Monday, July 29, 2013

EU single market for telecoms: international roaming major stumbling block

Neelie Kroes is aiming for a single market in the EU for telecoms. Everybody would agree with this concept, but there are several serious issues. Let's look at the main constituents of the single market:
  1. Net neutrality
  2. International roaming
  3. Harmonisation of regulation and spectrum management
All this would add 0.9% to GDP, or EUR 110bn per annum through innovation, new business models and enhanced demand.

1. Net neutrality: adapt or die
NN can be seen as a way to protect the OTT/CSP sector against blocking and throttling by ISPs. Competition at the services level increases, and ISPs (the incumbent) want something in return.
To ease regulation (open access to wholesale customers at layer 2 or 3) doesn't make any sense, however, because regulation covers the relationship between the incumbent and its wholesale customers, not the OTT/CSP sector.
It looks like this is just tough luck for the incumbents: times are changing, managed services are disappearing, adapt or die. They need to focus on broadband (fixed and mobile). And to die isn't all that bad (looking at it from a national security point of view), because infrastructure will always be an attractive asset, even when auctioned off in case of bankruptcy.

2. International roaming: not realistic
While sympathetic, this is as ambitious as leveling the price of bread throughout the EU. Costs (opex) vary dramatically across the EU, so how could wholesale (let alone retail) pricing of an MB be equalised?

3. Harmonisation: lengthy process
Operators would be allowed to do business across the EU - as if that wouldn't be possible today. Next, they could choose which regime to follow - which makes no sense. Harmonising spectrum is ambitious but sympathetic, with current license expiring at vastly different points in time.

Tuesday, July 16, 2013

LomboXnet: electric cars as storage devices in a solar powered smart grid

LomboXnet, the small-scale ETTH network in the Lombok part of Utrecht, is making an interesting turn. As it awaits a viable IPTV solution, it has decided not to expand the network, for now at least. Instead, it is developing a smart grid, based on the ETTH network, several solar plants and ... storage!

Solar panels are mounted on rooftops of local schools etc. and the smart grid will help to match supply and demand as much as possible. Weather forecasts will be included in the input. This is where storage comes in, and the company has decided to allow electric cars to act as storage devices for the grid and the local community. Charging and home use will alternate, depending on weather conditions.

A few numbers from the solar industry (approximations):
  • Existing electric cars (Nissan Leaf) have storage of c. 24 kWh, enough to run a household on for c. 3 days and LomboXnet for c. 8 hours.
  • New electric cars (Tesla S) can fully charge at c. 20 kW, which translates in just half an hour. Storage is 85 kWh. Any full day's drive in the Netherlands normally doesn't use more than half of this, leaving the rest for home use. Such cars are currently cheaper than buying comparable storage capacity on a stand-alone basis.
Local (de-centralised) energy production and storage may mean the end of large energy distribution & network companies, although for now they will be needed to make it through the night and through the winter. Solar energy is becoming ever more viable by the day, as a result of increasing efficiency of both production (solar cells are becoming better, faster and cheaper) and storage (driven by the smartphone/tablet/laptop industry).

Wednesday, July 10, 2013

War of the words continues between fiber and copper

Recently, the Dutch cable sector (i.e. Ziggo, UPC and NLkabel - NOT the smaller cable companies and CIF) decided to step up its lobbying efforts against the fiber lobby (led by Reggefiber/KPN). It all seems to come down to the use of the words 'future-proof' (toekomstvast or toekomstbestendig). Now, unfortunately, Hartwig Tauber of the FTTH Council Europe, decided to enter into this silly discussion, claiming that FTTH is the only future-proof network:
“Fibre to the Home is de enige toekomstbestendige oplossing. Consumenten profiteren nu al van glasvezelverbindingen die 1 Gbps en meer bieden voor het up- én downloaden. Bovendien is Fibre to the Home in staat een niet te kloppen servicekwaliteit te bieden. In plaats van consumenten te misleiden met maximumsnelheden kunnen Fibre to the Home-netwerken aan ieder huishouden een gegarandeerde snelheid leveren. Operators die gegarandeerde snelheden van 100 Mbps en meer aanbieden, bevestigen dat klanten tevreden zijn met die snelle verbindingen.
Er zijn echter nog steeds spelers op de markt die stellen dat hun koperoplossing toekomstbestendig is, omdat consumenten geen hogere snelheden nodig hebben. Het logische gevolg hieruit is dat deze partijen hun klanten voorschrijven wat toekomstbestendigheid inhoudt en de ontwikkeling van innovatieve diensten belemmeren, waaronder diensten met grote socio-economische voordelen.”
Of course, this is total nonsense. No single network is future-proof. Every network needs work: maintenance, repairs, upgrades, etc. And it all starts with the question: is this about the passive or the active components? Fiber appears to be the way forward, but you can never tell; and 100 Mb/s equipment seemed to be enough, until Reggefiber decided to upgrade to 1 Gb/s - with implications for backhaul (i.e. fiber) as well.

And then there is the use of the words future-proof: linguisitically (semantics), it is incorrect to talk about 'more' or 'less' future-proof, in the same way as it is nonsensical to say that something is 'more perfect' or 'less perfect'. Something is either future-proof, or it isn't. And no single technology is future-proof.

We have been proponents of FTTH for many years, but the discussion has to be fair. NLkabel and the FTTH Council are bending the truth (to say the least). And this isn't helping. Of course, fiber is better than HFC: more capacity, easier to upgrade, symmetric, open. But FTTH is on the roadmap of HFC as much as it is on the roadmap of copper networks.

Unfortunately, Hartwig's statement fails on more points:
  • He forgets to mention openness.
  • He talks about bandwidth guarantees, but networks are all shared at some point in their architecture.
  • He doesn't distinguish between GPON ('shared') and WDM-PON and p2p ethernet fiber (dedicated) networks.
We have written on the subject twice recently. In summary, there are three points to be made, two of which are mostly overlooked:
  1. FTTH beats HFC in many respects (see above). Cable operators are billing their networks as NGNs, which is total nonsense. One needs to distinguish between the passive and the active networks. Every network can be upgraded. FTTH is on the roadmap of all.
  2. There is a sharp distinction between the advantages for users (QoS, real estate value), for operators (capacity, opex, new business models) and for governments (socio-economic and environmental benefits).
    • Fact is, that many cable customers still are happy customers.
    • Fiber operators are trying to make the network a worry for their customers ('choose the network that is most future-proof'), but the customer shouldn't care. The network is the operator's worry. Fiber operators also claim that cable networks cannot keep up, but again, that is the cableco's worry. Or that they can't afford it - which is probably true, but let John Malone worry about that. If their upgrades start falling behind demand growth, the market will do its work and subscribers will migrate to FTTH. There's one problem though: FTTH penetration. In areas where FTTH will not be deployed for many years, HFC only competes with DSL and hence has no incentive to move to all-fiber, which could create a digital divide.
    • The government has no voice, because it decided to leave telecoms to the market (apart from rural areas, where the market fails), and so: either shut up or create a national infrastructure, either the Australia (nationalisation) or the Singapore way (tender).
  3. The way the market works, is that capacity is added as demand grows. Business models are based on scarcity. Moving to an all-fiber gigabit network is a big leap and only makes sense when other forms of upgrades make no sense from a return point iof view, or when new business models, based on abundance, are explored.