Once you let the gigabit genie out of the bottle, it won’t go back in

Over the last couple of months the holy grail has started to take shape, and it is beginning to look like the gigabit speed landmark. The big question is what do telcos do when they can actually achieve it?

This point was raised by Adtran’s Ronan Kelly at The Great Telco Debate in London. Do telcos have a clue about what their ambitions are? Do they know how to make money out of incredible speeds and capacity? Will the telcos give into the low hanging fruit and screw themselves over in the long run?

This is the argument which leads back to the statement made in the headline; once you let the genie out of the bottle, it is almost impossible to squeeze it back in. Taking this metaphor into the realms of reality, once you offer consumers ridiculous speeds and capacity, you won’t be able to take it back, or up the price.

The major trend over the last couple of years for the telcos has been offering more for less. It is crippling the telcos on a profitability perspective, and managing the strain on the network is becoming increasingly complex. When gigabit speeds appear, the telcos might be tempted to continue this trend, snatching the low hanging fruit in terms of attracting new customers with more attractive data tariffs.

But one question you have to ask is whether this is the most profitable use of the network. Is there more money in continuing to encourage the customers insatiable appetite for data, or would it be better to serve the B2B community, who might come up with an idea which could actually make use of gigabit speeds for a price which reverses the spiralling nature of telco profitability?

Once the gigabit milestone has been reached, the innovators of the world will start to get to work. The applications which need gigabit speeds will follow the milestone, but telcos need to ensure the strain on the network is managed effectively so there is a suitable environment to allow these applications to flourish.

This is the question which Kelly proposed to the room; can the telcos demonstrate patience and long-term ambition to reap the greatest rewards, as opposed to the soonest. One of the themes throughout the day is the commoditization of data. Margins in the consumer world will get smaller, and the B2B world will become more attractive. But the telcos need to ensure they haven’t given the gigabit away for free, before they can actually make some genuine cash out of it.

Part of managing this ROI will be managing the expectations of investors. The fund manager who represents thousands of different faceless bank accounts needs to understand the ROI from these network infrastructure investments is a slow burner. If the ROI is managed responsibly, it can be a long burning fortune, but only if patience is shown and the telcos reach for the ripper fruits at the top of the tree.

NBN legitimises G.fast by adding it to the Aussie mix

Australian public broadband initiative NBN has announced it will be incorporating G.fast into its technology mix from next year.

This marks a significant endorsement of the much-maligned technology by a major infrastructure player and has been one of the talking points of Broadband World Forum 2017. There’s nothing intrinsically wrong with G.fast, of course, but it has generally been viewed as a compromise move rather than going all-in on fibre-to-the-home.

“Bringing G.fast technology to the NBN access network in 2018 again shows our commitment to being at the cutting edge of emerging technologies,” said JB Rousselot, Chief Strategy Officer of NBN (pictured at BBWF 2017 above). “Adding G.fast to the toolkit for the FTTC and FTTB networks will allow us to deliver ultra-fast services faster and more cost effectively than if we had to deliver them on a full Fibre-to-the-Premises connection.

“Our FTTP and HFC end-users already have the technology to support Gigabit services and adding G.fast over FTTC provides the upgrade path for those end users to ultimately receive Gigabit speeds too.”

As we wrote previously the industry seems to have got the memo that banging on about FTTH the whole time isn’t very constructive. It remains the ideal fixed line technology but it just isn’t practical or economically viable in many cases – especially more remote locations. So the sensible approach is to be open to a mix of technologies and use the most appropriate one for the location.

NBN is a few years ahead of most infrastructure players in adopting that kind of pragmatic approach, according to Netcomm Wireless CTO Steve Collins, who we met at the show (pictured below) and whose company is one of NBN’s technology partners for this G.fast initiative. NBN is a public initiative and launched at the start of the decade with all sorts of lofty FTTH ambitions, but has since had to introduce other technologies as the sheer enormity of the task hit home.

Netcomm BBWF 2017

The other tech partners for this gig (excuse the pun) are Nokia and Adtran, who also have a conspicuous presence at the show. Nokia’s stand, in fact, seems to have been over-run the entire time and while Huawei is also here in force, Ericsson is conspicuous by its absence, but then again fixed-line isn’t really its thing.

