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Some telcos might have been afraid of committing to fibre deployment due to the vast expense and potential shareholder backlash, but attitudes are changing.
Over the last few years the need to invest in fibre has become increasingly evident, though progress is incredibly varied. Forward-looking telcos, Orange for instance, have been pumping cash into fibre deployment for years, while stuttering operators such as BT and Deutsche Telekom has chosen alternative technologies in an incredibly short-sighted move, maybe satisfy the bloodhounds in the annual general meeting, and the rising demands of the consumer.
While technologies such as G.Fast or vectoring might be appealing to the accountants, with the gigabit-economy around the corner, the shortfall is starting to look quite obvious. What was initially sold as a cunning move now looks to be nothing more than delaying the inevitable, with the overall result a net loss. But with attitudes towards fibre changing, the intensity of fibre rollouts might just increase. And it isn’t a moment too soon.
“We’ve seen the evolution of fibre as an asset class which is becoming much more accepted and more confidence in the take up and monetization potential of fibre,” said Chris Hogg, Investment Director at Amber Infrastructure, speaking on a panel session at Broadband World Forum in Berlin. “As an investor, we are getting a lot more confidence in the ability of the market to maintain the uptake level. It becoming a lot more visible and a lot easier to have confidence in these projects.”
Hogg’s position does offer him considerable credibility in making such comments, though he does work for a fund which specifically targets infrastructure projects and companies. This might not be the common attitude amongst the investor community. Kate McKenzie, CEO of wholesale network operator Chorus, does however confirm his position.
“We have definitely seen a change,” said McKenzie. “When we first started investors were sceptical about market adoption, but now investors are asking how they can go faster with the rollout.”
The issues from yesteryear were relatively simple. With profits being squeezed at the telcos thanks to the intervention and disruption of the OTTs, shareholders asked whether such vast expenditure on fibre was necessary. Firstly, did the network need such a facelift when it is dealing with the demands of the 3G and 4G world, and secondly, would the consumer appetite for fibre be there? Some investors doubted the business case, and these are the telcos who are falling behind when it comes to fibre rollout.
But what has changed over the last couple of years? Firstly, the consumer has demonstrated he/she is prepared to pay more for fibre connectivity. Secondly, new services emerged (Netflix for example), and new segments grew substantially (gaming) pushing the networks to the limit. Finally, 5G. The first point demonstrated there would be buyers for the new products, while the latter two suggested telcos would not even be able to offer adequate services unless the money was spent.
The takeaway here is simple; spend or die. Unfortunately for those who are late to the party, expenditure will squeezed into a smaller timeframe, while they’ll be playing catch-up in the time consuming task.
With 5G emerging, the investments in fibre become a little bit more palatable for investors however. With the incredible data rates promised with 5G, fibre is a necessity to ensure network performance. And while it might be able to act as a replacement for the last mile for broadband, fixed wireless access, the sites still need to be fibered up. It is as much an opportunity for connectivity as it is a threat to traditional broadband products.
“We’ll always need fibre to service the base stations,” said Dana Tobak, CEO of Hyperoptic, a UK fibre-to-the-premises broadband provider. “Some people think they’ll only need one connectivity technology in the future, but as our appetite grows, we’ll need more routes to the internet.”
For those investors who back fibre deployment plans over the years, well done. Those who were too timid, bad bet, there’s catching up to do now.
At Broadband World Forum one of the most common plays was to poke fun at the NBN troubles in Australia, but CTO Ray Owen’s reckons he’s got the last laugh.
According to Owen, the NBN network now carries 28 petabytes of data every day, with average user consuming 213 GB a month and the top 30% of fibre customers consuming more than a terabyte. Back in April, the team even noted one user managed to consumer more than 23 terabytes during the month. “We’re not too sure what he was actually doing, but he was definitely having a good time,” joked Owen.
The plan is to get 8 million happy homes on the NBN network by 2020, but also a minimum speed of 25 Mbps for all Australian citizens. In terms of penetration, Owen suggested the NBN network now services 4.4 Aussies, 63% of the target, though meeting the 25 Mbps government-mandated target would take more than fibre. A multi-technology mix has been tabled including Fixed Wireless Access (FWA), G.Fast, fibre and satellite to meet these demands. In a country the size of Australia, containing some very hostile environments, 100% fibre penetration is not a realistic goal.
