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?

Verizon to wholesale FiOS internet service

Verizon has closed a wholesale deal with DSL Extreme to resell FiOS internet (not TV or voice), which will be marketed as Fiber Extreme. Fiber Extreme will undercut Verizon's price points. The 50/20 Mb/s service will be sold for 100 $/mo, whereas at Verizon it costs 150 $/mo (or 140 if bundled with voice). It is available in 17 states.

Some remarks:

• This is a WBA (wholesale broadband access) deal, not unbundling (ODF access, which is not really an option on PON networks anyway), which was killed years ago. Perhaps the new FCC could reverse that. Obviously, Verizon is trying to stop it, as is described here (free registration). Are they making nice with the FCC by doing this deal?
• A wholesale deal makes Fiber Extreme not just subject to any pricing squeeze from Verizon, it makes the company much more dependent on Verizon for provisioning and innovation. Or so goes conventional wisdom. It is remarkable to see here that the deal comes without portal, email, content and security. Fiber Extreme will be bringing its own value-added services, including Google Apps Premier. And so goes unconventional wisdom: innovation is not only created at the active layer, it can be done at the services layer as well. In fact, new services, that fiber is so desperately in search of, are here today; they are called Web 2.0.
• Will Verizon learn that wholesaling (and unbundling) will actually help it fight off cable?