Thursday, 11 December 2008

PON networks vs P2P networks

The discussion between Point to Point networks and passive networks with splits close to the end user gets very heated because of different vendors getting involved in the discussion and touting their wares. However if you look at it from the point of view of the owner of the network and the options they have for the future with the network, then the discussion becomes alot clearer and also easier.

If you're an incumbent like Verizon, with a near monopoly and you don't have to worry about regulatory intervention, access by third parties, competition etc, then and only then splits close to the end-user might not be too  much of a problem. You might save about 10 or 20% on the Capex, by keeping the network "fibre lean".

However if your position as the owner of the network is more like the incumbents and new entrants in Europe, then the world changes pretty quickly. The physical layout of the network shouldn't excluede any optical technology you want/can use. So you can use either GPON, EPON on a point to point network as well as plain standard p2p Ethernet (or even ATM, SDH, xWDM if you would be so inclined). With splits low in the network, you do exlcude any networking technology that can't handle a network where different users share the same line. A flexible, fibre rich network that allows the world to change over 50 years is the answer.

As always, where you sit is where you stand.
- Regulators should want P2P (shame on CMT for not requiring Telefonica to use P2P)
- Network infra players should want P2P
- Any investor with a 10+ year investment horizon should want P2P
- Mobile operators should want P2P
- Incumbents with fear of regulation, long investment horizons, visions of remainig relevant for another 50 years, multi-service incumbents etc should want P2P
- Infra players should want P2P
- Monopolist with nothing to fear and shortsightedness should want low split fibre networks.
- Vendor touting PON wares --> Low split may be nice as it 'guarantees' sales in the future. Or it might not, as in 10 years your selling different wares.
- Vendor touting P2P wares  ---> Easy

The choice then between splits low in the network or a point to point network, then becomes a choice between flexibility over the life-time of the network, the ability to quickly raise penetration rate on the network and strategic possibilities to include or exclude service providers. Reggefiber in the Netherlands probably said it best "Fibre is a real estate play". And something they understand but don't shout too much, fibre is also a first mover market. So looking at the three items that make a busines case:

1. P2P offers the most flexibility.
 a. It supports different use cases, different customers etc best. Any network will have to support any possible mix of customers. It's not only fibre to the consumer, its also fibre to the business and fibre to the wireless antenna site. (and who knows, fibre to the lamppost might become an option). P2P designs allow FTTB/FTTH etc. to be mixed on the the same physical network. Low split may not be acceptible for FTTB type applications as it is a shared network, making everyone dependent upon the same end-point and the same technology used a the end-point. Simply put, some companies already need 10 Gbit/s upstream for back-up purposes and to keep latencies low between sites. PON technologies can't do this.  (Just to make it very clear, yes you can mix PON and P2P ethernet on a P2P network, just not on a low split network.
b. It doesn't exclude any future developments. There is no reason to assume Ethernet and PON will be the dominant technologies in 20 years time. Fibre is there for another 50 years. Any network design that doesn't make assumption over how people use it in 50 years is the best technology.

2. P2P allows the owner to raise penetration of the network better.
a. FTTH shouldn't be the only goal of a fibre network. The goal should be to get as many paying parties connected for as many different use cases as possible. Fibre lean is not a good idea then. If 70% of the cost of the network is in building the infrastructure, than the fibre bit is not the problem. Creating an option to hook up 5 times as more users than currently projected is not a stupid idea once you factor in mobile operators, municipalities etc as possible customers of the network. As the owner of the network, you shouldn't care about who connects as long as more people connect.
b. Multiple providers of wholesale services can operate on the same infrastructure. This is happening in Stockholm already. Stokab owns the fibres and if I have been informed correctly there are several operators of wholesale services selling to various ISP's and other service providers. For the owner of the physical infrastructure the question is not who sells the line, but if it's sold. (think of a huge office building.. it might be nice to have one tenant renting all the office space, but one tenant renting 50% of the space is not as good as 6 tenants renting 90% of the space.)

3. Strategic possibility to include or exclude certain operators
This one is most important for an incumbent trying to keep a position in every layer of the market. If a near monopoly in the infrastructure market is not good enough and a dominant position in the service layer can only be attained by nasty tricks and excluding other market parties, then low split fibre may be a good idea. Why make it easy for a competitor in the service market to enter the market. However if the infra investment is seen as separate from the service market, then opening up the infra might be a good idea. If you receive regula(r)(ted) returns on the infra, part of that money can be used to support the service business. Point to Point as said before allows a competitor to make use of the infra and still allow for competition.

Tuesday, 2 December 2008

Fighting over peering and transit

Scott Woolley , writing for , has written some excellent articles on peering and transit and the fights that Cogent got itself into in recent times. It offers great illustration of my explanation of Peering and Transit at Ars Technica.

