WBA and innovation at the center of FTTH developments

We had our first FTTH NL conference last Thursday, and I am happy to say that it was a big success. We will likely put on a second edition next September. You can still find the program here (and for those of you who attended, you can download the presentations).

There was a clear distinction between those who looked at FTTH indepth by the nature of their business (Reggefiber, Emtelle, FTTH Council), and those who followed the latest mantra (it's not about the network, it's about the services) - taken one step further by KPN who claim that it's not about services either - it's about whatever you can imagine you want to do with it.

At the same time, three out of a total of eleven speakers had to do their utmost to make a connection to FTTH. But this provided the topic with extremely valuable context and perspective.

• Tele2 NL, focusing on VDSL2 for now, but an FTTH trial wil be conducted in 2010. And: it was acknowledged that VDSL2 is an interim strategy.
• UPC, FTTH's nemesis, however had an interesting quote: "Should we need to do FTTH in 10, 20 or 30 years, we will."
• Ams-IX doesn't directly feel the effect of FTTH, because uptake is a very gradual process. Interestingly, community services (local traffic kept on-net and hence off the Internet) will grow its share of total traffic.

Our regulatory session (with Opta and a lawyer for alternative operators) focused on WBA. Opta has chosen not to regulate this service (the bitstream wholesale service that ISPs buy from operators) in order to stimulate newcomers to become an operator themselves. Opta claims that this worked well in the DSL world. I cannot quite see this - it's a stagnant market with just three unbundlers, and in an FTTH context it still isn't flying yet. Our Bird & Bird lawyer drew the obvious conclusion: we need WBA regulation in order to allow newcomers to enter the market. It is the first step on the ladder of investment. Once they have gained a market presence, they can move on and become an operator.

One thing he also pointed to was equal time-to-market, which isn't satisfactorily regulated at this point for ODF access (wholesale service bought by operators from the network owner).

On the whole however he did identify a certain 'investment run', with Reggefiber kickstarting the market, KPN buying into it and now Tele2 doing VDSL and cablecos doing Docsis 3.0.

Rabobank's Henk Doorenspleet had a very smooth and appealing presentation. He appeared to be quite worried over government funding, because he quite directly notices that this is preventing private financiers to enter the market.

Personally, I was happy to see a favorite topic of mine being taken up several times: where does innovation arise?

• At the active layer? This is the traditional ISP view, who feel they need to unbundle copper of fiber. So they need to be an operator. However, there is only limited (economic) space in each PoP to justify this model for more than 2 or 3 players.
• At the services layer, but on-net? This is the view of Genexis. It has a drawback: WBA isn't regulated. So what you see now is that KPN and cablecos are starting to make innovation happen themselves and seem to be trying to keep RSP's out of the market.
• At the services layer, but OTT? This is the Google, Skype, iTunes model. A lack of QoS and security is a drawback, that is however pushed to the background by network upgrades and the rise of CDN's.

Any suggestions, ideas, views here?

ECI Telecom trials DSM L3

Short follow-up on this post (DSM increase's xDSL's reach). DSM L3 is trialed by ECI Telecom at 3 European telcos to extend the reach and performance of VDSL. This could be a way to deploy VDSL2 from the Central Office, where existing ADSL2+ DSLAMs can simply be replaced, instead of from the cabinet. Effectively, with DSM you don't need to do FTTC to extend fiber from the CO to the cabinet.

The strategy pits Tele2 (VDSL2 from the CO) against KPN (VDSL2 from the street cabinet). Tele2 obviously has a much cheaper strategy and can truely regard it a solid interim strategy before starting to unbundle FTTH.

New milestone at Ams-IX: the 700 Gb/s barrier

Service innnovation on FTTH: institutions need help migrating online

Today I visited the Glasdag 2009 conference put together by Glasvezel.nu (the website devoted to community and other efforts towards FTTH in the Netherlands) and SBNA (the non-profit behind a number of such initiatives in the city of Amersfoort). The conference was aimed at volunteers interested in launching FTTH initiatives in their home towns. Speakers included Kees Rovers (the driving force behind the Nuenen and Eindhoven FTTH networks built by OnsNet) and Jan Griffioen (Reggefiber).

The conference was opened by an Amersfoort city council member, who hailed the social and economic benefits of these networks. He also hinted at the 'option value', quoting history: when the telephone was first invented, its main purpose was to inform people that a telegram was on its way.

Kees Rovers first gave his 7 key elements to successful network deployment:

1. Business case. Make sure you have one, including funding. A high take rate is essential. Remember that fiber is cheap; it costs only EUR 1,000, which is negligible when compared to your home's value.
2. Community sense. Everybody needs to be in.
3. Triple play. This will make the network finance itself.
4. Communication. Forget fiber speak. Keep that 75 year old granny in mind when talking about your plans. Focus on telephone and television services.
5. Local services. This is something the cableco can't replicate. Think of the local soccer club, even marriages taking place in the local church.
6. Customer service. Remember that people hate call centers.
7. Reliable network.

Jan Griffioen outlined Reggefiber's long-term strategy. Connecting every Dutch home in the next 10-15 years is core to that strategy. The consumer-facing brand is Glashart. Today, he was able to add one more network to Reggefiber current c. 35 projects: the Kattenbroek area in Amersfoort.

