Incufiber: presentation in Greece

Tomorrow I will be joining the Broadband Cities 2008 conference in Greece. Here you have the presentation, but it will only make sense if you come to Greece (Trikala, Thursday at 11:30 local time). Or invite me to come for a 20 minute talk.

FTTH in the UK: small leap of faith needed

Yesterday Analysys Mason published its fiber-in-the-UK report for the Broadband Stakeholders Group. Recently, there has been a wide range of FTTH related developments. Let's first make a little list of them:

• Incufiber: KPN is steadily, if not stealthily, rolling out through its Glashart ('heart of glass') joint venture with privately owned Reggefiber. New towns are coming on board on a near daily basis. Telefonica is launching its network October 1. Swisscom is getting serious too. Makedonski Telekom (owned by Deutsche Telekom) is rolling out in Skopje. SureWest (USA) is progressing too.
  
• Munifiber, utility fiber, etc.: Greece and Mauritius launched a big plan, whereas Australia (primarily targeting FTTC) and New Zealand are still stuck in the debating phase. Saudi Arabia is building a new city for 2m people, with FTTH from Ericsson. In the US, progress was made in several towns. Localised initiatives are found in Ireland and Australia too.
  
• Altnetfiber: Smart Comp is building in Brno. Over in Korea, Hanaro Telecom is getting its act together.
• Cable. There are several initiatives worldwide, most recently in Hawaii (Time Warner Cable), Japan (Suo Cable) and the US (Corn Belt Communications).
  
• Open access. Europe is fighting for the extension of open access obligations from copper to fiber. Companies as diverse as KPN and Telstra are saying they are in the OA mood. But not Telefonica. Interestingly, in Utah the iProvo network was acquired by Broadweave, which subsequently tried to end competition by buying up two independent service providers. But those deals fell through.
• Upgrades. 100 Mb/s isn't the end of it, 1 Gb/s is now in sight. FastWeb (controlled by Swisscom) still has to upgrade to 100 Mb/s first. Somehow, I have a feeling we will see more of that tomorrow ...
  

Here are my very easy comments:

• Of course the Brits need to do FTTH. Is anybody listening? Access networks are bottlenecks - FTTH is the end game - it takes 20 years to build - video is coming - and there are indeed socio-economic benefits, as this very convenient study from Eindhoven University shows (in relation to the well-known networks of Nuenen and Eindhoven in the Netherlands).
• Check out the new (second) Akamai report on the State of the Internet, as observed through their network. There is a lot about security, but Akamai also ranks countries by the percentage of connections above 5 Mb/s. Comparing the Q2 report with the Q1 report, some minor things catch the eye. The top 10 is pretty much the same, with South Korea #1 with an unchanged 64% of connections faster than 5 Mb/s. Belgium and the US make a big leap forward, both to 26% (from 21 and 20% resp.).
• Things are complicated. Analysys Mason produced an impressive report, but it's just a cost model, in other words: one half of the equation. There are so many variables, a decisive report, including a revenue model, is totally unrealistic. Why not then make a little leap of faith and play the end-game?
  

How to create competition on incufiber

Wednesday, at an NGA workshop ('High speed Europe ...') in Brussels, ECTA presented a WIK Consult report on FTTH. Based on case studies for 6 countries (DE, FR, ES, IT, PT, SE), they conclude that incumbents only can do FTTH, on a large and profitable scale.

The main points:

• Incumbents have both the infrastructure (available for re-use or closure) and the customer bases to make it possible in a profitable way (RoC = 10%), through a 30% cost advantage over altnets.
• Large-scale replication is not economically viable for altnets, outside very densely populated areas or in places like Paris (with its famous open access sewer system).
• The network must be open access, because all this implies that rolling out FTTH by incumbents bears the risk of re-monopolizing the telecom market. Duct access is not enough. Unbundled fiber (from Metro Core Locations) could allow for more altnets than unbundled copper. Sharing with altnets right from the start reduces the cost to incumbents.
• Access regulation has to change from 'how to provide access' to 'how to structure new network elements'. A form of 'fiber subloop unbundling' is only possible for point-to-point fiber.

The WIK press release (we haven't seen the report yet) raises a whole range of interesting questions:

• Does the report imply the obvious: we need just a single FTTH network?
• If full replication is not viable, the question remains: at which level do we need competition? (Take the poll in the right hand column!)
• How about cable competition: does that count as network replication? The 6 countries mentioned all have cablecos, but with diverging coverage. What happens once they start rolling out FTTH?
• Does the case still stand in a country like France, where altnets are cherry-picking high-density geographies?

This fits nicely with our 'incufiber' stance, which we were able to present in Rome earlier this month. We proposed structural separation as a way to maintain a proper level of competition. The advantages include:

• True equivalence between SPs.
  
• The ablity to attract (state) funding.
• Avoid more than one FTTH networks being built.
  

And there were more FTTH goodies:

• Viviane Reding (EC) proposed a 15% 'risk premium' for NGA builders in a speech that wasn't all too different from a previous one. So far, it's not clear what this means exactly. However, the message is clear: true infrastructure-based competition is favoured. Now, if the incumbents aren't supposed to re-monopolize the market (since only they have the scale for nationwide FTTH roll-out), there must be open access and true equivalence: all service providers (including SPs belonging to the incumbent) should have identical terms for accessing the network.
  
• Telecom Italia calls for increased NGN investments through PPPs. Partnering is the way to go.
  
• Vodafone considers entering the fiber game. It starts to look more and more as if Vodafone wants to be a full-service provider (integrating Arcor, bidding for Ghana Telecom, launching BB, etc.). Are they, sort of, going the Tele2 way (consolidating some markets, exiting others)?
  
• SFR targets 5m homes passed by 2012. It remains to be seen how France can reach nationwide coverage.
  

Roman Holiday: Incufiber to the People!

Off to Rome, for a presentation on incumbent FTTH, at an Economist conference. This is the reasoning:

1. FTTH: fiber to the people
2. Incufiber: now is the time
3. Structural separation: recommended
4. Case

Back on Thursday.

Incufiber: the case for structural separation

On Wednesday I will be in Rome for a keynote speech at a telecoms forum. I will be talking about FTTH, incumbents (can I trademark the term 'incufiber'?) and structural separation.

Digging into the subject, that Paul Budde down-under apparently has been researching also, I was reminded of the perennial complaint KPN has about regulation: there is no symmetry when it comes to regulating copper and coax. (OPTA, the Dutch NRA, defends this position, referring to its approach (market-by-market), but is looking into extended regulation of cablecos at the same time.)

There are plenty of arguments in favor of structural separation, and one of them is symmetry. How can competition ever by 'symmetrical' if there is no symmetry between the incumbent and its wholesale partners? Unless of course there is full structural separation. Go on, KPN, call for symmetry - as long as you realize that it will lead to structural separation of your own company.
(Assuming that the EC will not stear toward a US-style cable/telco duopoly and as long as full network replication is not deemed economically viable.)