Networks & Network Providers

I took part in a panel discussion today about networks. Over seventy industry leaders from across the UK. Was FTTH (fibre to the home) a good investment? Would FTTC (fibre to the cabinet) be cheaper and just as good? How do network operators reduce their costs?

I was surrounded by people all intensely interested in networks. One person (a Welsh MP) pointed out that the EU defined broadband as anything above 150kb/s and some other organisation had defined it is anything above 256kb/s (from memory). The UK government had so far not defined what it means by “broadband” and therefore the ambition to get broadband into every home by 2012 probably achievable simply by defining UK broadband as anything above 32kb/s.

However….During the discussion it was easy to get caught up in the hype and technology and how you could get 40Mb to the home. Would the customer pay for it, and how much?

Consumers don’t by broadband because they want broadband – sure early adopters and techys might get into a “my broadband is bigger than your broadband” type of discussion, but, as the actress said to the bishop, it isn’t about size its what you do with it.

Consumers buy broadband as a means of getting to content. In fact going back to the basic telephone service people wanted to talk to other people. The networks provided the connection and the consumers the content.

Technology and assets give companies a barrier to competition. Their ability to control and use the technology allow them to dictate the way it is used and who uses it.

The record industry is a good example – recording studios and vinyl pressing plants were expensive and inexcusable technologies for new companies to invest in and entre the market. They were certainly not in the reach of the consumer. But as new technologies came along so it eroded this control/power. Pressing plants were sold off as what differentiated one label from another was not how well the record was made but what was on it.

Broadcasters had technology but also had the benefit of limited radio spectrum. The licensing regimes of the UK and Europe, meant that it was difficult for new entrants to make the investment and take the risk to bid for a license. This additional barrier (lower in radio broadcasting) kept them in control and complacent, beyond the natural life of their business models.

Anyway back to networks… These too are starting to lose their power as one network (fixed line or mobile) starts to look very much like the other. Why chose one over another: –

1. Does it work?
2. Is there a cheaper one that works just as good?
3. Is it hassle to get/maintain?

What has changed for the network operators is that the desirable/compelling/valuable content that customers want to get to, is not user generated, point to point of voice and data.

So what do network operators (service providers) need to do? Do they want to simply survive or do they want to transform?

Railway operators never got into air transport. Yet they were wealthy organisations at the time and could have easily expanded. Enormous synergies in scheduling time tables, selling tickets, reservations, engineering operations, logistics of rolling stock/planes, and staff roles. But they were rail operators, stuck with the technology and not the transport market need they serviced.

Networks operators follow the same route, married to providing networks and not the fulfilment of the consumers’ demand for content access.

So how do I see the network providers evolving, as apposed to becoming a low cost commodity utility? One thought…

The telephone directory was a way of customers finding out information about what (or in this case who) was on the network. As the internet grows (around 5,000 pages/second in 2008) it is increasingly difficult for the consumer to find what they want. Google (fast as it is) is throwing up a mountain of information to sort through. How many pages am I going to visit before I find the information I was after?  You Tube. Very funny clips, but if I have to spend 50-minutes watch dross, to find a 3-minute gem, I’m going to start to rely on my friends sending me a link in an email. Much more efficient!

As content (quality, professional production) gets onto the internet, how does the consumer no it even exists, let alone where to find it.  Is there a role for the network provider to be trusted recommender or aggregator of content? Is that worth paying for? Collect information on what I like and sell it on, but let me see some benefit. And not just in the adverts

I think it is almost impossible to predict what the consequences will be if 40+Mb/s is delivered to the home but some indicators now are not good.

Of the population that can get broadband, the take-up is way less than 50%. So not the “must have” technology.

Of the people that do have broadband around 50% get less than 1Mb/s download speed. Assuming that they are putting up with this (as they continue to pay) if not delighted, then 4Mb/s would probably fit their current needs not 40Mbit. “What about HDTV?” I hear you cry. Does anyone want to stream live HDTV over the internet?

• If it’s a film or recorded programme = download it
• If its news = why HD
• If its sports = why are you not watching in on a broadcast channel

Take the scenario that there are two adults and two teenagers, each simultaneously watching a streamed HDTV programme. 10,000 lines in an exchange area x 4 40,000 video streams. Will the backbone cope –

“Some will be watching the same programme?” Even if they are if two people watch the same if they start at different times they are different streams.

“Cache the content in the local exchange!” for how long? 3 hours of HDTV per person adds up to a lot of storage.

I’m sure 40Mbit to the home will come. It could enable social change (maybe even a revolution) with people working from home and a growth in cottage industries, a reduction in travel and CO2 emissions. Our kids are already used to interacting and socialising and would probably be easy to adapt and adopt this working environment. But will we look at the society that creates with pride?