Despite Owen’s claim on progress, it didn’t stop the mocking. Conference chairperson Richard Jones was one to poke fun, in between humble claims of founding 25 different companies over the course of his unassuming career, while Kate McKenzie, CEO of New Zealand wholesale network provider Chorus, revelled in the troubles as evidence of how wonderful she and her business is.
While the poking might have been on the obnoxious side, it isn’t untrue. The NBN rollout has been a painful journey, with the latest revelation coming from the latest budget estimates. CEO Steven Rue told Senate Estimates NBN would still be using the Fibre-to-the-Node (FTTN) approach until at least 2040. The multi-technology mix has been taking stick, but it is the only genuine option to ensure all Australian citizens are taking into the digital economy together. 100% fibre penetration is not going to be a viable option in the foreseeable future. That said, many of the criticisms of NBN do have merit.
Looking forward, NBN forecasts increased adoption of 4K and 8K video, smart home adoption will increase rapidly and augmented reality will start to make an impact over the next couple of years, while the business segment will continue to diversify. Real-time entertainment services are quickly declining, VPN uptake is on the up and file sharing is heading south. This will not only impact the technology which will be used to facilitate connectivity, but the approach to experience. As you can see from the picture below, the plans have been laid to evolve the network beyond the 2020 deadline.
“What I’m interested in as a CTO is the different technologies which can help improve this customer experience,” said Owen.
Beyond 2020, perhaps the full fibre (FTTP) vision will be revived. The current technology mix is best case scenario to meet demands, but it is by no means perfect or particularly future-proofed.
In an entertaining session at Broadband World Forum, a common theme emerged; open data, which is a key component of any successful smart city programme.
The format was an interesting one. Four smart cities were given seven minutes to explain their proposition, and then three minutes to answer questions. Featured were Milan, Athens, Helsinki and Amsterdam, though thanks to your correspondent getting lost on the show floor, the Amsterdam pitch was missed and will not get the attention it deserves. That said, the common theme throughout was open data.
Starting in Milan, data is being used to create a hub of intrigue for start-ups. There isn’t necessarily a focus on segment or vertical, more a top-line ambition to create jobs and value for the economy. As part of the initiative, more than 300 data sets have been made available for citizens and businesses to create new applications and services. Looking at the numbers, the scheme should be deemed a success.
There are currently 1600 start-ups based in the city, out of the total of roughly 8000 across the whole of Italy. 10,000 people are directly employed (or own) start-ups, 80% of which survive the first two years of operation, the most dangerous time for any business. These are certainly promising numbers.
In Helsinki the message is the same. The Mayor has an ambition to create the world’s ‘most functional city’ through digital, with tourism a key factor. Part of this story is opening data up to the community and local businesses to create value.
Finally, over in Athens, open data has been used in a different way. Thanks to financial difficulties in Greece, governments are not trusted. This makes it incredibly difficult to launch new schemes, though by opening up data to the general public and businesses, Konstantinos Champidis, the Chief Digital Officer for Athens, said the team are regaining credibility. The aim here is not only to try and help those citizens create something new, but develop a culture of transparency to regain the trust.
Trust is a key element in these smart cities strategies, as while open data does fuel innovation, the data has to be sourced in the first place. Should citizens not be open to having information about them or their activities collecting and analysed, the whole concept of the data economy runs dry.
We’re sure the presentation from the city of Amsterdam was equally as interesting as the three we saw, but the theme was plainly clear here; open data is a critical component of the smart cities mix.
Every now and then a reality check is appreciated. Today’s reality check regards 5G; it isn’t always a massive deal.
In the ‘developed’ markets around the world the 5G buzz is starting to reach almost unbearable levels. Unfortunately for some, with Verizon claiming a world first with its 5G FWA proposition, the shouting match is only just beginning. Domestic competitors will start clamouring for attention, while each nation will start posturing claiming their own leadership position. If you think 5G euphoria has reached a peak, just wait till it’s actually been launched somewhere.
