Friday, November 26, 2010

NextGen10 conference report (day 2) - a curate's egg?


Day 2 kicked off with a keynote from YouView Chairman Kip Meek on how the service formerly known as Project Canvas is developing. He was keen to distance YouView from perceived competitors like Google and Apple TV: "Google is providing the Internet on television, YouView is an enhanced television experience". It's planned to launch in June 2011, later than intended as a result of the level of regulatory interest in the project.

To me, it was the wrong presentation for this audience. We know streaming TV services work, the iPlayer and others have proved this. We also know that people would prefer to watch TV on, well, their TV, rather than their PC - obvious really; lean back vs lean forward content and all that. YouView's "clever bit" is managing to negotiate the commercial and regulatory minefield that is broadcast TV to develop an aggregated catch-up service. Impressive, but hardly a subject of much direct relevance to NextGen10 attendees. The technology in the set-top-box is quite clever, in that it records most popular content from broadcast so it can be served locally rather than delivered via the Internet, to reduce the load on ISPs' networks. But I imagine other providers' boxes will do this as well?

But the claim that the service will help to address the digital divide seemed entirely misplaced, especially as while the set-top-box includes browser functionality, it only allows access to a "controlled environment". Sounds like a missed opportunity. YouView looks to me to be essentially a retail platform to sell Sky+ equivalent devices to people who don't want a Sky subscription. Rather like Freeview, which was often described as offering digital TV to people who didn't want a satellite dish (or, to out it another way, Radio 4 listeners). Nothing wrong with that as a business model of course, and I think they're probably on to something, just don't pretend it's something it's not. Given the BBC's involvement, isn't there something missing here about the provision of Internet access through the device being in the public good, in keeping with the BBC's principles?

This was followed by a choice of three workshops, I attended the one on NGA network roll-out. This involved a presentation by Keymile on the opportunities offered by hybrid copper and fibre roll-outs, to maximise bandwidths and performance at the same time as minimising costs, an important consideration in the current economic climate. The presentation raised the practical question of whether current application usage really requires FTTH bandwidths. I can see the point, but such a view risks a step backwards, given the growing impetus around broadband provision generally (and the commitment in other countries such as Australia to FTTH). An interesting point was made about backhaul costs though: whereas capex costs mainly comprise installation costs, opex costs are dominated by backhaul costs - which is where infrastructure sharing (if you can of course, see my notes from day 1) and re-use of existing networks has such a potentially important role to play. Reducing backhaul costs in this way could make fibre installation more viable?

There followed a panel session with representatives from the four BDUK superfast broadband pilots, as announced in the October 2010 Comprehensive Spending Review: North Yorkshire, the Highlands & Islands, Herefordshire and Cumbria. Still early days, all are at different stages and considering different approaches. The point was made that to the Highlands & Islands, the "big society" is nothing new - they've always had to get on with things themselves. NYnet are leading in North Yorkshire, with the region in a strong position thanks to NYnet's infrastructure already providing backhaul into rural areas (via a school in one instance). Cumbria flagged the importance of aggregation, suggesting their approach would be "PSN Plus", where PSN refers to the Cabinet Office's Public Sector Network programme. Herefordshire seemed to have the most to do, by its own admission beginning with a "blank sheet of paper". This elicited a rather cutting comment from one member of the audience: that securing public funds with such a blank sheet was a very impressive achievement. Ouch!

Three more workshops followed; I chose the one on the regulatory environment and state aid, as these aspects present key challenges to the potential repurposing of existing networks (for example, using schools' broadband connections to provide backhaul for rural broadband projects). Complicated stuff for sure; Paul Brisby of Towerhouse Consulting LLP began by highlighting the importance of regulated products and servces: they account for more than 50% of ISPs' opex, and Openreach generates over 30% of BT group EBITDA (earnings before interest, taxes, depreciation and amortization). The key regulatory issues and challenges in 2010 include physical infrastructure access (PIA, or duct and pole sharing), sub-loop unbundling, FTTH regulation (fibre unbundling) and generic ethernet access.

