Belgian hog uses 2.7TB, but how much money is that?

Ars Technica has the Belgian Bandwidth Hog story and even credits me, thanks Nate, but one element is missing, what does the little piggy cost?

2.7TBybte is roughly 9 mbit/s sustained traffic.

• 1mbit/s/month of transit is $1 wholesale now in London and Amsterdam through Hurricane Electric -->9 dollar
• If you would work with a day and night rythm for the traffic, where the average peak is about twice the average--> 18 dollars. --> do understand that an ISP like Telenet will use peering too, which would result in a lower bandwidth bill.
• If you buy the traffic up front from a hosting company 20 euro per Terabyte retail --> 54 euro
• If you need to buy the traffic because you went over the traffic you bought up front it's 50 euro per Terabyte retail. --> 135 euro

So the top downloader in Belgium is most likely still profitable to Telenet... though marginally

New blogposting at the Logica blog

I wrote a blogposting together with Gerben Mak on Innovation for ISP's for a customer and it is now also available to all on the official Logica NL blog at http://blog.logica.nl For my readers I post it here below... In Dutch, but Google has a translation:

Innovatie is hét toverwoord vandaag: dingen op een nieuwe, betere manier aanpakken, waardoor je waarde creëert. Innovatie is onlosmakelijk verbonden met transformatie: verandering van spelregels, business model, bedrijfsvoering, of beleving. Als er één wereld drijft op innovatie, dan is het de telecommunicatie. En juist hier zie je een inflatie van innovatie: elke extra verbetering lijkt minder waardevol te zijn dan de voorgaande verandering.



20 euro voor 1 gigabit en 10 voor 100 megabit, dat kost internet in Hongkong per maand. Nog een jaar of twee en in Hongkong heeft iedereen gewoon een gigabit. Met bandbreedte kan een ISP zich niet meer onderscheiden. Tien jaar lang bestond innovatie voor internetaanbieders uit het verhogen van bandbreedte. Natuurlijk, tussendoor werden telefonie en televisie, digitale tv en Video on Demand toegevoegd aan het pakket. Maar de geboden bandbreedte was het enige onderscheidende element tussen brons, zilver, goud, standard, home, premium, unlimited. Zo lastig is innoveren voor ISP's, dat ze kennelijk overal in de wereld vrijwel hetzelfde bieden, voor heel verschillende prijzen.



Riante positie
Het einde van de bandbreedte-oorlog viel te verwachten. Voor de (V)DSL aanbieders is het einde een natuurkundig gegeven. In dit universum lukt het niet meer om op een economische wijze nog meer bits uit een koperkabeltje te persen. De glasvezelkabel naar ieder huis is de natuurlijke overtreffende trap, maar gravers zijn duur en gaten graven kost tijd. Kabelaanbieders zijn gezegend met een netwerk dat langer mee kan en zij hebben dan ook in de komende jaren een riante positie. Een eenvoudig aanbod met een minimum van 50 megabit internet is al genoeg om elke aanbieder van DSL te overtreffen. De consument prefereert altijd sneller internet boven langzamer internet, maar er is een afnemende meeropbrengst.



Waarop kunnen ISP’s dan gaan concurreren, nu bandbreedte niet meer het onderscheidende element is? Wij vinden de markt voor ISP’s vergelijkbaar met die voor LCD-tv’s. Veel groter kunnen de tv’s niet meer, dus richten de aanbieders zich op de integratie van internet, video on demand en andere functies. Ieder half jaar een nieuwe lijn met nieuwe features voor dezelfde prijs. Top of the line aanbieders kunnen iets meer vragen en iets achter de goedkope aanbieders lopen, maar meer dan een jaar achterstand wordt genadeloos afgestraft. In de breedbandmarkt zal dit hetzelfde zijn. Kabel kan een premie vragen ten opzichte van (V)DSL, maar veel zal dit niet zijn. Het uiteindelijke doel zal moeten zijn om de churn – het overstappen van klanten naar andere aanbieders --  tot een minimum te beperken. De duurste klant is immers een nieuwe. Om dit te bereiken is continue innovatie gewenst. Hoe kun je als ISP dan het beste innoveren?



Cloud services
Eén gedachte is om te kijken naar meer diensten, zoals online backup en andere cloud-services, een betere en op afstand programmeerbare televisiegids etc. Dit is een interessante lijn, en we kunnen aanraden om eens bij Free.fr te kijken. Zij bieden voor 30 euro een werkelijk fenomenaal triple play abonnement. Dat is inclusief gratis bellen naar 100 landen, met een keur aan interessante functionaliteiten, tot een privé IP-TV kanaal toe. U bent uw eigen live omroep, geen enkel probleem.



