Tuesday, February 23, 2010

Digital Britain enters stormy seas

Recent announcements from the Conservatives echo some of the ambition currently being demonstrated in the US. Shadow Culture Secretary Jeremy Hunt has unveiled plans to help make the UK the first major European country that has superfast broadband in the majority of homes by 2017, via three key components:
  • We will create a regulatory framework to ensure the roll-out of superfast broadband at speeds of up to 100mbps to the majority of homes across the UK by 2017. This could involve either mobile or fixed line solutions and will be significantly faster than the Government’s proposed target. Our objective is to make the UK the first major European country to achieve this aim, securing its place as a European and global hub for the creative industries.
  • We will end BT’s local loop monopoly by allowing other operators to use their ducts and poles thereby encouraging competition in the superfast broadband market. This approach has proved successful in other countries such as Singapore and South Korea: these countries are global leaders in superfast broadband infrastructure.
  • We are committed to universal access to superfast broadband speeds. If the market does not deliver this in certain areas we will consider using the proportion of the licence fee dedicated to digital switchover to finance superfast broadband roll out under the new BBC licence fee settlement, starting in 2012. This amount would be leveraged to maximise the investment made, either by making it available as loans or on a matched funding basis.
Some very clear critcicism of the approach set out in the Digital Britain report there. Opposition to the 50p tax continues to increase, and not just from rival political parties either. The cross-party Business Innovation and Skills Parliamentary Committee (which includes 6 Labour MPs in its current total membership of 11 MPs) has today published its report on broadband, evaluating the proposals set out in the final Digital Britain report. While agreeing with the vision, the report disagrees on the detail, particularly in relation to the 50p tax/Next Generation Fund. From the summary:
"We disagree with the Government over its proposal to fund its intervention in the Next Generation Access market with the proceeds of a 50 pence levy on fixed telecommunications lines. Such a levy would be both regressive and poorly targeted. It would have a much greater impact on the less well-off who will pay for an enhanced service which only a minority will enjoy. If public funds are required for Next Generation Access, they should be raised through general taxation, in the same way as for any other national infrastructure programme."
...which suggests the tax is even more unlikely to come to pass? Of more direct interest to education are the recommendations on business rates on fibre. Again, from the summary:
"The business rating system currently discriminates in favour of BT and against its competitors. We believe that the Government should consider a reduction, or even a temporary removal, of business rates on fibre optic cable. This would be a more effective use of limited public sector funds than direct financial intervention. We also believe that the removal of barriers which prevent access by internet service providers to the BT duct network, municipal ducting, and canal and railway networks would do much to encourage greater levels of investment in Next Generation Access."
...and could also encourage further investment to consolidate education broadband infrastructure? However I think the report's conclusions on the lack of a "killer application" to drive takeup of NGA are very short-sighted:
"The evidence we have heard suggests that there is no pent-up pressure for super-fast broadband from consumers, due both to a lack of new applications and an unwillingness to pay higher bills for internet access. We do not believe that the Government has yet made the case for intervening in the market to provide NGA access to consumers who already receive a reasonable quality of service. Furthermore, we conclude that achieving a universal service of 2Mbps should be the priority."
Surely the priorities of ensuring universal service and encouraging next generation access aren't mutually exclusive? And it's disingenuous to argue that consumers don't want next generation broadband, when many are (as is to be expected) simply unaware of the breadth of benefits that next generation broadband will bring?