Ginny O'Flinn, Senior Associate in the Olswang EU and Competition Group, provided a very detailed overview of state aid issues for NGA networks, her presentation is well worth a look. She flagged the EU's September 2009 guidelines on state aid in relation to broadband networks, as well as the EU's state aid decisions in relation to NYnet (N746/2006 published in February 2007 and N559/2009 published in June 2010) and Cornwall (N461/2009, also published in June 2010). The EU fully recognises the benefits of broadband and bases decisions on balancing positive and negative effects, as well as proportionality, or the extent to which any aid provides the minimum necessary to achieve the intended objectives. There was some discussion of the practicality of BDUK's intention to obtain a blanket state aid approval for broadband projects (possible and is being explored currently, but individual regional assessments will still be required) and the timescales involved in obtaining decisions. These can be lengthy but not too ridiculous; Cornwall applied in July 2009 and was approved in May 2010. NYnet has been involved with three state aid applications, the two mentioned above took 4 and 12 months respectively, while the application for the South Yorkshire Digital Region Broadband Project (N157/2006) took 14-16 months.

And so we headed into the final straight...Dale Barnes, Acting Director of Advanced Technologies and Innovation at Virgin Media gave an overview of their NGA activities and pilots. Virgin Media downstream traffic has increased by over 215% in three years. 750,000 customers are paying for 20Mbps+ services, and almost 100,000 homes are connected at 50Mbps. Virgin Media are looking to ensure a 10:1 contention ratio across all services in future and have established the Stop the Broadband Con website to encourage greater honesty and transparency in relation to connection speeds...or to throw the bandwidths of competitors' offerings into sharper relief, depending on your point of view. Half of the UK will have access to their 100Mbps service by 2012 which will cost £35/month as part of a bundle or £45/month as a stand-alone service. 10,000 registrations for the 100Mbps service were received on the first day registration opened. Challenges identified by Dale included business rates, wayleaves and the PIA product set as currently proposed by BT (see my notes from day 1 for more on this). There is an opportunity for power companies to play an important role by opening up their infrastructure, and Openreach needs to accept inputs from community networks as well as larger players.

The last keynote of the conference was from Simon Towler, Head of Broadband Policy  Programmes at BIS, who reiterated Ed Vaizey's remark from the previous day that the government's broadband strategy paper would be published soon. This will bring all the current strands of activity together. He also explained that the government's definition of the "best superfast broadband in Europe" would be about more than download speed; this of itself doesn't illustrate the actual user experience and having an effective, competitive marketplace is another important facet in describing "best in Europe". The government doesn't want to constrain technology choices as it sees all having a role to play. The private sector should lead investment while the government's job is to get the regulatory and investment framework right. BT's reference offer for access to its ducts is due in January 2011 with a similar offer for access to poles to follow in May. The audience expressed further concern over the potential disconnects between the procurement exercises for BDUK's pilots, BT's infrastructure sharing offer and the timing/availability of European funding, an issue that will require further deliberation I think.

Of the three remaining workshops, I chose the one exploring different ways of extending fibre to the community, which included delivering town centre and wider NGA via a CCTV fibre optic network, further insight into the PSN and solutions provided by Rutland Telecom, who cited an instance of a village with a population of 104 being quoted an excess construction charge (ECC) of £166K to deliver broadband, which clearly is simply not viable. An option Rutland Telecom can provide is installation of a DSLAM on a telephone pole, to deliver broadband to the premise over the remaining copper loop.

Unfortunately I missed the final panel session and conference close, but I'm not sure I could have taken in much more anyway, as my brain was already full ("every time I learn how to set the video I forget how to drive the car" - a Homer Simpson quote I have much sympathy with). In summary, it's clear that while we're moving forward in many regards, some serious issues remain to be addressed, mainly in relation to funding (the current amounts committed aren't sufficient) and continued obstacles from BT which could severely hamper progress. The next few months are going to be crucial, with BT's reference offers particularly significant, and plenty more fun and games to come I'm sure. Watch this space.