Toegang
Een andere gedachte is te kijken naar de essentie van een Internet Service Provider: de toegangsdienst. Toegang tot het internet, televisie en telefonie, tot jouw diensten, tot alles waar je voor betaalt en alles wat je gratis kunt krijgen. Anytime, Anyplace, Anywhere zou het devies moeten zijn. Het is daarbij irrelevant of die ISP een rol speelt bij het leveren van die diensten. Apple kan net zo goed video on demand leveren. Maar wat de over the top aanbieders nooit zullen bieden is de toegang.

Toegang is helaas veel moeilijker dan we denken. Het begint al in huis. Eenvoudig alle verdiepingen in een Vinex woning van draadloos wifi netwerk voorzien is niet triviaal. Eén access point is niet genoeg. Meerdere accesspoints met een naadloze overdracht van de een op de ander wordt niet eens ondersteund door huis, tuin en keuken access points. Een apparaat verbinden is niet zoals het steken van een stekker in het stopcontact. Je moet codes en instellingen weten en begrijpen, niet iets wat in een gemiddelde abonnee zonder hulp van het buurmeisje lukt. ISP’s kunnen dus het leven van hun klanten vereenvoudigen door het verbinden van apparatuur te faciliteren. Een printserver, een USB-schijf als gedeelde opslag, apparatuur voor zorg aan huis. Bijkomend voordeel: een klant die al zijn kabeltjes aan de set-topbox/kabelmodem heeft hangen is minder geneigd naar een ander te gaan.

Toegang buitenshuisToegang om het huis en buitenshuis is nog een stap moeilijker. Het gaat hier om verschillende vormen van toegang. Zo is de vraag waarom als we onderweg zijn we niet dezelfde gebruikerservaring kunnen hebben alsof we thuis zijn. Levert de toegangsleverancier een eenvoudig te gebruiken VPN bijvoorbeeld, zodat thuis en buiten één worden en de klant altijd alles kan doen wat hij thuis ook gewend is? Kan de klant bij de afgenomen diensten, zoals bijvoorbeeld de telefonie en televisie? Als telefonie toch VoIP is, doet dit het dan ook vanaf een laptop of mobiel? Of het uitgebreide TV-pakket? In de USA wordt nu gewerkt met een TV Anywhere-pakket, waarbij de gebruikers van dure TV-pakketten op reis via IPTV toch de programma’s kunnen bekijken waar ze voor betaald hebben, bijvoorbeeld de Amerikaanse NFL.


Wifi delen
Een andere vorm is toegang tot netwerken. Waar verbind je mee als je onderweg bent? Wat kan een ISP doen om die ervaring te verbeteren? Een optie die in Frankrijk en in Groot-Brittanië aangeboden wordt, is om het wifi-accesspoint dat in de modem ingebakken zit te splitsen en te delen met andere gebruikers van dezelfde aanbieder. Franse internetters hebben opeens toegang tot 4 miljoen Wifi-accesspoints. Door het scheiden van het verkeer worden Quality of Service, veiligheidsproblemen en vragen rond aftappen afgevangen. Het netwerk zal niet zo naadloos zijn als GSM/UMTS, maar daar waar het werkt is het wel direct sneller dan LTE. Roaming over andere wifi-netwerken in binnen- en buitenland zou het verhaal compleet maken.


Kortom, innovatie in de telecommunicatie is toe aan een nieuwe dimensie – die van verbreding en uitbreiding van het dienstenpakket, gericht op behoud van klant, ook buiten de directe omgeving van het aansluitpunt. Daar is nog veel waarde te creëren op het gebied van toegang, gemak en servicebeleving.

Dutch Cable grows faster than DSL and KPN is in trouble

KPN is in serious trouble in the Dutch broadband market. Telecompaper published the numbers and KPN is losing customers. Cable is winning, DSL is losing.  This may be surprising to some readers because:

• KPN is one of the few incumbents that understood it needed to share its copper network with new entrants in order to defend against cable.
• KPN made a good strategic move by entering into a joint venture with Reggefiber, thereby securing its access to FTTH, without serious impact on it's current balance sheet.
• KPN had announced serious investement in VDSL2 and Fiber to the Curb in it's All-IP programme. It promised that by 2011 most of the country would have 50/50 VDSL2. 
• KPN was on my Telecom Cool Wall for all of the above reasons

Unfortunately for KPN, there is a difference between strategy and execution.