The fundamental problem here is that we as a nation still seem content to allow the market to lead us by the nose into a next generation broadband world. As a result, such a world will be very much on the telcos' terms, which misses a huge opportunity. Many other administrations around the world are stepping up to the leadership challenge the transition to NGA presents, to create an entirely new model of broadband provision. Based on publicly funded open access networks, such a proactive policy approach will deliver a much greater variety of public and commercial services, with a much greater positive impact on society as a result. The OECD capture this in their report
Policy Responses to the Economic Crisis: Investing in Innovation for Long-Term Growth:
"Given the costs involved in fibre deployment it is fairly certain that outside the dense urban areas the market will not be able to support more than one fibre based network. The exception may be in markets which already have well developed and ubiquitous, cable TV infrastructures which may provide an alternative and competing platform. Governments, both central and municipal, can play an important role by facilitating investment, e.g. through public-private partnerships which stimulate development of nationwide high speed broadband networks. However, when the public pays for broadband investment they should expect to benefit from improved service and greater choice in the market place. One means to accomplish this is to ensure that networks built or augmented using any public funding are available via “open access” rules meaning network providers offer access or capacity to all market participants at cost-based, non-discriminatory terms."
In addition, there are plenty of existing applications that signpost the huge additional potential that next generation access will unleash. From the ITIF's excellent Need for Speed report:
"Google Maps, Gigapan, and Photosynth are three very useful applications whose appearance or utility would have been impossible to predict. They would never have emerged without broadband, they perform better with faster broadband, and they point to the kind of exciting new applications that will become possible once next-generation broadband is ubiquitously deployed."
...which also neatly encapsulates the "chicken and egg" nature of the conundrum. But there is still a degree of certainty in such a conundrum: if you start off with an egg, you end up with a chicken. But perhaps more appropriate in this context, if you start off with a chicken, you soon end up with lots of eggs, meaning that you soon lose interest in which came first. Also from the ITIF, an extract from an article on framing a national broadband policy:
"...broadband is unique in that the social returns of broadband investment exceed the private returns to companies and consumers...The second, and most important way that broadband is different from other unregulated consumer products is the significant positive externalities generated by its adoption. The notion of externalities is straightforward: it is a divergence between private costs and social costs (or benefits). Externalities occur when one market participant’s action affects others without compensation being paid or received. In a competitive equilibrium with the presence of costs (or benefits) that do not accrue to the individual economic actor, the competitive markets alone will not achieve optimal outcome — what economists refer to as Pareto optimality...there is considerable reason to believe that there are significant externalities from high speed broadband, and that if left to themselves, market forces alone will lead to less investment in broadband than is societally optimal."
Which to me underlines the fundamental importance of governments stepping up to the challenge, rather than allowing themselves to be swayed by the many vested commercial interests that, through their highly effective lobbying, are much too close to the debate.

I'd really hoped we'd moved on from this poor "excuse to do nothing" line of argument. But unfortunately, it seems we still have a very, very long way to go to convince those who, by now, really ought to know better.

US broadband policy developments

Some interesting developments in the USA in the run-up to the presentation of the National Broadband Plan to Congress on 17 March. In a speech to the NARUC Conference in Washington on 16 February, FCC Chairman Julius Genachowski set a goal that by 2020 the minumum broadband access speed should be 100Mbps:
"Our plan will set goals for the U.S. to have the world’s largest market of very high-speed broadband users. A “100 Squared” initiative - 100 million households at 100 megabits per second - to unleash American ingenuity and ensure that businesses, large and small, are created here, move here, and stay here. And we should stretch beyond 100 megabits. The U.S. should lead the world in ultra-high-speed broadband testbeds as fast, or faster, than anywhere in the world. In the global race to the top, this will help ensure that America has the infrastructure to host the boldest innovations that can be imagined."
A couple of days later the FCC unveiled the Broadband Plan's working recommendations for key national priorities. These are categorised into six themes:
  • Providing jobs and creating economic opportunity
  • Improving healthcare and controlling costs
  • Providing more educational opportunities and improving outcomes
  • Promoting energy independence and efficiency
  • Enhancing government performance and increasing civic engagement
  • Increasing public safety and homekand security
In marked contrast to the picture painted by the Caio review and Digital Britain reports, the FCC directly acknowledges the need to address school connectivity and promote digital inclusion as matters of urgency:
  • Challenge: While 97% percent of public elementary and secondary schools have Internet access, speeds are insufficient. 
  • Solution: Upgrade E-rate program to provide additional connectivity, flexibility and efficiency. 
  • Challenge: Online learning can reduce time required to learn by half and increase course completion rates, but there are barriers to wider adoption. 
  • Solutions: Remove regulatory barriers to online learning; increase supply of digital content and online learning systems; promote digital literacy for students and teachers.
While commentary in the Wall Street Journal suggests there is still more to do:
“…few details have been released on the most anticipated issues in the plan. It still isn't known what the agency will propose to increase competition among Internet providers or how it will overhaul an $8 billion-a-year federal phone-subsidy program.”
...and CircleID report that there are continuing issues with making stimulus bill funding for broadband projects available:
"The Rural Utility Service (part of the US Agriculture Department) and NTIA (part of the US Commerce Department) have awarded only 15% of the first round money they promised to make available. To be blunt, they failed in their mission. They are now poised to compound that failure with an absurd deadline of March 15 for second round applications prior to availability of first round results."
...this all still seems streets ahead of where we're at in the UK to me. The FCC has also  revised the E-Rate progamme to allow members of the general public to use schools’ Internet access during non-operating hours, something we've taken for granted in the UK. Internet2 has welcomed the FCC's announcement. All evidence of a new sense of broadband ambition in the US?

Finally, it's interesting that the Utah Telecommunication Open Infrastructure Agency, more commonly known as UTOPIA, a group of 16 Utah cities joined together to form a state-of-the-art fibre-optic network, has formerly announed its intention to bid in Google's Fibre Communities Programme - but surely it would be better to annouce you've been successful, rather just that you've applied...pride comes before a fall and all that?

