a 'Full Alternative' (other than resale) is hard to dream up. We will see.
In the meantime, KPN was allowed to buy yet another ISP (Tiscali NL), and T-Mobile is close to acquiring Orange NL. I am sure T-Mobile is interested in the mobile assets of Orange only, which effectively puts the former Wanadoo BB unit on the market. Any lack of interest among the remaining players (Tele2/Versatel and bbned/Telecom Italia):
- May signal the end of infrastructure-based intramodal competition on the KPN-network, as it would put Tele2's and TI's commitment to the Dutch market in doubt.
- Which would lead to a duopoly market (cable having near 100% coverage).
- Which would highlight regulatory asymmetry (no resellers on cable networks).
- Which would lead to open access to cable networks (OPTA will publish its cable market analysis in 07Q3).
Notable absentees include many of the big virtual reality sites (Second Life et al). Only the MMORPG Gaia made it to the list.
Other sites conspicuously missing include NYT's About.com and Yahoo! Answers; mash-up engine Yahoo! Pipes; social shopping sites like Shopstyle.com; office suite look-alikes such as Zoho; social address book Plaxo; video (and revenue) sharing site Revver; blog search Technorati.
In the 'Productivity and Commerce' section my eye fell on Basecamp (project management tool from 37signals).
I counted 13 apps from Google, 9 from Yahoo!, 8 from Microsoft, 5 from eBay and 2 each from Amazon.com and News Corp. Taken together, that is just a third!
For reference: read this CNN Money article on virtual reality; Time.com's article on 37signals, belonging to a category that looks like a new area for telco's to go takeover shopping; this survey from Evans Data, ranking Web 2.0 developer programs (do not go beyond page 28 for text errors).
070106: Plans launch of SlingCatcher (box) + SlingProjector (software)
summer 2007, < $200 (internet/PC-to-TV)
070109: Launches Clip+Sling: share content on-net (among Slingbox users), deal with CBS (beta)
070207: Launches Palm OS version (beta)
070322: SlingPlayer Mobile to be pre-installed on Amp'd Mobile's Q (from Motorola)
070410: Plans support of Apple TV
070516: Plans ISP service 2007 in the US
070606: Teams with NHL: allow Clip+Share
070618: Adds SlingLink Turbo 1 Port ($100) and SlingLink Turbo 4 Port ($150): in-home connection via HomePlug PLC
Monday, June 18, 2007
I suppose KPN’s plans could be anywhere between fully dismantling Tiscali NL and maintaining it as a standalone operation. One thing seems inevitable: a namechange, as Tiscali SpA’s Italian and UK operations are now completely unrelated. Possibly KPN will have the retail branch focus on a certain demographic, under a new label. The wholesale operations could actually be kept at an arm’s length to service ISP’s who suffer a certain degree of ‘green-phobia’ (green being the KPN corporate color – formerly that is). The latter part of Tiscali NL will be cherished, I suppose, because it only recently scored its largest customer win: Vodafone NL, which is working toward it's fixed/mobile strategy. I hear that Vodafone issued its RfP around the time that KPN and Tiscali came to an agreement (September 2006), so when Tiscali NL was chosen, Vodafone was very well aware of the KPN takeover.
Vodafone NL was also invited to speak. Daniel Nordström presented the new fixed/mobile strategy. I wonder if Vodafone’s mobile portfolio could be offered to Tiscali Wholesale’s other ISP customers. Of course, that would be a tough sell at the new parent company (KPN), but it could be a smart way of luring green-phobic customers and at the same time get some inside information on a competitor. However, I doubt KPN would allow Tiscali this level of independence.
What stood out during the day was Tiscali Wholesale’s focus on the end user, which coincided nicely with my own presentation, which related Timothy O’Reilly’s Web 2.0 to STL’s Telco 2.0. People at Tiscali are definitely aware of those developments in the marketplace.
Also, I touched on LLU in the Netherlands, which is coming to an end because of KPN’s ‘All-IP’ plans. What will OPTA come up with to replace it (a ruling is due this month)? If SLU is not feasible (as Analysys calculated), something rather big seems to be heading our way. I believe LLU and SLU are intermediary strategies, fiber is a natural monopoly (both in the backbone and on the in-home level) and thus open access FTTH is inevitable. How about some separation (to add some recent news: Sweden is looking at the Openreach model)?
I aired my growing surprise at the lack of willingness to cooperate among network operators. Recent developments are few and include Australia (G9), possibly Sweden (Telenor/Tele2/Telia) and Nigeria (25 ISPs teaming to build a WiFi network). Sure, these operators are backed by competitors, but if you want to compete with the powerful incumbent, you better get together.
Which brings me to my final observation. We all know the ‘business model’ of many a start-up in Silicon Valley: be bought by Google. Now, somebody confided to me that a similar model was explicitly chosen by many ISP’s in the Netherlands: be bought by KPN. And we all know how that ended!
Monday, June 11, 2007
More about this after the meeting.
It is the fixed-wireless version (16d), in other words the DSL-replacement.
- Hafslund, a Norwegian utility, will build a network in Ostlandet. Dirk van der Woude points me to the fact that this part of Norway, which includes Oslo, actually contains almost 50% of the entire population. Hafslund is controlled by the city of Oslo.
- More utilities and municipalities at work: the tiny town of Dijkerhoek (NL) will get a network; the Rural Utilities Service (RUS) of the US Department of Agriculture approves PacketFront's solution, which makes deployments eligible for RUS grants and loans; the Swedish town of Sundbyberg will get a network; both Powell and Cody (Wyoming) are exploring PPP (public private partnerships).