• This blog has pointed out in the past KPN's dismal FTTH and FTTC offer. 
• Many of you also know that KPN has postponed most of its All-IP programme and will announce at the end of this year whether it goes for FTTH or FTTC. This while both UPC and Ziggo have upgraded their networks to Docsis 3.0 and are offering much higher speeds than KPN could dream about with any version of DSL. 
• As of next year, KPN will offer VDSL2, but only from the central office. Almost all customers will get a speed increase, but most of them will not come close to the speeds VDSL2 could offer. 
• KPN has offered no innovation in it's double play and triple play offer. Everything is basic and there are no extras, nothing unique. KPN's offer is below par. (74 euro per month for 20mbit/s, TV and local calling) Compare this to UPC, (74 euro for 60 mbit/s down 6 up, TV and europe wide calling --> cheaper options available too) 

Telecompaper published this quarters broadband numbers (ending September 30) and here are the results, there is a more extensive report, that you can purchase from them:

• There are 5.996.000 broadband users in The Netherlands, this is up 38.300 from previous quarter
• Cable has scooped up almost all those new subs. 
• Ziggo took 18000 subs
• UPC took 14500 subs
• Fiber grew with 17,000 subs or 12% to 160,000 subscribers, most of them seem to come from DSL. 
• DSL lost 12.700 subscribers or 0.4% of the market to 3.542 million
• Tele2 did increase its subs with 15,000 net adds to 390,500 DSL subs
• KPN subsidiary Het Net lost 11,000 subs

Even though I don't have the full report yet, this does suggest that KPN lost at least 27,000 subscribers and that almost all new subscribers to broadband either take cable or fibre.

What is KPN to do? An agressive lowering of prices doesn't seem to have much impact on switchers according to Ed Achterberg of Telecompaper. It's budget offer Telfort wasn't too succesful with that strategy Introducing a Free.fr type service innovation isn't part of KPN's DNA and will take at least two years to materialize, but could help it stem the bleeding. Short term, KPN could do a couple of things, that would raise it's profile in the market.

• Open the customers wifi access points for other customers. 2.x million hotspots potentially. Dutch cable companies never integrated wifi with their cable modems, so they can't follow KPN there. Nice thing is it requires almost zero opex and capex to realize and doesn't cannibalize other efforts. 
• Integrate it's DSL offer with it's mobile internet offer. Cheap or free access to 3G on the go is an offer the cable companies can't counter. It may cannibalize some of the 3G offers currently on the market. 
• Include international calling in it's telephony offer. UPC is already offering this. Ziggo isn't yet. KPN could leverage it's position in iBasis to offer better deals. This does lead to some cannibalisation.
• Provide free online backup. KPN already has an online backup service. It's €4.95 and the first 6 months free... It wouldn't be extremely hard to copy by other's but it's one of the very few services KPN could offer straight away

Basic truths about broadband speeds (reaction to Kevin Walsh on GigaOm)

On GigaOm Kevin Walsh has written down some basic truths about broadband, as he sees them. He sees a big problem with politicians wanting the wrong things when it comes to guarantees on bandwidth speeds. As he says:

Many believe that broadband service providers selling, say, a 5Mbps service should be required to set aside the same amount of capacity in order to fulfill that implicit service-level agreement (SLA). In other words, if you pay for 5Mbps, it’s there when you need it. But the reality is that networks, just like hotels and airplanes, are almost always oversubscribed — the owners of these assets sell more capacity than they have available.

Unfortunately this article messes things up just as badly as the politicians criticized. I reacted in the comments and post the comment here too. There are the important elements that need considering.

1. The speed of the line from the end-user to the local aggregation point (switch, cable head-end). DSL and wireless technologies are particularly crappy, as the speed the end-user can have is a function of the distance the end-user is from the DSLAM or the antenna. Unfortunately there are still telco’s that sell up to 8mbit or up to 20mbit subscriptions that can only attain 4-8mbit/s because of distance limitations. The really nasty one’s try to upsell the customer to a top tier 20mbit/s line where only 4mbit is achievable and so a 4mbit/s subscription would have sufficed
2. The speeds that can attained between 6pm and 10pm and the speeds that can be attained between 2am and 6am. These can be limited by oversubscription on:

• a. the local segment (cable and wireless) and
• b. on the ISP’s WAN
• c. from the ISP to the rest of the world

Oversubscription on the local segment is a fact of life on cable and wireless networks. It is a shared medium. This should be clear to end-users. It is not bad, it is a fact of life. It’s effect is that between 6pm and 10pm the speeds can be erratic. between 2am and 6am the listed speeds can quite often be attained.

