THIRD PIPE://Benefiting from having less or better legacy infrastructure

TeleGeography reports Electropaulo plans a PLC (BPL) trial, after three years of testing. During that period, data rates increased to 200 Mbps from 45.

Some remarks:

• Third pipes are coming to life. J-COM and StarHub are doing pre-DOCSIS 3.0. BPL and DOCSIS are forcing VDSL services upon telcos - or FTTH, for that matter.
• In some cases, non-western operators seem to have the advantage of not having too much legacy infrastructure.

KPN may move beyond FTTH

Last week, I spoke with a couple of Ericsson people. They had a really cool slide of how market shares have moved for all vendors (Ericsson, NSN, Alcatel-Lucent, Huawei, ZTE, NEC, Cisco, Motorola, Nortel). The X and Y axis represented mobile and fixed sales. Each company was represented by three blobs, representing sales in 2006, 2007 and 2008. By their size and direction, one could tell who is moving where. Curiously, Cisco was regarded purely fixed (not counting the Starent takeover) and in LTE, Ericsson expects to see three winners: Ericsson, Huawei and some third party (I wonder who that could be).

When it came to LTE, they were perfectly clear about what it means: it is the third pipe that we have been talking about for a long time (but not recently). In Ericsson speak, mobile broadband (MBB) is not a complement, but a fully-fledged replacement to fixed NGA networks (helped by releases such as these: 500 Mbps, even if we should not get carried away). And make no mistake: we are talking laptop (or netbook) usage, not an inferior smartphone experience. Of course, MBB requires FTTS (site).

All this may be a blissing to KPN's indecisiveness regarding FTTC and FTTH.

On the side, new service development is notoriously slow, which may contribute to KPN's undecisiveness. One reason is (semi) governmental agencies' unwillingness to move online. A reason behind this, as was stressed in my newspaper this week, is the fact that health workers are paid by the hour. They are completely disincentivised to embrace e-health, because it threatens to make their work much more efficient.

Back to KPN. They bought a 41% stake in the FTTH start-up Reggefiber, and injected their own (few) FTTH projects into it. And now they are trialling both FTTH (through Reggefiber) and FTTC. By the end of the year, they want to decide their strategy going forward, based on these trials. (The Q3 release is due October 27.)

My prediction is: they will freeze the Reggefiber expansion (blaiming it on the financial markets) and move forward with FTTC. And this may be a smart move after all. The original FTTC targets were to bring fiber to 28k street cabinets. And perhaps some of these can also house LTE gear. At the same time, KPN's mobile sites will have to be fiberised as well (it is a well guarded secret how many actually already are).

It also becomes clear why KPN bought the Reggefiber stake: for the good old business reason of taking out a competitor. Remember Nielsen Media Research, once part of VNU, following the exact same strategy by buying start-ups that threatened Nielsen's monopoly on the US TV ratings market. They were never heard of again.

As a result, KPN may be the first operator in the world to actually move beyond FTTH. (So much for those who like to term FTTH not NGA but LGA: last-generation access.)

FTTH keeps moving ahead in August

Returning from a long holiday period, I want to summarize the big news of August, with a T.I.M. (telecom internet media) twist.


1. FTTH
The local Metro free daily reports on Reggefiber. This Dik Wessels (a Dutch billionaire who made his money in the construction sector, as well as by being part of World Online when it went public) vehicle builds out in the Netherlands. The costs are EUR 1000 for passing and EUR 300-400 for connecting a home. Reggefiber intends to add 150k connections a year, or 50% of the nations total FTTH connections.

Other new deployments were planned in Barcelona (Spain), Mauritius, Hawaii, Canberra (Australia), Chattanooga (Tennessee) and Iowa, Dundas (Minnesota?) and South Africa. Again, lots of activity in the US, as well as another utility (EPB in Chattanooga) joining. Who has additional English language information on Adamo Europe (the one doing Barcelona)?

Also, Telekom Slovenija detailed its plans (still among very few PTTs/ILECs), devoting EUR 450m.

Finally, PacketFront has acquired DynamicCity, operating the UTOPIA network in Utah (that looks like an interesting deal!).


2. Third Pipe
KPN is testing both WiMAX (with Samsung) and HSPA (with Ericsson) for rural access. This is a fixed (DSL) replacement service first of all, so don't count WiMAX out just yet. In fact, it could be clever from the point of view of traffic unloading: mobile networks are much more capacity constrained than fixed networks, to it could be wise to dedicate HSPA to mobile wireless access.

Further, Sprint detailed its WiMAX plans ('Xohm'), very much a mobile offering. But then, they have CDMA and Nextel for 'offloading' voice and P2T.

Finally, DirecTV enters the BPL market by teaming with Current Group (Google and Hearst hold a stake). Its coverage area is very limited, so DirecTV will still need to team with others.


3. Consolidation
The KPN takeover of Tele2/Versatel Belgium lead to some interesting (albeit obvious) conclusions: KPN is serious about Belgium, but a Belgacom merger will not happen; the same strategy will likely be followed in Germany, perhaps involving Versatel Germany (no longer related to Tele2/Versatel); after that, who knows what - France ?