We also caught up with Federico Guillén, President of Fixed Networks at Nokia. He has been stressing the mixed technology message at the event and said NBN’s approach is a great illustration of his point. He has been talking about ‘fibre to the most economical point’ for a while and you get a sense that he feels that’s finally paying off.

The NBN news has contributed to a general sense at this year’s show that we’ve moved on from stigmatising G.fast as a compromise technology. Yes, it allows infrastructure companies to further sweat their copper assets, but if end users are getting a good level of broadband performance – most importantly a guaranteed acceptable minimum – then what’s the problem? You can read further analysis of the NBN announcement at UBB2020.

Let’s not obsess about FTTH – Broadband World Forum 2017

The first full day of Broadband World Forum 2017 saw both operator and vendor keynote speakers explore strategies for achieving ubiquitous gigabit connectivity.

On the operator side Franz Seiser, VP of Core Network and Services at Deutsche Telekom (pictured) set the tone by urging the industry discard its legacy systems and habit in order to embrace the possibilities offered by 5G. “We can only enable the new if we throw away the old,” he said, adding that the current focus on enhanced mobile broadband is still too narrow.

Seiser also touched upon what was probably the central theme of all the morning’s talks: that it’s most unrealistic and blinkered to focus solely on FTTH as the answer to our future bandwidth needs. He noted that it would cost €80 billion to build fibre to every home in Germany, so that’s not going to happen anytime soon. To satisfy short and mid-term demand we need to be investing in technologies like G.fast and fixed wireless access.

This was echoed by the CIO of BT Group Howard Watson, when asked about G.fast, who agreed that the technology will do just fine for now, as BT has been insisting at this event for years. He spent most of his talk bigging up the work of his company and its subsidiaries EE and Openreach, as well as delivering a montage of recent BT press releases, but he also confirmed DT’s assertion that on the 5G side it’s all about eMBB for now.

The vendors were all keen to stress the multi-technology approach for satisfying bandwidth demand. Both Huawei and Nokia echoed a major theme of yesterday’s keynotes that wifi is an often-overlooked piece of the puzzle. Both companies now offer managed wifi solutions to their customers and seem to think that can be a differentiator.

Federico Guillén Nokia’s president of Fixed Networks, was especially keen to stress the need to embrace a number of technologies and strategies in order to solve tomorrow’s connectivity challenges. “The strategy of deploying fiber to the most economical point in the network is still valid, but the combination of fixed fiber, wireless and other access technologies is now even more crucial to the operator’s business case,” he said.

“Fixed networks are going to be essential for the growth of 5G, for example, as they will complement wireless for mobile transport. We will also see a combination of fibre and fixed wireless access to deliver ultra-broadband to the home using technologies such as WiGig.”

Guillén also insisted that virtualization has finally reached the mature end of the hype cycle and has become a reality, but we’re not sure all operators would share his bullish stance. He did, however, concede that virtualizing everything is not, by itself, the answer to our connectivity challenges, once more stressing the need for a hybrid approach.

The morning session concluded with a talk from Ronan Kelly, EMEA and APAC CTO of Adtran, who chose to reflect on the underlying trend of symmetry being introduced to previously asymmetrical industries, such as video entertainment being disrupted by user-generated content or the taxi industry turned on its head by Uber.

Telecoms are having to invest in capacity without getting any return because it’s all being used by OTTs that cut them out of the commercial loop – the old ‘dumb pipe’ dilemma. Kelly reckons greater flexibility of product offering – such as the ability to buy ad hoc increased bandwidth when needed – is going to be a key part of tackling that issue for CSPs.

On the whole this was a balanced, mature set of keynotes that avoided some of the buzzword hype of previous years and focused instead on looking facts in the face. Gone too is FTTH dogma, replaced by an acceptance that if alternative ‘last mile’ technologies like G.fast, DOCSIS 3.1 and FWA get people close to 1 Gbps fixed-line connectivity, then that will do for now.