Internet Thought

This is just cool. Bart de Rijk, a colleague at Logica Management Consulting went to Kenya to help a micro-credit organisation that is supported through Logica's Bloom corporate responsiblity initiative. There he learned about Safaricoms M-Pesa, mobile payment platform. M-pesa allows anyone with a mobile phone to recieve money from a Safaricom customer. In a country where most people don't have a bank account this has become the default bank payment system. It started 15 months ago and currently carries €200 million per month. That's 5% of its GDP. There is a cost involved, at 25-35 eurocents per transaction it is not cheap, but it is still appreciated (by the people, not by competing banks)

My colleague learned about how much it was appreciated when he asked a group of women who formed a micro-credit group if they would prefer to pay their loan via mobile payments. The resounding answer was: YES PLEASE. It saves them from making long walks to meetings, risks of robbers and lions etc. To read about his experiences: Google Translate or the Bloom blog (in Dutch)

WIK in Germany has finally released the PDF of the research that ECTA had been PR-ing for months already. The WIK-report on economics of Next Generation Access networks is a very handy overview of a series of research papers on FTTH (including mine). It contains a summary of many research papers and a state of play in various countries, like the US and Australia and it models the roll out of NGA networks in various EU countries. Some interesting tables are:

There is also a presentation available:

After having read Slashdot for 10 years one of my articles made it to the frontpage. I won't lie . It feels cool and yes I did submit it... 

A while ago I wrote an article here on Peering and Transit and Ars Technica picked it up and wanted to publish it on their site. I reworked it for them and now here it is.  Unfortunately I missed that it had been published for a couple of days, but still cool to see how many people have read it. Please follow the link here:
http://arstechnica.com/guides/other/peering-and-transit.ars#

Top Gear, the hugely successful BBC car program, has an item called the Cool Wall. Its the most subjective way of dividing cars up from subzero, via cool, uncool to seriously uncool. An Audi TT is seriously uncool a Landrover Defender is subzero.

I thought I do the same for the telecom industry. Being cool or uncool is as subjective here as it is there. Cool is defined as novel, alternative, fun, smart,benefiting the end-user and society. Uncool is benefiting the company and the company alone. I would love to hear readers opinions too

To quote ICON at the end of the Salone Internationale del Mobile 2005 (design): “We also make no apologies for the heavy representation of Dutch designers and brands: Milan once again shows how this small nation continues to produce the most innovative and intelligent design.”
The same goes for the Telecoms industry, though it isn't the best in everything, the climate still is exceptional.

Subzero
Free (France) 30 euro a month buys you 28mbit/s DSL (design their own DSL modems), free calling in France and to fixed numbers in 50+ countries, IP-TV, HD-TV, recorder, TV-Perso + native IPv6 (thanks Jap), etc. It has redefined the French broadband market by teaching marketeers that its not about new services that generate new revenues, but that it's about delivering more for the same money. Delivering something new every month drives churn to 0%. This company is so cool that it actually upped the ante by investing in fibre networks! For 30 euro per month of course. It is the perennial favorite for the fourth French mobile license, sending shivers up the spines of it competitors. Best of all it makes a healthy profit every year.

Internet Exchanges (mostly Europe and Asia) Most internet exchanges are cool. They are the not-for-profit associations (or similar) where ISP's interconnect their networks. The effect of internet exchanges has been massive competition in the European telecoms market. Their stats are flabbergasting (400Gbit/s traffic in Amsterdam). People working for Internet Exchanges are also good for having a beer with that's bonus points. Sub-zero then.

Internet Network Geeks: Beards, T-shirs and Sandals. Most of these men are great to have a beer with. They know why the network works. Because it imposes as little constraints on the end-user as possible. Most of them will not try to sell you a dysfunctional protocol or worse force it unto you by government regulation (though DNSSEC might be an exception)

Cool
Rabo Mobiel (Netherlands)A bank with its own MVNO. Cheap calling included with integration with your bank account. Better even, they've introduced SMS payments for everybody in The Netherlands, regardless of whether they have a bank account with the bank. All you need is a mobile phone number. That is just cool.

Telekom Slovenije (Slovenia): They are an incumbent, so that almost defines them under uncool or seriously uncool, but they have their own FTTH program called F2, without being pushed by anyone, just a general idea that it might be good to the country (I think). Just realizing that dream, makes you Cool in my book.

KPN (Netherlands): The smartest incumbent in Europe and maybe the world. Decided a while ago to invest in an All-IP network, which meant VDSL2 50mbit/s symmetric to every home. Now take that BT, that's what you call a network upgrade... And of course a brilliant way to kill of the competitive DSL-network. On the one hand it was forced by the potential of the cable industry in The Netherlands, but it has done so without the mistakes of fighting over the investment and access to it with the regulator. Much smarter then Deutsche Telekom and BT again. It knows exactly how to appease its shortsighted shareholders and still invest in FTTH. Yup, by investing in Reggefiber for 41%. You just know they will be the reigning incumbent for the next 50 years in The Netherlands, leaving the scraps for others.

