The second interview I managed to do in Lisbon was of Sue White, who is in charge of Alcatel Lucent’s recently unveiled HLN strategy. I asked Sue to explain what HLN was and how it affected Next Generation Access deployment strategies.
I apologise for the intense shakiness on this video. Definitely need to get a zi8!
Ever since the Google FTTH announcement a couple of weeks ago, the internet (and indeed the real world, for a change) has been abuzz with rumours, analysis, speculation and downright madness in some instances. In the meantime, I have written and published my own analysis of the announcement, accessible to Yankee Group customers under the title Google’s FTTH Experiment Could Profoundly Reshape US Wireline Landscape.
This has led me to also take a deeper look at how bloggers, newspapers and tweeters have dealt with this piece of news and I was surprised and – to a certain extent – dismayed as well to see how polarizing Google’s image is. I guess it’s not surprising that a company so successful should generate such strong passions for or against it but I guess I never realised quite how profound the adulation or the hatred could be.
Here are a few of the arguments, rants, points, or just wild guesses that I’ve come accross in the last few weeks on this topic:
Now some of these might be reasonable assumptions, others verge on crackpot theories. What I find interesting is that I saw very little commentary focus on what was actually in the announcement which, until proven otherwise, is still the most likely course of action for Google.
But perhaps more importantly, this exercice of scanning what is being said on this made me realise that Google has a PR problem on their hands. While there is still a lot of goodwill towards the brand out there, it seems to me that there’s also the seeds of a Microsoft syndrom. An increasing number of people think (and say) that Google is after nothing else than world domination and the Orwellian state. Once that starts, it only takes so long for people to start repeating it.
One thing I heard in nearly every discussion, for example, is that Google as your ISP is a really bad idea, they would know everything about your online self. That’s actually sensible, which is probably why Google clearly stated they had no intention of being the ISP. Strangely enough, many people seemed to disregard that particular aspect of the announcement…
What this really highlights to me is that Google has some serious PR work to do. There’s been a history of disregard for people’s concern around personal information, and while Google has (I think) been relatively careful in the way it’s been using that data so far (whereas the late Phorm hadn’t) the fact that Google has or could have access to usage data is enough to make a lot of people freak out.
I wouldn’t want to be in that place, and it certainly suggests to me that if their FTTH Experiment is to be successful, radical transparency might be necessary. But is that something Google can operate with ?
I did a few interviews at the FTTH Council Europe Annual Conference in Lisbon before my zi6 camera failed me. I also think I need to upgrade to the zi8 for stability and sounds reasons, but that’s another topic.
Anyway, here is the first of the two interviews I could salvage, and it’s with Wolfgang Fischer, the FTTH guru of Cisco in Europe:
Internet video, iPhones, explosive growth of mobile phones in Asia, flat-rate broadband pricing… these and more have sent capacity demands on the Anywhere Network through the roof in the past year. Many of the packets these activities generate end up queuing for intercontinental transport via one or more of the Earth’s submarine cabling systems.
In London last week I had a chance to catch up on the implications of demand and approaches to submarine cabling finance from an Anywhere industry insider, Vinod Kumar. Vinod is President and COO of Tata Communications and a long-time communications sector leader. Among many other submarine cable activities, Tata Communications operates SEACOM, the big cable that recently reached the shores of East Africa from Mumbai, opening up network capacity in Africa in a big way.
Bandwidth demand is booming around the world right now. Do we need more undersea cabling?
“If you wanted to write a check for more right now, I’d say the Atlantic Ocean needs another cable. Not necessarily because of bandwidth demand in total, but rather because of the rise in demand at various landing spots. I’d run one from south Florida at one end, to southern Europe at the other. South America needs another, so I’d run a branch cable down there off of the new one.”
Public markets aren’t enthusiastic about financing big speculative projects right now – and the debt that supported private equity backers is harder to get now, too. How are these projects getting funded these days?