Mobile TV - update

I’ve just read an article in Broadcast Engineering (July 08) title “Get mobile”. The article, better written than my meanderings, is not out of tilt with what I said in an earlier blog. However, one thing it highlights is simultaneously broadcasting on DVB-H (the mobile standard) as DVB-T (the television standard). This seems a waste of radio frequency spectrum.
If you can buy a simple USB dongle to put digital television on your PC why not use the same technology to put it on your mobile.
The article also highlights the different screen formats on different mobile devices that each would need their own format. Although ignored in the article the implication is that there would potentially be multiple DVB-H versions to cover each format. Again, a waste of valuable spectrum.
Why not use DVB-T on mobile devices and make the device reformat for the screen it has. This would be an efficient use of the spectrum – will make obsolete the older mobile devices, so playing to the mobile phone manufacturers’ obsolescence strategy.
Some may say that this loses the opportunity to personalise the content and adverts. However, there is no reason why interactivity and personalised ads and content could not be delivered via cellular network. This network could down load the ad of content to the mobile device and insert it into the broadcast ad break at the appropriate time.
DVB-T is being deployed across Europe and will probably have a better coverage than any DVB-H network will for some time.
The only problem is if you are on a train (for example) and watching a programme and moved out of one transmitter area into another how would you maintain the TV experience during the transmission. Cellular network already does this if you are on a call. A simple reference table that said you are in this cell’s coverage and the best DVB-T signal is “A transmitter” as you moved into the next cell site this could trigger the DVB-T tuner to move to the “B transmitter” if that gave a better signal.

Video to the mobile phone

Video to the mobile phone has been tried for a number of years now.

That is broadcast TV, download, streaming or on demand with mixed technical success and largely commercial failure for one reason or another.

Products and services have to fulfil a customer's need (at a price point) to be successful. So is there a need and at what price?

Mobile phone manufacturers have a strategy that is forcing the issue and creating hype around the technology but who is going to make money?

First the mobile phone manufacturers strategy. Make a mobile phone. Then make smaller phones, make it in different shapes and colours, then add polyphonic ring tones to the next generation, two band, tri-band, mp3 players, cameras, more storage, more computing power etc. With each generation, a new function gradually makes the older phones less desirable and obsolete, causing the consumer to up grade.

Network operators have fed this beast by using new phones to tempt people from other operators and upgrades to keep them. Who wins out of this Nokia Samsung, Erickson and the others keep their factories in operation so they are. Network operators? Probably not as customers shuffel around the networks they probably tend to maintain a status quo. The consumers? Maybe if they value the phone and its functions above the higher services charges the operators have to maintain, in order to pay the manufacturers.

Anyway, adding features to a phone was totally in the hands of the manufacturer. For example adding a camera to a phone didn’t require the network operator or anyone else to change their operation or service. Neither did adding an MP3 player. That is not to say that business did not see the opportunity to sell downloads and data services around these. However, put video on a phone and you are faced with some significant technical, operational and commercial differences.

First the bandwidth required is much higher if you are going to do anything more that preloaded video. Secondly you are going to need content that people want to watch.

As well as being obvious they don’t sound too hard and they are not, except in one area and that is the commercial area of who pays, how much and to whom?

Obviously the mobile video network needs to be paid for. That is technically possible as the many trials have proven. Payment comes from usage – the more you use the more you pay – but to complicate this simple model put yourself in the position of a TV broadcaster who wants to put there channel on mobile. They could pay through revenues they get for advertising around their programmes. Well that would be OK if the current research didn’t show that 2 to 3 minutes is about as long a programme people want to watch on their phone. Put adverts in front or interrupt the video with an ad and the consumer doesn’t watch. Bigger screens like those on the PSP and iPhone will push up the viewing time (as long as the batteries last)

Make the consumer pay-per-view or subscription. If Wimbledon tennis on and you’re a fan then you might, for a fortnight, but the rest of the time? Event specific subscriptions may have a place, but will you be able to see the ball on such a small screen?

So as we look at who pays for the network and why, we have crossed over into the second problem of content. BSkyB has paid for the Premier football rights, in order to attract customers to their satellite services. They are not going to be pleased if you can see every goal on your mobile for a few pennies that cover the network costs. They or the Premier league will also want their value recognised and rewarded. And its not just a case of taking Sky’s pictures and putting it on mobile. The picture needs to be zoomed in so you can see the action – possibly graphics need to be created so the off-ball actions can be seen – and therefore the costs just went up for Sky.

User generated content where your friends in night club send 20 seconds of video to your mobile phone to show you what a great time they are having is a low cost from of content that has a place in the market. Its very network heavy in terms of bandwidth as the point to point transmission can be almost the same as a point to multipoint of a broadcast.

The result is the mobile phone manufacturers can’t get video to the mobile off the ground globally as they might like - there are some parts of the world that have started. Some manufacturers have diversified to resolve all the issues with launching a mobile TV service to the extent that Nokia can supply all the technology for encoding, managing and transmitting mobile video content. They just can’t get the content that people want and they haven’t resolved the commercial model for how anyone (other then them) make money at it.

The next step for manufacturers, like Nokia, maybe to launch their own mobile video service, buy content rights and put their money where their mouth is.