The economic impact of broadband

Prompted by references in FCC Chairman Julius Genachowski's speech to the NARUC Conference in Washington on 16 February, I thought it would be useful to bring together some links to reports documenting the economic impact of investement in broadband infrastructure. So here goes:
  • The Brookings Institution ("a nonprofit public policy organization based in Washington") - An international look at high-speed broadband, February 2010: "...it is clear drawing on the experience of other nations that high-speed broadband enhances economic development, social connections, civic engagement, and online government. Broadband no longer is just a technology issue, but is creating new applications in areas such as health care, education, energy, and entertainment...Countries with fast and accessible networks are able to fuel innovation and create new types of applications for individuals, businesses, and governments."
  • Massachusetts Institute of Technology, MIT ("The mission of MIT is to advance knowledge and educate students in science, technology, and other areas of scholarship that will best serve the nation and the world in the 21st century") - Measuring the Economic Impact of Broadband Deployment, February 2006: "The analysis presented in this report represents a first attempt to measure the impact of already-deployed broadband technologies...The results support the view that broadband access does enhance economic growth and performance, and that the assumed economic impacts of broadband are real and measurable."
  • The World Bank ("...a vital source of financial and technical assistance to developing countries around the world") - Broadband Infrastructure Investment in Stimulus Packages: Relevance for Developing Countries, June 2009: "In response to the financial crisis, infrastructure expenditure can play a major role as a fiscal stimulus by helping to create new jobs...More importantly, government spending in broadband infrastructure is expected to have impact on long-run productive activities in other sectors of the economy. Network investments are typical examples of productive government investment because of the positive externalities they provide. ICT especially is a General Purpose Technology that facilitates great leaps of innovation and results in substantial restructuring of the economy. It is proven to contribute to virtually every sector in the economy through productivity gains. Therefore, investments in broadband infrastructure may have spillover effects and increase payoffs of investments in other sectors. In addition, broadband infrastructure, like all telecommunications networks, also has network effect (also referred to as positive network externalities) where the overall value of a network increases as the number of consumers goes up."
  • Organisation for Economic Co-operation and Development, OECD ("...an international organisation helping governments tackle the economic, social and governance challenges of a globalised economy") - The role of communication infrastructure investment in economic recovery, May 2009: "Broadband networks are increasingly recognised as fundamental for economic and social development. They serve as a communication and transaction platform for the entire economy and can improve productivity across all sectors. Advanced communication networks are a key component of innovative ecosystems and support economic growth. Broadband networks also increase the impact and efficiency of public and private investments which depend on high-speed communications. Broadband is needed as a complementary investment to other infrastructure such as buildings, roads, transportation systems, health and electricity grids, allowing them to be “smart” and save energy, assist the aging, improve safety and adapt to new ideas."
  • OECD (again) - Policy Responses to the Economic Crisis: Investing in Innovation for Long-Term Growth, June 2009: “Investment in high speed broadband communication networks that are part of economic stimulus packages must be accompanied by regulatory frameworks which support open access to networks and competition in the market. Such investment should also aim at stimulating the use of information and communication technologies (ICTs) to secure economic and social benefits. Linking ICT investment with other large physical infrastructure investment, such as buildings, roads, transportation systems, health and electricity grids, allows them to be “smart” and save energy, assist the aging, improve safety and adapt to new ideas. These infrastructures can also lower the barriers to entrepreneurial activities and provide means for the efficient and “green” delivery of energy, mobility and important social services – training, job search and networking…Besides direct investment in broadband, stimulus packages often have a more indirect but larger impact on ICT deployment and use, for example investment in education, "intelligent" transport systems, greening the economy, smart buildings and grids, health, the environment, and modernising public services. Investments flowing into these areas can often be much bigger in monetary terms than those for broadband alone (e.g. in the US, $19 billion for healthcare ICTs and $100 billion for modern infrastructure, compared with $7 billion for broadband). The fostering of ICT infrastructure and services in, for example, healthcare or underpinning research networks will also provide the technological basis and platform for further ICT-based innovation in other fields as there are, e.g. natural synergies between broadband deployment and making other investments work, e.g. smart electrical grids and transport systems.”
  • DCITA (Department of Communications, Information Technology and the Arts, Australia) - The economic effects of broadband: an Australian perspective, May 2007: "There is no doubt of the importance of broadband to the benefits generated by ICTs in areas where bandwidth hungry activities are significant...care needs to be taken, however, not attribute to broadband benefits that should in part be attributed to other critical factors...What this means for an assessment of the benefits of broadband is that a counterfactual analysis would have to control for the influence of changes to these other critical factors that may change simultaneously with the advent of broadband but not be caused by it. In some areas of e-health, such as case conferencing and the transfer of digital images, for example, the evidence also indicates that broadband has helped to generate economic benefits. Again, however, broadband has not been not alone in generating these benefits...As we move into the future, broadband is likely to generate higher economic benefits than it has to date, whatever that quantum may be."
  • The American Consumer Institute Centre for Citizen Research, ACI ("...a 501(c)(3) nonprofit educational and research institute (that) focuses on economic policy issues that affect society as a whole") - Broadband Services: Economic and Environmental Benefits, October 2007: "According to a number of studies, IT investment, including investment in broadband networks, has provided an important catalyst for operational efficiency in the US...Consistent with the general conclusion that IT investment spurs economic growth and productivity, a handful of studies have made a direct link between broadband investment and consumer benefits...This study has shown that information technologies can produce significant reductions in greenhouse gas emissions and can do so without sacrificing economic growth and productivity.  In fact, a review of the literature shows that broadband investment and use have significant stimulative effects on economic growth and productivity, providing the best of both worlds – improving both environmental and economic welfare."
  • The Benton Foundation ("...works to ensure that media and telecommunications serve the public interest and enhance our democracy") - An action plan for America - using technology and innovation to address our nation's critical challenges - a report for the next administration, 2008: "The qualitative and quantitative evidence is clear and consistent: at the individual, local/community, and national levels, the deployment of fast, reliable, and affordable broadband will stimulate tremendous economic development and create hundreds of thousands – if not millions – of good-paying jobs that might otherwise be lost or go offshore."
  • The Public Policy Institute of California, PPIC ("...a nonprofit, nonpartisan think tank. We are dedicated to informing and improving public policy in California through independent, objective, nonpartisan research") - Does broadband boost local economic development?, January 2010: "Our analysis indicates a positive relationship between broadband expansion and economic growth. This relationship is stronger in industries that rely more on information technology and in areas with lower population densities."
  • Research by the Sacramento Regional Research Institute on behalf of AT&T showed a strong correlation between broadband growth in California and the number of new jobs available, forecasting that even small increases in broadband use could substantially affect the state over the next 10 years - Economic effects of increased broadband usage in California, November 2007: "Overall, SRRI’s analysis demonstrates that increased broadband use (and migration from dial-up to broadband access) within California has had a positive effect on employment and payroll growth."
  • A analysis by the National Economic Council titled Recovery Act Investments in Broadband: leveraging federal dollars to create jobs and connect America that accompanied the announcement of the first awards under the USA's $7.2 Billion Recovery Act Broadband Program in December 2009 reported that "These critical broadband investments will create tens of thousands of jobs and stimulate the economy in the near term. By providing broadband-enabled opportunities to previously underserved communities, these investments will also lay the foundation for long-term regional economic development and foster a digitally literate workforce that can compete in the new knowledge-based economy."