“They can take $250M to $1B at a go. In the old days, the way it used to be funded was through the formation of massive industry consortia. Tata [via the 2006 acquisition at its core, Indian state-run long-distance network firm VSNL] was involved in quite a few. You’d get 60 to 80 firms to commit up front to the commercial demand for the capacity when the cable got laid, in order to get the project financed. But these cable consortia are tremendously complicated to manage; for one thing, you need to control how a consortium’s members push for capacity upgrades before the bulk of the project cost has been recovered.”
“Then you had the speculator model, which boomed in the late ‘90s… for instance, the private equity firm Blackstone funding SEACOM. Rather than go through all the hassle of securing demand in advance, proponents of this model had a ‘build it and they will come’ approach. That boom, though, led to several busts, when the investors didn’t sew up enough commercial commitments before proceeding.”
“Tata then pioneered a model which seems to bring some attributes of each of those models towards the middle. Maybe you’d call it the ‘private club’ model. We own the main intercontinental cable we lay, and various landing parties own the various cables that branch off regionally to local waters, like to Vietnam or the Philippines. It’s less complicated than the consortium approach because there are fewer members. The main asset is 100% owned by Tata, but about 60% of the demand for its capacity is covered by the club members who run branches off it. It’s better for Tata, since we ourselves only have to risk 40% of the investment cost and it’s easier to manage a much smaller group. It’s better than the completely speculative model for the club members, since they get to buy the capacity at our cost plus a limited markup, less than 10%, and since Tata is an experienced undersea cable operator, they can hold us to extremely strict SLAs [service level agreements] to get comfort about reliability. Since we’ve started doing that, others have mimicked the model and it’s become pretty popular.”
But with exploding demand, and Tata’s balance sheet, aren’t you tempted to go the speculative route yourselves?
“Traffic is growing at 60% a year — but no one foresaw the irrational pricing that’s driving some of that. We’ll never take a speculative undersea cable project to Tata’s board — because we don’t need to. We tell the board what our own organic load will be, and we can find the rest of the funds to keep it prudent. It’s a small industry. We have investments in almost 80 cable consortia, so people know us, and we’re good at the work itself, like figuring out how to put cables where other cables aren’t. Those sound like small details, but the earthquake off Taiwan earlier this week disrupted several cables – not ours.”
My conversation with Vinod was on a day when he and other members of the firm’s management team were showing how far the formerly India-only operator has come in the provision of global connectivity. Vinod’s ambition: for Tata Communications to become ‘the Singapore Airlines of network services’. In an episode that reminded me of those times when you suddenly start hearing about the same movie or restaurant multiple times within a few days, a lot of the rest of our talk was about the new models for wholesale network services. I’ll do another post on that shortly.
I’m finally back home after over a week of traveling in Europe. Bloggers Pauline Rigby and Carlos Bock, amongst others, have already expressed their views of the FTTH Council Europe Annual Conference in Lisbon, so I’ll try not to overlap too much of what they covered, but will nonetheless share my own thoughts.
I don’t fully agree with Carlos that it’s been a year lost, but I think he has a point when he says that facially there was very little different to be heard in Lisbon this year compared to Copenhagen last year. I’ve always said and written that FTTH deployment would be a slow affair and we are certainly seeing that now. The fact that the numbers have hardly budged in Europe is certainly depressing, but it doesn’t mean that nothing if shifting in the background.
Where I do agree with him is that I sometimes feel frustrated with a certain lack of vision from many vendors who form the bulk of this show. When I say lack of vision, it’s really about vendors looking beyond their concrete interests in selling gear and understanding how this market might happen. I addressed some of these issues in my keynote speech on the Benefit Compendium – a study that I have undertaken for the Council alongside Roland of Idate – but essentially, with the exception of Alcatel Lucent and Cisco, I’m not seeing anyone tackling the issue yet. I’ll have video-interviews of executives from both companies up later this week discussing these issues.
