No Broadband Equality: Density Still Matters

Observers of both U.S. and U.K. efforts to stimulate innovation and competition in the core communications markets will note the vastly-different regulatory approaches. In the U.K. market, where satellite is a significant factor but cable is not, regulators have chosen an aggressive wholesale unbundled local loop regime.

The U.S. market has seen the same initial thrust, only to be followed by an alternate reliance on inter-modal competition between cable and telephone industries, rather than a primary reliance on wholesale, unbundled local loop.

So far, the U.K. market model has proven more friendly to competitors. But physical constraints still are an issue, irrespective of regulatory framework. In thinly-populated areas with low density, the cost of providing broadband remains hig

If BT’s 21st Century network provides evidence, it is that one does not change all access cost inputs simply because a network converts to IP in place of TDM protocols.

In fact, it appears that wholesale access cost for partners who want to use BT’s transmission network to serve rural or suburban customers will be as much as three times higher than similar features will cost in dense urban areas, says Keith McMahon, a U.K.-based blogger.

There’s nothing terribly surprising about this. Infrastructure always costs more, per household, per business or per person in lightly-populated areas.

There’s simply more construction cost and physical media to support, and less ability to share common costs (ports or software licenses, for example), in less-dense areas. IP doesn’t change that.

The implications for competitive providers who lease access from BT and provide retail services to customers under their own names (analogous to U.S. competitive local exchange carriers) are clear enough. Competitors will choose to place their own facilities where customer density is greatest.

The largest nationwide providers, including Carphone Warehouse, Sky, Tiscali, O2 and Orange will find it worthwhile to interoperate at the Tier 1 MSAN level, which gives them coverage of 1,200 exchanges and about 70 percent or 17.7 million of the 25.3 million U.K. homes.

U.K. cable networks largely overlap the areas served by Tier 1 MSANs, for obvious reasons: that is where most of the customers are. Cable networks pass by around 11.8 million homes or 47 percent of total U.K. homes. As McMahon lays out the competitive scenario, about seven companies will contest for customers in 11.8 million homes, or just half the market.

About six companies likely will compete to serve 5.9 million homes or 23 percent of the market. In all likelihood, just one company, BT, will be in position to serve 7.6 million homes, or about 30 percent of total homes.

Population density and loop length still are key impediments to high-bandwidth services, no matter what the regulatory framework.

Web, Internet, Unanticipated Consequences

As John B. Horrigan, Pew Internet & American Life Project associate research director points out, the way people use the Internet today was not necessarily the way policymakers were told people would use it more than a decade ago.

In 1993, thinking focused much more on applications related to education, health care and improving democratic discourse, for example, that would use two-way video.

Today, online interactivity means something different. It is commerce, transactions, content gathering and, unexpectedly for many, content production, or user-created or user-generated media.

Simply put, the way content, information, gossip and tastes get produced and distributed is changing. That sort of thing used to be highly centralized and expensive. These days, anybody can speak; anybody can publish; anybody can participate.

That implies a different sort of information economy in the future; a new way of getting messages out; a new set of influencers to work with.

Also, the emergence of user-generated content also shows another common artifact of transformational technology: it gets used in ways even its creators did not anticipate. We should now be preparing for something else that frequently occurs with technology transformations.

Change seems less significant than many would anticipate, in the early stages. But the changes are far more significant as the shift takes hold. We are about to hit that stage.

As one example, what do you think the primary purpose of an enterprise data network is today? What do you think the purpose will be in five years? How do enterprises create networks today? How do you think they will be created in five years?

Tom Austin over at the Gartner Group might surprise you with his answers. He argues that the primary purpose of an enterprise network in five years will be to support social networking (think Facebook). And where enterprises these days tend to create and operate their own data networks, in the future they will find themselves outsourcing a number of those functions, if not the entire basic architecture, to "compute in the cloud" suppliers.

The reason social networking turns out to be so important for enterprises is that it allows very-large organizations, or highly-distributed groups of people, to discover what skills and insights the other people have, in ways that have been impossible up to this point.

One researcher or consulting team might be working on a problem someplace, and not know that somebody else, someplace else, has insight that can help solve the problem at hand. Social networking will help organizations and people create those links. Today, much of that insight is simply trapped inside organizations because nobody can conveniently discover whether it exists and where it exists.

The move to a highly-distributed computing framework is driven by mobility. When most people are mobile or distributed, a highly-decentralized computing architecture, assuming only the existence of Web browsers and broadband access, is highly useful and efficient.

Google Docs & Spreadsheets Use up 84%

After a year, the data seems to suggest that users are figuring out how to use Google Docs and Spreadsheets, according to Compete data. Usage has been up sharply since June 2007, for example. In its first full year, Google Docs and Spreadsheets has seen an 84 percent year-over-year increase.

So why use Google Docs and Spreadsheets? Some people might like the fact that usage is free. Others might like the fact that Docs and Spreadsheets is easy to use. More important, perhaps, is the online sharing and collaboration aspect, which seems to be on the verge of greater importance in today’s workplace.