- And from the telco front: activities at Telekom Slovenije, Golden Telecom (Russia), neuf Cegetel (France) and France Telecom, and finally TEO (Lithuania).
- Finally, regulatory developments. Arcep (France) is consulting on two issues: duct access and sharing of the 'last 10 meters'. In related news to the latter, the FCC has issued rulings that should facilitate both telcos and cablecos easier access to MDUs (multiple-dwelling units). I always thought differently, but sheetrock is labelled 'physically inaccessible'.
Thursday, June 07, 2007
The WSJ proves its value
The Wall Street Journal once more proves its value, this time at a very convenient moment. The Bancrofts may be pushing Murdoch for raising his Dow Jones offer, or they might want to entice somebody else to mount a counter offer.
Just two days ago a WSJ story carried this headline: Will Vodafone Be Put in PlayBy ABN-Energized Activists?. And today, John Mayo steps forward with his ECS Assets vehicle to push for the freeing up of up to GBP 38bn.
Will wireless be a duopoly market as well?
Further, one may question the long-term chances of a standalone wireless operator such as Vodafone, along the lines of consolidation in the European broadband markets: AOL has vanished (as an ISP), Tiscali has retreated to the UK and Italy, Pipex is up for sale, and today France Telecom and Deutsche Telekom are swapping assets (see below).
Vodafone's break-up value could be considerably more than its current market value. For now, mobile is a far more attractive game than broadband, in terms of margins, justifying 3, 4 and 5 player markets (not to mention markets like Bangladesh, served by 6 operators). But in a few years, mobile could be another utility. Look out for cablecos to snap up mobile operators once they have their networks and balance sheets under control.
Also, imagine the kind of cost savings when access networks are shared. In the end, base station networks are extremely overlapping access networks, which may very well be shared.
Telco/cableco duopoly nearing in the Netherlands
As to the FT/DT swap: today Ya.com is snapped up by France Telecom and Orange NL goes to T-Mobile.
Spain is consolidating:
- three major players (Telefonica, France Telecom, Vodafone)
- two standalone operators (Yoigo in mobile, Jazztel in fixed)
- cable company Ono.
- it will be a 3-player mobile market (KPN, Vodafone and T-Mobile).
- there is no obvious buyer for the Wanadoo-part (ISP) of Orange NL.
What could happen to the former Wanadoo-part of Orange NL?
- I am sure T-Mobile is not interested - unlike FT, DT has a mobile-only strategy 'abroad'.
- KPN is restricted, as the regulator barely allowed its recent Tiscali NL takeover.
- Tele2/Versatel could be a serious candidate; if not, do not be surprised to see Tele2 abandoning the country altogether.
- Scarlet could step in and move to a facilities-based business plan (following the Tele2 example).
- Vodafone doesn't seem interested, as it uses Tiscali NL as its broadband partner for its 'Total Communications' strategy.
- Finally, bbned (Telecom Italia) is a candidate, but its commitment to the Netherlands is doubtful.
In other words, the Netherlands seems to be advancing toward this telco/cableco duopoly.
I believe PTT's are increasingly proving to be winners, but so far this seems to be visible in the Netherlands only. Pushing fiber deeper into their networks (FTTC: fiber to the street cabinet - not to mention FTTH) makes LLU a thing of the past and effectively forces altnets to follow or die (see below).Unless PTT's allow munifiber to get a too strong foothold, will many markets move toward a US-style duopoly of telco v. cable.
If SLU is impossible, network sharing should be considered
As I have written several times before, KPN is trying to kill LLU by moving to an All-IP network, which includes FTTC. The most obvious replacement would be SLU (sub-loop unbundling: from the street cabinet, instead of the central office), but Analysys has shown that this is not economically viable.
OPTA, the local NRA, is grapling with this dilemma. A 'full alternative' to LLU was promised for Q2, but so far hasn't emerged from OPTA's offices.
In my view, the obvious way out would be the Australian way, where 9 altnets have come together to propose an alternative to Telstra's fiber plans. Sure, altnets are backed by competing companies, but shouldn't they set aside their differences to work locally on a country-by-country basis? It simply makes no sense for 9 altnets to want to each compete with a strong incumbent.
Still, one may question the long-term viability of intramodal competition (operating active elements like DSLAMs on the incumbent telco network). Fiber will be extended - sooner or later all the way to the user: FTTH. Any xLU model (LLU, SLU, ?LU) would imply altnets replicating more and more of the incumbent's network, in the end actually replicating the whole thing, as the copper last mile gets shorter and shorter. The only way out seems to be to sooner or later admit that a single fiber network is the only economically viable situation. Now that LLU is coming under strain seems to be the time to acknowledge this. In other words, altnets should aim for network sharing with incumbents. However, the PTT could be tempted into wanting to go it alone. Hence, an NRA like Arcep (France) is trying to facilitate network sharing.
The viability of intramodal competition in general was questioned earlier this week by the Australian Kevin Morgan. He referred to this an arbitrage game. Frankly, I hadn't looked at it that way before, but I suppose he has a point as altnets are merely kept alive by regulatory intervention. It reminds me of what the Bells over in the US kept repeating a few years ago, when the 1996 Telecom Act was replaced and intramodal competition was effectively killed: after 8 years of competition and cherry-picking, altnets should have built their own networks. However, Kevin does not acknowledge one important thing: how LLU operators have increased competition, driving prices down and broadband penetration up.
Anyway, the end of intramodal competition seems to be nearing. FTTH, fiber in the last mile, seems to be a natural monopoly. If PTTs do not see this, newcomers (like Reggefiber, Iliad, neuf Cegetel) will.
Which leaves cablecos: will they follow?