Tuesday, February 16, 2010

European fibre deployments continue apace

A piece in the FT by Karel Helson, president of the FTTH Council Europe, signposts a range of interesting activities across Europe, where a number of administrations are putting significant investment behind next generation access:

Portugal: "In January 2009, the Portuguese government signed an agreement with four of the nation’s operators – incumbent Portugal Telecom, alternative operators Oni Communications and Sonaecom, and cable TV company ZON Multimédia – for the roll-out of fibre networks to 1.5m homes and businesses. The operators agreed to co-operate and share ducts (the channels into which fibre-optic cables are laid), while the government contributed an €800m (£700m, $1.1bn) line of credit."

This report from Companies and Markets offers further insight:
"The government has also committed considerable infrastructure funds to develop the fibre sector, having already provided €800 million towards the estimated €2.5 billion national network cost. In common with many EU countries, the government has included broadband development in its economic recovery plans and has undertaken to pass legislation in 2010 aimed at reducing barriers to investment in new networks and ensuring equal access to the new infrastructure."
France: "...a few weeks ago, France announced it would invest €2bn to bring fibre to rural and less densely populated areas as part of a new economic recovery package." The Wall Street Journal offers further commentary, as does this blog posting on CircleID:
"The French government has now committed itself to investing €4.5 billion to support the rollout of a fibre-based telecom network and the development of a range of e-services (teleworking, telemedicine, health, government, justice, education etc) which can exploit the network's potential. The funds form part of a larger €35 billion bond issue announced by President Sarkozy last month: known as the 'grand emprunt', the government plans to pay for large-scale public projects through public debt in a bid to increase economic growth from 2010 and ease the country out of the continuing global economic crisis. The scale of the loan has been hotly debated, with some pundits suggesting upwards of €50 billion or €100 billion is a necessary expenditure in research, infrastructure and technology.

