KPN's iTV Online is best described by what it is not

KPN's iTV Online app for laptop or iPad, although very sleek and simple to use, can best be described by what it is NOT:

1. TV Everywhere: access is restricted to in and around the home.

2. Companion screen: it is a second screen, but it doesn't complement whatever is watched on TV.

3. Connected TV: instead of bringing broadband content to the TV, all it does is liberate TV content from the big screen. It moves in the opposite direction.

Much has to do with rights holders. What is interesting is that it challenges the premise of connected TV: not all content needs to be seen on the best & biggest screen. And it's a bit embarrasing to the cable sector in that KPN beat them in bringing live TV to the second screen.

Read the full review here (in Dutch).

B4RN wants to bring customer-owned Gigabit to Lancashire

Another Gigabit initiative has launched: B4RN (Broadband for Rural North), in Lancashire, England. They are currently assessing demand and at a 50 percent take-up rate, the project will go ahead. B4RN wants to know by October 2011. In Phase 1, the network is to connect 8 parishes with 1,300 properties: Arkholme, Wennington, Melling, Wray, Tatham, Roeburndale, Over Wyresdale, Quernmore and Caton with Littledale (Littledale part only). This phase will cost GBP 1.86m (this includes some of the shared costs between all phases). There will be 3 phases.

Needless to say, Lindsey Annison of Fibrevolution is involved.

The specs:

• FTTH, 1 Gb/s symmetrical (and, depending on the electronics: more in the future);
• Aimed at Britain's 'final third': rural areas;
• Cost per home: GBP 1,000 at most, based on community co-operation;
• Financing through the issuance of shares; founding members invest a minimum of GBP 1,500; the Industrial and Provident Society (IPS), a non-profit, will own the network, shareholders are members; you can also earn a share by doing work for B4RN;
• Interested individuals outside the reach of the network can buy shares for a sum anywhere between GBP 100 and GBP 20,000;
• First year of service comes free (worth GBP 510);
• Normal price: GBP 150 connection fee plus a GBP 25 (excl. VAT) monthly fee;
• Femtocells may be added;
• B4RN will be the ISP, providing Ethernet IP; they are considering to provide access to other ISPs (using VLANs), but what's the point?

Some thoughts:

• Another Gigabit initiative, even in rural areas. Customer-owned is getting hot.
• Anyone can be a share owner.
• Will there be some form of co-operation with the Fujitsu initiative, that involves Virgin Media UK and TalkTalk?
• Just broadband + Internet access, no triple play. Over-the-top (OTT) services are recommended: a Gmail address, VoIP, YouView.
• Third-party ISPs could sign up to sell their well-known triple plays, it remains to be seen if this will be part of the plans.
• I wonder if they would be interested in speaking at our conference .....

TMG hiring Bain & Co to justify something dramatic

Telegraaf Media Group (TMG) has hired Bain & Co to assist in developing a strategy. It should be presented early 2012.

So what is that, is the 100+ years old TMG hiring an outside firm to tell them how to run their company?

In fact, it is really quite commendable. TMG is a more or less diversified consumer-oriented local media firm, that is being squeezed on all sides: dwindling circulation, adverse advertising markets, Internet substitution and competition from global (i.e. US-based) Internet services. Hiring a few experts isn't such a bad idea. The point is: there are two very different skill sets involved.

When I started as a financial analyst at an investment management firm, I knew nothing of telecoms, but was appointed 'telecoms analyst' nonetheless. That's how it works in finance. My chief said: "In five years time, you will start to understand how the business works". Sometimes this model works, sometimes it doesn't. Analysts are usually very young and don't get the chance to develop some industry insight before moving on to a different job. Still, there is not much wrong with the model: the job requires two very different skill sets, finance and telecoms, and its fine if you more or less control either one of them. The other you will grow on the job. And importantly: arriving at an investment firm, there is lot's of infrastructure: not just financial models and decision making systems, but access to the best research there is out there. It's a perfect playground for any devoted analyst to learn a new trick.

The same model is applied to politics. Our current government consists of politicians. They have learnt the skill of politics. And one would wish that they would draw on experts for making sound policies. Alas, that appears not to be happening. Time and again, expert advice is completely ignored, as the stupidest of all, Halbe Zijlstra, is not ashamed of to share with the world.

