I’m a firm believer in celebrating all the milestones in life. (At right are some fabulous fireworks from Boston’s Independence Day celebrations, as shot by YG’s own Carl Howe from our offices that evening.) Tuesday was a good day for Anywhere–the world’s move to ubiquitous connectivity and all it will unleash–because British Telecom announced that it will provide the UK with more fiber for delivering broadband capacity to its citizens’s homes. (See this earlier post for a taste of the agita that’s been building around this.)

The good news: it’s a much-needed market signal. BT is showing commitment at a time when it would be easier to hold back. (Was its hand forced by Virgin’s more aggressive approach?) This should encourage other participants essential to making the Anywhere Network happen in the UK — competitors, equipment vendors, more.  BT says the fiber buildout will add 3%-5% to its capital expenditures each year for the next five years (with the first results in 2009). These spending levels will help boost the UK’s current household broadband penetration from 50% today to something beyond Yankee Group’s current CAGR forecast by 2011 of 28% (info here if you’re not a YG Connected View client). That’s one adjustment to our outlook we’ll be happy to make.

Like many milestones, it’s just progress, not a full victory. Some of the fine print:

• It ain’t all the way there. The plan falls short of committing to anything as ambitious as full fiber to the home, and rather is focused more on putting fiber in the access network up to the cabinet–a way-station to the consumer’s premises that means the capacity actually reaching the home won’t be as great as it would with fiber all the way there.
• It ain’t going to be 100% fiber. As part of the expanded broadband delivery, the company plans to use a copper-based broadband technology called ADSL2+; while better than speeds currently delivered by ADSL, it doesn’t offer the same bandwidth that a fiber-to-the-home link does.
• Language is fun. You have to love the marketeers who create phrases that suck us in. The BT release features this doozy: “super-fast broadband.” What does that mean, specifically? Even BT’s not sure. The Q&A in the release includes a question about how that’s different from “next-generation broadband”, but the answer doesn’t define it.
• Ofcom is the escape hatch. The commitment is clearly gated by what the UK regulatory body’s support will be for BT charging others to use what it builds. Our own take, from Dianne Northfield’s quarterly regulatory review: Ofcom’s making the right noises. But if Ofcom doesn’t step up, BT has pre-warned us all on its intent to slow or change plans.

Light those fireworks anyway, to mark off another step on the path to Anywhere — the pervasive, high-capacity connectivity fabric that will rock our world.

The emergence of ubiquitous connectivity–changing the meaning of location in our lives as a global network lets us be wherever we want–provides enormously rich research fodder for Yankee Group analysts. The move to Anywhere is nothing more, but nothing less, than what we care about here.

Summer is for reading, and I enjoy seeing what our clients are reading of our analysts’ work. And read they do; to paraphrase Mark Twain, reports of the death of the written word are widely exaggerated. (Mostly spread, I suspect, by people who don’t like to write!) Here are the six most widely read reports by thousands of Yankee Group clients in the last three months — and what they have to say:

1. Anywhere Network Scorecard: Phil Marshall sets out Yankee Group’s unique assessment methodology for the work we’ve begun to score global network providers on their journey to building out the Anywhere Network.
2. Surviving the Digital Home: Josh Martin calls out the winners — technologies, behaviors, companies — in the game to build out the fully digital home environment. Given spiralling energy costs, it’s good to see that tele-working will improve dramatically.
3. Riding the Wave from Mobile Commerce to Mobile Transactions: Jon Paisner, Chris Collins, and Nick Spencer explain how and when mobile transactions will finally emerge after years of wishful thinking, as Anywhere Consumers embrace financial services on mobile devices.
4. Advancing Mobile Applications through Managed Services: Nick Spencer shows how application architectures and the IT channel play in increasing adoption of enterprise mobility.
5. Thinking Beyond Flat-Rate Business Models: Ari Banerjee says that next-generation business models for network providers–charging a premium for quality of service, for instance– means tackling new kinds of charging technologies inside the network itself.
6. Finding a Femto Future: Roberta Wiggins forecasts the world market for femtocell technology: cool in-home bandwidth distribution that’s a game-changer for consumer broadband. But she also sees potential beyond residential applications, into the SMB/SOHO markets too.

