Wrote article for Ars Technica on Belgian broadcasters try kneecapping DVRs, demand compensation

I sent in a linktip to Ars Technica and was asked to write it up in English. With a little help from Inside TV International, who had the original letter, it became an interesting post. The short story is: Belgian broadcasters are mad about the use of DVR's in Belgium as it messes up their product, the full evening of TV. Say what? See the link: http://arstechnica.com/tech-policy/news/2010/09/belgian-broadcasters-seeking-to-kneecap-dvrs-want-compensation.ars

Free lesson: KPN Fiber receives a death blow and Reggefiber is left with the mess

If you work in telecoms, read this and learn. This happens if you don't pay attention to detail and just because this is an incumbent doesn't mean it won't happen at your FTTH project. Pay attention or it might cost you your FTTH-dream. 

KPN must have had one of the worst nights in a while tonight. Their fiber offer was on TV in Dutch consumer advocacy programme Tros Radar. The words consumer advocacy say enough: Guilty and no way of proving yourself innocent on TV. The piece was lacking in some technical areas, but was damning in many others. The most damning, hidden camera footage of an actual purchase and install. Some of the claims:

1. Fiber isn't always fiber. It's often VDSL2 where the fiber end only goes as far as the start of the neighbourhood. Fair enough, UPC does the same with Fiber Power (Docsis 3.0). But still, people claim they are cheated and the name "KPN Fiber" has now been tainted. 
2. KPN's sales and billing are completely detached. People are told they will pay 65 Euro a month for the whole package and then find additional costs on the bill. Sales for instance promises a third IP-TV decoder, for which they are charged extra, just to get the sale. Customer service can then mop it up, but doesn't seem to be able to fix things straight away. 
3. The technician who installs the technology in the home will do it all for a fee of 35 payable to the technician. THIS IS A NO NO. NEVER ALLOW THIS ON YOUR PROJECT. The technician quickly turned it into an extortion racket, a complete con job. He just claims that several things are not on his job list, like the third decoder. Also he says there is no electricity near the fiber drop (in The Netherlands the meter closet) and that that is extra. Everything that isn't on his list is some number at KPN and he can do it for half. Yeah yeah, so pretty soon the charges add up and he walks out with alot more and KPN doesn't need to know about it. Nice huh how people who work for you can F your product. I'm betting as of next week installation is free and KPN doesn't allow any money to be charged at all. The free bit is only because fixing the billing system to work with a 35 euro charge is more expensive than just giving installation away for free. 
4. KPN uses a product it calls wireless to deliver the IPTV in the home. Of course it isn't wireless, it's actually some version of Powerline communications, probably Homeplug (I didn't Google it). Branded with KPN's logo, it doesn't actually perform as expected. Speeds are low. It isn't really wireless and brings unsightly plugs in the home. The nasty thing is that sales pushes it hard... probably to shift inventory and customer service tells people it is a lousy product. Yes, that's right KPN customer service knows its a rotten product and tells its customers so. 
5. KPN's IP-TV service mine is shown on TV as malfunctioning. It doesn't do HD-TV at one customer and at an other the pause function is malfunctioning. It's not a nice picture. My wife asked me if it didn't do the same at our home, but that happened to be the DVB-T service of KPN called Digitenne. However, you can get the idea, if my wife thinks TV over FTTH is the same as DVB-T quality wise... than you're in deep trouble. 
6. Other problems have to do with the entire delivery process. There was a customer whose telephone line couldn't be found, probably for VDSL. There was a customer who found out on delivery that the price was different as quoted. There was one who thought he would get HD-TV in the cheapest pack and didn't get it. 
7. 1200 KPN Fiber customers were interviewed. 47% reported speeds weren't as promised. No explanation, probably because of the use of Wifi that speeds aren't up to snuff.. but try to explain that to a consumer. 

