if connected

[BT] Openreach has announced plans to install fibre optic cable instead of traditional copper to connect houses on a 1,000-acre new-build project at Ebbsfleet Valley in Kent. At this site Openreach will offer all of its products on a wholesale basis to all UK CPs. From August 2008, CPs at Ebbsfleet will be able to support data at speeds of up to 100Mb, the fastest headline speed available to residential customers in the UK, allowing high-definition television (HDTV) channels to be watched simultaneously and enabling HDTV gaming and near-instant music downloads.

(from BT’s results today)
Go on Virgin, with your “fibre” network, why not deliver real fibre speeds like 100Mbps or even 1000Mbps per home?
And, why not deliver those speeds without your current evening volume limits that drop speeds in half if your customers use the service a little too much during one evening?

Fixed-mobile continues to be a major trend in Europe by both incumbents and competitive operators.
Latest news is from Arcor, Vodafone’s German subsidiary, that it plans to build a VDSL network. This will likely cost billions of Euros and will compete with Deutsche Telekom’s controversial equivalent network.
In Ireland, Vodafone this week announced the acquisition of Perlico, a fixed player with DSL customers. Again, this reflects Vodafone’s pragmatic country-by-country strategy on fixed. [no link as the news release doesn't appear to be on Vodafone's website yet]

As the results season draws to a close, it’s clear all the major European operators are grappling with:
1. When to invest in new broadband infrastructure and how fast.
2. Whether to invest extremely heavily in fibre to the home (FTTH) or to the building, or whether to invest less to build fibre to the street cabinet with VDSL2 then copper. The cable guys have their own DOCSIS3 upgrade on the roadmap.
3. Will consumers pay increased fees for very high speed broadband Internet access? Or will they even continue to pay what they pay now?
4. What, if any, new value-added broadband Internet services or content could be built on these new broadband networks that consumers will pay for? Will this justify the capex? Or is the capex table stakes to remain competitive in fixed broadband?
5. Do future operational cost savings justify the capex outlay?
6. Do future bundled products that are not the Internet – e.g. HDTV, IPTV, video communications etc. – justfiy the capex spend with increased revenues?
7. If FTTH/B, which technology route to go down, PON or point to point?
These are all good questions. We’ll be covering these topics in a variety of different reports over the coming months.
But for now, I’d strongly advise all European operators to read this new Jupiter report which goes a long way to helping to understand consumers’ views of broadband access:
Net Neutrality in Europe – Navigate Through Future Internet Access and Distribution Models
The report includes a segmentation of online consumers that reveals some rather startling links between consumers that object to limitations on their broadband connection and the best consumer prospects for Internet paid content and services.
Clients – I’m very happy to discuss anything in this report on a call or by email.

Swisscom intends to acquire Fastweb. There are tremendous potential implications for this offer. I’ll split my first takes into the benefits for Swisscom, and the impact on the Italian market.
Swisscom:
Swisscom gains an experienced competitive unbundled local loop and fibre operator. This will help Swisscom understand future unbundled threats in its home market and secure FTTH expertise.
Fastweb’s IPTV platform may also be of interest given the widely reported teething problems Swisscom has faced with its Microsoft IPTV solution. Microsoft needs to move quickly to ensure that if the IPTV platforms are standardised between the two companies, Microsoft wins a new client rather than losing its lead operator customer. On this, Swisscom states:

“Fastweb also has a competitive edge in terms of expertise in the strategically important field of multimedia applications based on broadband, and has been delivering IPTV to its customers since 2001.”

Swisscom sees the fixed broadband market in Italy as highly attractive, with strong growth to complement Swisscom’s steady home market. Such a home and away game is far from a unique incumbent strategy in Europe, but it is a major break from Swisscom’s previous domestic-centric strategy. Swisscom implies that this is a one-off expansion as the company reiterates a continued Swiss market focus.
Italian market impacts:
Swisscom plans to support Fastweb’s plans for an MVNO. Such support should strengthen Fastweb significantly both through cash, mobile expertise and Swisscom’s existing Vodafone relationship.
Telecom Italia now faces a mammoth competitive alliance. Fastweb must ensure that its existing partnerships with Vodafone and Sky Italia survive its change of ownership both intact and stronger. They should. Telecom Italia’s modest VDSL2 build out plans provide the Fastweb alliance with a tremendous opportunity to enhance their very high speed broadband and IPTV customer base.