The first report is available free on our homepage; the others are only available to Yankee Group Link Research clients. Check them out — and tell me what else you think we should be investigating on the road to Anywhere.  Happy reading!

One of my most memorable job interviews ever was one in which I was asked to come up with an answer on the spot to this question: “What are the odds that there are at least two people who live in New York City and have the exact same number of hairs on their heads?” *

It was a programming job; the interviewer was looking for a display of a rational problem-solving. Nonetheless I compulsively said the first thing that came into my head: “One hundred percent. I personally know two bald New Yorkers.”

Smart aleck. I got the job offer, but I knew I hadn’t really demonstrated the thinking they were looking for. I’ve just started a cool book called Guesstimation: Solving the World’s Problems on the Back of a Cocktail Napkin. If I’d read this then, I’d have had the tools to think through that question in the way I suspect the interviewer had hoped.

We’re doing some interesting guesstimation at Yankee Group right now, though, so it will come in handy. As part of some work we have underway to assess the scale and pace of the emergence of ubiquitous connectivity — what we call Anywhere — we’re sizing its impact today and in future. I’ll post again here in a few weeks when it’s finished, so you can see what we have come up with and share some feedback. But at the moment the project is reminding me of the basic challenge of predicting the future: combining art and science in just the right measures. As the book’s authors point out, too many decimal points in a forecast ”are like lying,” since they suggest a level of precision and confidence that these methods can’t possibly offer up.  We’ll round the numbers up to the nearest hundred billion, I promise…

* The current population of NYC is over 8 million, and the average human has 100,000 hairs on his head. so you figure it out.

What if our ability to imagine a world for consumers made richer and more productive with connected devices was limited by the imaginations of the engineers chartered with building them? What if how we’re conceiving of these things is one of the very things holding them back from arrival on the market?

Michael Rayfield, GM of nVidia’s mobile business unit, showed me a prototype Anywhere Device last week that his firm built to showcase its Tegra computer-on-a-chip family–a potential core component in an entertainment-focused device. What I learned reminded me that the way you ask a question at the outset of any undertaking has a huge influence on the nature of the answer.

“One of the problems with the mobile internet devices out now such as the Eee PC is battery life. That’s because engineers seem to approach the design challenge by taking a conventional x86 PC design and saying, ‘How will we cut back the thing’s power requirements?’ nVidia decided we could help the industry by creating a sample pocket-sized mobile device that could be really useful for 24 hours without a recharge. We think that’s key to a successful consumer experience. To do that, our design process started with a zero power budget.”

I did the expected double-take with that remark. To design a power-miserly device, they decided to allocate no power? “Not far from it,” Michael said. “What we said was, nothing gets power in the design until it’s been proven that it’s needed.”

I thought suddenly of NASA’s Apollo 13 mission, the so called “successful failure,” when following the initial crisis, grounded crew member Ken Mattingly (left in the NASA photo above, next to mission capcom Joe Kerwin) was tasked with figuring out how the crew would re-start the command module without exceeding the limits of the reduced power available. In the film version of events, after many attempts based on removing steps from the power-up sequence, he finally realized he needed to start over — to design a brand-new power-up sequence that didn’t cause the system to overload the available power.  Only then did they manage to address the severity of the limitations. 

It’s a compelling dramatic moment in the film. More importantly, it’s a reminder that a zero-based approach to anything ensures you take nothing for granted. In the case of nVidia’s zero-based power budget, the thought exercise worked in spades. The device that Rayfield’s team built serves up gorgeous high-resolution graphics, multi-tasks like crazy, and runs forever.

Just as the technology industry suffers from blind incrementalism–as in, what other new slick thing can we add to this product–it also suffers from, shall we say, decrementalism. Why do we like the iPhone so much? One reason may be this: its designers didn’t aim to out-do the smart mobile phone category, but rather to come up with the best hand-held device they could make, starting from a clean sheet of paper.

I’m sure some 2009-2010 connected devices will benefit from nVidia’s power re-think. The real question is, what false assumptions have we been making about what needs to be in a connected device? What zero-based rethink can we do on function?