One panel session at Broadband World Forum put some perspective on development. There are countries where 5G is about as relevant today as the Teletubbies.
“None of our incumbents have the desire to rollout 5g right now aside from entering into a pissing contest,” said Paul Hjul, Director at Crystal Web, a South African start-up ISP.
“We’re not looking to deploy 5G within the next five years,” said Martin Wessel, Head of Technology Evolution at Telecom Argentina.
5G might be a defining era for some countries who are looking to maintain a leadership position in the technology world (the US) or perhaps those attempting to retain relevance in a fast-changing global economy (the UK), but the buzz is considerably quieter in some regions.
In both Argentina and South Africa, the market is not ready for 5G. 4G is still developing and creating new angles in the national economies. Basic connectivity might be an issue, or ARPU perhaps inhibits vast expenditure, maybe the country is at the beginning of the digital transformation curve. Irrelevant to the underlying reasons, 5G is simply not a pressing priority.
This is not to say it has not been factored into conversations. Hjul highlighted 5G brings about a different mindset in South Africa with the focus on ‘fibering’ up the country as opposed to launching 5G services, while in Argentina there are long-term discussions about potential evolution. It’s more a ‘fifth generation’ mindset than a focus on 5G technology. However, the message is the same; we’re not at that stage just yet.
It is easy to get lost in the excitement of 5G, on the very same panel Leo Lundy of Irish rural ISP Imagine Communications bemoaned the political issues surrounding spectrum availability and Muhammed Sameh of Telecom Egypt suggested it was a great way to avoid ‘dumb pipe’ references, but a reality check is needed every now and then. 5G is not all its hyped up to be in some places.
Yesteryears rumbling story was the enforced separation of BT and Openreach, and while this might have been nothing more than a thinly veiled show, Ofcom might look at the success of Chorus for future inspiration.
Down in New Zealand, Chorus is an example of what can be achieved through structural separation and effective centralised investment in broadband infrastructure. The business is rolling out fibre faster than many in the world, giving rise to a landscape which benefits the consumer and is remaining profitable in the meantime. Speaking at Broadband World Forum in Berlin, Kate McKenzie, CEO of Chorus, demonstrated just what is actually possible.
Back in 2011, Telecom New Zealand was completely separated into two legal entities; Spark for mobile and Chorus for broadband. Unlike the Openreach and BT separation, these are two entirely separate (and listed) businesses, both of which are proving to be a success.
Fibre broadband penetration is at roughly 70%, with the team targeting 87%. Ubiquitous penetration would be perfect, but due to the at times harsh environment in New Zealand, it is just commercially impossible with today’s economics. New Zealand might be a small country, but the environment is incredibly varied and population density can be a nightmare. Technology is now the third largest contributor to the economy, accounting for 8% of GDP, and is steadily growing. The country now even has its own space programme, and fibre penetration has been heralded as part of this success.
“Coming up with a plan and sticking to it is key to success,” said McKenzie. Sensible regulations, consistent government policy, an understanding of consumer demand, as well as a vigilant board to keep a close eye on costs and returns, are needed to create a successful centralised infrastructure model.
The only suspect outcome is the 90+ service providers in the market. This might be great for the consumer, but it is not sustainable. Barriers are entry are almost none existent allowing anyone to get involved, but numerous of these businesses will fail due to the cut throat nature of competition. However, there certainly are some interesting models. One example is energy companies bundling energy and broadband services together.
Of course, there are dangers of centralising so much spending. Without a resilient and robust regulatory framework, the monopoly could be abused. Australian broadband providers are supposedly feeling the sting of NBN’s dominance with Telstra complaining wholesale rates are double what they should be. The political agenda also needs to be quite stable, as too much interference or changes from different government administrations could cause disaster.
Despite the negatives, New Zealand seems to have struck the right balance. Perhaps this is a country Ofcom should have a close look at. BT might have resisted (and will obviously continue to do so) pressure to remove Openreach from its business, but under the right conditions, New Zealand has shown the great benefits which can be realised for the economy and the consumer.