Back to TMG. TMG know all about traditional media, and Bain & Co will tell them to integrate the firm, increase synergies, reduce costs and find new revenue streams. They have six months and will claim expenses to the order of millions of euros.

All that can of course be thought of by the TMG management. Hiring Bain & Co is only done for one obvious reason: drastic measures. Watch out for TMG to announce something big, early 2012 - justified by the Bain & Co suits.

Versatel's Mesch brothers reappear at CityFibre

Here's a reprint of an earlier background article to be found here: http://goo.gl/149hN

Versatel founders pop up at UK's CityFibre

The founders of Versatel, Greg and Gary Mesch, have started CityFibre in the UK to roll out FTTH. Time for a short analysis of the power of challengers on the telecom market.

The telecom sector is dominated worldwide by incumbents, and only in mobile telephony has there been a definite breakthrough in the situation. The UK offers perhaps the most extreme example of this: BT sold its mobile activities (first called BT Cellnet, then mmO2 and now O2) in 2005 to Telefonica. On the fixed market, cable provides competition and in Europe unbundling has also been added, bringing new players and lower prices to the market and growing broadband penetration.

However, the eternal question is whether there is truly competition if vertically integrated companies compete with their own infrastructure? But then how many types of infrastructure can the market support? Doesn’t the existence of two or three networks lead to an oligopoly? Does mobile (4G) even figure in this? Is infrastructure not a natural monopoly, which as such can be best managed by the government, just as other utilities?

Challengers

However much sympathy you may have with the last point, which in Australia is more or less underway with the construction of the National Broadband Network, there are still a number of places in the world where challengers are shaking up the market with their own infrastructure. A few examples:

• Hong Kong: incumbent PCCW is under pressure from the newcomers City Telecom (of Hong Kong Broadband Network, HKBN) and Hutchison Telecom. The local market is relatively easy to cover with fibre due to its compact size and high density, making a FTTB network an obvious choice.
• France: a real FTTH market is in bloom, although limited to certain regions, including of course Paris. The latter makes grateful use of the easily accessible sewers network. In addition to France Telecom, Numericable, SFR and Iliad are active. Iliad, which operates under the brand name Free, has acquired a certain hero status, for keeping pricing simple (EUR 30 per month) while at the same time continuously expanding the range of services provided. The basis is its own DSL network, but a couple years ago it started rolling out FTTH. In addition Free develops its own software and hardware.
• Italy: FastWeb is one of the most important competitors of Telecom Italia on the fixed market. It started with its own FTTH network in Milan and later expanded to the DSL market. In 2007 the company was acquired by Swisscom, but it still has a minority stake listed on the stock market.
• Netherlands: Versatel was started already in 1995 in order to compete with KPN, focusing on the business market. In 2002 the company suffered a financing crisis and could no longer pay the interest on its accumulated debt. It started afresh, but fell into financial troubles again in 2004 when it bought the broadcast rights to the Eredivise football. Versatel wanted to launch a pioneering IPTV service, but barely had its network ready in time for the new football season. It failed to attract a significant number of customers and Tele2 acquired the company. In addition, Regggefiber is active on the FTTH market, although the company is largely in the hands of KPN since 2008.
• UK: the British broadband market is dominated by BT and its unbundlers on the one hand and cable operator Virgin Media on the other. Newcomers have largely limited their efforts to local projects. Among them is CityFibre Holdings, which acquired the assets of i3 Group. The assets include H2O Networks and FibreCity, which plan to roll out FTTH, partly through the sewers, in Bournemouth, Northampton, Dundee and other cities.

The common factor among all these is FTTH, but success is also clearly determined by good, innovative services at a low price. HKBN and Free have been the best at that. Versatel suffered from financial problems, and as part of Tele2 really only has much impact on KPN on the business market. With its Best Deal motto, its ambitions as well as its market share have stagnated on the consumer market. i3 Group was forced to sell its assets due to financial problems, and the new CityFibre has ambitious plans to roll out FTTH in a number of cities, starting with Bournemouth. CityFibre is led by a number of former Versatel people: the brothers Greg and Gary Mesch, Mark Collins, Chris Toller and Leo van Doorne.