Specifically I want to single out:
The day the web went dead - about the fight between Sprint and Cogent. Nice numbers are that Sprint started a fight over 0.004% of its revenue.
Metadata: Internet Innards - shows that peering is about power not morality
Telecom Knockout - On Cogent, its boss mr. Schaeffer and the fight with Telia

It really illustrates that the Peering and Transit market is very competitive and generally will come up with a good solution without governments intervening. (why do you think that most telco's don't want to see the voice business go that way? Telco's love government regulation. It has strenghtened the status quo in the voice business)

A great bonus but not peering and transit related is an overview of the money in the business:
Blown to Bits - on a digital world where all communications can be converted into generic bits and shipped over the internet for less. Here are the juiciest profit pools to drain (U.S. figures only). 

Thanks to Niels for the tip!

Monday, 1 December 2008

My internet connection was saved :-)

Thanks to the most highly valued reader who sent me the e-mail adress of BBNed's CEO. Thanks to the lady manning the phones at BBNed in Hoofddorp, who was kind enough to fire an e-mail to some people in the organisation at Friday afternoon. Thanks to BBNed's CEO, mr. Van den Ende, who forwarded my complaint and thanks to Bart at the Alice Helpdesk who was in contact twice today to tell me what was going on.

We're not going to be shut down :-) We might see a small interruption, but it shouldn't take too long.

Now I need to think again of something useful to post.

Friday, 28 November 2008

Alice / BBNed will disconnect me, can you help?

Just found out that my ISP, Alice / BBNed in the Netherlands has made an error with our move to a new home. We're moving end of next week, but Alice is disconnecting me by the 30th of November at the current location and connecting me by the 1st of December at my new location. This leaves me without phone and internet for almost a week.

Anybody know how I can have BBNed not disconnect me on Sunday?

Much obliged for any help that can be offered :-) Will think of a proper way to say thanks too :-)

Monday, 24 November 2008

KPN/Reggefiber offer fiber for €12 euro/month

The  Dutch will get wholesale fibre for between €12 and €17,50 a month. OPTA has just released its opinion on investments in fibre networks where a party with significant market power is involved. You have until january to voice your objections and then the digging starts. That's what tonights published document says (more or less).To find out much more about this proposed deal and its background and how KPN and Reggefiber fit together see these ubervalued , super-duper , hi-James-we-copy-your-style , multi-talented, scoop-hunting , fellow-bloggers and my own  stuff. I hope those guys will go into comparisons on price etc as I'm now going to go to sleep.  (Update the morning after: Yves Blondeel has a good analysis of the proposed regulation too)

To start with the sweet stuff in the back of the document. In the annex you can find the prices for the Optical Distribution Frame service of  Reggefiber as the passive operator of the FTTH-network. The offer is for a wholesale service. The annex is written as the contract that operators of the active services on the network will have to sign. All costs are excluding VAT (19%) and applicable discounts.

The monthly fees are:
Depending on the area type there will be different CAPEX. The monthly fee per customer is dependent upon the area type and CAPEX. Normally the price should be at the first price, but it may go up by as much as €2,50 if certain penetration rates aren't reached to satisfaction etc. If an area has a higher or lower CAPEX, every 50 euro's is another bracket and another 75 cents. There is a discount for bringing in more customers in a specific area. The discounts are as follows: Vincent correctly saw that this all suppliers get this discount if the active fiber pairs in a region hit this number!
This sounds like a good teaser for KPN as it will give them discounts in their retail side when they bring customers over from the DSL offers to the new environment. There are some connection, disconnection fees, Pop-fees etc. Most are one-off, some monthly. Energy is outside the scope. In the accompanying letter OPTA says it agrees with the Reggefiber's pricing. It will formally say so on December 19th and explain its reasoning after which it will notify Brussels and give you time to voice your objections. The Dutch Competition Authority NMA will start this week on a market test. 
The main bit of the letter however is the market consultation of the proposed policy rules for price regulation for unbundled access to fiber optic networks. You have until December 8th to have an opinion. This bit is full of legalese.  So I'll try to condense it. Everything is done in conjuction with the Proposed decision for the unbundled access to the wholesale level of November 5th. In this proposed decision KPN is designated as a party with Significant Market Power. 
OPTA nicely adheres to the stated goals of infrastructure competition. On paper it looks good, but realistically we won't see a second, third and fifth party rolling out a ftth network under these conditions. The Netherlands is stuck with Cable vs KPN forever and wireless will play a minor role too. 
Opta will regulate the offer done by Reggefiber and KPN as it would with a copper network. So there are protections against price squeeze, discriminator pricing and excessive prices. Nothing on delaying tactics, which is a bit of a pity as I would think that KPN's All-IP plans have already sown Fear Uncertainty and Doubt in the investors community and this plan just ups the ante. 
The regulation will be by creating a ceiling for he prices Reggefiber can ask for its wholesale offer. The calculation of the price is done by using a variable All-Risk Weighted Average Cost of Capital. The WACC consists of the standard WACC for the copper network, with on top of it:
  1.   an extra fiber WACC as fiber is a risky investment by itself. This one is thought to be variable and decreasing over time as the investors know better what they got themselves into.
  2. a regulatory risk WACC, which is stable as regulators are notoriously unstable and investors want to be compensated. 