I had a lot of interesting discussions behind the scenes though which suggest that there is some awareness that the way the market is being developed needs to evolve. The reluctance of most incumbents to move is becoming clearer every day, and the lack of attractive services is also increasingly glaring. That suggests two topics that will be key in the next 24 months: policy and services.
As I’m fond of saying and did indeed say at a DSM Desotech dinner that I was invited to give a speech at
“Deploying the infrastructure is actually the easy part: it can be solved just by throwing money at it. Getting customers to embrace the new infrastructure is the real challenge.”
On the policy side, it’s becoming increasingly evident to me that the incentives put in place by regulators, governments and the European Commission to kickstart FTTH deployment in Europe have largely failed. FTTH is only emerging in countries where the market dynamics make it imperative for the incumbent to respond to competitive NGA initiatives, and even then only as fast as the threat really is. In every country in Europe where this is not true, deployment is at a standstill. It seems to me that the powers that be need to acknowledge this and look at easing local government involvement one more step to create that impetus.
On the services side, there was a sign of hope in Lisbon, and that was due to Google’s FTTH announcement the previous week. Irrespective of the aims of Google on shaping the North American policy agenda, the fact that they want to experiment with fiber grade services is a positive sign. It suggests that they consider the aggregate number of fiber users worldwide will reach critical mass in two years and be worth addressing as a specific market. That should in turn spur the telcos on to accelerate service deployment for their own FTTH networks when they have them…
While researching my new book ANYWHERE: How Global Connectivity is Revolutionizing the Way We Do Business, I had the good fortune to speak with over 50 connectivity thought leaders. I’m using my blog to periodically share some of the insight that didn’t fit into the book.
In this excerpt from my interview with Paul Sagan, president and CEO of Akamai Technologies, which provides managed services to power the performance and delivery of rich media online, dynamic transactions and enterprise applications over the Internet, we discuss the path to ubiquitous connectivity, obstacles to its growth, and how connectivity is accelerating human evolution.
Paul Sagan, President & CEO of Akamai Technologies (c) W. Marc Bernsau
How is connectivity changing over the next five to 10 years? What’s happening to the network from where you sit?
This is a consumer answer to your question, but I do believe this change will help power business things, too. We’re starting to see the Internet becoming television, replacing the giant gorilla in the home. Call it the HD Web, if you will. You will be able to get competitive quality, variety and control over your ‘IP television’ (that’s an incomplete term, but I don’t yet know what to call it) better than you get with conventional TV today. At Akamai, we are starting to deliver live TV streams of HD-type quality, using the term “HD” loosely. A majority of viewers are now selecting the higher-quality video streams over the lower-quality ones.
We handled the NCAA March Madness [U.S. college basketball playoffs] on the Web for CBS this year, as we have for some years now. This wasn’t the first year that they had cable-network-size audiences. We served hundreds of thousands of live simultaneous viewers, but for the first time, a majority of those viewers selected video streams of 1 Mbps bandwidth or greater. That’s a stunning milestone. And that’s in the U.S., where the potential audience has very low penetration of FiOS-quality broadband to the home.
You could argue that’s not ‘true’ HD, not Blu-Ray quality, but it’s more than watchable—after two beers, you can’t tell the difference, and maybe that’s always how college basketball is watched. ‘Two-beer HD,’ maybe we should call it.
What that means to me is that the Internet is now a challenge to TV. If you extend broadband growth out three, five or even 10 years, it’s still a pretty short horizon. TV gets fundamentally changed, and from there, so does gaming and all home entertainment. That is a sea change in the economy. All of home entertainment was completely analog until not that long ago! That affects all sorts of businesses.
Because of my current research interests, most of my meetings at MWC 2010 in Barcelona were about mobile broadband and in particular, the crunch that network operators experience as usage soars.