Now as said at the start, in this programme, you're guilty. Not even until proven innocent. They'll have a talking head lawyer tell you that this is against the law etc etc.They'll have the socially inept discuss your product. They have someone who "works in IT".  They'll tell people KPN uses coaxial cable into the home, whereas that's not the case of course. They won't look at the normal marketing material, which contains the caveats. They won't talk to people who are happy with what they got. But it doesn't matter. KPN messed up big time and it should have known it's too easy and too big a target not to shoot at. It's like painting a big bulls eye at the face of the CEO and then handing out pies at an amusement park. 

That said, KPN's partner Reggefiber, who installs the Glashart network KPN uses and pays for it out of its own pocket, must be fuming. The way to mess up a billion euro project like Reggefiber's is to have untrustworthy partners. Instead of the likely thing to happen, that one of it's minor service providers, like Solcon, Lijbrandt, Tweak, Concepts or one of the other one's messes up, it's the big one. The one that is known to every one in the country and it takes everyone with them. KPN paid for a 41% share and caused almost as much damage. 

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

Video: Why all telecom marketing and product management is wrong

Last year I gave two presentations at eComm Europe. Both were captured on video. The first one, on interconnection and telephone pricing, was up for some weeks. The second one, on telecom marketing and product management, is now available for your viewing pleasure. It aligns well with my previous blog post on choosing simplicity. Please if you have any comments send them.



And the presentation slides are here:

Why all Telecom Marketing and Product management is wrong

View more presentations from Raindeer.

New column on Nu Zakelijk: Choosing simplicity

I wrote a column on Nu Zakelijk for my employer: Logica. It's a combination of the Paradox of Choice (prof. Barry Schwartz)


and the Power of Free (Dan Ariely).


Both are very interesting concepts and linked to previous pieces I wrote on the greatest ISP in the world and why all telecom marketings and product management is messed up. Here is the Google Translation for those of you who think Dutch reads and sounds like a form of Klingon.

Choosing Simplicity

Released:	August 10, 2010 8:39
Last edited:	August 10, 2010 8:39

Simplicity can be very rewarding. Disappears as the stress in consumer choice and cost savings a business organization.

By Rudolf van der Berg | Logica

It seems that almost every town now has an "unlimited meals" Chinese-Japanese restaurant . The principle is simple enough, the customer is free to take from an unlimited buffet or ordering the dishes on the menu. There are some rules: drinks not included and a fine for food left over.

The choice of customer options are reduced to a choice: do we eat here tonight or not. Yes, there is also a choice of dishes, but the choice for one another court does not. It is this limited choice that the formula for other interesting businesses.

Choice

Choice seems good. Any marketer can you explain, you have your product in order to segment all product-market combinations to serve. An ideal marke produces for every consumer  the ideal product.

This requires not only a producer who knows what his customers want, but also a customer who knows exactly what his needs are and which supplier can meet these. And there lies his problem: many customers are not happy from a multitude of choices.

Satisfied

Scientific research shows that if a customer gets a lot of choices, the customer is less satisfied and chooses less . The paradox of choice that customers experience a stress choice and that choice stress leads to dissatisfaction with the choice (what else) and even to completely postpone a choice. (For a more detailed explanation, see this amazing video of Professor Barry Schwartz at TED).

That limiting choice in other sectors can work well, for example in France shown by ISPs. In the Netherlands can choose between a variety of subscriptions for different prices. The customer must choose between different Internet speeds, unlimited calling or not, or not HD Plus package.

Offer

In France, most, but Internet providers offer a quick internet with unlimited calls to landlines in France and many foreign countries and including HD TV. The customer receives a simple choice and do not go there to think about and thus avoids a lot of stress choice. This simplicity can also be achieved elsewhere.

Is the customer really waiting for a further tiered Internet, energy supply, zorgpolis or mortgage? Probably not. What customers want is, quick-acting and the Internet, a good insurance, stable energy prices and a fair mortgage.

The comprehensive simplicity translates to the supplier not only sell more, but also savings in the internal organization. A customer who is happy with the choice and no choice less stress, call the help desk, looks less at the competitor and the entire back office can be simplified.