Personally, I use Docs and Spreadsheets because I do a lot of blogging, and Microsoft Word seems frequently to require translation to "text" to post cleanly on some sites. If I am going to have to do that, I'm simply not going to bother with Word.

Which Future for Telcos?

What name would you choose to describe "who you are" if you were an executive at any leading incumbent telecom company? Sure, you might come up with "converged communications and entertainment provider" or something like that, but the term is unsatisfying and probably will confuse most mass market customers in any case. BT already is trying the "information and communications" company tagline. The problem with such efforts as it isn't so clear how the tags differentiate "telcos" from large system integrators, large software houses offering hosted services, cable companies and possibly others.

"Experience provider" is a buzzword some toss around, but it lacks much descriptive power, beyond suggesting an approach to creating services and features. "Application provider" likewise hints at something important, but again is rather too broad to be useful.

But no matter how the nomenclature efforts finally resolve themselves, it seems clear enough that something important is changing. Even if the unique, irreplaceable assets any "telco" owns are the actual pipes and software used to create communications capabilities over those pipes, that will not be a key part of the future identity.

One way or the other, "applications" are going to figure into the description in some key way. Which is odd, in a way. To a very large degree, telcos have always been "application" providers, in the sense that voice is an application running on a network optimized to provide it.

The big change now is the sheer range of applications providers create or deliver.

The big conundrum is that the irreplaceable and unique assets "telcos" possess, aside from their regulatory prowess, is the pipes and associated software that makes those pipes useful. And yet it seems inevitable that "telcos" want to be known as something else more directly associated with "apps."

If you can configure this out, please, make sure all the rest of us know. Maybe somebody can capture the multiple values in one easy to remember phrase.

iPhone: Some Glimmers of Enterprise Adoption

SAP, Salesforce.com and scores of smaller developers are letting sales and finance teams work away from the office on their iPhones, says Reuters. SAP, in fact, has broke with precedent by introducing a version of its upcoming customer relationship management software for the iPhone before launching versions for mobile devices from Research in Motion and Palm.

In SAP's case, its own salespeople demanded it, according to Bob Stutz, SAP SVP.

There still are some issues many of us believe will be resolved over time. "Push" email and over-the-air synchronization are some of the features a really enterprise class iPhone would have to support. Integration with Microsoft Outlook is an issue, but basically a licensing deal.

Some potential business buyers probably are holding out for a model that runs on faster wireless networks, but that is a problem being resolved by Apple and at&t already.

One barrier some users might continue to have, though, is the relatively higher error rates for entering text, compared to other devices with keypads.

O2 Says iPhone is Share Changer

Three out of four buyers of the iPhone in Britain will be new O2 customers won from rival mobile networks, according to the new head of O2, which has an exclusive deal to sell the iPhone in the U.K. market.

"Over time, three out of four customers of the iPhone will be new O2 customers, because you can only get the iPhone by becoming a customer of O2," says Matthew Key, incoming O2 chief executive.

Google's Embrace of Failure

At the recent Stealth Communications Voice Peering Forum, a group of us were asked to speculate about where the telecom industry was headed. Panelist Rich Tehrani said Google was going to be a major factor. As part of a vigorous discussion that followed, one attendee argued the opposite position, that Google has pretty much failed at just about everything it has tried aside from search.

One point that wasn't made (as the moderator I had to let the panelists have at it) is an observation many observers have made about the process of innovation, and what is necessary to spur innovation inside just about any company.

And that point is that the rate of failure has to accelerate if truly significant innovations are to be discovered. Failure is an unavoidable part of the process of experimentation. And the issue, many observe, is that "failure" traditionally is not treated kindly inside most large organizations, including large telcos.

One reason many observers have little expectation that telcos will lead the innovative process is precisely the cultural aversion to failure. Telcos need to make big bets to get any meaningful revenue lift. That need to place big bets also acts as a brake on innovation, though.

What seems an insane culture at Google might actually be viewed as a deliberate attempt to "accelerate the rate of failure." The more failures, the more the organization learns. The more it learns, the more chance it can discover something really important.

Failure, in other words, is not the end. Failure is part of the process of figuring out what works and what doesn't. And Google is looking for large returns as much as any other major entity in the communications and media space. The difference is that Google is highly tolerant of experimentation and failure as a basic part of its attempt to "win big."

That isn't to say every idea Google tries to implement seems "logical" or even prudent. It does seem quite "messy," quite frequently. But there is a method to the madness, as they say.

That isn't to say Google is guaranteed success in its endeavors related to media and communications, going forward. It likely will fail in public ways in the future. That should not lead us to conclude Google really is overhyped as a force in the communications business because it fails so often.

I will be more concerned when Google stops failing so much. Because that will be the signal it really has ceased to be a force for genuine innovation with life-changing and market-affected impact.