FON and Eduroam: Fon and Eduroam are cool. Sharing wireless is cool. It should be mandated by law that all wifi access points should be shared amongst the customers of the ISP. Ofcourse almost no incumbent does it, because it might hurt their mobile data revenues.

Google: Google is cool, but getting less and less so. It used to be you wanted to talk to the Google guy at a party... in the Telco world I'd much rater shake hands with FON, Free, Internet Exchanges etc. Their ideas were once the coolest on the planet. Now they are just part of a larger group. Google is good at ideas, but not always at execution. Their bluffs (Android and White Spaces) in the telecom business are amusing and they are the only thing that really grabs the attention of Telco CEO's, who mistakenly see Google as a competitor. However all their forays in the telco market will result not result in Google becoming a telco, but hopefully scare the telco's into not seeing themselves as application and content providers.

Uncool:
British Telecom: There is much against BT to be listed in the Cool section. Incumbents are not cool. BT's 21CN is not cool, as it's all hype and nothing of substance to the end-user. Only delivering ADSL. Expensive backhaul (Ofcoms fault but still). Whining about the fibre investment (better then Deutsche Telekom), dumb enough to sell mobile branch. Only thing going for it is its cooperation with FON. That's Cool. Fon is cool, but the association is not enough to get BT on the cool list.

Reggefiber: Reggefiber is behind most investements in FTTH in the Netherlands. Therefore it should be cool. The problem with Reggefiber is that I see only calculations and no conviction. They haven't offered novel things in the market, nothing to brag about except connections. My image of someone working for Reggefiber is that of an accountant. Not cool.

Cable companies: I don't know any cool cable company. Some smaller ones like Reka, Kabel Noord and maybe Caiw may come into touching distance of being cool, but the big brothers, Comcast, Virgin, UPC, Telenet, Kabel Deutschland just aren't. They've promised us everything and haven't delivered a thing. Video on Demand anyone? ah yes, that's something iTunes gives us. Cable companies delivering fibre? Only in the advertisements, never to the end-users. Never a front runner, often only a runner on paper. So why are they not on the seriously uncool list.. well they sometimes keep the incumbent honest, like in the Netherlands.

European Commission: Mrs. Reding has many qualities that would list her in the subzero section. Taking on the mobile sector is really cool. However the solutions generally don't lead to permanent competition. The EU way of regulating roaming is a cent at the time. My mobile roaming solution (kind of carrier preselect for roaming) would solve it. The Commission is getting better at working on tough problems like structural separation etc. However it is an undemocratic institution that so often caused the problems it is now trying to solve, including sanctioning the GSMA-cartel. So the good stuff is keeping it from being seriously uncool.

Seriously uncool
Incumbents: Almost by definition they're uncool. Some even seriously uncool. They've been given this great asset and a perennial monopoly, that is impossible to crush. But instead of using it in a benevolent anti-competitive way (the way KPN works) most of them are just plain evil. Worse still almost all of them have cornered both the fixed and wireless market and their steps into the FTTC market will kill of any potential the competition may have.

Mobile companies (and the GSMA): In Europe all of them are money hogging, price fixing, cartel supported, marketing companies. It's not even about telecoms anymore. Most of them wouldn't know why the roaming rules are the way they are, why we're paying outrageous interconnection tariffs etc. The GSMA even argued for increasing traffic charges if internet traffic crosses a border. Hello! It does offer great value to the shareholders. However overcharging is only cool if you know your doing it and the customer doesn't. Mobile are completely the other way round. They have no clue about their business and the customers know that they are being ripped off.

Deutsche Telekom: In 1994 my student room had more bandwidth (10mbit/s) to the internet than all German universities together. The main cause: Deutsche Telekom. In Germany connecting a fax or modem to a phone line was illegal --> Deutsche Telekom. Even today: VDSL2 is a service according to Deutsche Telekom and therefore exempt from EU regulation. Are you kidding, a modulation technology cannot be a service. All this results in an enormous legal fight with the EU. They could have done what BT does. Same thing, different reaction. Oh come on Germany will never improve on a national scale as long as DT is there, seriously hurting its competitive chances.

