ISP Bandwidth Planning has been Remarkably Effective and Efficient

Something we learned during the Covid pandemic was that the way internet service providers engineer their networks--adding capacity in advance of demand--does work to handle unexpected demand spikes. They have been effective at building networks that can withstand even an unexpected and sudden change in the demand curve.  

On the other hand, it always also makes good business sense to invest in additional capacity only with respect to anticipated demand increases, whatever rate you believe reflects actual demand growth. AS it turns out, ISPs and their suppliers also have been good at "efficiency" in supplying new capacity.

This forecast by Point Topic illustrates the concept. Given expected demand growth, capacity growth is planned at a rate that stays ahead of demand, but not too far ahead. 

In other words, investment  is matched to revenue. The trick always is that customer segments exist. Some customers have higher demand than others. The geographic locations of those customer segments also is mixed. Business locations are mixed in with consumer locations. Higher-demand home worker locations are mixed in with lower-demand “average consumer” locations. 

source: Point Topic 

In other words, the whole network embeds assumptions about the minimum performance that must exist to handle the peak load by the heaviest users. At the same time, it makes sense not to “over-engineer” the network, adding cost that has no corresponding revenue upside. 

So much hinges on how fast any firm believes typical demand will increase. Is itr 50 percent per year; 40 percent per year or some lower figure? Those assumptions might also fail to account for improvements in networking infrastructure efficiency or the emergence of new bandwidth-intensive applications that change demand expectations.

Did a Covid Emergency Program Work? We Don't Really Know

It often is difficult to determine whether any specific government or private program to “fix a problem” actually worked. An emergency program  for broadband service might provide a case in point. 

The Emergency Broadband Benefit (“EBB”) Program, established by the Consolidated Appropriations Act of 2021 had nearly nine million participants by the end of 2021. The stated purpose was to keep low-income households connected at a time when Covid restrictions made it hard for people to go to work. 

So the U.S. Congress created a program providing up to a $50 monthly subsidy (more in tribal areas) for Internet connections, in addition to existing programs. 

The issue is how to interpret program success. The stated objective was to “keep people connected. 

The problem is that most of the people using the temporary program also were using the existing programs. So it is akin to trying to  “prove a negative” (proving something to be true--with certainty--in the absence of evidence).

Households on support programs did not disconnect. What we do not know is whether they would have disconnected in the absence of the emergency program. 

“My analysis suggests that in November 2021, Lifeline subscribers (households receiving discounted service) accounted for about 80 percent of EBB participation,” says George Ford, Phoenix Center chief economist. “With broadband adoption by low-income Americans being about 75 percent, it could be that only about five percent of EBB participants were not previously online.”

What we might be able to say is that the “EBB Program did not appear to be increasing broadband adoption by much, though it may be argued that was not the point,” says Ford. “The point of the EBB Program was not necessarily to expand adoption but to maintain it during the pandemic’s economic malaise, so perhaps this finding is untroubling.”

Still, we do not know what might have happened if the EBB did not exist.

Telefonica Selling Copper Lines to Macquarie

Telefónica is selling part of its copper network to the Macquarie fund for 200 million euros. 

It might seem a curious transaction, as the copper access lines are described as “obsolete infrastructure.” It is not clear how many access lines are part of the deal. 

But Macquarie plans to upgrade those copper lines with optical fiber access, betting it can assure itself a long-term stable source of cash flow, functioning as an alternative asset in its portfolio. 

Separately, many other telcos with copper assets have concluded they need to upgrade copper access to  fiber-to-home rapidly, as a matter of protecting asset value and revenues. In substantial part, all internet access providers are having to consider similar moves to keep pace with the competition, including BT and Virgin in the United Kingdom, for example. 

In May 2021, for example, 40 percent of U.K. homes (11.6 million) had access to gigabit-capable broadband, according to Ofcom. About 24 percent were covered by FTTH access facilities, according to S&P Global Intelligence. 

As BT steps up its FTTH deployments, competitors believe they must get there first, or get there to stay competitive. 

Monk Seal Visits #PTC22

I realize this looks like a piece of drift wood. It actually is a Hawaiian monk seal the hauled up on the beach in fron of the Hilton Hawaiian Villiage, where #PTC22 is being held, Sunday earcly evening.  

In more than 20-some years of attending PTC, this is the second time I've seen one on Waikiki. 

They don't do much but sleep when they come ashore. 

Some say this is just a log. The Hilton staff who surrounded it with traffic cones and barrier tape did not believe it was a log. 

The Hawaiian monk seal is one of the most endangered seal species in the world, according to the National Oceanic and Atmospheric Administration.

Marine Mammal Center

The population overall had been declining for six decades and current numbers, though increasing, are only about a third of historic population levels.

Hawaiian monk seals are found in the Hawaiian archipelago which includes both the main and Northwestern Hawaiian Islands and rarely at Johnston Atoll which lies nearly 1,000 miles southwest of Hawai'i. These monk seals are endemic to these islands, occurring nowhere else in the world. Hawaiian monk seals are protected under the Endangered Species Act, the Marine Mammal Protection Act, and State of Hawai'i law.