If the internal rate of revenue goes over the WACC than Opta will either lower the ceiling or Reggefiber will need to quikckly invest more into less profitable regions. OPTA will evaluate the ceilings every three years based on the entire business case. Nice thing is that the Reggefiber is allowed to increase prices in accordance  with the official Dutch inflation numbers. (Now how does that work in a time of deflation). Unfortunately there are no numbers on the height of the WACC etc yet. 
Opta does promiss to be vigilant and guard that Reggefiber won't make excessive profits by misrepresenting potential penetration rates, Capex per region etc etc. 

Firewalls prohibiting working at home

I've been working from home quite alot recently and the corporate VPN my boss provides has been quite helpful. However I think we need a bit of a paradigm shift before we all can truly enjoy working from home when we want to. And it doesn't even fibre for all, just a different kind of corporate IT-security department. I also had a word with some colleagues and some of Logica's IT-architects are arguing against firewalls and defining a strict internal and external view of company IT.

The result of not having an internal or external view of company IT, would be that a system is either safe and trusted and can be accessed from anywhere by authorized users or a system isn't safe and it doesn't matter whether it's in the corporate perimeter or not. (one of the assumptions is that if you run a large company like some of our clients, inside is almost as hostile as outside as corporate espionage is a risk)

The effect may be that it doesn't matter where personnel lives/works as long as they can access the systems. Of course there are other objections against not seeing your colleagues, but on a day like today when we were supposed to be snowed in, being able to work from home can be a production saver.

An example, my wife works as a credit management consultant for different clients every 3 to 6 months. She always has to drive to the client as they don't trust her to tele-work (you know corporate IT security). Yet she has complete access internally... Now how is that different?

Sunday, 23 November 2008

Regulators blog too (in Espagnol) + Dutch Radio on KPN/Reggefiber

The Spanish Regulator CMT blogs ! Their CMT blog actually linked to my blog. I actually found them looking for post's on the Reggefiber/KPN story, via the British Fibrevolution , which ofcourse got its name from Benoit's Fiberevolution . The Spanish also link to Tim's Communication's Breakdown and how everything depends on a Regulator! (BTW according to Tim's twitters OPTA will publish the long awaited FTTH paper at 7PM tomorrow)

BTW on the Reggefiber/KPN story; you should have already seen James' Eurotelcoblog piece where he answers my question of where KPN got the money for the investment.

Dutch Radio 1 also has an item on the Reggefiber/KPN story. They have an interview (in Dutch) with Gaby ter Keurs, the marketingdirector of Reggefiber. Absolutely no denying Vincent's story . Congratulations Vincent! Good scoop! Usual words on how it costs between 1000-1500 euro per sub

Ziggo is also in the broadcast. They're giving the usual story on how their network is 80% fibre. How they will reach 300Mbit/s. (great marketing btw, fibre should go with standard 1Gbit to every house as 100Mbit just sounds lame) But interestingly enough, they don't deny that fibre is the end game and kind of acknowledge that. (must have been a slip of the tongue)

Good question is whether the fiber network will be cheaper. No real answer to that question. However the marketing guy of Regge could have been a bit more confident there. Their investment of 1000-1500 might give lower prices as it is significantly lower than the €1560 per connection paid by Ziggo's owners. Plus the owners KPN and Regge seem to have a longer term view than the owners of Ziggo. (UPC is in better shape as said previously)

Wednesday, 19 November 2008

Voda-NL: UMTS is useless

Voda-NL has just come out with the message that UMTS is useless. Well, not literally, but that is how I interpret Vodafone capping new and renewed Vodafone Careless Internet Blox to 256kbps instead of the current 3600kbps. There is absolutely no reason for users to buy an HSDPA enabled phone anymore as GPRS is all you get. Literally Vodafone's spokesperson has said that 3600kbps is overkill for end-users as they only surf to and use E-mail.(According to them this is what other market parties were offering).