4. Credit crunch
Over at Wolters Kluwer, $12m in sales is affected. A small acquisition can be seen as mitigating this.

McGraw-Hill and Moody's are bleeding.

THIRD PIPE://Amsterdam inspires FriscoNet

San Francisco released a feasibilty study regarding munifiber. A promising element is that the city had Dirk van der Woude come over to give them some advice. Dirk was involved in getting Citynet started in his hometown Amsterdam.

Recently he also pointed me to this Light Reading article, from which he took a number of quotes:

"threaten to overwhelm even their fattest broadband pipes"
"It's definitely a real problem; there's definitely a storm coming."
"Prepare your networks for the primetime on-demand wave."
"There's an absolute risk of people dropping basic video service for
Internet video."
"Thanks to these trends, some tech executives contended that the bandwidth
crisis may never actually end for cable operators."
"They're even weighing such previously unthinkable moves as building
fiber-to-the-home (FTTH) networks".

On the other hand, some respected research firms still dig in, doubting the demand side of the equation:

"We conclude that the new broadband divide would be best bridged using a
combination of VDSL and fixed wireless."
"Our main conclusion is that any decision to promote investment in higher
speed broadband on the grounds that it will accelerate economic growth cannot be
justified by evidence that such investment will have a measurable effect".

THIRD PIPE://Citynet to start on FTTH in Amsterdam

Citynet will officially start work on the Amsterdam FTTH-network next week, October 12. The first phase targets 40k homes.

The EC has not yet formally approved the venture, but Citynet regards a court ruling supportive. Moreover, they made sure to follow the European Market Economy Investors Principle. Citynet also refers to other state-owned firms providing BB access (e.g. MSO Zeelandnet).

Summary:

• Owner:GNA (Glasvezelnet Amsterdam), which is in turn 33% each owned by the city, 5 housing corporations and several investors (ING and Reggefiber, which we also know as Lijbrandt Telecom owners).
• The network will be operated by bbned (= Telecom Italia), which rents the network from GNA, on a wholesale basis.
• There will be many service providers.

THIRD PIPE://Minor movements around BPL, BiG and xMax

BPL: the IEEE 1901 Draft Standard is to be published early 2007. The FCC is supporting the technology.

BiG: Nethercomm claims field trials next year, but designated partners (utilities) deny. 6 Gbps brought to you for just $200 per household.


xMax: ZDNet UK witnessed a succesful trial in Florida. 4 Mbps at an 18 mile distance, supposedly NLOS too, and at tiny power usage.

THIRD PIPE://Do the math on Clearwire and Current Communications

Check out some recent developments around these two companies:

WiMAX: Clearwire (Craig McCaw)

• $900m funding from Intel and Motorola
• Working on a deal with DirecTV (controlled by News Corp)
• To join the August 9 FCC AWS auction

BPL: Current Communications (William Berkman)

• $130m funding from GE, TXU, Sensus and EarthLink (earlier investors: Google and Liberty Media et al)
• Linked to WiFi through Google and EarthLink (stakeholders)
• To join the August 9 FCC AWS auction in the POP Wireless consortium

Add some cross-links

• Google is a candidate for serving ads on News Corp's MySpace.
• AOL resells Clearwire. Google holds a 5% stake in AOL.
• Lots of speculation around Google's infrastructure efforts (servers, dark fiber, server chips, WiFi access, FON, VPN) to bring the internet closer to the user.
• News Corp wants to buy out Liberty Media.
• Motorola has WiMAX as well as BPL capabilities.

Now do the math.

UPDATE: POP Wireless is on the list of non-qualified bidders for the upcoming FCC AWS auction (#66).

THIRD PIPE://Endesa in PLC, NetCologne and Chunghwa in FTTx

Even if WiMAX has an uncertain future, presumably as a 4G technology, there are plenty of alternatives lining up as fixed line replacement.

PLC
Endesa is working with DS2 to turn the power grid into an intelligent network, for both triple play services and utility functions such as meter reading. There is an International Intelligent Network Day in Madrid on July 17.

FTTHx
Both Chunghwa in Taiwan and NetCologne in Germany have big FTTH/FTTB plans.

Bad news as ever for PTTs, especially in Spain where Telefonica finally is experiencing increasing competition (also from ONO, MVNOs and TeliaSonera/Xfera).

New Poll: Structural separation?

My third poll (How to solve the broadband incentive problem) has ended, and here are the results:

1. Usage-based metering: 9%
2. Service-based tiers: 18%
3. More bandwidth (FTTH): 31%
4. Allow throttling: 15%
5. Accept that access is a dumb pipe business: 53%
6. Bundle access with other services: 25%

I suppose answers 1-4 are remedies of sorts, with FTTH fortunately by far the most popular. Answer 6 has surpisingly few proponents, or put differently: surprisingly many people still feel that access is good business (answer 5), despite the fact that it is quite 'dumb' (in other words: a utility service).

Of course, one could easily vote for all 6 answers since none of them excludes another, as a valued reader remarked.

Now, do take the new poll (see right).