Bonus

An extra bonus for the organization to simplify its product offering a choice is the addition of the word free product. By simplifying the supply and simultaneously increase sales in the package, certain elements "free" added to the product offering.

Lets just say one free of the most powerful words in marketing. A product that comes with free items is almost irresistible scientific research shows to see.

Think of a telecom product with free international calls, an insurance policy with free dental visit or a car with free navigation. A simple product with free features, that is what the customer wants.

Rudolf van der Berg Management Consultant for Business Logic Consulting. His work lies at the interface between government, telecom, energy and strategy.Rudolf.van.der.berg @ logica.com LinkedIn / Rudolf vander Berg

KPN using CDMA450 for M2M communications

I knew this for a while already. Now it is on the wweb. KPN has moved to CDMA450 for M2M applications. CDMA450 offers DSL like speeds with very good propagation qualities.  Bonus is that KPN only needs 50 sites to cover the country. As it is the only one who has this spectrum in The Netherlands, it might be an extremely valuable proporty to offer customers multi mode coverage. It's late so further speculation will have to wait. (thanks KH for the tip)

I hope to publish much more on M2M in the coming weeks. Mostly on the costs of switching operators and what the effect of some regulatory changes may be.

http://fmc.dotnet-services.nl/news.htm#Het_grote_KPN_geheim:_CDMA450_netwerk (DUTCH)
http://www.rcrwireless.com/ARTICLE/20100709/CUSTOMERS/100709962/-global-cdma-forum-how-one-dutch-carrier-is-using-cdma450-for-m2m (ENGLISH, thanks to B)

I am a bonafide radio pundit now, 5 million heard me.. for 4 seconds

Yesterday I received an e-mail from the NPR radio programme Marketplace Morning Edition if I wanted to do an interview on the future of phone numbers in the light of Vonage and Facebook working together. I had a really nice phone call of about ten minutes with the editor that you hear in the segment, Jill Barsay. We discussed mr. Strowger and his competitors wife and Skype etc. etc. I tried to keep my answers to sound bites... quite hard to do, but fun.. So this afternoon I tune in to the website, find my piece and yes, I've been reduced to a 4 second blurb. :-) That's being a pundit for you. Listen to it, or read the transcript here:

Audio

http://download.publicradio.org/podcast/marketplace/morning_report/2010/08/05/marketplace_morning_report0450_20100805_64.mp3?_kip_ipx=1570894183-1281011291

 transcript 

 http://marketplace.publicradio.org/display/web/2010/08/05/am-are-internet-apps-killing-the-telephone-number/

Best thing is there is a memorisation expert in there, who had memorized a phone book. Great... now go and learn all the facebook accounts, URI's, e-mail adresses etc. 

Most expensive and least expensive iPad data countries

Wired had this datafile on its website and I must say I am flabbergasted. It seems to bear little relationship to broadband data for fixed networks. For instance France is by far the most expensive. A gigabyte of data costs about as much as 1 month of unlimited calling to 100 nations, 28mbit DSL and HD-TV. Belgium is expensive too, just like their broadband, so no surprises there, but the Netherlands is a laggard too and data is cheap in NL. Germany is the exact opposite, it is a wired broadband laggard, but one of the cheapest countries when it comes to mobile data. Why a German Vodafone customer pays 15 times less per bit than a Dutch one is just baffling. Have fun with the data and tell me what you think.

Slide with your mouse over the countries and the prices to see more information, for instance that Europeans pay a hefty extra for buying Apple.

Powered by Tableau

And here is a version that I hacked together to show the costs for the cheap version together with the expensive version. The sorting is still done by the expensive version, with the high usage, but the bar extends to the price per gigabyte of the cheap version. It's not perfect but it's getting there. Also I hacked together two versions that show per country what the price ranges of the operators are and per operator what different prices they charge in different countries. (T-Mobile NL was mislabelled by the original source and I can't fix that). Yet another version might be to show the differences in absolute prices, regardless of the amount of gigabytes. And I think the 30 Gigabytes that the original calculators used for the unlimited version is a bit too high, bringing down the lowest per Gigabyte charges too much.