Conclusions

FastWeb saw that it was too soon for FTTH and made an understanable shuift to DSL. Since then demand for bandwidth has been near insatiable, and FTTH has become profitable. HKBN and Free are examples of this, remarkably also with innovative and low-priced services. Financial problems are always lurking in the shadows, and too much debt becomes a problem when forecasts are too optimistic. Being acquired by Tele2 (Versatel), KPN (Reggefiber) or Swisscom (FastWeb) may provide for financial stability, but can also be a brake on ambition. CityFibre, for those who see the history of Versatel clearly, is therefore a company to keep an eye on.

KPN's new mobile tariffs bode ill for market share

KPN has announced new tariffs (from September 5) for its KPN and Hi brands on the Dutch mobile market (Telfort will follow at a later date), in response to the new Net Neutrality laws and decreasing revenues from voice and SMS. For our views on NN, see this post and this commentary.

It appears as though the new tariffs may need some tweaking:

• There is one bundle for voice, SMS and data. This is not what consumers want, now that voice/SMS are being replaced by data.
• If you buy more minutes/messages, you automatically buy more bits as well. Again, and for the same reason, this is not what consumers want. They want an inverse relationship, or even better: the ability to pick amounts separately.
• Nobody knows what an MB is, how much MBs are spent on a video clip, etc. Moreover: usage may vary wildly from month to month.
• Speeds are quite slow, not just the downlink (for some reason KPN's upper limit is 7.2 Mb/s, whereas other HSPA operators worldwide have arrived at 42 or even 84 Mb/s). At 0.1 Mb/s, the uplink will surely frustrate those trying to send an MMS.
• Both brands are now offering no fewer than 24 different subscriptions.
• The overage fees may not appear to be unusual, but in light of this, they are rather high for data. And KPN's 35 c/min for out-of-bundle minutes appears to be another rip-off, best to be avoided.

In fact, it looks like there is very little right about these new tariffs. Take a wild guess what will happen next to KPN's market share. And share price (down over 20% since the recent Investor Day). Add to that: deep trouble on the business market and a write-down coming for the shares bought back during the quarter.

The Q2 results are due July 26. We recommend you stay in bed and keep the curtains closed. That's what the marketing people did when they concocted the new tariffs.

The RS-DVR issue comes to Europe

My friend John Goedegebuure unearthed a new service from KPN: Opnemen Pakket ('recording package'), basically an RS-DVR service, comparable to Cablevision's cloud-based service.

Specs:

• 5 EUR/mo (free for Premium subs)
• max 6 simultaneous recordings
• initiatiate using red button or EPG
• max 200 hr in SD quality (or 100 in HD)
• max 32x fast forward during playback

The new service could undermine catch-up TV, since recording is made very easy. It could also undermine the advertising models that underpins both broadcast and catch-up TV, because ad skipping is made very easy as well and because the service (presumably) doesn't have pre-rolls.

At the same time, KPN has found a new revenue source. Obviously, that may not sit very well with the content industry. John also found a verdict from the Oberlandesgericht in Dresden, in a case brought forward by RTL Germany against Save TV. It basically says: Save TV is allowed to offer the service - but needs RTL's consent.

Conclusion: in Germany, the content industry prevailed. What will happen next in the Netherlands? RTL Netherlands apparently hasn't taken action yet, but based on the German verdict, it may ask KPN to end its RS-DVR service. The way out then appears to be some sort of revenue sharing agreement.

To do 240 km/hr on the highway - that's why we need a gigabit

Some people try to calculate the need for bandwidth per household and arrive at 32 Mb/s, discounting x users and y connected devices. They claim that more makes no sense, because the human eye isn't even capable of digesting more information.

Pathetic.

Here's a nice analogy, drawn from the recently widened and renovated A2 highway, running all the way from Amsterdam to Maastricht and beyond. After a heist of a Brink's money storage facility near Amsterdam, the robbers were able to escape to Eindhoven and subsequently disappear altogher. According to media reports, they had been doing 240 km/hr on the A2.

We may not need to speed that much all the time, but sometimes it's nice. And that's why we need gigabit networks!

MPJC: no visionaries

Last Thursday was the annual Mediapark Jaarcongres (MPJC) of the public broadcasting sector in the Netherlands. Not quite as interesting as last year's edition, but well worthwhile. No real visionaries, apart from the 4K contribution, but that was done last year as well. Here are a few common themes.