North American Telco's: Yes Canada that includes you too (except for some bits touched by Bill St. Arnaud) None of them are cool. Most of them are very seriously uncool. Level 3 and Verizon are a bit more on the positive side. All the others are a shame for the industry. Passive collusion is rampant in the industry. All their employees seem to be lawyers. They seem to be clueless about what's going on in the rest of the world and every investment in the network is seen as an unbearable burden. Yuck. Even Munifi and FTTH initiatives in North America have the image of being a miserable failure. About the only thing good in North America is the absence of regulated mobile termination tariffs... unfortunately this is more then offset by all the rest.

Andrew Odlyzko has written a very insightful paper called "The delusion of net neutrality". The title is a bit of a misnomer as he is not arguing that net neutrality is a delusion. Instead he picks on network providers who argue that there shouldn't be/cannot be net neutrality. The technologies used for Deep Packet Inspection are used to enable streaming and real-time communications. Real-time communications may be sensitive to jitter, latency etc. and may benefit from QoS mechanisms on an overloaded link, but any communication that is not realtime (most streaming and near-realtime) communication shouldn't have that problem. Andrew Odlyzko'sargument is very true and well worded.

Video shouldn't be streamed it should be send via "faster than real time"-download. If it is send in this way their will always be way more in the buffer, so that temporary hickups will not harm the download and once the entire movie or a section of a movie has been downloaded there is no problem at all anymore even if the network goes down. The advocates of streaming video can't bring anything against this idea, except that it doesn't allow them to sell very expensive streaming kit. A big online video farm like Youtube always makes use of faster than real time downloads for exactly those reasons. Highest Quality of Experience for the end-user and lower costs for Youtube are a killer combination. So needing to enable streaming video is not a good argument in favor of non-net neutral networks.

One argument I did miss is that "Faster than realtime" also frees up resources later on in time, allowing better overall quality of experience to end-users. I've argued this in the OECD report on Broadband I wrote. Let's say a streaming movie takes 10% of line capacity. If there are 10 parallel streaming movies at the same time, the link is full. If you allow for faster than real time downloads, if there are two users they can download the movie to the buffer five times faster than they need it from buffer. When later on in time more people come online to watch a movie, the earlier downloaders either may have finished the download already, or may be able to stop the download of the movie for a time, freeing up resources to allow an eleventh or twelveth downloade in at the same time. (for other arguments, see my rants on QoS and flow based routing)

As of last Friday KPN launched FTTH. On their website http://www.kpnglasvezel.nl there is some information. Initially there are only 5 locations where the service can be had.

The Bronze package has 30mbit/s down for €65 and 3 up, Silver 50/5 €80 and Gold 60/6mbit for €110 . All offer a triple play including unlimited national calls to fixed lines and a minimum of 50 tv-channels with a harddisk recorder. There is VoD available, but no mention of HD-TV. http://www.kpnglasvezel.nl/nederland/?id=20

I think the bandwidth is a bit disappointing especially upstream. But hey, that's life. Hopefully competition will cure that (except, noone is competing at the moment)

Draka recently interviewed me on my FTTH report for the OECD. In the same issue of Nexst you can find an interview with Benoit Felten of Fiberevoluiton and an article on Reggefiber.
http://rudolfvanderberg.googlepages.com/DrakaNexstno2-2008_LoPv5.pdf

The Fibre Ring is a ring of excellent blogs on FTTH and associated subjects. Current Member blogs are:

Have fun!!

Great deal by KPN. They take yet another pain in the buttocks of the market. Instead of competing they can now cooperate and at leas for a while accelerate the roll out of FTTH. A joint attack on Cable? What really interests me is why 41%? Does Regge fall above or below accounting treshholds? Could it be that this is a way for KPN to do FTTH in certain areas without having to show it in the books? Could it be a ploy to invest in FTTH without hurting the stock price too much? (Depending on what the contract looks like it could be a loan shaped like a deal where KPN agrees to buy the network at a price when it has reached a certain size/profitability)

An interesting question is how cable will react. If it can react at all. Two years ago 3 cable companies were bought by private equity for 5.2 billion euro or 1500 per sub. This company Ziggo (used to be Zesko) has about half the market another sizeable chunck going to UPC. For 2007 they reported a 274 million loss (mostly due to 450 million interest payments). If KPN attacks with both technology and excellent product management, than these cable companies might find themselves outwitted. At the moment I don't think KPN will be content just to sit around and do nothing, but this might all change when a large enough piece of the market has been cornered.

What I find interesting for KPN as well is that it is in an excellent position to use this deal for both fixed as well as wireless networks. Their 3G and 4G network could just be plugged on top of this investment, leveraging the fibre assets, something none of its competitors can do at the moment.

For the backhaul market this is also an interesting deal. Regge owns Eurofiber, which had sizeable fiber assets throughout the country on backhaul routes, selling mostly dark fibre (or purple fiber) I know quite a bit of companies that bought Eurofiber to get rid of KPN. Eurofiber's new (nick)name may be KPN Fiber Wholesale. UPDATE I should have read the press release better, Eurofiber is explicitely excluded from the deal.