Oversubscription on the WAN is part of the problem you’re describing above. Oversubscription on the WAN is not an economic fact, it is a result of crappy network planning. Oversubscription on the WAN can be completely unnoticed by the end-user if the network operator builds enough bandwidth into it’s WAN. If the network owner and the ISP are the same entity, this shouldn’t be a problem. With traffic growing 50% per year proper network management dictates that an oversupply of bandwidth is necessary anyways. Statistics from the AMS-IX in Amsterdam show that peak traffic is about 50% higher than average and three times higher than the bottom. So next year your average is the same as today’s peak and in 2.5 years even the bottom is at today’s peak. WAN Bandwidth is a problem in some countries like the UK and the USA where the costs of backhaul to and from smaller communities are extremely high because of regulatory and/or competitive problems. Mind you, technical and cost limitations are often not important here, as the costs of installing faster equipment is often not prohibitively high. (DWDM, 10Gbit/s ethernet etc) This also means that you don’t have to build your network in a fashion where everyone can achieve max speeds at the exact same moment. Just carefully planning it. Like the highway system, where we don’t expect all car drivers in the US to show up at the Brooklyn Bridge at the same moment (or to start driving at the same moment at all, regardless of location).

The costs of traffic from the ISP to the rest of the world is governed by the economic laws of peering and transit. For an explanation see my article on Ars Technica. Whether enough is available to the end-user is dependent upon how easy it is for an ISP to get peerings with the most important networks (Google, Microsoft, Yahoo, Akamai etc) and the local costs of transit. Many developing nations find that their biggest problem lie here:

• The national incumbent monopolizes transit traffic and charges outrages amounts for it.
• No local internet exhanges to keep local traffic local.
• No possibilities for local peerings with Google, Microsoft, Yahoo etc meaning that the transit link gets hit harder.) 

Amsterdam, London, New York are places with low costs for transit ($4/mbit/s/month) and many peering opportunities, so any network operating there should be able to get enough traffic for their end-users. Dave Farber once mentioned that traffic costs were only between 1%-5% of a subscription.
So, to conclude:

• Politicians are right to complain when listed speeds on the local loop cannot be attained because of distance problems. Providers of DSL and wireless should be put in the doghouse for this. The should inform their customers properly of what speeds can really be achieved.
• Cable networks and wireless networks could be required to publish the mean and median speeds users can attain between 6pm and 10pm.
• Problems on the WAN and on the interconnect to the rest of the world are either a result of bad investing in backhaul or because of regulatory and competition problems. If that is the case the ISP should inform its customers of the situation, explain why this is the case and show how it deals with distributing a scarce resource among all the users. A good example is the Plusnet DSL network in the UK who are very clear on how they prioritize network traffic between different classes of customers.

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)

Joined the Fibre Ring

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

• Broadband Prime (Costas Troulos)
• Communications Breakdown (Tim Poulus)
• Fiberevolution (Benoit Felten)
• FTTH in Europe (Dirk van der Woude)
• Jean Michel Billaut
• Quinta in English (Stefano Quintarelli)
• Unser Netz (Kai Seim)
• Keith McMahon now blogs on Telco2.0
  

Have fun!!

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)

	June	dec-07	Up or down?
Denmark	1	1	0
Netherlands	2	2	0
Iceland	6	3	3
Norway	5	4	1
Switzerland	3	5	-2
Finland	7	6	1
Korea	4	7	-3
Sweden	8	8	0
Luxembourg	14	9	5
Canada	9	10	-1
United Kingdom	11	11	0
Belgium	10	12	-2
France	13	13	0
Germany	17	14	3
United States	15	15	0
Australia	12	16	-4
Japan	16	17	-1
Austria	18	18	0
New Zealand	20	19	1
Ireland	22	20	2
Spain	19	21	-2
Italy	21	22	-1
Czech Republic	24	23	1
Portugal	23	24	-1
Hungary	25	25	0
Greece	27	26	1
Poland	26	27	-1
Slovak Republic	28	28	0
Turkey	29	29	0
Mexico	30	30	0

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

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."

OECD publishes (my) paper on Fibre

The OECD has published a paper titled "DEVELOPMENTS IN FIBRE TECHNOLOGIES AND INVESTMENT". Technicaly it's an OECD paper and it represents what the OECD finds important, but I spent two months in Paris (dec 2006-jan2007) writing it, so emotionally it's my paper. It was really great that my previous employer assigned me to the OECD for that period. The people at the Directorate for Science, Technology and Industry - Information and Communications Policy are great people and I had great fun working with them. These are the same people who make the infamous OECD Broadband Statistics, which are every time cause for discussion in the countries that are ranked low.

