Thursday, August 25, 2011

KPN's iTV Online is best described by what it is not

KPN's iTV Online app for laptop or iPad, although very sleek and simple to use, can best be described by what it is NOT:

1. TV Everywhere: access is restricted to in and around the home.

2. Companion screen: it is a second screen, but it doesn't complement whatever is watched on TV.

3. Connected TV: instead of bringing broadband content to the TV, all it does is liberate TV content from the big screen. It moves in the opposite direction.

Much has to do with rights holders. What is interesting is that it challenges the premise of connected TV: not all content needs to be seen on the best & biggest screen. And it's a bit embarrasing to the cable sector in that KPN beat them in bringing live TV to the second screen.

Read the full review here (in Dutch).

Monday, August 15, 2011

B4RN wants to bring customer-owned Gigabit to Lancashire

Another Gigabit initiative has launched: B4RN (Broadband for Rural North), in Lancashire, England. They are currently assessing demand and at a 50 percent take-up rate, the project will go ahead. B4RN wants to know by October 2011. In Phase 1, the network is to connect 8 parishes with 1,300 properties: Arkholme, Wennington, Melling, Wray, Tatham, Roeburndale, Over Wyresdale, Quernmore and Caton with Littledale (Littledale part only). This phase will cost GBP 1.86m (this includes some of the shared costs between all phases). There will be 3 phases.

Needless to say, Lindsey Annison of Fibrevolution is involved.

The specs:
  • FTTH, 1 Gb/s symmetrical (and, depending on the electronics: more in the future);
  • Aimed at Britain's 'final third': rural areas;
  • Cost per home: GBP 1,000 at most, based on community co-operation;
  • Financing through the issuance of shares; founding members invest a minimum of GBP 1,500; the Industrial and Provident Society (IPS), a non-profit, will own the network, shareholders are members; you can also earn a share by doing work for B4RN;
  • Interested individuals outside the reach of the network can buy shares for a sum anywhere between GBP 100 and GBP 20,000;
  • First year of service comes free (worth GBP 510);
  • Normal price: GBP 150 connection fee plus a GBP 25 (excl. VAT) monthly fee;
  • Femtocells may be added;
  • B4RN will be the ISP, providing Ethernet IP; they are considering to provide access to other ISPs (using VLANs), but what's the point?
Some thoughts:
  • Another Gigabit initiative, even in rural areas. Customer-owned is getting hot.
  • Anyone can be a share owner.
  • Will there be some form of co-operation with the Fujitsu initiative, that involves Virgin Media UK and TalkTalk?
  • Just broadband + Internet access, no triple play. Over-the-top (OTT) services are recommended: a Gmail address, VoIP, YouView.
  • Third-party ISPs could sign up to sell their well-known triple plays, it remains to be seen if this will be part of the plans.
  • I wonder if they would be interested in speaking at our conference .....

Saturday, August 13, 2011

TMG hiring Bain & Co to justify something dramatic

Telegraaf Media Group (TMG) has hired Bain & Co to assist in developing a strategy. It should be presented early 2012.

So what is that, is the 100+ years old TMG hiring an outside firm to tell them how to run their company?

In fact, it is really quite commendable. TMG is a more or less diversified consumer-oriented local media firm, that is being squeezed on all sides: dwindling circulation, adverse advertising markets, Internet substitution and competition from global (i.e. US-based) Internet services. Hiring a few experts isn't such a bad idea. The point is: there are two very different skill sets involved.

When I started as a financial analyst at an investment management firm, I knew nothing of telecoms, but was appointed 'telecoms analyst' nonetheless. That's how it works in finance. My chief said: "In five years time, you will start to understand how the business works". Sometimes this model works, sometimes it doesn't. Analysts are usually very young and don't get the chance to develop some industry insight before moving on to a different job. Still, there is not much wrong with the model: the job requires two very different skill sets, finance and telecoms, and its fine if you more or less control either one of them. The other you will grow on the job. And importantly: arriving at an investment firm, there is lot's of infrastructure: not just financial models and decision making systems, but access to the best research there is out there. It's a perfect playground for any devoted analyst to learn a new trick.

The same model is applied to politics. Our current government consists of politicians. They have learnt the skill of politics. And one would wish that they would draw on experts for making sound policies. Alas, that appears not to be happening. Time and again, expert advice is completely ignored, as the stupidest of all, Halbe Zijlstra, is not ashamed of to share with the world.

Back to TMG. TMG know all about traditional media, and Bain & Co will tell them to integrate the firm, increase synergies, reduce costs and find new revenue streams. They have six months and will claim expenses to the order of millions of euros.