For now, the government is concentrating on a number of priorities, including education, research, the digital economy, and industry. As for broadband infrastructure alone, the government plans to spend €2 billion to enable up to 70% of the population to access at least 100Mp/s services by 2019. Public funding, it is hoped, will by supplemented by up to €4 billion from the private sector. The government's own €13 billion contribution towards overall infrastructure investment equals the amount which it has received from French banks in repayment of special funds extended to them in late 2008 and 2009, at the height of the economic crisis."
Greece: "The strategic importance of fibre networks is also evident in Greece, where the government is planning to support large-scale fibre roll-out." Samknows reported in November 2009 that the Greek FTTH plan is down but not out:
"Back in September 2008, the Greek government said it intended to build a next-generation access network that would pass 2 million homes – roughly 40% of the population – in Athens, Thessaloniki, and 50 other cities and towns across Greece. The network would offer speeds of 100 Mbps or even higher, giving the country a much needed boost on broadband league tables.

The Greek government wouldn’t have to foot the entire bill. Instead it would set up public-private partnerships – an increasingly common business model in Europe, and one that has been succesfully used to invest in fibre networks before. The state would contribute roughly one-third of the estimated €2.1 billion total cost, with the remaining investment coming from industry...If everything goes according to plan, the FTTH project will be submitted to the European Commission for approval in the second half of 2010, and the tender for network construction issued in 2011."
Finland: a particularly interesting one, this. From Paul Budde's blog:
"The Finnish government and regulator have set in train a national fibre or cable network enabling 100Mb/s connections across the country by December 2015. Wireless broadband based on Long-term evolution (LTE) technology became available in Oslo in December 2009 and will be progressively extended to other cities in 2010-2012. FttH networks are expected to push connectivity to 1Gb/s in urban areas. The regulator estimated that by 2015 about 94% of connections would be within 2kms of the network."
But what's even more interesting is the Finnet Group's Supermatrix project:
"(The Finnet Group) is now well advanced in developing an ambitious cloud-based collaborative project – dubbed Supermatrix – involving more than 40 telcos and IT players and to which the Group alone plans to invest about €1 billion during the next ten years. Essentially, the project aims to deliver 100Mb/s or more to subscribers while obviating the need for personal computers by providing the desktop as a service. Customers linked to Supermatrix only need certain peripherals – screen, mouse, keyboard, webcam etc – while data is processed in computer rooms located to serve each town or village. The ‘supercomputer’ system is connected to the IP backbone, and to individual users through fibre guaranteeing at least 100Mb/s. The essential functions such as data backups, maintenance, virus security and OS updates are performed by Supermatrix employees – essentially in the data datacenter run by the local telco. By logging on to the system, users tap into their own data and applications held centrally."
More on Supermatrix here and here. Three years to go before commercial launch, apparently, so watch this space...

Internet2: consolidate education and research networks

Internet2, together with 27 other US national, state and regional research and education network organisations, has made a filing to the FCC to inform the development of the National Broadband Plan, which is due to be presented to Congress on 16th March 2010.

The filing (the full text of which is available here) sets out how the FCC plan could spur economic growth through strategic investments in high capacity networks that today connect community anchor institutions like universities, community colleges, hospitals, libraries, K-12 schools, and public safety entities. A similar approach for the UK has been flagged at various points throughout the Digital Britain debate, but with nothing like as much detail or consideration.

The filing (which acknowledges the previous Gates Foundation filing on the cost of connecting anchor institutions to fibre) makes some very compelling arguments. It sets out the concept of a "Unified Community Anchor Network" (UCAN) connecting all community anchor institutions. A UCAN doesn't need to be created; it just needs to be completed, by upgrading and extending the interconnected regional and national networks which currently serve the education and research community. Such development should be led by the R&E community:
"The Internet evolved into the economic and social powerhouse it is today as the result of large-scale demonstrations of new networking technologies in the R&E Community. It was only because the R&E community was able to build an operational network (initially the ARPANET and then the NSFNET) that its transformational superiority over the then-closed approaches to networking was demonstrated. The Internet in its current form exists because the world outside of the R&E community recognised the enormous advantage of an open, extensible network environment and wanted, perhaps even needed, to be a part of it."
Transparency is flagged as a key advantage of such an approach:
"...because the networks are run transparently - unlike those of the carriers - it is possible to determine where in the multiple hops from a desktop in Arizona to a desktop in Maine, or even in Europe, problems are occurring. These tools, along with a shared development of architecture and engineering plans, open budgeting processes, public operational ticketing and performance tools and regular communications among organisations, form the foundation of operational transparency in a multi-provider environment - empowering end users with the knowledge to hold their providers accountable for performance and service levels...The community wants to ensure that there is an open network that will be available to all, as its focus is on benefiting the public. Unlike for-profit companies, it does not need to be focused on shareholder profits."
But unfortunately, and dispiritingly, just as in the UK, those for-profit companies are extremely well connected and thus able to exert a huge influence over the debate. The FT highlight this in an article describing the challenges Google currently faces, despite having developed a close relationship with the Obama administration:
"...the question facing Google is whether its popularity among decision-makers will give it an edge over its political enemies, many of whom have been engaged in trench warfare over regulatory issues for decades and nearly always win...Google is attempting to curry favour on Capitol Hill through the usual tactics, such as hiring former Capitol Hill staffers, as well as unconventional methods, such as trying to educate politicians about how to use the internet in campaigns. People who are watching the company try to gain influence say it is using an intellectual approach in a town where “the best idea” does not always win."
I fear this excellent proposal is likely to suffer the very same fate. There are simply too many commercial vested interests too close the debate, on both sides of the Atlantic. If a company of the size and influence of Google struggles to get its voice heard, what hope for the R&E community?