Voda was offering a Blox subscription at 3600kbps for €9.50/month. It baffles me why Vodafone has taken this blunt route. It seems to me they have made a PR/marketing/financial blunder:
  1. The change was announced without a viable alternative being introduced. So now everybody sees them as short changing customers. 
  2. Voda has said they will come with a new subscription, that would offer the old speed back. What they should have done is introduce 2 new subscriptions, next to the old one, on day one. One that is much slower and has a low cap. Say 128k down and 50 meg cap for 5 euro, one 256k 150 meg cap for 10 euro and one unlimited for 20 euro/month. Nobody would have been the wiser. (I trust Voda could come up with a better plan that even someone with a degree in finance wouldn't be able to understand)
  3. I don't see how capping download speeds is good for Voda. The best thing that could happen to them is customers going over their cap and paying a bonus. That is what hapens with bundles of minutes. Its very simple to go over a 50MB cap if you have 3.6mbit/s available. At 1 euro per meg you go over your cap, this could be a real money maker. 
So, badly communicated and it may be bad for  business too.

Update the day after: Voda has just said the speeds will remain 3600kbps for all users. Bad PR was killing them.

Breaking news: KPN Reggefiber 7 billion in FTTH and regulatory approval

James Enck beat me to it: KPN and Reggefiber are going to invest 6 billion in FTTH for everybody in The Netherlands. Plus NMA/OPTA seem to be cool with the KPN/Reggefiber joint venture. That is news! For those of you who want the original article... you need to wait for the archive of Trouw, probably tomorrow. Update (13:19): The article is now available online and so is Vincent's blog posting on the subject.

Some interesting questions:
  • KPN announced this morning that they will also be doing a stock buy back worth 1 billion. Where are they getting the money?
  • What will be the effect on competitive networks, like BBNed. Will they have a place in the Dutch landscape? The answer is probably yes. Reggefiber is thinking of fiber as a real estate play. (Light/beer, whatever you want to push through the fiber is your problem).  Regulators (in their right mind) should see it the same. So mandated unbundling and access for BBNed/Tele2 should be the norm. 
  • What will be the effect on Cable? UPC is probably in better shape than Ziggo. Liberty/UPC got a free network when they converted the bonds to stock when the bubble burst. Ziggo paid €1560 per sub and is in much more difficulty when it comes to being competitive in the market. 
  • Will this prove to be a pre-emptive strike by KPN/Reggefiber to create Fear, Uncertainty and Doubt in the market? Whether or not it was aimed to discourage others to invest in the market, the effect will be the same. Investments in competitive networks are already more difficult ever since KPN's All-IP plans. This will have the same chilling effect. All KPN needs to do now is work 2 years tirelessly and then nobody will invest in new networks anymore. 
  • Is KPN's deal with Reggefiber exclusive? Could we see other financiers step into this market? Pension funds should be interested?
Oh well  this time next year I'll have FTMH (Fiber To My Home) as I'll be moving to Almere in  december and my street is scheduled for November 2009. (pictures will follow). I don't need to Bring my own Broadband

Monday, 17 November 2008

BT shareholders don't like broadband

The Inquirer runs the story with the following great quote from BT's CEO Livingstone.

"There are some shareholders who say 'you know something, don't do that, don't do a whole lot of other things. That leaves you with a lot more cash and cash today is worth a lot more than cash in a few years' time'."

And let us be honest. Right they are. BT should only do a defensive move into investing where it might loose market share to Virgin. Maybe some investment where the OPEX decrease warrants the CAPEX increase. Because all in all, shareholders are not there for the public good. Their only interest is self-interest. 

Regulators are to blame for this as well. It seems the return on the local loop is good enough that there is no reason to invest in anything new. Said differently, why invest for the coming 50 years if the last 50 years makes enough money.

This is what I tried to get across in the presentation below at the OECD's fibre conference in Stavanger. 

Dig Now
View SlideShare presentation or Upload your own. (tags: investment ftth)

Thursday, 13 November 2008

The Netherlands the greatest nation in the world bar none

Gordon Cook asked on his excellent list about the reasons for The Netherlands success in the telecoms arena. Here is my answer.

Here are some items that make The Netherlands the greatest nation in the world bar none (specifically towards telecommunications).

First of all, the Dutch are pragmatists. Whatever they do, it should work. It's less important what the dogma is, as long as it works. This has it's effects everywhere:

  • Administrative processes and regulation should just work (making The Netherlands quite efficient, with for instance the best looking tax forms and money)
  • Technological choices are based on what works
  • No winner takes all mentality. Everyone can leave a negotiating table feeling that both parties have benefitted
    • Unions and employers get along quite well. The employers are not too stingy and the unions don't ask too much money.
    • Solutions to societal problems are generally thought through quite well as all sides get a say
    • The Netherlands (like Switzerland) can be a neutral solution between big nations.
  • Dutch Creativity/Design is an example of designs that generally are simple, witty and work. Think Koolhaas, Wanders, airport signage by Mijksenaar, TomTom
Second, the Dutch always have this fear of not being taken seriously by the rest of the world because of our small size as a nation. (As individuals we fare better size wise) The result is that we put alot of effort in being among the best.
  • The Dutch can't stand being in the bottom of an (OECD) list. Top 10 is the least.
  • The Dutch always wonder why they are not part of G7/G20 meetings
  • In international negotiations we want to be heard and so try to find the pragmatic middle between the various nations.
Third, the Dutch have been traders (transporters) since the middle ages.
  • Traders need flexibility. Tomorrows success is something different than todays
  • Traders see solutions everywhere in the world and adapt them for their own situation
  • Traders need communication to execute trades and to track shipment
So how does this work out for the position of the Netherlands in the Telecommunications world?