All that can of course be thought of by the TMG management. Hiring Bain & Co is only done for one obvious reason: drastic measures. Watch out for TMG to announce something big, early 2012 - justified by the Bain & Co suits.

Friday, August 12, 2011

Versatel's Mesch brothers reappear at CityFibre

Here's a reprint of an earlier background article to be found here:

Versatel founders pop up at UK's CityFibre

The founders of Versatel, Greg and Gary Mesch, have started CityFibre in the UK to roll out FTTH. Time for a short analysis of the power of challengers on the telecom market.

The telecom sector is dominated worldwide by incumbents, and only in mobile telephony has there been a definite breakthrough in the situation. The UK offers perhaps the most extreme example of this: BT sold its mobile activities (first called BT Cellnet, then mmO2 and now O2) in 2005 to Telefonica. On the fixed market, cable provides competition and in Europe unbundling has also been added, bringing new players and lower prices to the market and growing broadband penetration.

However, the eternal question is whether there is truly competition if vertically integrated companies compete with their own infrastructure? But then how many types of infrastructure can the market support? Doesn’t the existence of two or three networks lead to an oligopoly? Does mobile (4G) even figure in this? Is infrastructure not a natural monopoly, which as such can be best managed by the government, just as other utilities?


However much sympathy you may have with the last point, which in Australia is more or less underway with the construction of the National Broadband Network, there are still a number of places in the world where challengers are shaking up the market with their own infrastructure. A few examples:

  • Hong Kong: incumbent PCCW is under pressure from the newcomers City Telecom (of Hong Kong Broadband Network, HKBN) and Hutchison Telecom. The local market is relatively easy to cover with fibre due to its compact size and high density, making a FTTB network an obvious choice.
  • France: a real FTTH market is in bloom, although limited to certain regions, including of course Paris. The latter makes grateful use of the easily accessible sewers network. In addition to France Telecom, Numericable, SFR and Iliad are active. Iliad, which operates under the brand name Free, has acquired a certain hero status, for keeping pricing simple (EUR 30 per month) while at the same time continuously expanding the range of services provided. The basis is its own DSL network, but a couple years ago it started rolling out FTTH. In addition Free develops its own software and hardware.
  • Italy: FastWeb is one of the most important competitors of Telecom Italia on the fixed market. It started with its own FTTH network in Milan and later expanded to the DSL market. In 2007 the company was acquired by Swisscom, but it still has a minority stake listed on the stock market.
  • Netherlands: Versatel was started already in 1995 in order to compete with KPN, focusing on the business market. In 2002 the company suffered a financing crisis and could no longer pay the interest on its accumulated debt. It started afresh, but fell into financial troubles again in 2004 when it bought the broadcast rights to the Eredivise football. Versatel wanted to launch a pioneering IPTV service, but barely had its network ready in time for the new football season. It failed to attract a significant number of customers and Tele2 acquired the company. In addition, Regggefiber is active on the FTTH market, although the company is largely in the hands of KPN since 2008.
  • UK: the British broadband market is dominated by BT and its unbundlers on the one hand and cable operator Virgin Media on the other. Newcomers have largely limited their efforts to local projects. Among them is CityFibre Holdings, which acquired the assets of i3 Group. The assets include H2O Networks and FibreCity, which plan to roll out FTTH, partly through the sewers, in Bournemouth, Northampton, Dundee and other cities.

The common factor among all these is FTTH, but success is also clearly determined by good, innovative services at a low price. HKBN and Free have been the best at that. Versatel suffered from financial problems, and as part of Tele2 really only has much impact on KPN on the business market. With its Best Deal motto, its ambitions as well as its market share have stagnated on the consumer market. i3 Group was forced to sell its assets due to financial problems, and the new CityFibre has ambitious plans to roll out FTTH in a number of cities, starting with Bournemouth. CityFibre is led by a number of former Versatel people: the brothers Greg and Gary Mesch, Mark Collins, Chris Toller and Leo van Doorne.


FastWeb saw that it was too soon for FTTH and made an understanable shuift to DSL. Since then demand for bandwidth has been near insatiable, and FTTH has become profitable. HKBN and Free are examples of this, remarkably also with innovative and low-priced services. Financial problems are always lurking in the shadows, and too much debt becomes a problem when forecasts are too optimistic. Being acquired by Tele2 (Versatel), KPN (Reggefiber) or Swisscom (FastWeb) may provide for financial stability, but can also be a brake on ambition. CityFibre, for those who see the history of Versatel clearly, is therefore a company to keep an eye on.