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Powered by Tableau

Powered by Tableau

The common errors of Telecom CEOs

With a recent spate of Telco CEO's complaining about the evil deeds of Google and Apple and some other stupidity, I start to wonder how hard it is to be a Telco CEO. So sit back and enjoy the rant. :-) Let's look at some of the errors of most telco execs.

Error 1. Lack of basic managerial skills and telco knowledge
Of course Richard Obermann of Deutsche Telekom got me irritated, when he said he wanted to charge Apple and Google. However Maxime Lombardini, the CEO of (my beloved) Free.fr, made the exact same mistake. A mistake Ed Whitacre, then CEO of AT&T had made years before and which gave me my opener on a primer on peering and transit. The main reason this viewpoint irritates me is; they complain about their underinvestment in their network. They then point at two companies who are very visible, but don't really matter in the equation. If Apple hadn't existed, someone else would have come with a bandwidth hogging device in a matter of 0-2 years. If Youtube hadn't existed, Dailymotion and Facebook would have existed and would have delivered the goods. What I mean to say is that user behaviour wouldn't have changed and somewhere between 2010 and 2013 we would have hit the exact same limit as now.

You think a Telco CEO would know that his companies projections about network growth were completely off and that his team doing network planning should be sacked. However, the painful thing is, these guys seem to believe their own stories. They actually don't know what pays for their network. They don't understand peering and transit. They can't extrapolate growth models and they don't know consumer behaviour. Hullo, anybody home? Those are the things a CEO should keep track of!

Error 2. Google and Apple Envy
Whenever you hear a telco exec speak about other companies, it  mostly is Google and Apple. Google and Apple is what they are afraid of, are envious of, that they blame, that have caused the world to change, that have made them miss a target, it's all Google and Apple's fault etc etc. Worse still, they compare themselves to these global giants and then alude to how they will compete with them, because competing with Google and Apple will let the halo of Jobs and the colors of Google shine upon them and will make them somehow worthy of the enormous pay they get and compensate the lack of charisma they generally have.

Google and Apple are great examples to look at if you like reading Forbes, Harvard Business Review and Wired. They are less interesting to look at when you are a telco exec. There are no similarities between their company and a telco:

1. They are global companies competing on a all continents with varying success, telcos are masters of a local business, literally rooted in the soil of their home country and some countries they acquired. Telcos wouldn't know what to sell in Nigeria, whereas Apple and Google need to consider how to monetize Nigeria, as it is a 160 million people market,  that is already actively using their products. 
2. Apple is as dependent upon blockbusters as Pixar and MGM. A telco will report steady flows of capital. A bad year is a couple of percentage point less revenue than projected. Apple can only mess up so many times and everyone leaves them. They know, it happened in the nineties. 
3. Google is in a constant state of flux, running the world's largest computer and changing it, while it remains operational. If it messes up, people move to Bing. So change in the face of uncertainty is essential to its business.  A telco can plan for a major transition 3 to 10 years ahead and the planning department should be able to get everything right with a maximum of 2 years difference. 
4. Both Apple and Google value brilliance and excellence more than anything. They need to stand out. A telco, weirdly enough, doesn't need that. It needs consistency and dependability. A couple of small field trials solve more problems than brilliant people. 
5. The valuation of Google and Apple may be through the roof, but it rather pales compared to turnover and profits for telcos. Google's yearly turnover is slightly less than the EBITDA of Deutsche Telekom, which is 20 billion euro or 25 billion dollar. Google has to conquer the world for it's money and Deutsche Telekom is safe in its empire. Apple is twice Google, but still only half of Deutsche Telekom's revenue. Apple is however  a consumer electronics company who had a very good last 10-13 years, but just ask Sony and Philips, how hard it is to keep that lead. Oh, and both Apple and Google don't pay dividend, Telco's do. It may be old fashioned, but as a shareholder I would like that. 

So where should telco execs look? At other utility companies of course. However that is much less sexy.

