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.

2.0 is all about comparative advantage and nothing more. Adam Smith would be proud.

In this whole 2.0 world, I just can’t keep things straight. Was I born at 1.0 or 0.1? And where am I today? Am I in my 3.0s or just 1.9.2? Because I’d say that it looks like my 4.0s or my 5.0s are on the horizon, and I definitely feel like I’ve learned lessons from my 2.0s. And what will version 2.1.7b be like when we get there?

Unless I’m in the world of technology…which feels the need to 2.0 everything. Whatever you were doing is 1.0 and whatever you will be doing is 2.0. So according to the recent Advertising 2.0 conference, I’m destined to do tomorrow what I’ve been doing for years, which is going to conferences and looking for cellular signal. Or looking for a way to cram a day’s worth of work into the 30 minutes between sessions.

The biggest take-away from Advertising 2.0 is that, no matter what happens, the best that digital advertising can do is to grow its comparative advantage against other media. This is a difficult concept to grasp, but it’s very important. Everyone looks at Google, and they think that digital advertising is the land of milk and honey where riches abound.

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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!

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.] 

Just a quick check-in from Shenzhen, China where the weather is a balmy 85 degrees and what feels like 120% humidity. I have endured 18 hours of flying [in coach] and the aforementioned soupy weather to attend Huawei’s Global Industry Analyst Summit. I was compelled to attend this conference given the colossal impact Huawei’s market presence has on the carrier equipment and services market and was eager to hear an update from their execs on corporate strategy and a review of 2007 results. What we saw and heard was clearly impressive…however, Huawei still has some growing up to do if it wants to crack into the top 3. Read the rest of this entry »

Greetings from Korea, land of  innovation in chips and ‘cinos (as in cappuccino, frappucino, and now the exciting new sweet-potato-cino). I confess I didn’t venture to try this; my time in Asia this week is more focused on the innovations in the emergence of Anywhere than in beverages.

Due to the advanced state of play in Korea and Japan in mobile technology, I have been lucky to get a taste of some exciting developments. More on those insights later. Sometimes, however, the lessons you learn as an analyst may not be the ones that were intended. Several visits to technology R&D centers around Seoul today provide a great example.

Here’s the scene: you arrive at the gatehouse of the campus, and there you register your laptop, cellphone, portable storage drives, music player, and any other technology you happen to have with you and are foolish enough to produce at the counter. (One gentleman registered a large curved piece of smooth black plastic sheathed in bubble-wrap.) Once all the serial numbers are dutifully recorded manually on carbon forms (after a gentle but protracted debate about which of the many long numbers on the base of your PC is the device’s serial number), a beautifully dressed and exceedingly polite hostess then begins the laborious process of applying security stickers to your laptop.

Each orifice of your device – representing potential egress of the company’s proprietary IP, or ingress of some malevolent threat – is taped over. Small ports get small stickers, CD bays get larger stickers. Thus baptized, your laptop is returned and you proceed to your meetings. In theory, you will present it for re-inspection on your departure, allowing the hostesses to verify, very politely, that none of the stickers now says “VOID”, indicating that you disturbed it during your visit.

I say in theory, because in point of fact my own laptop was never examined when I left, nor was the USB drive that had been equally carefully packaged in a special plastic bag with a similar security seal. As with many security procedures, it doesn’t take much to render them toothless; the best concepts can fail in imperfect implementation.

Throughout today’s sticker application, I kept trying to visualize how we will put stickers on all the devices and things that could harm us in the Anywhere Network of the future. As the network expands and devices that use it proliferate, we are sowing the seeds of a massive new security problem; see my interview with Ken Silva here.

I’m wishing I’d tried the sweet-potato-cino. Maybe on my next visit.

Las Vegas is a strange place, so much noise and excitement; it’s literally pure sensory overload. The barrage of people, noise, and lights usually makes me long for a quiet place after a short amount of time. To my surprise I actually stumbled upon that very place yesterday right smack in the middle of the CTIA tradeshow! I carved an hour out in my ridiculously busy schedule to attend a session dedicated to an industry status check on IMS, or the IP multimedia subsystem. A few things struck me before the session even started; attendance was sparse [especially taken against other sessions such as Yankee Group’s own standing room only M2M track], and the assembled panel of experts was 100% on the carrier infrastructure side of things.

Now as an analyst, part of the job description is to assemble panels and when we take on that task vendors are usually the first to raise their hands to participate given their natural inclination to “get their story out”. However, a good panel usually balances the “vendor speak” with some demand side representation, in this case I would’ve expected to see at least an operator or two.

The lack of operators on this panel was telling. After some introductions, the panel got down to the business of admitting what we at Yankee Group have been saying for some time. The IMS movement has been severely over-hyped and is presently mired in various obstacles ranging from the technical [too complex, security concerns] to the business side [service providers are still very siloed, lack of killer applications create a business chicken and egg syndrome]. Does the tail between the legs routine from the vendors mean IMS is dead? Surely not, it will happen in fits and starts and operators are currently deploying different parts of IMS to suit their needs. There are clearly some interesting pockets of sunshine which include a strong cable multi-service operator interest in the platform along with AT&T, NTT and BT’s public roll-outs.

What it does mean is that unabashed hype cycle is officially over and we are now in the more pragmatic and difficult phase of building viable business cases and actually making it work.

So there is to be an OpenSocial Foundation…great! Earlier this week Google, Yahoo and MySpace all got together to tell the world about the importance of creating a Foundation to support Google’s already announced OpenSocial initiative.  OpenSocial (the initiative, not the Foundation) allows developers to use one source for code to create applications  that can be distributed across a number of social networks including MySpace, Bebo, Hi5, etc.

The Foundation announced on March 25 has been entrusted with ensuring that the original principles of OpenSocial would be enforced and “assure neutrality and longevity of specification for building social applications across the web.”  Neutrality and openness are becoming increasingly important for the developer community and for the internet companies themselves who are beginning to show dependence on external development to enhance internal innovation.

However, the announcement itself was far from groundbreaking.  We already knew about the principles of OpenSocial, so why bother with a big announcement?

Well if you are Google, this was a big deal indeed.  Remember a little story about a company called Microsoft trying to buy Yahoo?  Remember Google’s reaction to the news story, through its corporate blog that it hoped the deal would not go through because Yahoo had been an important partner in web development and openness?  Well, it looks as if that philosophical idea had become a reality - now Google and Yahoo are partners in ensuring open web development of the social variety. 

Moreover, Google and MySpace had been rumored to be breaking up over their partnership for advertising.  Again, Google has been able to squelch that rumor with this.

The story a lot of people missed wasn’t the announcement but the players - Yahoo, Google, MySpace all coming together and Google being the tie between them.

So the real winner in the OpenSocial Foundation release?  Yes, of course, the little guys (the developers) are winners.  Certainly the on-going development of the web, in theory at least, will enhance a consumer experience.  But congratulations Google on continuting to be the source of code and partnerships that are tying the world of the web together.

The rattle of jackhammers and traffic gridlock welcome any visitor to London after the ides of March.

The UK financial year is ending: Spend your budget by April 5 or expect a cut, particularly if you’re in public works.

This year, the thud of suitcases locking and money swooshing down the Thames join this noisome mix. London’s non-doms and investors are in startled exodus.

The cause: severe new UK tax laws. And they’re empoverishing our industry.

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