I’m not a big cereal eater, but I do like the occasional bowl of Wheatabix.  I’m not the only one who recognizes the value of a diet high in fiber.  I was in Europe last about 6 weeks ago and walked right into its on-going fiber debate (see this post).

This week, back again for various events in southern Europe, I got another dose. Everyone (except that banker in London who doesn’t know why British families need broadband) wants a fiber-rich network. The issues in the way are simple, but the permutations of solutions to each quickly become non-simple.

• Who builds it: The state? The incumbent network provider, forced then to share it with others? Many competing providers, creating redundant infrastructure?
• Who pays for it: The state? The incumbent? The providers? Customers? Utilities and other owners of rights-of-way where fiber is installed?
• Who gets to use it: …you get the picture.

A recent Yankee Group report by regulatory expert Dianne Northfield (from our Link global regulatory dashboard assessing broadband regulation in 45 countries) has stirred the pot, predicting that European next-generation (fiber-based) network regulation will become more granular, down to the sub-national level, rather than harmonized at the EU level, even while the EC attempts to create yet another regulatory body that oversees its member nations’ own regulatory agencies. Not that any further stirring was necessary, given the alphabet soup of associations (APDC, BSG, ETNO, and ECTA to name just a few) already pummeling each other with their argumentation and interpretations of EC directives.

A very senior exec at a European carrier erupted in frustration to me this week: “Someone needs to ask the EC why they’re so in love with the British regulatory model. Typical government types, missing the point. It might look good on paper, but exactly how has it sped up fiber deployment in the UK? The model the EC needs is the US. There, the FCC has stayed out of next-generation fiber network regulation… and Verizon has spent billions to build out a fiber-to-the-home network. We know we have to do this here, and there is plenty of competition to make sure it happens.”

The network is the raison d’etre of the flattening world. Freidman’s money-maker could never have been written without the network linking India’s call centers to the developed world. A state of the art network must evolve throughout Europe to keep the region from losing further ground economically. Making the sweeping over-simplifications that both CEOs and Americans are (in)famous for, my answer at an APDC dinner event in Lisbon this week was this: “Every day’s delay is an added cost. Make it fast and fair. But make it fast.”

How do you transform a 100-year-old government-owned telco into a technically, structurally, and culturally modern competitive provider of an Anywhere Network? In Australia, they may not be sure yet of the entire recipe, but one critical ingredient — apart from a pretty scary cap-ex budget – may be a brash but focused leader.  I met yesterday with Sol Trujillo, CEO of Telstra, the world’s 12th-largest network operator by market cap, who’s been on the hustings in recent weeks with progress reports. Some comments from our discussion:

What are the key elements of such a massive change? There are four pieces. First, you have to have a vision about the converging world. We have that. Second, you have to organize your company along those lines; you can’t do this with traditional silo’d P&Ls. Third, you have to have the right people: ‘multi-cultural’, I call it, meaning from varied backgrounds that are relevant to us, like retail. Then, and here’s where you can trip up, you have to allocate resources according to that vision only. You can’t do a thousand things; you have to pick 5 or 6 across the company, but do them really well.

What’s the hardest part? We are still removing old things so we can do new things. We are still eliminating outdated SKUs, systems, and suppliers.

It’s tough to kill your own children. Exactly. It takes discipline. We are getting to a seamless world; it’s not fully brought to life yet because we’re still writing the playbook.

You’ve been critical of the Australian regulators. Talk about that. It’s the worst regulatory market in the world; that’s just a fact. You have the lowest [regulatory ceiling on] wholesale prices, with the lowest population density. That just doesn’t make any sense.

You’ve also been the target of a lot of criticism in Australia, too, as you lead the change program at Telstra. Has that let up at all? Let’s look at who doesn’t like me. It’s the media and the regulators who have issues. They don’t have to serve the customers; I do. We are changing Telstra from a regulation-focused company to a customer-focused one. The tests should be, are we growing? Are we taking market share? Those numbers are going the right way.