At his press conference, Ericsson’s CEO seemed to breeze by the issue in a “Brave New World” speech (why do these always remind me of films from the 1939 New York World’s Fair?). But it came up in meetings with the rest of his company and with every other vendor I met with from Tier 1 network vendors (Alcatel-Lucent, NSN, Huawei), to OSS vendors (Amdocs, Comverse, Convergys, Telcordia), to mobile backhaul vendors (RAD, Cambridge) and of course with Femtocell vendors (Airvana) and specialists like Allot. It was the “elephant in the living room” in a Telecom TV panel discussion I did on WiFi and it even came up in a discussion with over-the-air TV chip maker Telegent who proposes their solution as a way to off-load streaming TV traffic from the mobile network.
In every meeting the following question either arose naturally out of the discussion or I forced the issue and asked it directly:
Are dongles (mobile broadband modems) or smartphones to blame for the problem?
Hardly surprising that the answers were almost equally balanced between the one and the other i.e. both are to blame. But depending on the country, the principal blame will lie ether with smartphones or with dongles.
In developed markets like North America and Western Europe, the blame lies with smartphones. Sometimes it is bad protocols or bad settings and so sometimes just a software refresh by the device manufacturer gets things under control. But most of the damage is done by apps that constantly poll the network for new information. As the king of the app ecosystem, the Apple gets singled out but the issue isn’t the iPhone per se but the types of applications advanced smartphones like the iPhone encourage users to install.
In emerging markets like Latin America or Eastern Europe or developing Asia Pacific, the issue is dongles. Lack of adequate fixed broadband and heavy marketing by mobile operators mean that 3G wireless connections are increasingly the primary means of accessing the internet in these countries. As I have written elsewhere, that means the devices are stationary instead of in motion, connected for long periods of time instead of just for brief dips into an app or for a quick search and they are often used for heavy video or even peer-to-peer traffic. To state the obvious, this is not the kind of use-case the 3GPP standards bodies had in mind.
The solutions are many but they basically boil down to variations of the following
Of these only “Waiting for LTE” is anything more than a stop-gap, a way to slow down traffic growth and hope that LTE arrives before the seemingly inevitable crash of 3G networks.
Much has been made of Apple’s pervasive industry influence, accomplished without actually participating at the in-person events that make up the annual tech sector calendar. But here at Mobile World Congress in Barcelona this week, Google has been the largest presence without a presence.
“What will Google do next (to us)?” has been the prevailing question in virtually every executive conversation I’ve had. It’s safe to say the industry fears Google’s brand, cash, capabilities, and perhaps most of all, sheer audacity. I suspect if Google announced plans to put a new data center on the moon, the network community would nod sagely and say, “Sure; it was only a matter of time.”
Google CEO Eric Schmidt keynoting the 2010 Mobile World Congress (c) Monty Metzger
Tuesday night, Google CEO Eric Schmidt entered a packed auditorium, nominally to give a conference keynote. What he really did was subject himself to the Spanish Inquisition. He did offer some formal remarks, but following that, with poise a politician would envy, he fielded questions from attendees for close to 45 minutes.
Diplomacy was the order of the hour; he took pains to talk about how honored he was to attend, how Barcelona is now “the place to be” for the computing industry, and how the enormous success of the mobile sector to date is due to the community gathered here this week.
Some highlights:
The rumors of a Motorola dismemberment plan have sprung anew with a Wednesday article in the WSJ. Everyone, get your axes ready – either to grind or to hack off your favorite piece of the Moto beast. The latest round of speculation points to the possibility of Motorola combining their handset and set top box divisions to build a new integrated future. Of course, speculation also exists pointing to the potential spin-off of these units. Who are all these unnamed speculators anyway? Whether it is to sell them off or create competitive advantage, the merger of the two units raises some interesting prospects.