Recently re-named Thinkbroadband, formerly ADSLGuide, has just published a collation of its UK speed test data. This is a good first step in providing comparison across providers (ISPs), however, this data needs to be treated with a little care:

• Mix of each ISPs’ customer base. Some ISPs have a greater proportion of customers on the old flat rate 512Kbps or 2Mbps services than others. Those can’t be compared directly with ISPs with a customer base mostly on max ‘up to 8Mbps’ services.
• Broadband connection technology. Cable, LLU and BT Wholesale-based broadband products are not directly comparable in this way. For example, take Be, mobile operator O2′s ISP arm: They offer exclusively ADSL2+ marketed at “up to 20Mbps”. Clearly, if the majority of Be customers were to experience just 2Mbps speeds [for example, they don't] that would be poor given their connections are capable of a higher maximum than Zen Internet (who only offer BT Wholesale-based ADSL1 at ‘up to 8Mbps’).
• Modem connection speeds are ignored. As the impacts of contention — lower speeds because of insufficient behind the scenes network capacity — become more important, what would be interesting to track on Thinkbroadband’s reports is how closely a user’s actual speed is to the maximum that their modem and telephone line supports.
• The tests are partially human fallible Thinkbroadband’s tests rely in part on consumers correctly identifying their ISP (although there is automatic detection it is not infallible) and on the consumer succeeding on switching off all other Internet applications while a test runs.

Either way, it is essential for consumers to be able to compare the actual performance of different ISPs broadband packages. Otherwise, consumers will opt for the cheapest package available, lacking the information to justify a higher spend, and the overall ISP market will suffer, as I wrote last autumn in this blog entry: ISPs Are All Prisoners. Their Marketing Dilemma.
Despite all of these caveats, it is still clear from this data that UK ISPs differ extremely widely in their actual performance. Some of the smaller providers do well, many of the well known brands that have entered the tail spin of mass marketing and ever lower broadband prices do poorly here.
Read the thinkbroadband item here.

Today Vodafone announced heads of agreement with BT Wholesale to offer broadband services in the UK.
This isn’t a “me too” offer, although mobile competitors Orange, Virgin and O2 have previously shown their hand.
Vodafone is clearly aware of how fierce competition in the UK broadband market has become and is minimising its capital investment and risk. With European residential broadband access arpu set to fall 54 percent, the investment return on LLU, with so many UK LLU players is far from certain. Its competitors are following the other path.
If Vodafone is a sheep, its colour is black.
And, there is nothing I can see here that would preclude Vodafone from adding a second wholesale provider, or even bar Vodafone from investing in LLU at a later date. This is a sensible first move for Vodafone in DSL.
The most common mobile operator strategy on fixed broadband is infrastructure investment and ownership:
- Orange is investing in LLU.
- O2′s parent, Telefonica has purchased LLU provider Be.
- MVNO Virgin, is part of cable operator ntl.
- MVNO Fresh, is offered by Carphone Warehouse, one of the free fixed broadband crowd.
So far, just T-Mobile and 3 are yet to announce a UK fixed broadband strategy.
Elsewhere in Europe, Vodafone is doing what it said it would at its AGM, and is tailoring its fixed broadband market entry strategy to local country conditions.
This is both highly pragmatic and differentiated from the zeal of other operators.

New entrant in the UK ISP market Be, is attempting to make waves with its LLU-based 24 Mbps ADSL2+ service.
However, despite their main home product’s name, Be Unlimited Home, it isn’t, or at least not entirely.
My interest was piqued by the new BT-based line max services which will offer up to 8Mbps nationally. Most of the ISP’s basing service on that BT wholesale offer will opt for some form of explicit or implicit usage limits, or deploy ‘traffic shaping’ to manage their costs. This is a result of the underlying charging structure that BT Wholesale have put in place.
The LLU ISPs, like Be, have more flexibility should they choose to use it.
Be correctly claim there is no explicit usage limit on their ‘Be Unlimited’ home range, so it is unlimited usage. However, there is ‘traffic shaping’, according to both their home and office product sales lines. I asked both what the difference is between their two products, as described on their web site:

Be Unlimited Home
Up to 24 meg ultra-fast broadband, Up to 1.3 meg upload speeds, Unlimited usage, £24 monthly (paid quarterly), £24 connection fee, 24/7 support hotline.
Be Unlimited Office (just differences)
£75 monthly (excl. VAT), Priority helpline, Included static IP (a 4ukp a month option with the Home product).

All three calls confirmed that traffic prioritisation is in place on their network that gives the office connection superior performance. So, Be Unlimited home, has no hard limits but plenty of softer less obvious ones. Worse, for potential customers trying to choose an ISP, the traffic management is not mentioned on their site (that I could see).
Be is missing a trick by not differentiating their service more greatly from the BT-based 8Mbps line max services.
For consumers and others, traffic shaping and usage limits are making choosing an ISP considerably more complex. Internet content distributors need to be aware of the evolving market and lobbying to make sure that broadband penetration provides the platform they need to distribute video, audio and so forth. ISPs risk incurring the wrath of the UK’s Advertising Standards Authority.
Be should tread more carefully with their product descriptions (and equally importantly their tier design) or they may not be here, or there, for much longer.