Monday, February 15, 2010

Do Google's fibre plans include the UK?

An interesting observation from PC Pro, following George Osborne's announcement that a Conservative government would look to provision 100Mbps connections:
"Parliamentary sources have told PC Pro that the Tories' plans were based on foreign investment in the UK broadband network. Google is one of the few companies with the necessary capital and motivation to invest in British broadband. Google latest financial results reveal that 12% of the company's revenue comes from the UK...The Conservatives and Google already have close links. Last year, Tory leader David Cameron appointed Google CEO Eric Schmidt to a committee of "top talent" that would help lead Britain out of recession."
This theory has done the rounds before though, albeit in a different context. The Guardian offered this commentary on the Conservatives' links with Google in July 2009, when reporting on the Conservatives' spring conference in Cheltenham:
"... the Tory leader said that his party would have adopted a different approach to the issue of how to improve access to patient records in the internet era. "We would have said, 'Today you don't need a massive central computer to do this,'" he said. "People can store their health records securely online; they can show them to whichever doctor they want. They're in control, not the state. "And when they're in control of their own health records, they're more interested in their health, so they might start living more healthily, saving the NHS money. But, best of all in this age of austerity, a web-based version of the government's bureaucratic scheme services – like Google Health or Microsoft HealthVault – costs virtually nothing to run."
From the same article:
"The proposal has aroused controversy because of Cameron's close links to Google. Steve Hilton, his most important policy adviser, is married to Rachel Whetstone, a senior Google communications executive."
Shortly afterwards the Spectator offered this robust defence in its blog:
"...this strikes me as a nothing story. The Tories are mentioning Google so much because it is the kind of modern, successful brand that they want to be associated with...considering how Google has become shorthand for so much of the technological change going on around us, it would be rather hard for a politician to talk about how the internet can change the way public services are delivered without ever mentioning the company...it is hard to see how politicians and their advisors could avoid this kind of attack unless their partners gave up their jobs as soon as they reached a certain level of seniority - and that is clearly absurd."
From Google's own corporate information:
"Rachel Whetstone joined Google in 2005, after 15 years advising senior politicians and companies on their strategic communications. She leads the company's global teams for public policy and communications."
Anyway, wherever Google decides to build its network, it won't be cheap. This from Business Week:
"Google wants to offer 1 gigabit-per-second speeds to some 50,000 to 500,000 people. At 2.6 people per household, that roughly translates to 20,000 to 200,000 homes. Our friend Ben Schachter, Internet analyst with Broadpoint AmTech, estimates that it will cost Google between $3,000 and $8,000 per home, or roughly $60 million to $1.6 billion, depending on the final size and footprint of the network. If Google reaches, say, 100,000 homes, it would cost the company about half a billion dollars."
Watch this space I guess.

Friday, February 12, 2010

France & Australia - investment & separation

The FT reports that France Telecom is to resume investment in the country's new fibre-optic network:
"...the significance of this week's French decision to press ahead with an initial €2bn ($2.7bn) of investment in the new network extends well beyond a change of style and tone at France Telecom. It also reflects a new sense of urgency at all European telecoms operators and perhaps the need for a pan-European regulatory framework to facilitate the imminent digital revolution...Telecoms groups still flinch at the memory of the roll-out of third-generation mobile technology when vast sums were spent on new networks without the demand being there to populate them. A decade on, the world could not be more different. Smartphones, social networking, online gaming, remote working and TV over the internet are resulting in a surge in usage which risks overwhelming the infrastructure.

