The Business Case for Fiber Just Got Better

According to TVover.net, Verizon customers in West Virginia have suffered outages because thieves now are after copper, and telecom cables contain lots of copper. The most recent copper cable theft occurred at the end of January, when a twenty-foot-long section of cable was stolen, causing an outage which affected not only residential customers but also the emergency departments in the area. Verizon has lost a significant amount of money responding to the thefts. This used to be a problem confined to developing countries.

The upshot, however, is a potential uptick in costs to maintain copper plant, plus financial penalties for violating service level agreements, plus increased customer churn.

More iPhone Ripples

Though there has been speculation about the ultimate impact the iPhone will have on the wireless business, one effect is undeniable. Other phone makers are going to have to respond, pushing device development in a new direction. Samsung Electronics Co., for example, has unveiled a new mobile phone that features some of the sleek design and functions of the iPhone.

The Ultra Smart F700 operates using a touch screen and also runs a version of the Mac OS X operating system. The phone also features a slide-out key pad as well.

Wireless Incumbents Will Claw Back

Over the next five years, incumbent mobile service providers will start to reclaim lost market share to virtual operators, in large part because advanced features is growing and low cost calling simply isn't enough reason to go with a virtual operator, says Juniper Research. In fact, Juniper predicts the trend will occur in both developed and less developed mobile markets.

Even in the hot mobile space, demand for simple, low cost calling is declining while use of, and demand for, advanced features is growing. At the same time, basic calling needs increasingly can be met other ways. So the issue, as it always is, is a complex assessment of "value for money."

At one point, the equation was simpler. No-frills voice services delivered what was perceived as lots of value for less money. The value equation now is much more complex, including text, Web access, personalization, dual-mode operation, even the style and feel of a handset, and Apple's iPhone is the best current example of that.

Users these days now have a more complex, richer set of inputs that form the value mobile communications represents. Fashion, for example, now is an important facet of the value.

So though the trend has lagged similar developments in the wireline space, new value requirements are bubbling up in the wireless space as well, with obvious implications for providers of no frills services.

Mobile Over the Top

BridgePort Networks, Oberthur Card Systems and CounterPath Solutions have announced commercial availability of MobileSTICK, a USB stick-based way to provide mobile calling and texting "over the top" from any broadband connection.

MobileSTICK launches a PC softphone, secured by a SIM card that uses the existing mobile phone number to make and receive phone calls, SMS and multimedia (MMS) messages. The user’s existing mobile remains active and continues to utilize its existing SIM.

So the obvious impact includes enhanced ability for mobile operators to displace even more landline traffic, without building a network. Tangential benefits include creating a new revenue stream and offloading traffic from atmospheric to wired networks, conceivably helping reduce new capital investment

Almost as a side benefit, MobilSTICK provides a sort of "one number" feature for some portion of a user's calling and communicating.

Over the Top, Everywhere

One reason virtually every service provider now worries about "over the top" apps that compete with carrier vertically bundled applications is that every customer segment now has access to over the top services. In the consumer market there are independent VoIP, video, IM and portal-based applications disassociated with any particular carrier. In the small and medium business space there are hosted PBX, managed security and business VoIP offerings. In the enterprise there are managed services put together by large system integrators. Note also that Cisco has become one of the largest managed service providers. On other fronts there is growing pressure to unlock mobile phones so any device can be used on any network (GSM, CDMA or Wi-Fi). That's not to say we have reached the end of all vertically-bundled apps. It is simply to note that horizontal, unbundled apps grow with each passing day. And that the ability to customize, in the business space, and personalize, in the consumer space, increasingly becomes a primary value add.

Monetizing "Bring Your Own Access"

Fon, the sharing network of consumer end user Wi-Fi access points, is intriguing for lots of reasons. For one thing, it represents a new twist on building an access network. At the heart of matters, end users pay for some forms of access (cable modem or Digital Subscriber Line, for example)and create some forms of access (in-home Wi-Fi)and then contribute their access assets toward a network. Fon also is interesting because like lots of other developments in Web services, "nobody owns it" or "plans it." Each single Wi-Fi point can be withdrawn from the network at any time and Fon basically is given rights to use, but does not itself "own" any of the access points.

Equally interesting is how a business model can be constructed around the created network.

Separately, BT has been building its own Wi-Fi network to support a mobile element for its fixed broadband and voice services, without buying any spectrum. That also is a novel approach. So rumors that BT wants to ink a deal with Fon for access to hotspots in the U.K. market are significant because it would create a revenue model for Fon. It also would move a tier one carrier further down the road of novelty. Carriers routinely buy capacity from other carriers. But up to this point, how many have purchased capacity from end users, aggregated voluntarily into makeshift networks?

Wi-Fi arguably fills a niche between nailed-up (optical, cable modem and DSL) bandwidth and fully-mobile forms of broadband access. Fon and BT might just suggest a niche revenue model as well.

No Way Do You Have Enough Bandwidth!

So how will service providers realize they haven't got enough access bandwidth? Their customers will start calling them to complain. Not very scientific, perhaps. But most service providers will find themselves running as fast as they can to keep up with levels of demand that simply stagger the imagination. "We are on a path to providing 30 Mbps to every home," says Canby Telecom president Keith Galitz. "Our current capex budget calls for that." Now, remember than Canby Telecom has just 11,000 access lines in service.

"10 gigabits per second is going to be the speed in your network to handle unicast digital video," says Charlie Cano, ETEX engineering manager. ETEX has 17,152 access lines in service. And what if a particular service provider has to face a cable competitor with DOCSIS 3.0 channel bonding? "Then you need to plan for 50 Mbps over the next 12 months, and as much as 100 Mbps beyond that," argues Steve Ulrich, Cisco Systems consulting engineer.

Still think Verizon is wrong about fiber to the home? Equally to the point for service providers serving business customers: think T1s are going to cut it?