Trends

It was all about:

- Smartphones, tablets, touch screen, swiping

- Connected TV, TV everywhere, second screen

- Social media and social TV

- Consumer is in control

i.e. nothing really new.

Hybrid TV

UPC and others pointed out that there still is very little true integration of broadcast and broadband, despite all the connected TVs. We have come to the same conclusion (report available at 50% discount for readers of this blog), which is well worth stating explicitly, because the term 'interactivity' is used much to easily for functions that aren't really worth it. Such as pausing live TV - nothing more than a very basic feature exploring the two-way connection of an 'interactive' TV. There is still a lot to be done.

Kevin Slavin

Excellent talk from Kevin Slavin of Starling TV and Area/Code about the role of the audience. From the laffbox (LFN: laugh from nowhere - check out this) to Facebook/Twitter, parasocial relationships, the audience becoming a character (see Brand Fiction Factory), a character as the audience and finally Everyware (... is where the laughter comes from): social media replace the laugh track.

Twitters problems: hashtags are not unified; there are simply too many tweets.

RTL, Sanoma

Both are pusuing a strategy of 'follow the consumer' - not surprising.

Sanoma NL (revenues: EUR 500m) took some effort defending its takeover of SBS (3 TV channels, program guide) for EUR 1.2bn (shared with Talpa). The problem is not so much SBS's current underperformance (that's simply due to a 'cycle'), the real problem is that this is essentially a change of control where the acquirer has no clue how to run a TV company. Talpa (TV productions) is included in the deal, taking a 33% share, but they don't know how to run a company like SBS either. Which is why they will have a very hard time realising synergies.

UPC

Solid statements: Google lacks a unifying UI across all devices; social TV is still embryonic. No news on the Horizon box (see page 5 of this journal: trial coming to the Netherlands in July, commercial launch September).

Glashart Media (Reggefiber)

Reggefiber has ~700k homes passed and ~200k homes activated (for more details on the Dutch FTTH market: our FTTH NL 2011 report will be out next week - here is last years' edition). Glashart Media services 130k TV homes, of which 45k use interactive services.

Its claimed USPs: picture and sound quality; number of channels; EPG (providing access to apps); 3-D ready; content (local TV, VOD, catch-up TV, Eredivisie Live). OTT services are drawn into the managed services domain, while providing open access to all content parties (0900-TV).

2010 Was the year of 'fix the basics', 2011 is the year of 'boost the base'. A new box will be launched, allowing 3 TV sets to be connected and with a 250 GB hard disk optional. They also want to experiment with a kind of prepaid card, giving access to certain content for a limited time. Intriguing plan: an off-footprint break-out is coming, i.e. Glashart Media providing TV services outside the Reggefiber footprint.

NOS

Launch of the new site m.nos.nl/video.

NLbuzz

Some stats on Eredivisie Live: 550k subscribers, 1m unique visitors/month, 1.5m views/month, 300k live streams/year. A new site will be launched at the end of June 2011, relying completely on adaptive streaming. It will offer a single-sign-on (across devices). They see an interest in niche content, such a waterpolotv.nl (just 30k active sportsmen, but no fewer than 28-30k views per video).

TNO/Waag Society

Wonderful demo of 4K, which is predicted to come to market in 2011. What it claims to be is an even sharper image, creating the illusion of 'really being part of it'. But 4K also offer a more dynamic picture and a much better opportunity to zoom in. Japan expects 8K by 2020. SD (720x576) implies 0.4 megapixels, HD (1920/1080) implies 2 mp, 4K (4096x2160) goes to 8.8 mp and 8K to 33 mp. And then you can combine 4K (or 8K) with 3-D. Bandwidth consequences are apparent.

Public Broadcasting

The day started off with the PO (public broadcasting) commenting on government plans to reduce support by EUR 127m. This number is supported by a recent BCG report. Broadcasters (essentially production companies) will be forced to merge to reduce the field to 8 players, from 21 currently. (According to the PO, this will supply only 30% of the targeted savings and the plans will force 20% lay-offs.)

Ericsson: File-sharing is a symptom of a problem, rather than a problem in itself

Considerarti recently published a study on piracy in the Netherlands. With expert advice coming from Warner, Universal, Buma/Stemra and other contnet parties, the outcome is predictable.