For the regulator this will be a tough deal to look at. There are multiple angles to look at this deal. One could say that three competing infrastructures is not a viable option anyways. One could say that this doesn't really change anything to the current competitive landscape as Reggefiber currently is mostly a story, an element in business plans or an investor in the background and only very locally a real force to reckon with. So if the NMA or OPTA sais no and Regge sais that they won't invest anymore than nothing has changed. Another option may be to split of Eurofiber and some other assets. Not allowing the investment is also an option, but does that also mean projects like Almere are not allowed? In a changing industry this would go to far.

I hope it doesn't need any comment :-)

The much debated OECD broadband statistics have been published again. The stats portal is here. They also published a paper on broadband policies, which I hope to give a separate blog post.

Australians will again say that they're rubbish (biggest drop), USA will not know what to say (they remained equal), Luxembourg will say that their broadband policies work (biggest rise, probably because they installed 1 DSLAM in their country) Weirdly enough Korea dropped 3 places... but that can probably be attributed to the fact that the top has become very competitive. (I would like to see the OECD statistics not only on a per 100 basis, but also percentage of households connected)

I've also updated my motion chart (unfortunately Google hasn't yet updated motion charts)

In recent weeks I learned more about the value of embedding stuff into pages. Scribd is one of those services that allows people to embed papers. What I really start to wonder is why every webserver and browser doesn't come enabled with a bit of neat technology to allow embedding movies, presentations and pdf's. When I started using the internet in 94 it wasn't possible to view .jpg's inline in Netscape. Pictures had to be downloaded and then viewed. Now everything is a picture. However if we want to be able to publish movies, presentations and documents in an easy fashion we either have to download or use a third party service. Good ones that I found so far are Viddix, Scribd, Slideshare and Youtube and for some applications even Flickr.

I would love to see an embedding-tag. And here is an embedded document:

I've written an explanation of Peering and Transit. Which is available in PDF in draft. I would love to receive comments on it from anyone who is interested. My main questions are: Did I cover all angles, is it readable, is it structured well and does it need anything else? Please send your comments to the e-mail address in the paper.

You can find the paper here:

presentations of the Encore workshop are available. They all argue forcibly in favor of diminishing or abolishing MTA-tariffs. For those of you who want to know about Peering and Transit as the alternative model, see my draft explanation.

Reuters last week reported that the EU will dramatically cut Mobile Terminating Access to a level of 1-2 cent per minute. " "The logic of the recommendation would be that by 2012 the incentive for keeping fixed termination rates and mobile termination rates would go," the Commission official said." I had missed this, but today this was confirmed at a workshop organised by Encore in The Hague. An official working for one of the EU regulators said 1-1.5 cents would be the goal of the Commission.

There is a great deal of logic behind this number. Currently the termination rates vary from 2 cents in Cyprus to 16 cents in Italy. Many countries are now forcing rates down to about 6 or 6 cents. Which is still well above cost according to ARCEP who are of the opinion that current costs are 3-4 cents and 2.5 cents is what their models predict the cost will be in 2010. So cost can come down dramatically without dropping below costs in the current Long Range Incremental Costs models.

The Commission wants to be forceful and will therefore not shy away from a statement. It cannot state a number that regulators already envisage. The start for the Commission will be the current MTA-tariff of Cyprus. It will not follow the gradual glidepaths of regulators. It doesn't want 2.5 cents by 2020, but it will want it next year or the year after. Bij 2012 this will need to be at 1 cent, as this is where mobile to fixed and fixed-fixed MTA-tariffs are at. Anything higher is not a proper statement.

The Commission can do this because there is no proper controlling force of the Commission. A recommendation will work as a regulation in the work of most regulators. If the regulator comes to the Commission with a higher MTA-tariff, the Commission will refer to its recommendation and the MTA-tariff of 2.5 cents. It will then start the serious doubts procedure, causing all sorts of political trouble for the national regulator while making the Commission look all harmonizing and consumerfriendly. So this is a lose-lose situation for the national regulator.

The Commission may have won part of the roaming battle, but it didn't succeed fully, because it wanted a directive and therefore had to agree to some changes in order to get the support from Vodafone.... I mean the UK. By doing a Recommendation the Commission may save itself the trouble of listening to the operators (countries) protest in all kinds of EU Council meetings. The Commission will look benign and any regulator not following the guidelines will look incompetent.

I don't belief the Commission will force Bill and Keep on the market. It will hope that by bringing the MTA-tariff's to the same level as fixed-fixed the market itself will choose to abolish MTA's all together.08-05-2007 The