One Downside of Hybrid Business Events

One of the issues with hybird trade shows and buisness conferences is how to take a group photo when half the people are remotely attending. The Pacific Telecommunications Council head its first Advisory Council meeting of the year at PTC'22 and most attendees were attending virtually, including AC members, legal counsel, chair of the Board of Governors. 

Yali Liu, Bert Crinks, Felix Seda, Patricia Paoletta, Darren Yong, Gary Kim, Nico Grove, Jim Poole (sitting in for Alex Vaxmonsky, Isabel Paradis and Nakul Rege are in front of the screen. 

Secretariat members Sharon Nakama, Liane Kobayashi, Jancie Spencer and Nicole Fuertes also attended, as did Tara Giunta, John Gasparini, Sean Bergin, Stephan BeckertThomas “Tom” Cooper, Mark Dando, Joe Zhu, Brandon Amber, Mohamed Elagazy, John Garret, Heng Lu, Robert Mitchell, Francis Pereira, Masaaki Sakamaki, Muhammad Rashid Shafi and Una Zheng were others on the call, as I recall. 

We got our work done, but it really is harder than when we are all face-to-face in the same room. 

Home Broadband Costs in U.K. are Low, But Vary by Average Monthly Income

With the caveat that entry-level home broadband is different from the typical level of service most people purchase, or the highest-performing tier of service available, entry-level broadband prices in the United Kingdom show the relative cost of entry-level  home broadband as a percentage of monthly income. 

source: Point Topic 

Those prices range from a low of 0.35 percent of monthly income in London to about 1.4 percent of monthly income in the most-costly area. Much of the disparity is caused by differences in typical monthly income. 

With fixed prices, higher income leads to lower costs as a percentage of income.

"On Demand" is the Key for Anything "As a Service"

It never is quite clear whether connectivity as a service is “something new” or simply a new way of restating an older value proposition known as outsourcing. The traditional value of outsourcing is that it converts capital and human resources investment into a managed service.

In place of enterprises owning and managing their own resources, they shifted hardware, software and human resources to a third party. The upside for enterprises was supposed to be lower capex cost, access to the latest upgrades and fewer management chores. 

The advantage for outsourcers was creation of managed services revenues with a hoped-for higher value content and therefore higher revenues in what might otherwise be a profit-challenged business. 

The traditional issue has been that outsourcing makes more sense for a smaller entity than for a larger entity, especially when license fees are set on a per-user or per-instance model. While outsourcing (or connectivity as a service) often makes sense for small entities without the resources to manage infrastructure, it typically becomes uneconomical for a large enterprise. 

The economics of owning unified communications platforms versus buying “communications as a service” provide a clear example. A small entity often can justify paying per-user license fees for a managed service rather than owning a switch. A large enterprise always does better owning its own switches, given the alternative of many license purchases. 

Small entity Wi-Fi almost always is easy to set up and own. Larger enterprise deployments entail more engineering, so a managed approach can make sense. Still, while it might make sense to contract for site engineering, it might not make sense to use a managed services contract for maintenance. 

Perhaps a better case can be made for management of more-complicated environments where connectivity has varying quality-of-service parameters, where private networks anda public network access coexist or where application customization is required, and can be provided by the “as a service” provider. 

As always, customized software requires domain expertise beyond “connectivity.” Higher-value “as a service” helps increase offer value, but also requires supplier expertise that is costly and specialized. 

But recent moves by major connectivity providers to essentially outsource or buy “computing as a service” to support core 5G networks provides another illustration of when “as a service” has perceived advantages over “do it yourself.”

One way of illustrating complexity is the difference between onboarding “cloud computing” capabilities and ensuring “connectivity” across national boundaries and usage settings. Many enterprise or business users might want to have a simple, transparent way to add connectivity of any type by clicking on an order menu, much as they can order compute services. 

That “network as a service” capability might be as much a matter of provisioning ease as anything else. The key concept is “on demand.” Ideally, customers can dial up or dial down services and features, quality of service levels, performance levels, pricing and rating options, at any location, for any service term, on demand. 

Still, it remains debatable how much value most connectivity providers can deliver, beyond core connectivity. That is simply an acknowledgement of the traditional value of scale in a connectivity provider’s business.

It makes more sense to scale functions and features horizontally (connectivity of any type, anywhere)  than vertically (customization by industry, for example).

No matter how much talk there might be of “customization,” a few key core capabilities--privacy, security, identity; quality-assured bandwidth and latency; on-demand provisioning and “connectivity anywhere I need it” are the horizontal foundations. 

The irony is that connectivity most often has been a “service” (though sometimes it is created on a “do it yourself” basis by enterprises). The really novel change here is not “outsourcing” or even “management” but the ability to order up anything “on demand.”

“On demand” has been the industry objective for five decades, no matter what we call it.