The paper examines developments in broadband technology, going from submarine, wireless, to hybrid (BPL, xDSL and Docsis) and all-fibre networks like (xPON and Point to Point). (Submarine is included because it both shows where the technology will go and the difficulties businesses may face) It describes the relative differences and the effects this has on the way these networks can be used. In one of the figures it shows the difference between the bandwidth on a dedicated link (like VDSL) and a shared link (wimax or Docsis) available to one user and to twenty simultaneous users. The paper is already a year old, so LTE isn't included. Service-wise it works from the idea that users need at least 50Mbit/s downstream capacity in order to be able to freely choose services from a variety of service providers and to be able to run several services parallel.


It also discusses the business case there are for investment in fibre networks and the different positions between incumbents and new entrants. Furthermore there is an evaluation of the possibilities for alternative financing models. It also shows a financial model based on a model for the Dutch Ministry of Economic Affairs. This model developed by Arcadis in the Netherlands is based on real investments in The Netherlands and therefore is quite accurate. When applying it to other countries your mileage may vary. What it does show is that housing density matters as well as penetration. What is also clear is that there is not much room for multiple providers of physical infrastructure in the same region.

The last part goes into the role of the government as a stimulator, regulator and investor. Some of the things it argues is that first governments should have an idea of what they want to achieve. Second it argues that governments should take away any barriers to entry, but also must be aware that if they stimulate one party that this interferes with competition for others. So if governments stimulate the roll out of a network, they should demand that the network that they have stimulated becomes open to others under equal conditions.

With regards to regulation an important insight is that regulators should provide regulatory certainty with regards to the success of networks, not with regards to the competitive services offered over that network. Also policies should aim at the local exchange of traffic between networks, thereby relieving backhaul networks of unnescessary traffic.

As an investor governments should be cautious and determine the amount of market failure. If they do invest it should be limited starting with i and then if more is necessary moving up to iv.

i) Digging trenches and laying ducts, removing a significant part of the costs of rolling out a
network.
ii) Providing passive network infrastructure to which network providers can connect their active
infrastructure.
iii) Providing an active network over which others can provide their services.
iv) Providing services over the network to end-users.

All in all it was great fun writing this piece. Another paper was also published called: PUBLIC RIGHTS OF WAY FOR FIBRE DEPLOYMENT TO THE HOME There is a conference in Stavanger next week that will delve much deeper into this topic. I will be speaking there too.

OECD broadband infographic using Google Motion Chart

Over the weekend I've been fiddling with the OECD Broadband stats to get them into a Google Spreadsheet and then be able to publish the results in their moving charts. I've also made a heat chart. It's not really perfect, but it shows the possibilities. One of the conlusions I do draw is that there seems to be a strong correlation between household PC usage and Broadband penetration. Unfortunately there are only limited numbers available for PC usage

I've found that the apps are not consistent in the way the work. A heatmap works with rows, a moving chart with columns. Also I'm missing tracking options to follow one particular dot (you can click them, but they don't leave a trail unfortunately.) You can find the sheet here.

If you really want to know how it is done, than have a look at http://gapminder.org/ or look at the Youtube movie of Prof. Hans Rosling, the inventor, at the end.

Moving Chart


Heat Map



Hans Rosling

No Broadband means no Mobile Broadband

Brough Turner brings up an interesting point how most backhaul from mobile cell sites are only 1 or 2 E1 or T1's and that just doesn't do the trick for mobile broadband. Nyquist Capital made a quick remark that this would be booming times for mobile backhaul. My opinion is that in many countries where broadband in the rural areas hasn't arrived yet will also not benefit from mobile broadband as it takes broadband to the cell site just to be able to make mobile broadband.

Broadband btw is not defined as 256kbit or 2mbit/s but at least 10mbit to the cell site in order for it to maintain adequate capacity for modern usage. WiMax sounds interesting for backhaul until you realize that the advertised 40mbit is half duplex and only reached within short range of the antenna. So for Wimax or LTE to fly in Rural areas at advertised speeds you need a minimum of VDSL/SDSL to the cell site, but a strong preference for VDSL2 or Docsis 3.0 as a minimum. However VDSL2 requires being closer than a 500 metres from the cell site. At which point you could say... why bother and just dig all the way. Docsis is tricky for different reasons most of them being that Cableco's don't do SLA's as a general rule. And there we have it... mobile broadband over any technology requires a finely distributed fixed network. Gentleman start digging!