Telefonica’s UK business O2 might be avoiding convergence like the plague, but for its cousins in Germany, FWA is one of the biggest drivers for the adoption of 5G.
Speaking at Broadband World Forum in Berlin, Cayetano Carbajo Martín of Telefonica Germany is not fearful of the convergence distraction. In fact, it might just save the country from a connectivity embarrassment.
“5G implementation will be driven by different needs from fixed wireless access to ever increasing eMBB demand and even co-created new industry and service solutions,” said Martín.
As you can probably imagine, dealing with the tsunami of internet traffic is a big driver for 5G within Telefonica, but FWA is a long-term money making opportunity. In terms of the rate of growth, Martín highlighted traffic increased 160% over the last 12 months on O2’s network. Looking forward, even if you take a conservative estimate of 50% year-on-year growth, by 2027 internet traffic will be 38 times greater than it is today.
Looking at today’s resources, the network will hit full capacity by 2022 and the demand for new frequencies will become a necessity. And of course, these are conservative estimates not taking into consideration the unknown usecases of tomorrow. From a bandwidth perspective, 5G is increasingly becoming a necessity, with the deadline is becoming shorter and shorter.
This will also facilitate the telcos plans to venture into the FWA market. Martín highlighted there are no ambitions to explore the possibility of 4G FWA, it simply wouldn’t be able to compete with the experience of traditional broadband, though trials in Hamburg are readying the assault on the FWA space. If you listen to Martín, the opportunity is quite significant, with the CTO predicting 20-25% of Germany will convert to FWA, and perhaps this will dig Germany out of a hole.
Like the UK, Germany is one of those markets which has not glorified itself with an ambitious fibre rollout and is now playing catch-up. The FWA buzz which is beginning to build might just disguise a couple of blushed Bavarian cheeks should 5G-driven FWA be able to cover up the fibre-less cracks across the country.
What is worth noting though is FWA will not be the saviour many are plugging it to be. Some, no names mentioned, believe it might be able to bridge the connectivity gap between urban and rural environments, but this is exaggerated. The same financial pressures will be on FWA as there will have to be suitable population density to build the business case. FWA will not mean gigabit speeds will be democratized.
Even at what is supposed to be a fixed broadband conference, 5G has managed to muscle in on the action. It’s almost embarrassing how much its hogging the limelight.
Predicting when self-driving cars will hit the streets is turning into a real-life version of roulette, which is always a worrying sign.
Last year, UK Chancellor of the Exchequer Philip Hammond set out his bold ambitions; autonomous vehicles to be on UK streets by 2021. If you listen to those testing out the solutions across the world, this is certainly achievable. But then again, there are always the neigh-sayers.
At Broadband World Forum in Berlin, Alexandros Kaloxylos, Assistant Professor at University of the Peloponnese, was one of those who poured a little bit of water on the ambitious fires of progress. From Kaloxylos’ perspective, there is still a lot of work which needs to be done on developing network slicing for autonomous vehicles, and also on the roaming side of things as well.
Looking first at the network slicing, this is an important aspect of the technology as these are applications which are safety orientated. Cars can hurt people, which is why network slicing becomes paramount. Having a ‘dedicated network’ to facilitate the communications of these vehicles is an important step towards the realisation of this dream.
This in itself is a problem, as Kaloxylos pointed out the specific V2X (vehicle-to-everything) usecase for network slicing has not been discussed or examined closely enough. This is a different type of usecase and cannot be bundled together with the rest of the exciting applications. Remote surgery is another excellent example of a usecase which needs network slicing, but the operating theatre does not move, vehicles will, and they will very quickly. The industry has addressed this challenge yet.
The second challenge which was highlighted during the session is roaming. If an autonomous vehicle moves from Germany to Switzerland for instance, or from one network to another, will the handover be efficient? As it stands, this handover can take up to seven seconds. When 20 m/s latency has been targeted for the successful implementation of autonomous vehicles, this is clearly not good enough.
Some might be excited about autonomous vehicles, but it is worth getting a reality check every now and then.
