Tuesday, August 26, 2008

Telco TV: in search of a strategy

Here are some follow-ups to my previous posts. Telco TV is the one common theme.

1. The P2P/net neutrality/broadband incentive problem
A valued reader and analyst at a major research firm pointed me to a solution out of it.

To put it in my own words:
Why not sell a portion of your bandwidth and reserve the rest for your own services? This way, you may sell e.g. 10 Mb/s (best effort) for 30 EUR/mo, and keep the rest for your own www and IPTV services.
I'm not exactly sure where the rub could be. To me it is interesting to see how telcos can learn from cablecos (as I pointed out before), because this is exactly what cablecos are doing: they sell BB, but keep most of the available spectrum for their own broadcast offering.

2. Blog roll
Here are some interesting recent posts out of the Fibre Ring:

Stephen Davies: white papers.
Rudolf van der Berg: on streaming video.
Stefano Quintarelli: on separation.
Kai Seim: on PAN, LAN and WAN (cool graph).

3. Video
There seems to be coming some urgency to the telco TV market.

KPN is raising the price of DTT (in this Opinion piece on Telecompaper.nl it is revealed that probably 1 in 10 of KPN's TV subs is on IPTV, the rest on DTT; 50-60k IPTV subs is far above what I personally had in mind), while HanseNet (the Telecom Italia subsidiary in Germany) is making basic IPTV free of charge (marketing talk of course: for 30 EUR/mo you now get a triple play, which used to be 40).

4. Poll
I intend to do a poll on structural separation.

The one problem I have is this: I have some trouble getting into the heart and mind of an incumbent. Who is willing to play devil's advocate and tell me why structural separation is such a "bad thing"? You can take the above link to Stefano's blog as a starting point.

Thursday, August 21, 2008

Take the new Poll

In the right hand column is my new Poll. For more info (such as a link to the original MIT paper) see my previous post.

P2P: down with Dvorak, up with Dvořák!

My second poll has ended. Time for some commentary and a new poll.

Basically, it is Andrew Odlyzko v. John Dvorak (not to be confused with Anton). (Anybody care to make a Wikipedia entry about me?)

1. Outcome of Poll #2

What to do about illegal P2P file sharing? (multiple answers were possible)
  • It's like shoplifting: learn to live with it. 8%
  • It's illegal and killing ISPs: keep fighting it. 0%
  • People want downloads and streams, at lower price points, instead of disks, which are perceived as expensive: new distribution models and record companies are needed. 70%
  • P2P file sharing can be legal, as well as a very efficient distribution model: new business models and DRM are needed. 41%
The third and fourth answer were similar, but especially the third obviously rings true with many file sharers. In the Internet era, where pop stars are born on YouTube, record companies are perceived as expensive dinosaurs. And who needs discs, if you can store them on ever smaller devices?
The fourth answers was quite popular too. It centers not on records and record companies, but on the technology itself.
The second option still has some support, but the good thing is that they focus on providing legal alternatives.