  • Dutch academics in the nuclear particle physics community in the 70's and 80's always ambitious to be among the best, so needing communication with the rest of the world
    • KPN wasn't as pro European/anti-American as other Euro incumbents
    • Dutch Networks easily allowed to connect to both European countries with European communications standards and the Americans with their own communications
    • Netherlands (Amsterdam) became the hub between the Europeans and the Americans
    • Meetings were easily set up in Amsterdam, good connections by plane.
  • Always active in whatever standardization organization was important. Be it ETSI, ITU, IETF, IEEE etc.
    • Whatever needed standardizing, the Dutch were there with a pragmatic, just get it working approach.
    • When you help standardize it, you want to trial it (and not wanting to be the dumbest kid in class, The Netherlands did quite early generally) 
    • Many technologies developed in The Netherlands or influenced heavily by developments in the Netherlands. Bluetooth and Wifi come to mind, but also the DNS community, IP (adresses by RIPE) 
  • Entrepreunerial people helped to develop good ideas into practical realities that just worked, or adapted to changing situations.
    • Think of the start of the commercial internet in Europe (EUnet and NLNet)
    • KPN dealing with the reality that they weren't the monopolist anymore and actually "allowing" competition. This was a different reaction than many of their competitors east and south of The Netherlands. 
    • Start of internet with companies like XS4ALL, who supported the greater good and not only their own bottom line.
  • Regulatory environment that supported the growth of telecommunications
    • Government tax credits for buying a PC via your employer, resulting in high PC penetration --> resulting in a high uptake of internet
    • Regulations that gave telecommunications companies the freedom to lay fiber backbones throughout the country without negotiations with every municipal government.
    • Regulations that allowed competition in the telecommunications market. 

Wednesday, 12 November 2008

Question: What can an IPTV/VOD provider do with viewing data?

A student asked me what the legal problems were with selling data on viewing habits with digital TV/IPTV (both broadcast and on demand). I must say, I don't know.

- Can a provider of digital TV resell information on whether a user has ordered certain (naughty) television channels?
- Can a provider of digital TV resell information on all regular viewers of BBC Top Gear (name your programme?)
- Are they allowed to store all viewing data?
- etc etc

Anybody have any good pointers to academic papers on the topic? What laws do apply (preferably Netherlands, Europe, rest of world (in that order)

Addendum November 13th: Read the super addition on the Italian situation by Eugenio!

Thursday, 6 November 2008

Started Twittering

I really don't know why, but I all of the sudden had an urge to start Twittering. Given all the buzz that twitter will fail in the coming year/years, I at least want to know why and what it actually was. To me it looked a bit like IRC without conversations, just people shouting into an echo pit. Oh well, we'll see if it is something that is useful or not. I've already found out that most people I know don't Twitter at all for my twitters (or see the sidebar next to the blog page)

Mobile content makes money in Korea

The Inquisitor reports on two mobile media moguls in Korea. Their company DirectMedia is hugely succesful in the Korean mobile content market. The article is a bit sketchy on the why and how of the Korean market. The positive things are:
  • that its DRM-free mostly, 
  • short release periods for all content. (so the movie comes out this week, but you don't have to wait half a year for the mobile accessible version),
  • 60% of music downloads are to mobile, compared to 15% elsewhere,
  • they create new and original content for mobile as an extra next to the official movie/soap (can you imagine Heroes comic episodes? (GRMBL... I forgot to tape the new episodes of Heroes yesterday on BBC)
  • the Telco invests in them and provides a billing platform. 
  • and the killer, they don't see themselves as a content company, but as an applications company that provides multiple applications for users. Revenue share on content (b2c), operator fees for
    supplying the platform (b2b) and shared data charges on sporadic
    special events, such as a Korea Vs Japan Baseball game. Incidentally the only time
    their servers have gone down.
What I didn't get was the revenue that they have. $15 million is kind of bleak next to the "Crazy Frog" people who have $300-$500 million. Korea's country size is 49 million, so allowing for size of the US and EU markets, it might not be a very bad number, but it does sound lower.