Thursday, November 25, 2010

NextGen10 conference report (day 1) - plus ça change...


...plus c'est la même chose? A little unfair perhaps, as there have been many developments since NextGen09, which were reported over the two days of the conference. Also, attendance was at capacity, a clear indication of the ever increasing recognition of the importance of broadband access. But at the same time it seems some very significant obstacles and problems remain to be addressed, which is concerning.

In his keynote address on day 1, BT's Bill Murphy was at pains to point out just how much BT were doing in support of UK NGA: "no other company in the world is investing as much in fibre without public sector support or a regime that allow for greater returns", apparently. An interesting line to take. The second part of his statement is clearly a not very oblique reference to (criticism of?) the UK's regulatory regime. But surely any public sector support (which he would appear to be asking for in the first part of his statement) should be conditional upon appropriate regulation, to ensure taxpayers' interests are addressed first, with shareholders' interests second? BT wants the best of both worlds here it seems, to have its cake and eat it. You can't have it both ways?

Recent developments in Cornwall ("the most ambitious rural broadband project in the world") were also flagged in Bill's presentation, about which more later. A couple of interesting additional facts and figures cropped up too: of the £830m announced for broadband in the Comprehensive Spending Review on 20 October 2010, £230m will come from the digital switchover, with the remainder from the BBC licence fee, to be allocated in £150m chunks annually from 2013. This last bit was news to me and two things struck me: a) it's not very much money, given the scale of the task (which we already knew), and b) we've got several years to wait before these funds become available. All of which puts significant additional pressure on the government's already ambitious target to ensure the UK has the best superfast broadband in Europe within the lifetime of this parliament.

Some interesting points were made in the subsequent panel session, the first of the conference, on approaches to NGA. Dave Carter, head of the Manchester Digital Development Agency, pointed out that many families now have no landline, relying totally on mobile telephony (an issue Becta also encountered as part of its Home Access programme). FTTC solutions are thus likely to be of little relevance to them. For more on this, see Ofcom's 2010 Communications Market Report, pages 337-338 - apparently 15% of households did not have a landline in Q1 2010. The point was also made that it's expensive for operators to work with multiple small community projects, and the thorny issue of business rates on fibre was raised for the first time here too. It struck me that in relation to this first point, publicly owned or community interest, not-for-profit vehicles could provide a solution, if they were purposely structured to deal with such small-scale projects, as well as being equipped to procure wholesale services on an open access basis from telcos that can't or won't deal with small concerns. A man in the middle if you like. NYnet is a good, successful example of this kind of procurement vehicle; could local authority/regional public networks be restructured to function similarly?

Next up was Peter Ludin, Vice President EMEA of Draka Telecom Solutions. One of his slides showed a pie chart revealing that approximately 75% of fibre deployment costs relate to expenditure other than equipment - civil works, installation and project management being the main costs here. He also flagged the importance of planning, using geographic data and software tools to develop cost estimates to inform investment. There seemed to be a parallel with the approach JANET(UK)'s LLU reports can facilitate, in terms of planning a local authority or regional WAN based on BT exchanges.

The next panel session, on open access networks and infrastructure sharing, was very revealing. Chris Smedley, Chief Executive of Geo set out the limitations of what's currently proposed in terms of opening up access to BT's ducts and poles, as announced by Ofcom last month. This was news to me, Pauline Rigby has an excellent account of the detail of this on her site here and the issue was also reported by Computer Weekly. This issue (specifically, that bidders don't know what their input costs will be) was a key reason why Geo and others pulled out of the Cornwall NGA project, leaving BT as the only bidder, and places a question mark over the likelihood of effective competition in procurements for the four BDUK pilot projects if it remains unresolved. An additional issue here is that other sources of funding for the pilots (for example, from Europe) are time limited and will be lost if this impasse isn't revolved prior to the commencement of tendering exercises for the pilots.