As a fellow network transformer, do you think Dan Hesse (new CEO of Sprint Nextel) has a tough job?  Well, it’s easier than mine. He only has 2 network technologies to integrate, not 3 as I did, and he’s got 50 million customers to work with, whereas the entire population of my market is only 20 million. When I was at US West, with a very rural character to the market, I used to fly over Iceland on trips to Europe and think, ‘well, at least there’s a less dense market for telephony than mine.’ Since I’ve come to Australia, I’ve learned that we’re even less dense here than in Iceland. So no, I don’t think his task is more difficult than mine.

Me again: I’ll say one thing, he is certainly focused. In public remarks following our meeting, his message never varied from his theme with me: Telstra is changing to a market-focused company and we’re making progress. Getting up every day to work at the same task while teaching others how to do the same, day in and day out, may be the toughest part of leading any transformation, network or otherwise. As they say in Oz, Sol, good on you!

When banking was about protecting touchable financial assets–stacks of gold coins and engraved stock certificates–the edifices built to contain them looked like fortresses, imposing and impregnable.

When the essence of banking is about transferring a few bits from one side of a digital ledger to another, banks can look like this:

This is a typical storefront in Kenya, where there are thousands of small entrepreneurs selling necessities packaged in the daily doses that many Kenyans’ limited cash can afford at one time. Yes, some of those Kenyans make up the world’s unbanked, but that’s not the point. If you’re reading this, you’ve probably already seen retail banking outlets cropping up in the supermarkets of the developed world.

The principal raison d’etre of a retail bank–holding onto my money and letting me get at it from time to time–is going away. It just is, and the reason (you were expecting this, perhaps) is nothing less than ubiquitous connectivity. With a network wherever I need it, I can store digital money anywhere, as long as there are many physical devices that can help me transfer those assets when and where I need. So why would that physical place have to be a destination dedicated to that, as opposed to one that might also let me pick up a few groceries, pay some bills, mail a package, or anything else I need to do in life?

Vodafone’s intrapreneurial mobile transactions effort, called M-PESA in a clever adaptation of the Swahili word for cash and led by the impassioned Nick Hughes, has signed up over 2 million users in Kenya through the mobile operator Safaricom. It allows its subscribers to load digital money to their mobile phones, to transfer it to other people and institutions, and to offload it back to cash. “Only some of our users are unbanked. As a payment service, we’re really competing with the cash economy,” he told me. We talked last week at ITU Telecom Africa, in a quick meeting sandwiched in-between his mission to win banks on board for the expansion of the program in other markets. He admitted they’re a tough crowd to win over.

Dominic Endicott, a partner in the wireless-focused venture capital concern Nauta Capital, said something the other day that is probably supremely obvious, but potentially earth-shaking: “The wireless world can give us more information about the behaviors of its users than at any other time in the market.”

When mobile operators can easily and instantly move our money around for us, and can mine that activity to know where, how, and when we spend it–why on earth do I need a retail bank, reluctant or otherwise?

Media, both the industry and its physical representations–LP, tape, DVD, more–have been forever transformed by the move to bits. Retail banking, and indeed physical currency as we know it today, will go away. Blame–or thank–the network.

Dateline: Cairo, Egypt. I’m here to speak on Africa’s wireless future at ITU Telecom Africa 2008 – but as with many conferences, it’s the hallway chatter that’s the most interesting. Today I was talking with Carsten Clemens of Nokia Siemens Networks about the increasing divergence in mobile connectivity economics. For the next billion subscribers who want phones, the costs rise (as they are more rural thus less efficient to serve), while their ability to spend is dramatically lower. That’s not news; operators and their vendor partners around the world are working to lower costs to make mobile service a reality in many new markets.

But what I heard about from Carsten was an innovation that’s as much about a new business model as it is about lower system costs. In trial in Tanzania now is an extremely simple wireless base station with subscriber management run from a PC, with an equally simple antenna, all run from a solar-powered battery. The system can be managed by a village entrepreneur, someone perhaps who also sells drinks, soap packets and newspapers. The entrepreneur can set and collect a flat fee for intra-village calls, managed entirely by his setup. And a larger operator who supports him can benefit from unleashing pent-up demand for in-bound calls to the village from absentee workers, extended family, and others who previously had no way to reach the villagers by phone. “It’s still low ARPU,” said Carsten, ”but it can be attractive in these markets, especially if the operator sets it up in a franchise model, and an entrepreneur can add more villages to the systems he runs. It’s already working in a similar fashion in India.”