Fortunately, we have the Ericsson Business Review. In the latest edition (#2 2011), Rene Summer very eloquently explains what is wrong with the content industry:

ISPs are being forced to act as digital security agents on behalf of economic rights holders by listening in, screening, surveying and filtering the exchange of information between consumers. Such strict enforcement further damages the prospects of legal digital alternatives by introducing the principle of innovation by permission. It also carries unwelcome echoes of the old Eastern-bloc surveillance societies that modern Europe has decisively rejected.

File-sharing is a symptom of a problem, rather than a problem in itself. This problem is the inadequate availability of legal, timely, competitively priced and wide-ranging choices of affordable digital-content offerings. Consumers also expect to be able to make decisions freely regarding when and how to consume the content of their choice. By clinging to outdated business methods such as windowing and territoriality, economic-rights holders are in fact creating the consumer behavior against which they so violently protest.

How can we, as good Europeans, accept this state of affairs? The success of our European project is founded upon freedom of movement – for persons, goods, services and capital. Why should digital content be an exception? How can policymakers continue to endorse the vested interests of economicrights holders at the expense of the promises of the single market and our fundamental freedoms?

Ericsson is calling for full consumer access to legal, timely, competitively priced and wide-ranging compelling content offerings, and a free choice of when, where and how this legal digital content can be consumed. We call for an end to regulatory barriers and deliberate non-availability through windowing and territoriality. We call – a full 60 years after the Treaty of Paris – for a digital single market that not only meets the requirements of today’s and future European consumers, but also the requirements of European history.

Can you discuss internet freedom with morons and barbarians?

My colleague, who is a member of the D66 LibDem party in the Netherlands, asked me to host a debate on internet freedom and net neutrality at the upcoming D-cafe meeting. They are trying to get government officials for the discussion. I'm not sure if the topic still warrants such a debate, because there appears to be broad consensus about the validity of net neutrality.

Internet freedom may prove to be a whole different kind of animal. But how do you discuss freedom with parties such as we have in our minority government (VVD, CDA), supported by the neo-fascist PVV party? How do you discuss basic values with people who are showing democracy's dark side: a minority, with support from dubious morons, imposing their will, having no eye for the democratoc rights of minorities. Or social cohesion and cross-party loyalty for that matter. VVD and PVV have the V for freedom (vrijheid) in their names, but we all know where their conception of freedom ends: when people start wearing funny things on their heads.

The latest disgrace coming out of them is cutting the cultural budget. Classical music especially is falling victim to their cultural barbarism.

• The Radio Kamer Filharmonie will disappear. A few years back, the national radio 0rchestra infrastructure was severely cut back and now it will happen all over again. We have an internationally acclaimed set of orchestras (Radio Filharmonisch, Radio Kamer, Metropole) and a unique choir (Groot Omroep Koor).
• All institutions will receive less state subsidy and will need to be more commercial to find new income sources. A US model around patrons paying big bucks is seen a role model for our country.

The government wants to make our cultural life less dependent on subsidies. But this comes at a very bad time, when culture is completely undervalued and the economy isn't picking up. But what do you expect from a governement that honours mediocrity? They have appointed the embodiment of mediocrity as their minister of arts & sciences: Marja van Bijsterveldt. Her state secratary Halbe Zijlstra is probably even worse. His cultural background reaches no further than rock band Metallica. And a system of patronage cannot simply be imposed to a nation that is alien to the concept. You can't change a national character just because you want it. And look at what it brought to the US: culture is for the very happy few only and the range of music on offer at live concerts (esp. outside a handful of large cities) is horribly poor.

In our country, another complete moron, Joop van den Ende, king of musicals and soap operas, is looked at as a patron of the arts, because he is building a 'musical hall' for his horrible and mediocre 'art'. It is mediocrity that is at the heart of today's cultural barbarism. I come from a place where mediocrity = bad. But the people ruling our nation today live by the opposite of this rule.

Here is what Reinbert de Leeuw, who needs no introduction, has to say on the matter in today's newspaper:

"I feel defeated and dispirited. It is as if all if did during the last 50 years was without value. I am bewildered by the resentment against the arts. It's one big frontal assault. As if you are sitting at the table and somebody gets up to slap you in the face. That makes it so hard to formulate a response."

Indeed, how to discuss matters such as art, or freedom, with mediocre morons like the people he refers to? Come to Utrecht on June 29.

If they will still have me.