Chris also set out Geo's definition of open access networks, which seemed right on the money to me, more on this in this excellent Geo white paper. Chris said that a network that's truly open to all players is "the best place for public sector investment" and I entirely agree. Gareth Davies, Ofcom's Competition Policy Director was also on the panel and did his best to explain why the duct and pole sharing proposals are the way they are, but it did seem to me that Ofcom were (as ever?) rather caught up in their own peculiar and impenetrable internal logic on this one. My guess is that this is an inevitable consequence of the complexity of their relationship with BT, but unfortunately it makes the lack of progress very frustrating for all the other parties involved, who simply want to get on with building the NGA networks that they know their customers want.

Next up was Ed Vaizey MP, Minister for Culture, Communications and Creative Industries, reprising his appearance at NextGen09 when he spoke for the opposition. He gave an overview of the government's intentions for this area, flagging that we should expect a strategy document (the coalition's take on the previous administration's Digital Britain report I guess) shortly. Malcolm Corbett, CEO of the Independent Networks Cooperative Association (INCA) launched their Beyond Broadband guide to NGA, which provides an excellent, concise summary of developments to date and future opportunities in this area. Malcolm was followed by Adrian Wooster, founder of the JON Exchange, which was launched earlier this month as "a wholesale marketplace that bridges the gap between service providers and the panoply of European access network owners" - a single source of alternative access networks, providing easy and consistent access to customers and a viable opportunity for network operators to demonstrate their open access credentials. Hopefully it will provide a solution to the question of how to persuade major players like BT, Sky and Virgin Media to allow their content to be delivered over networks they don't own and maintain themselves. I think this has to happen if the open access model is to gain credence and succeed in overcoming the inherent inertia in the current way of doing things?

The last keynote of day 1 was from Matthew Taylor, Chief Executive of the RSA, on the importance of involving our communities in broadband developments, highlighting the important evangelical role of the public sector in championing the benefits of broadband. For a further excellent insight from the RSA, have a look at this brilliant animation on changing education paradigms. Unfortunately I missed the last workshop, so that concludes my account of the first day. My report on day 2 to follow as soon as I've managed to decipher my scribbles. Back soon...

Wednesday, November 17, 2010

Ed Vaizey on an open internet and net neutrality


An interesting speech from Ed Vaizey today (related BIS press release here), setting out the UK government's take on net neutrality. A well-informed speech, making reference to developments elsewhere in the world such as the FCC's four/six principles (as discussed previously here) as well as approaches taken in Canada and by the European Union (see this previous post from April of this year).

The importance of transparency, openness and the need for ISPs to be able to innovate and experiment are common threads across all these developments. It's also good to see the acknowledgement that ISPs already manage traffic and have been doing so for years, a fact which I think comes as news to some campaigners. If the principles above are properly adhered to by all parties, there is little reason to intervene. I agree with this in theory, but I do have some concerns over how such principles might be ignored in practice. But let's hope for the best.

Coverage from the BBC ("ISPs are supposed to treat all web traffic equally - serving only as a one-size-fits-all pipe for whatever data is passing from content providers to end users"...hmmm...are they really?) and the FT (Internet blow for Google and BBC: "Internet service providers should be free to favour traffic from one content provider over another as long as they inform customers"...surely their current network management already favours certain types of traffic?) rather over-simplifies the issue, and  further convinces me that the term net neutrality is actually no longer helpful, given its negative connotations and the increasing complexity of the debate ("two-sided markets" anyone?). Has the internet ever been truly neutral? I don't think so, and neither do the ITIF.

I think Neelie Kroes nailed the heart of the matter best back in April:
"...over time, we should continue to monitor whether traffic management is a spur to future network investment, and not a means of exploiting current network constraints."
A difficult call though. Very close monitoring will be essential if they various parties are to be persuaded from misbehaving; without this, intervention and regulation are inevitable.

Play nicely, children?