Downside: no data support yet. But compared to existing rural mobile setups that still require towers that cost $100K or more, this is breakthrough thinking — not so much in the use of low-cost equipment, but in the approach to revenue-sharing that creates incentives that suit the way developing-market villages work.

I visited Tanzania several years ago; here are some eager school girls I met. Their country is stunning. But it will be no less so when they have the same opportunities to connect to the world that I do.

Big day for the future of wireless in the U.S. market yesterday — the announcement that Sprint Nextel, Clearwire, Google, Intel, Comcast, Time Warner, and others have formalized their plan to collaborate in a nationwide rollout of a fourth-generation WiMAX network is nothing short of huge. This demonstrates how diverse the convictions are in the tech sector about the opportunity for an open, data-centric wireless broadband fabric, and it should end a great deal of debate about whether a Sprint-only effort to do that was going to succeed.

That’s progress of a very real sort. Just a month ago, April 2nd was a whip-saw day for wireless in the Wall Street Journal: The U.S. edition featured two contradictory stories cheek by jowl on one page. At the top, a report from Beijing on Intel’s splashy launch of so-called “ultra-mobile devices,” showcasing a number of new product concepts using a purpose-built low-power chipset and functionally offering something less than a PC but more than a phone.

But just below the fold, you’d have found a summary of the FCC’s reluctance, announced at CTIA, to force the U.S. wireless operators to open their networks to devices not authorized by the operators themselves.

The national WiMAX announcement, along with that first story on April 2nd, speaks to the opportunities we see at Yankee Group for an internet of devices well beyond today’s PC and phone approaches – although frankly I saw little in these early concept products to spark the demand that I do believe lurks in that gap.

That below-the-fold April story showcases the resistance of U.S. wireless operators to recognize one of the imperatives of the Anywhere revolution, which is for an open platform. The FCC thinks the operators are doing enough to open up their networks. But can a network be ‘kind of open’ any more than someone can be ‘a little bit pregnant’?

The good news is, we’re going to find out!  Onward and upward.

Yankee Group’s mission to chart the future of the Anywhere Network includes figuring out what it actually looks like as it emerges around us. If an informal poll of 250 telecommunications executives at two separate events in London last week is any predictor, the UK’s part of that global fabric must include fiber to the home.

At TEN2008, I shared YG’s forecast for hockey-stick growth in U.S. home bandwidth consumption, explaining that the network effect is not the only thing driving network demand on this side of the Atlantic: video, gaming, and a host of new activities enabled by broadband are causing home appetites for network capacity to explode. Moderator Peter Cochrane polled the attendees on UK household needs, and the group was nearly unanimous in its belief that fiber to the home (FTTH) is the right thing to do right now. (Only a lone banker from JP Morgan Casenove grumbled, “I don’t see how the British family needs more than 3 Mbps.”  Someone sitting next to me said, “Reminds me of Thomas Watson’s famous projection about the world’s need for computers…”)

Then at Yankee Group’s own roundtable later in the week, another group had the same energy on the topic — but further agreed that the British government has a large role to play in ensuring that it actually comes to pass. One participant put it this way: ”Various sources have estimated a UK-wide FTTH initiative as likely to cost between 9 and 15 billion pounds sterling. That’s only 28 miles of highway, a half a bridge, or something else equally modest. Why can’t our government see the incredible value it could create for our economy by pushing this forward?”

Just having survived trips in and out of Heathrow’s new Terminal 5 – stunning for sure, but hard to get to and, as with many airports, a giant chunk out of your day — the sooner we have a high-capacity infrastructure the better. 

[Meanwhile, a group of Swedish communications experts I met with in Stockholm last Wednesday were focused on making the mobile environment deliver on its potential to support Anywhere Consumers. See my summary of their assessment here.]