Friday, 31 October 2008

Show me the money! (or The Dutch have the most beautiful money)

There is an internet edge to this story, as this money was created using open source software only. For the full story behind the coin, follow the link, but the money is dedicated to "The Netherlands and Architecture". On the one side it shows the face of Queen Beatrix made out of the names of Dutch architects, sorted by how often they are named on the internet. Rem Koolhaas, Pierre Cuypers, Aldo van Eyck, Gerrit Rietveld are the top 4. All of them are very interesting. The reverse side shows the Netherlands, with birds at the locations of capitals of provinces. the shape is made through lining up the backs of books on architecture by Dutch Architects (eg. you can see S, M, L, XL by Rem Koolhaas)

Also have a look at the great designs for the Dutch guilder banknotes by Jaap Drupsteen.

Wednesday, 22 October 2008

Location based services another missed Telco2.0 opportunity

Telco's went out of their way to prove that they have no position in the Location Based Services market this month:
- Super colleague mailed the story of Nulaz a Dutch Location based service idea. They presented at the Dutch Telecom Society and complained that KPN wouldn't give them access to their Location information as KPN was of the opinion that that their own LBS services/brainswaves were too competitive to allow others use of the data
- Different but equally valued colleague, different incumbent of different country thought similarly of itself. Colleague forwarded a mail he received regarding an opportunity for the use of Location Based Services to the incumbent . Telco reaction: OOH cant tell you the super secretive commercially sensitive LBS ideas we have. No, we might loose money here, don't you know we are set to be a major LBS player?

Twice! a network saying no to someone paying for LBS information. Well dear Web 2.0 start ups and Telco's with 2.0 aspiration, forget about the Telco playing any role in this market. Google has just donated its LBS knowledge to the world and now you can find out where your potential customers are for free.

Dear Telco's why do you say no to free money from people who might be willing to pay you for some of your network location knowledge? You might have had a minor competitive edge with the real time location knowledge. The minor money companys might have paid you would have been free money for minimal effort. Instead you thought you could stun the world with your own inventions. (You are not global players, services companies are. You have access to a small part of your local market, service companies to everyone in the world) Now the world bypasses you and uses the stuff you already broadcast and  other antenna's broadcast for free.

Sunday, 19 October 2008

The house always wins

The way the stock market works has always given me the idea that it is a big casino. I've always had trouble seeing people buying stock on an exchange as investors. They didn't really put money down to finance the company. They bought somebody elses shares in the hope that the shares would pay dividend or (now happening more often) that the shares will rise. Shareholder value? Only for the guy financing the company buying stock directly from the company, to put money to share in its profits, not for gamblers who think the stock is going up.

Especially the last thing has always amazed me. If theory dictates that all we know, understand and predict about the share is incorporated in the share, then why should it go up? That is a paradox. (Corollary: If the stock moves up or down, is that because we understand the future better? Or is it because we don't understand it allow and were all in some mass delusion?)

Well, today I learned from The Guardian that the financial markets are even more like casinos than I thought. It seems that many banks have bonus pools. Bonus pools that fill up regardless of the performance of the company. "At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank." That sounds exactly like a rake . A fee given tot the casino for playing poker there.

So you see, the house always wins... 

Teacher on Demand

A while ago I wrote a plan for a Leraar on Demand (teacher on demand). The idea was that we could record good teachers, while they explained their subjects in class and then put the video online.  This way the students could access the teachings even though they might have missed the class, had forgotten it or similar problems. The idea originated during beer nights with a group of friends at Twente University. It had been pitched to the faculty of Eductional Technology there, but didn't receive attention. I tried to pitch the idea to Kennisnet and the Ministry of Education in The Netherlands, but I didn't find anyone who was really interested and as it isn't my main field so I didn't pursue it full force.

I thought about entering the idea into Google's 10100 project as I still think it's a great idea. It would be great for both the First as well as the Third world. In both the First and the Third world we have a huge lack of good qualified teachers (both in numbers as well as quality). Fortunately I did a bit of research tonight and you know what, there are now two initiatives pursuing the same kind of idea. One in Sweden called "Teacher on Demand" (looks very good) and one in the US called Teacher Tube. So I am not going to submit it to Google as I'm hardly original anymore. However I do want to spread the word on these good initiatives and it's nice to see good ideas will find their way.

What I am still missing is that not an entire curriculum has been put online and can be downloaded. That would be cool. It would allow students to really search for the stuff they didn't understand well. Also it would allow third world countries to download these movies and distribute them via DVD's. At 35 dollar for a DVD player, this has become an idea that can be easily realized. 

Thursday, 16 October 2008

Aftappen in Nederland, Hoofdstuk 13 uitgelegd.

Apologies to my international friends, but this one is in Dutch. I was given the opportunity to give a class at Leiden University on Chapter 13 of the Dutch Telecommunications law. This is the (revised) presentation.