2. Commentary

Several topics are related to the P2P problem:
  • Usage growth. In June, Cisco predicted a 46% CAGR for global IP traffic during the 2007-2012 period. Then in August, Andrew Odlyzko picked up a very conspicuous decline, the first ever on a quarterly basis, in the data traffic on Cogent Communications' backbone (-1% qoq, with school holidays to blame at least partly). On Telephony Online it was suggested that CDNs could have something to do with it (pushing content closer to end users, so we should look at last mile traffic separately) and that internet-based video is far from mature. Odlyzko himself is still seeing 50-60% growth rates. Dave Burstein of DSL Prime has some AT&T statistics, such as: growth per customer is 25-30% per year. I would add that the availability of high-speed networks causes usage to go up, as Ventura Team has pointed out.
  • Net neutrality. Should network owners be free to 'shape' (or whatever term they use) traffic, or would that be a threat to innovation? Too much is being said about this problem, but I will add one thing. Operators are trying to squeeze more money from the likes of Google, who already pay to put their content in the cloud (!), just because they have no pricing power at the other end, as the retail market is very competitive. In other words, it is one possible answer to the:
  • Broadband Incentive Problem (MIT, September 2005). Flat-fee pricing is at the heart of our broadband economy, but at the same time it perversely stimulates ISPs to discourage usage. "... operators have not yet found access pricing mechanisms that both make sense to users and effectively align user behaviors with the costs they impose".
  • Usage-based metering. Is this then the answer? The first argument against it is to say that the 5% of users that use up most of the available bandwidth changes every day. However, I don't see how that would make usage-based metering an unfair pricing mechanism. I could even go a long way with John Dvorak, defending a metered internet. He is absolutely right - except that he is totally wrong. We must remember that dial-up was really bad and that the internet is meant to bring lots of benefits (economically, socially, environmentally). We should not return to the 90s. Instead, usage must be stimulated (as Odlyzko says, or read this piece by Colin Dixon), not discouraged. We must remember that bits aren't like water or electricity. When it comes to bits: the more the better. Water and electricity however are scarce and producing them requires energy and puts a strain on the environment. But some folks just won't stop.
  • FTTH. I suppose throwing bandwidth at the problem is at least a partial solution. However, I have heard people say that they refuse to believe in FTTH, because there is no legal use for such networks. "Why should we pump money into it, if all people do with it is illegal file-sharing?"
  • The value of music. Last but not least my personal view on modern music cultures. These days music is all around us. Long ago, it was limited to concert halls and in the 19th century people like Franz Liszt produced piano reductions for people to enjoy the great works of art in their homes. The rise of popular music has accelerated this technological development, and now we have iPods and iTunes. Thirty years ago, people complained about elevator music, aptly called muzak. But I don't hear the term muzak anymore. Today, we have gone so low that DJs make CDs. This dear reader, is behind the third option in the above poll. People want to listen to DJs, but at least they are right about one thing: it shouldn't cost them anything. May I suggest you go to your web store (I would suggest jpc.de) and get yourself a decent set of Olivier Messiaen (born 100 years ago) and Elliott Carter (100 years old this year, and composing like mad) CDs. Just so you know good music is still around and very much alive. And not very expensive.

3. New Poll

My third Poll is in the right hand column. Cast your votes!

Tuesday, August 12, 2008

Fiber diet restored

Upon returning from the my vacation, I had to wade through some 2k emails. Mostly newsletters, from which not very much interesting at all stood out. But there were a few notable highlights:
  • The Fibre Ring. Not only did Costas relocate to a different host, James Enck returned and embraced FTTH. Of course, I added him to the Fibre Ring (right hand column, way down). Now, I'm not the only member to be unemployed.
  • CSI Internet. On my holiday, I did some catching up reading my newspaper (in Dutch, subscription). There was an interview with Henk van Ess, who is an authority in the search world (Google itself links to his site. His book will be out next year, cleverly titled CSI Internet. Expect some buzz around it, because Henk is an expert on privacy and security. People leave many traces on the net, while browsing, searching and socializing.
  • FTTH. I haven't quite put together a list of stock performances (as I sort of promised), but I have a feeling KPN's share price not at all responded very negatively to their embracing both FTTH and Open Access. That is quite good news for the fiber guys!
  • Metaphor. No responses at all to my call for solving the metaphor riddle. How the hell can 'My Cousing Vinny' be a metaphor for FTTH? I suppose, only in my twisted mind. So, I will take the prize myself for worst metaphor in the history of bad metaphors. O yes, here it is:
The prosecution in this movie (or a different legal thriller?) focuses on the horror of the crime (much like FTTH aficionados focus on the benefits of FTTH), although it really should focus on the question: was the defendant the one who actually did this? (In the FTTH conundrum the question must be: will FTTH deliver a good return?)