France Telecom has certainly been wise to step out of what was becoming a perpetually escalating conflict with its domestic regulatory authorities and its competitors - a conflict that was increasingly irritating its most important shareholder, the French government. But as much as anything, the decision is an exercise in enlightened self-interest. For even in France, where the network is recognised as one of the more robust in Europe, there is no time to waste in preparing for an all too predictable explosion of usage."
...unless you're in the UK it seems. Australia, on the other hand, currently faces a different issue, in relation to the future of Telstra, the incumbent telco. Also from the FT:
"Telstra is in the middle of regulatory upheaval after Canberra warned last year that unless the telecoms group separated its retail and wholesale businesses its ability to expand wireless broadband operations would be curtailed. Canberra is working on a public-private initiative to create an ambitious A$43bn nationwide broadband network (NBN) and wants Telstra to fold parts of its existing network into the proposed venture. However, talks on compensation to Telstra and the new regulatory environment have been drawn out."
The BBC also reported on this issue last year:
"Telstra is being asked to split its retail operations from its wholesale network. The government says this would help in the roll-out of a national broadband network worth A$43bn ($30bn, £20.9bn). The government has been warning of a major regulatory shakeup of the telcoms industry...Telstra was a state-owned monopoly before it went mostly private in 2006. It owns the country's aging copper telecommunications network. This could be made redundant as the government pursues its plan for super-fast broadband across the country. Roll-out of this new network would go faster if existing telecommunications providers folded into it."
...sounds familiar, but we don't have a venture to fold anything into, unfortunately...

Google's fibre ambitions

A very interesting announcement from Google this week:
"We're planning to build and test ultra high-speed broadband networks in a small number of trial locations across the United States. We'll deliver Internet speeds more than 100 times faster than what most Americans have access to today with 1 gigabit per second, fiber-to-the-home connections. We plan to offer service at a competitive price to at least 50,000 and potentially up to 500,000 people. Our goal is to experiment with new ways to help make Internet access better and faster for everyone."
What's particularly interesting  is that Google intends the network to be open access, giving users the choice of multiple service providers. Given how embedded existing complex commercial relationships are within current triple- and quadruple-play offerings, this will be a challenge, but if anyone can do it, it's Google? Building a network brings one set of challenges, building relationships with service providers to use you network brings a whole lot more.

At the NextGen09 conference in Leeds last November I asked the folks presenting the Digital Region project who they had lined up to run services over the new network. The answer? "Discussions are ongoing." Hmmm. The Digital Region site suggests they're still going, three months later. Which says to me that you need more than a philosophy of "if we build it, they will come" when embarking on such ventures? Field of dreams indeed...but, then again, Google have quite a few of their own services to run over a new fibre network, and I'm sure they have plenty of ideas about how to use all that extra bandwidth too.

The BBC's coverage flagged that in many ways this is just an extension of the fibre network Google has built to connect its data centres, which has been discussed many times previously, often in relation to the (ill-informed) net neutrality debate. This from VoIP News in May 2007:
 "Google head of special initiatives Eric Sacca has said the fibre helps Google avoid long-haul transport costs for traffic that needs to get to, say, peering points that connect to the AT&T network. Google also uses formerly dark fibre to interconnect its massive data centers and perform mundane tasks like replicating its search index to Google sites worldwide."
The article goes on to speculate what Google's other intentions might be, beyond the official line above, one of which was "a Google-branded telecom network" - good guess. But another analysis from Internet Evolution suggests Google's intentions may be very different, given the low return on fibre investments and the limited availability of "utility fibre" (=dark fibre? I guess the issue here is that what's there isn't where you need it?) in the ground:
"Given this, what’s behind the Google move?

Step back a bit. Ask yourself why Google pushed the notion of municipal WiMax for the Bay Area. Ask why they bid on a mobile spectrum auction. Google didn’t really get into any of these businesses. The goal was to manipulate others to build what Google wants. Even Android and Nexus One are manipulations of the mobile market. Now, Google is trying to start an arms race in broadband access.

Google wants an Internet that can grow to eat every other form of information and entertainment distribution. That gives Google, which is clearly the power of the Internet, a big ecosystem to support its growth. The part of the Internet that’s the hardest to grow isn’t the core, where traffic density and economy of scale apply, it’s the access connection. Nobody makes much of a return on broadband access, and Google is very afraid that will reduce access investment. A small Internet on-ramp means a small Internet.

Municipal governments, meaning taxpayers, can decide to spend money to create FTTH, and if they do, then Google will be glad to help out with ideas and tech support. But watch and see who carries the big cost. Google will provide proof-of-concept trials and will work to validate different technology approaches, but it's not going to pay the bills, because its ROI would be too low. When the dust clears on Google broadband, the same old players will have to be the ones to pull out their wallets."
The article does go on to temper this cynicism, by acknowledging that Google's offer could produce some notable benefits, for example by informing the FCC's National Broadband Plan (perhaps by encouraging the minimum bandwidth bar to be set a little higher?) and by driving further deployment and development by telcos. Another article on Internet Evolution highlights that "it takes more than equipment or cable to run a network", wondering if Google knows what it's getting itself into:
"...if Google really means to respond to members of the public and local governments with this FTTH plan, the company will have to be prepared for a lot more than a list of dark fibre and some major municipal glad-handing. The introduction of a super-fast FTTH fibre network anywhere increases issues of security, user support, and technological upkeep."
But if Google's plan is a success it could speed things up for everybody. Well, everybody in the USA at least...but then, who knows?