Dit is een presentatie die ik gegeven heb in een gastcollege in Leiden. Erg leuke ervaring. De feedback heb ik gebruikt om vooral de eerste sectie meer uit te breiden. Ik hoop dat de Nederlandse lezers er plezier van hebben en het studiemateriaal waarderen. Mocht je vragen hebben, dan hoor ik het wel. :-)

De centrale stelling is: In Nederland kunnen we tappen omdat we het op orde hebben. Ik had nog wat meer kunnen doen met uitleggen hoe het buitenland werkt, maar daar kan ik later nog wel eens wat tijd aan wijden. Zie anders Stratix en Norton Rose over Aftappen in het Buitenland
Aftappen in Nederland
View SlideShare presentation or Upload your own. (tags: lawful interception)

Ten aanzien van webhosting bedrijven geldt dat zij veelal niet onder de Telecommunicatiewet vallen. Een ruwe sortering van de branche levert de volgende indeling van de rollen die partijen spelen:
- Pure colocatie - leveren een pand, een rack, stroom. De klant levert zelf de computer, doet het beheer etc.
- Verhuurder van computer rekencapaciteit: Levert een computer (of een deel van een computer) waar de klant mee kan doen wat ie wil. Wordt veelal geleverd met een netwerkverbinding naar het internet. (theoretisch gezien hoeft dit niet)
- Systeembeheer: Voert voor de klant beheer op een computer/netwerk. Klant kan eigenaar zijn van de systemen of deze huren van derden, deze systemen kunnen staan bij de klant of ergens anders.
- Applicatiebeheer: beheert specifieke software voor de klant, levert soms wel en soms niet de licenties voor het gebruik als onderdeel van de dienst. Bv een CMS. De klant doet zelf de content, kan wel of geen eigenaar zijn van de computer etc.
- Content/designbeheer: beheert de content voor de klant.

Dit zijn allemaal rollen die niet zoveel met telecommunicatie van doen hebben. Of het een CMS, mailserver, VoIP server of eCommerce applicatie is, de functies lopen steeds meer in elkaar over. De beheerder routeert het telecommunicatieverkeer niet.

Qua telecommunicatie heb je twee opties.
- Inkopen bij een leverancier van een toegangsdienst. (bv een ISP of andere telecomaanbieder). Geen mogelijkheden om zelf verkeer te routeren. Nog steeds niet tapplichtig.
- Zelf gaan routeren. (vergt in de internetwereld een AS-nummer en eigen IP-space) Pas dan ben je echt een telecommunicatienetwerk of dienst aanbieder.Dit betekent dat je dus ook je eigen aftapverplichting moet regelen. (Andere partijen kunnen de tap niet meer uitvoeren, want je kunt zelf je eigen routering doen dmv BGP)

Disclaimer: Dit is mijn mening, geen uitspraak van de Hoge Raad. 

Tuesday, 23 September 2008

Safaricom, M-Pesa is just cool.

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)

Saturday, 20 September 2008

WIK report for ECTA on the economic of Next Generation Access released

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:

Sunday, 7 September 2008

Slashdot reading list

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... 

So for those Slashdotters who end up here and wonder what else I wrote, here a reading list:

Saturday, 6 September 2008

How the internet works: Peering and Transit

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:

Monday, 1 September 2008

Telecom Cool Wall

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.

(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)

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.

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.

Monday, 18 August 2008

Say no to streaming video (there is no use for it and it hurts net neutrality)

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)

Tuesday, 22 July 2008

KPN launches FTTH €65-€110/month

As of last Friday KPN launched FTTH. On their website there is some information. Initially there are only 5 locations where the service can be had.
  1. Almere
  2. Son en Breugel
  3. Uden
  4. Veghel
  5. Elburg.

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.

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)

Monday, 21 July 2008

Interview with Benoit and with me on FTTH in Draka Nexst

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.

Thursday, 22 May 2008

Quick reaction to KPN's purchase of 41% Reggefiber

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.

Telecommunications in one slide

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

Tuesday, 20 May 2008

OECD publishes broadband statistics december 2007

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)

Junedec-07Up or down?
United Kingdom11110
United States15150
New Zealand20191
Czech Republic24231
Slovak Republic28280

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

Thursday, 15 May 2008

On embedding and a Scribd version OECD paper on Future of Fibre

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:

Friday, 25 April 2008

Draft: Explanation of Peering and Transit

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:

UPDATE: now available on Ars Technica

Tuesday, 22 April 2008

Mobile Terminating Access tariffs to go to 1 cent in 2012

08-05-2007 The 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.

Thursday, 17 April 2008

Why no one may dig fiber to your home (OECD presentation)

Whether or not you will get fibre to your home is a tug of war between various actors. In this presentation for the OECD Fibre Workshop in Stavanger Norway, I tried to describe this tug of war between the players. Though I show that the government is the party with the money and the possibility to monetize the benefits of the network, this doesn't imply it should (and in many countries its doubtful it is legally allowed.) Who should and who can depends on where you are and the competitive situation there. See also the OECD Fibre paper mentioned further on this blog

Monday, 14 April 2008

ARS Technica has two good stories on future of the net.