A few things stood out. First, if any demographic needs to converted to the Fiber Religion, it's .... women. It was practically a men-only conference.

Second, Kees Rovers conspicuously de-emphasised fiber in order to put services in the spotlight. This is all fine and dandy, but it must be kept in mind that he is now involved with KPN's 2x5 trial towns, and that half of these are around VDSL, not FTTH. But obviously, on the whole he is quite right. If the end-user is to be converted (remember: a high take-up rate is needed for the business model to work), then it must be basic and understandable services to convince them to sign up. Many city workers and departments come to mind here: doctors, soccer clubs, church, library, school, hospitals, local broadcasters, city hall, etc.

What really stood out was that all these grassroots initiatives really appear to grasp this issue. But was even more striking, was Kees Rover's observation on how to get it done. Don't count on any organisation here to take care of this issue and migrate their services online themselves. It will never happen this way. That's just not how people are. They need to be forced, one way or another.

One final word: this movement is behind taking a lot of traffic off the internet. It's all local traffic. It has been reported before that local traffic can make up as much as 50% of traffic on FTTH networks.

DSM increases xDSL's reach

In this podcast at Cnet, John 'copper' Cioffi talks a little bit about DSM (dynamic spectrum management), a software solution for noise cancellation on DSL lines, sold through Assia. It delivers a reach increase of 25-30%, enlarging customer reach by up to 50%, according to him. Apparently, he is betting the farm on copper, delivering up to 100 Mbps over a maximum of 1 km.

At around the 17th minute, he also talks about VDSL2 and ADSL2+.

With great abundance comes great responsibility

The success of new applications has a lot to do with freedom and abundance:

• The mobile phone liberated us from having to sit at the desktop phone.
• VoD liberates us from having to watch linear broadcast TV.
• Social networking liberates us from having to be friends with family, neighbours, colleagues etc. only, because it allows us to explore the entire world.
• The digital camera made us much more independent from the photo store and the limitations of 'analogue' (chemical) photography.
• etc.

Imagine what the Snapdragon-based smartbook will bring about (always connected, 3-D graphics, GPS, video calling, full web browsing, all-day battery life, etc.).

There is however a shadow side to all this and it has to do with quality, art and science.

• How does a gallery owner select photographs in the age of digital photography? ("Everyone can be super! And when everyone is super ... no one will be.") Which raises the wider question: What is art anyway?
• How does a teacher put together a curriculum in the age of Wikipedia? What do you teach kids when they can look-up and download anything from the Internet?
• Where do you get a profound musical experience (check out Cesar Franck's Piano Quintet) in the age of MP3-files, flat fee access to millions of songs and DJs being promoted to artist status?
• How do you engage in profound relationships in the age of e-mail and social networking?
• etc.

To paraphrase a famous quote: With great abundance comes great responsibility.

FTTH versus HFC: short- and long-term over- and underestimation

Paul Budde has written a very eloquent piece on the FTTH/HFC debate. I have been talking to a number of cable execs myself recently, and my attempt at The Truth is something like this:

• The Medium. In general, the shortcomings of HFC networks include limited downstream (where Docsis and other technologies help out), even more limited upstream (where channel bonding options are more limited), the medium itself (which is much less 'transparant' for signals than fiber, which is why HFC operators need several amplifiers in their access networks) and the fact that it is a shared access network (just like wireless).
• The Upgrades. HCF operators have a choice of many technologies and techniques (I counted 14!) to upgrade their networks. The trouble is, some do not apply for practical reasons, some are still embryonic and others may prove costly.
• End-game. Even if HFC operators manage to do node splits to 1 per 20 homes and fiber deep to reduce the access network to 50 meters, expand the spectrum to 3,000 GHz and apply 256-QAM, questions remain: how much does it cost, and is it enough?
• Access network. In the above case, a 50 meter access network could in practice not be too different from an in-home network based on copper or coax in most FTTH networks.
• Non-linear video. The big threat is a migration away from linear TV to non-linear HD video, in both the uplink and the downlink. Here it is important to note that people tend to overestimate the short-term and underestimate the long-term. In other words: yes, upgrading will allow HFC operators to compete for several years; and no, it may not be enough and a full FTTH migration may be necessary.

Akamai new State of the Internet report

Akamai put out its 09Q1 State of the Internet report today.

Time spent online doubled in 4 years

Instead of asking 'why should NGA networks be built', a different question is worth asking: What will people do with virtually unlimited bandwidth?

Part of the answer comes a survey on the time spent online (done by The Media Audit, as quoted by BizReport, among a US audience).

"On average, American adults are now spending just under 4 hours each day online; that is an 81% increase over 2006 numbers, according to a new report from The Media Audit. Researchers have found that the Internet now accounts for more than 30% of a 'media day' for adults in the US."

In other words: time spent online must have doubled since, let's say, 2005. And it makes up only 30% of a media day.

FTTH in the Netherlands 2009: Conference September 17

At the parent company, we are working hard to put our first conference together. It is devoted to FTTH in the Netherlands and will be held September 17 in Houten (NL), in Dutch. Our list of speakers has been finalised, and we are very proud to have such a varied (and large) band.

We are selling the report (in English) and the conference as a bundle, but you can order them separately as well.