For years the CSPs have been a fading voice in the telco ecosystem, but control is being wrestled back through the open communities.
The challenge over the last couple of years has been a lack of control. Standards organizations and technological developments are controlled by the vendors, which in turn results in control the industry’s landscape. The CSPs are no-longer masters of their own fate, which is primarily their own fault, but according to Mauro Tilocca of Telecom Italia the open source communities are giving the CSPs a voice.
“We need to blend the strengths of standards organizations and open source communities,” said Tilocca at Broadband World Forum in Berlin. “This is the only way to get to carrier grade solutions.”
It’s amazing to think that in years gone CSPs used to be technologically innovative organizations. But tough market conditions and stress on profitability has seen a trend of outsourcing responsibility. In other words, outsourcing the risk element of innovation.
Speaking to other attendees at this year’s event, there is a feeling the CSPs of yesteryear wanted to be financing organizations. This might explain why there are so many accountants in leadership positions, and such a distaste for risk. Allowing others to innovate and then leaning on the findings is certainly a safer way to conduct business, sitting on the top of the stack realising the advances of others; standing on the shoulders of giants is a common phrase which can be applied here.
But the downside is a loss of influence from a technological perspective and future developments in the industry. This might have allowed the accountants to manipulate spreadsheets to make the financials of an organization healthier, but the standards working groups and research projects are dominated by vendors. The CSPs are having their roadmaps dictated to them because they have lost their voice in the ecosystem.
With open source and white box groups becoming more prominent in the ecosystem, the CSPs are starting to find their feet. Open source and open standards are becoming more regular fixtures of the telco world, and these are the groups which are designed to be led by the CSPs. Of course, these groups alone cannot dictate the terms of the industry, there is still too much knowledge and talent hiding away in the vendor-influenced standards groups, but the balance of power might be shifting towards a healthier position.
The outsourcing trend which handed control of the ecosystem to the vendors was a massive over-reaction from the telcos. Fear took over and too much risk was outsourced. Openness is leading a CSP renaissance, but it is still a bit early to call CSPs innovative.
The 5G euphoria might have reignited excitement for Fixed Wireless Access (FWA) but Nokia doesn’t think we need to wait that long.
The FWA portfolio from Nokia isn’t new, here we’re talking about enhancements to products and solutions which are designed for 4G connectivity. What is worth bragging about is the simplicity of the portfolio, something which Nokia’s Head of Fixed Networks Marketing Stefaan Vanhastel thinks is critical for adoption.
“Fixed wireless access is all about ease of deployment, so need to make it is as easy as possible,” said Vanhastel. “We don’t want to send out engineers for every customer, but make the products all about deployability. Each of the announcement make by themselves are relatively minor, but when you bring everything together suddenly you have an offering which is appealing.”
FWA might be primarily a 5G conversation, though there is no reason the technology cannot be run over 4G networks. With 4G networks peak residential speeds beyond 100 Mbps are possible but not always achievable, though Nokia will be launching new antennas which it claims can improve performance. Nokia FastMile can help improve spectral efficiency by 4-5x, resulting in faster connections for residential users, more consistent performance at the cell edge and lower RAN costs. It starts to make 4G FWA a more viable proposition.
Another area of the portfolio which has received a power-up are the indoor gateways. Nokia is introducing new products which include high-gain antennas and 4X4 MIMO to increase performance. Some models are also claimed to be 5G upgradable. However, the most important point is ease of deployment; it is simply a plug-in device.
This for Vanhastel is one of the most important aspects of FWA. The usecase not only has to be built for the telcos, though this is a simple one with the cost of laying fibre, but also for the users. FWA is likely to be a considerable change for some customers, many of whom will know the pros and cons of mobile connectivity and coverage. Simplicity and ease of deployment will certainly come as an advantage over waiting for a couple of weeks for an engineer to show up.
Realistically most broadband connections across the UK do not reach the speeds which Nokia will suggest is capable over a 4G-FWA offering, but the task will be to convince telcos and users of the reliability of the offering. Should reliability be proven, it poses an interesting question; why should we have to wait for 5G when FWA is theoretically possible over 4G networks?