"Ars Technica had two good stories on the future of the Net. One story examines the future of broadband networks and how ferrets will be bringing it to you. The article points to the OECD-study on how we will need 50Mbit/s minimum in the coming years, which was mentioned earlier on the blog. (Also explaining why squirrels and sharks are natural enemies of the internet, which ARS didn't pick up.) I do find it amazing to see what the press does with a paper like the OECD future of fibre paper. Mostly they do nothing with it (because the OECD doesn't send out press releases) but also they pick up on one line in the entire paper. It is however a fun way of looking at things.
The other one is an interview with Andrew Odlyzko of the Minnesota Internet Traffic Studies (MINTS) project, explaining how the predicted Exaflood that would overflow the web is not happening and the growth of traffic is actually slowing and there is no sign that ISP's cannot keep up with bandwidth growth."

Friday, 4 April 2008

Technology, economics, ethics, qos and flow control

Dr. Lawrence Roberts, who was one of the men who started the internet and is no head of switch company Anagran wrote on Internet Evolution. I reacted as follows:

I think I will have to disagree with the whole contents of your post. The problem lies in a combination of factors: technology, economics and ethics. Technology wise I do wonder about the technical soundness of flow control routers. We tried much of the basics with ATM and the idea didn't scale well. However, you've got your technical credentials, so lets assume the product you are pitching works as sales sais it does.

The problem however is that technology in itself may be sound, but that the discipline of economics provides the measures along which the success of technology gets measured. Terms like: the best, fairness, quality, simple and even scale are not technical terms. There is no best chip or router design. ATM isn't better or worse than Ethernet. It does different things. Simplicity is impossible to measure when you're talking millions of lines of code, high end lasers, asics etc.

Measuring what is best requires therefore insight into the field of economics. I've once tried to write an outlne for a scientific paper on the subject. You can find it here: One of the main problems with adding flow control like structures to networks is that they base themselves on the premise that the network is almost full and therefore we need a mechanism to manage congestion on the network.

There are 2 problems with this idea:

1. Is there a problem: Are networks really full? (which means in technical terms that spikes at small time intervals (hundreds of miliseconds) are exceeding network capacity? Are we really seeing this often?

2. Are you the solution: Is the solution to managing a traffic jam, to introduce congestion management or to increase capacity? Network growth is 50% per year according to mr. Odlyzko. So when the current usage of the network is set at 100 and it is reaching the capacity where flow control kicks in.. In a year time it will be 150 and in two years time at 225. How many packets can flow control drop without it being like TCP?

With TCP fairness (fairness is ethics) ideas there are also similar problems.

1. It assumes that over the entire stretch between two network points there is a problem. What if the two end points are small say 1mbit upload on both sides. Why would that require control in a non congested 10Gbit network in the middle?

2. It seems to assume that every TCP flow should get an equal proportion of bandwidth. However I have paid for 20/1 DSL. What would be a fair distribution of available space on a 100mbit line between me and 40 people with a 5 mbit line? Do we all get equal amounts of bandwidth? Do I get 4 times as much because I have bought 4 times as much? or 8 times as much, because I pay 8 times as much. Do we want communism or capitalism?

3. You mentioned that TCP punishes those that are further away. This sounds correct from an economical point of view, distance incurs costs, costs decrease efficiency. Inefficient solutions should be thrown out. Get stuff locally.

4. randomly dropping packets is seen as unfair. many solutions are trying to think up ways to determine which packets should be dropped. This requires the network to know the utility function of all users in order to determine fairness. However if I have 2 streams running each consuming 5 mbit/s whereas there is only one 9 available, maybe I don't want 4.5mbit per stream, but want to drop one of the streams. How would the network know which one to drop. Random dropping hits everybody equally with the added costs of omniscience.

5. How do you balance streams fairly if you don't know the future? traffic changes on miliseconds. Are you sure that dropping this packets is necessary, maybe the end-user stops a transfer and other packets should be dropped from the que. or maybe no packets need to be dropped, because all of the sudden traffic stops.

All in all if we look at this from an economics point of view, the rules of economy teach us that generally the solution is that one which is the most efficient as seen from the market players individually and as a whole. It should therefore have low entry costs, low transaction costs, little overhead and generally not make assumptions on what individual actors want.

All of these considerations I miss in your proposal. Plain flat Ethernet/TCP/IP maybe dumb and stupid, but it's dumb and stupid for everyone. It's not pretentious. If it's full you upgrade capacity. If there is enough capacity. There is enough for everyone.