Monday, February 08, 2010

Is the writing on the wall for BT?

Some very interesting speculation recently on BT's future in the light of the imminent election. Speaking on the importance of broadband to Britain's future on the BBC's Andrew Marr show last week, shadow chancellor George Osborne made some interesting statements:
  • “…in the 21st century let’s build the superfast broadband network that will create hundreds of thousands of jobs for Britain…”
  • “…we’re talking about 100Mbps which is a big step forward for this country…it means you can have interactive teaching over the Internet at home, you can have telemedicine…”
  • “…the best way to deliver this is to break up the BT monopoly at the moment which holds back companies like Carphone Warehouse and Virgin…”
This last comment, about breaking up the BT monopoly, was picked up by the FT with some related coverage from the BBC:
"BT faces a hostile regulatory regime if the Conservative party wins the general election...the Conservatives promised legislation to force the company to give competitors greater access to its network infrastructure...The Conservatives would introduce legislation to force BT to open up its underground ducts, so that competitors could run alternative fibre networks through them...The Conservatives would only look at the case for public subsidy for fibre networks after 2012, when the switch from analogue to digital TV is completed."
Previously the FT had also reported that Carphone Warehouse was considering the case for launching its own high-speed broadband network:
"Charles Dunstone, Carphone's chief executive, voiced concerns about BT's proposed wholesale products for high-speed broadband based on optical fibre. He said Carphone's Talk Talk telecoms unit was considering all its options, including running its own fibre network through BT's underground ducts. Analysts say BT could struggle to make a return on its £1.5bn plan for a high-speed broadband network unless it secures wholesale deals with other providers under which they supply fast internet access to consumers. Carphone and British Sky Broadcasting, the second- and fourth-largest broadband providers, want modifications to BT's fibre-based wholesale products partly because of concerns that the proposed arrangements will not allow them to innovate sufficiently."
Now comes an announcement from BT Chief Executive Ian Livingston, also reported by the FT and the BBC's Rory Cellan-Jones on his blog, that BT is preparing to open up its underground ducts so that rivals can run their own high-speed broadband networks through their infrastructure:
"BT's willingness to open up its ducts marks an important policy shift and emphasises the intensifying political and business pressure it faces. Last month the Conservatives pledged that, if the party were to win the next general election, they would legislate to force BT to open up its ducts . The Tories hope their legislation could stimulate market-led investment that would ensure superfast broadband networks reach rural as well as urban areas. BT stressed it had been talking to Ofcom, the telecoms regulator, since last year about opening up its ducts and that its decision was not a response to the Conservatives. Ian Livingston, BT's chief executive, told the Financial Times: "We told Ofcom last year we're willing to provide open access to our ducts...and we are working with them on how to achieve it. Although it's unlikely to be the silver bullet to get fibre to every home, open access to all ducts, not just ours, might help BT and others extend coverage and so we would like to see a future government support such a move." BT is rolling out a £1.5bn high-speed broadband network using optical fibre and it hopes to secure a return on its investment partly by signing wholesale deals with rivals."
Potentially a very interesting development for education, this. Sharing ducts has been identified as one of the potential remedies to reducing the cost of investing in NGA, alongside other mechanisms like sub-loop unbundling and access to dark fibre. So we should continue to watch this space in the hope that this and other announcements encourage further competition and better pricing as a result.

Digital Economy Bill rumblings continue

The BBC report that the file sharing provisions set out in the Digital Economy Bill could breach the rights of Internet users. In addition, the bill could create over-broad powers.

The concerns have been expressed following scrutiny of the Bill by the Parliamentary Joint Select Committee on Human Rights. From the summary of their report:
"The Bill provides for the Secretary of State to have the power to require ISPs to take “technical measures” in respect of account holders who have been the subject of copyright infringement reports. The scope of the measures will be defined in secondary legislation and could be wide-ranging. We do not believe that such a skeletal approach to powers which engage human rights is appropriate. There is potential for these powers to be applied in a disproportionate manner which could lead to a breach of internet users’ rights to respect for correspondence and freedom of expression."
The BBC report the Chair of the Committee, Andrew Dismore MP, as saying "The internet is constantly creating new challenges for policy-makers but that cannot justify ill-defined or sweeping legislative responses, especially when there is the possibility of restricting freedom of expression or the privacy of individual users."

In other coverage, the FT report that the Bill has been dealt a severe blow by the resignation of  Siôn Simon, junior minister at the Department for Culture, Media and Sport, and one the ministers charged with pushing the Bill through Parliament before the election