Error 3. Infatuation with delivering services

Ever since someone coined the term service economy, everyone wants to offer a service. It is better than being in agriculture or manufacturer of products. But instead of just naming their network a service, telcos have looked at services to be delivered over their network. For a while they bought content and services companies like Endemol, Time Warner, Plaxo etc. And we all know how that ended. So now almost no one in the Telco industry is in real internet service and content companies. 

But still, they don't learn, so they invest in IT-services, where everything is much more murky. And let's be honest, nobody believes the telco exec is cooler than a movie mogul, but he is stil cooler than an IT-services exec. Several telcos have bought or grown IT-service companies. KPN bought Getronics, BT has BT Global Services, Deutsche Telekom has T-Systems and last week NTT bought Dimension Data last week. There is never an explanation why, other than that services are the wave of the future and customers demand it. I doubt both highly. Furthermore, given how much money they pay for these companies, I doubt it is beneficial to the shareholders too. 

You see, I work for an IT services/consultancy company.  I know the nature of the business. IT-services companies are the construction companies of the digital age. IT companies are just like your local builders. They are lying, thieving, unprofessional, shoddy bastards you can't do without. Everything would be better if you could Do It Yourself, except that you don't have the time and the expertise and you've seen too many DIY projects fail horribly. So you hire a bastard IT-company (builder). Really there is no difference between a construction company and an IT company. Both make life hard for the customer and the supplier. An IT company is always faced with a customer who underestimates the work, but who still rather pays someone else to do it, than do it themselves. So whoever the customer chooses, it is generally the one with the second lowest price. This is the guy who didn't calculate all the contingencies well, but was at least able to name some to comfort the customer, who knows there will be contingencies. Then the customer and the supplier set of on a perilous journey of over expectation for both the end product and end profit. Half way through they know the journey is impossible and neither are going to get what they want. For the remainder of the journey they fight over all the extra work that needs to be done. In the end neither is happy, both claim they paid too much and got too little etc. So low margins, high hassle. And this is the market telcos want to get into, because somehow it fits their high margin business...

Error 4. Overvaluing the retail business over the wholesale business

It is amazing how many telco CEOs have fallen for this trap. The only one I know who avoided it is Ad Scheepbouwer. LightSquare and Reggefiber are based on a wholesale model, but I hardly would consider them traditional telco.  In most telcos it's the wholesale business that brings in the margins. Regardless of whether it's their own retail business that sells the line or a retail competitors. This is clear in the DSL market which is often regulated to support unbundled local loop and wholesale broadband access. But also in the business market the incumbent wholesale network organization will service competing retail organisations, because its much more efficient to use networks that are already present at a customer, than build a new network out. However apart from Ad Scheepbouwer, I've never heard of CEO's actively supporting open access networks. It's probably because services sound sexy instead of being a plumber. 

Conclusion

So if these basic elements are so often misunderstood and people can still become CEO of a telco, what is going wrong in the industry? Why is this so hard to communicate to shareholders and the media? Is it maybe that we want to be deluded into believing there is a grand future for telcos in GoogleLand? Or is everyone, the CEO and the shareholders included just dead scared of the grey future of commodity infrastructure that pays a nice guaranteed return?

A clip of my presentation on the future of interconnection at Ecomm

Lee Dryburgh put up the movie of my presentation on the future of interconnection. I gave this presentation last year at Ecomm '09 in Amsterdam. It covers topics like Calling Party Pays and Peering and Transit. What I set out to demonstrate was that it is very economically beneficial for networks to treat voice differently than data. This is because all networks benefit from the current Calling Party Pays interconnection scheme. A triple play ISP may see up to 10% of it's revenue and a significant part of its profit resulting from the fact that it has to 7.5 cents per minute to a mobile network. The lowering of mobile termination fees is therefore feared by many ISP's, because it negatively affects there turnover, even though most of the money just passes its bank account to go to the mobile networks. I have embedded both the movie and the presentation for your convenience.

Rudolf Van Der Berg's Presentation at Emerging Communication Conference & Awards 2009 Europe

View more presentations from eCommConf.