If Motorola can come up with a workable structure to blend its mobile device unit with its set top box unit, then that new combined group would hold tremendous promise to integrate consumers’ digital media in an exciting way. That combination would certainly attract the interests of companies like Huawei, Asus and others looking to gain more prominent market positioning in the mobile and CE industries. Of course, if Motorola could do that easily, it wouldn’t be looking to dismantle itself and sell off the valuable morsels to the highest bidder. So while I think the combination of the two units is a fine notion at a high level, the fact remains that Motorola has failed to integrate its two most important business groups in any significant way and will have to undergo major cultural and organizational changes to realize that vision. Back in early 2007, I met with then CMO of Motorola, Casey Keller, at a trade show to discuss media integration and device interaction between mobile handsets and set top boxes. Keller shared the view that Motorola held the strongest potential hand in the business to do that, but was facing an anemic mobile device pipeline (how many ways can you sell a RAZR, after all?) and new levels of challenge on the set top box side as well. So, vision took a back seat to triage and the more important task of stopping the bleeding, but execution proved to be elusive. From YE 2006 to YE 2009, Motorola’s annual device sales dropped by approximately 65%.
Three years later, the Motorola device group is showing solid signs of rebirth with its recent line-up of smartphones architected around the Android platform. The new expanding portfolio leverages Motorola’s greatest recent advance: the highly customized Motoblur experience that presents users with all their social networking and primary apps in a single view. If this concept catches fire, it provides an interesting potential roadmap for Motorola to upgrade its set top box experience to include similar capabilities for social networking but, perhaps more importantly, media sharing among a consumer’s multiple devices. With its massive share of the North American set top box market, Motorola holds a unique hand of assets and partners. Cable companies have been desperate to extend their relevance beyond the TV and laptop and a set top box that easily interacts with mobile and CE devices, integrating digital media could be just the trick.
But the window of opportunity for this integrated approach is limited, so, Motorola, god speed. As Jeff Goldblum famously said in Jurassic Park, “Life, uh, finds a way.” In the consumer media world “life” is the idea of acquiring, enjoying and moving media on any device you want, whenever and anywhere you want. Consumers are already experimenting with this in many forms. Whether it is the game station, laptop, media gateway, transcoders, mobile apps, etc, consumers have a huge selection of ways to get media from A to B, but few are terribly satisfying from either a user interface or device compatibility basis. This leaves Motorola with some wiggle room to merge the set top box business and mobile device unit to generate a new integrated vision of consumer media. The vision will need to be both technical and cultural to bridge the gaps between the two business units, which share nothing beyond a company brand. But with proper execution, such an approach could save set top boxes and the Motorola brand from being another set of fossils on the anywhere evolutionary path.
In a scenario that seems destine for a made for TV movie, Motorola reportedly is contemplating a new version of its spin off plan. The Wall Street Journal reported today that instead of spinning off the Home and Networks Mobility division from its handset group, the company is looking at continuing the auction of its wireless networks lines while creating a new publicly traded entity comprised of handsets and set-top boxes.
On the face of it, the combination of set-tops and handsets seems almost nonsensical. The former exists as a cozy effective duopoly with Cisco Systems–at least in the U.S.–is largely proprietary to every cable operator’s specifications, tends to stay in place for years and is as sexy as vanilla ice cream. Handsets are squarely in the consumer electronics camp where design and looks plays major roles.
But putting set-tops and handsets in the same group absolutely makes sense when we look to the future and in particular the future of the set-top. Set-top boxes are under increased pressure to start looking and acting like CE devices. And indeed many have been writing the obituary for the old cable converter for the better part of a decade.
I don’t necessarily believe the set-top is near extinction. However, its greatest threat is in fact coming from the CE community. While one can debate the relevance of stand alone devices such as a Roku or forthcoming Boxee box, increasingly gaming consoles and Blue-Ray players are taking on the same functionality as set-tops. Additionally, connected TVs have the same potential through are not being initially positioned as such. Regardless of the product, the end result is likely to force set-top box vendors to start thinking like CE vendors.
