Measure Outcomes if You Can, But Can You?

Productivity measurement as it applies to intellectual or professional work is notoriously hard to measure, if it is truly possible at all. For starters, Person's Law and the Hawthorne Effect  illustrate the concept that people who know they are being measured will perform better than they would if they are not being measured. 

Pearson's Law states that “when performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates.” In other words, productivity metrics improve when people know they are being measured, and even more when people know the results are reported to managers. 

Performance feedback is similar to the Hawthorne Effect. Increased attention from experimenters tends to boost performance. In the short term, that could lead to an improvement in productivity.

In other words, “what you measure will improve,” at least in the short term. It is impossible to know whether productivity--assuming you can measure it--actually will remain better over time, once the near term tests subside. 

 

Many argue, and studies maintain that remote work at scale did boost productivity. One might argue we actually have no idea, most of the time. 

source: Deloitte 

That workers say they are more productive is not to say they actually are more productive. 

Also, worker satisfaction is not the same thing as productivity. Happy workers can be less productive; unhappy workers can be more productive. This is an apples compared to oranges argument, in all too many cases.  

The other issue is that we equate worker attitudes with outcomes. Happier workers might, or might not, be more productive. All we can measure is a subjective attitude. More happy or less happy does not necessarily correlate with outcomes. 

In principle, one could have happier but less productive workers; less happy but more productive workers. And most workers prefer remote work; hence the obvious subjective reporting that “we are more productive when working remotely.” Maybe so, maybe not. The point is that a subjective statement is not a measurable fact. 

Now some argue  the traditional focus on measuring inputs makes less sense than ever. There is merit to measuring outputs, rather than inputs. Either way, as we shift from quantifiable outcomes to qualitative outcomes, our measurement tasks do not become easier. 

“Previous models of productivity-focused on several now-outdated approaches to measuring the ‘quantifiable’ results of an employee’s work,” Deloitte consultants say. “This included measurement of outputs, such as units and/or deliverables completed, and production line management’s (and its white-collar equivalents) assessments of hours worked by watching over a sea of workers, cubicles, and offices.”

Still, measuring inputs--for the most part--tends to overshadow business outcomes, as difficult as that may be. 

But when “outcomes” can be defined in ways that--though believed to contribute to business outcomes--might or might not do so. 

Perhaps it sounds logical enough to substitute “desired outcomes and outputs of work visible to employees in order to achieve them.” The hard part is ensuring that the substituted outcomes really have some causal relationship to business outcomes. 

Perhaps not everything an entity produces can be measured quantitatively and directly. Perhaps everything is not “the bottom line.” Qualitative outcomes matter, even if we cannot measure them. 

So, yes, outcomes matter more than measurement of inputs. The problem remains: intellectual or non-tangible output is hard to measure, if we can measure it at all. By all means, measure outcomes if you can. 

The issue is whether we can, and to what extent.

Is Web3 Utopian?

Web3 proponents want to build a decentralized web “where users control their own data, identity and destiny.” In substantial part, blockchain and cryptocurrencies are seen as examples of Web3. 

According to its proponents, Web3 should be “open, trustless and permissionless.” It is hard to be against such a notion. People now generally believe open source software is a good thing.

“Trustless” refers to the ability of all participants to interact publicly or privately without a  third party gatekeeper. 

Permissionless means anyone can participate without authorization from a governing body. 

source: Fabric Ventures 

In some part, perhaps a substantial part, the motivation is to avoid huge concentrations of power such as we have seen with the emergence of “hyper” apps including Google, Facebook and Amazon. 

It is easy to agree with the sentiment, as it was easy to agree with the sentiment of early internet pioneers that the goal was the ability for any single person to communicate with any other person and share information. 

Some might say that vision was utopian. The internet and web now are fragmented behind national firewalls in some countries. Some applications are banned in some countries. And in all countries, a few apps--and firms--tend to dominate all others. 

As with the emergence of cryptocurrencies, we already see signs that central financial authorities are moving to gain control over such forms of value or payment. 

If Web3 is about ownership, you might see the problem. The impulse to create a system where individuals own their own activity records and data is a reaction to the monetization of human activity on the web. The thinking is that if money is to be made, the creators of that value should be able to do so. 

Perhaps non-fungible tokens provide an example, to some extent. Perhaps not. While it is true that NFTs can secure value by preventing unauthorized duplication, personal ownership is not essentially in conflict with the creation of other assets--such as platforms--to scale transactions. 

In other words, there is no essential conflict between an artisan creating and selling an object and the creation of marketplaces to make that easier. 

source: the Skimm 

No matter what visionaries may wish, powerful interests will seek to create, control and own  revenue flows Web3 might produce. And scale matters, after all. The existence of small business does not preclude the existence of “big business.” 

The argument is that the new architecture will prevent such control. 

source: Digital Native 

We might be skeptical. In some ways, we might liken the sentiment for an open, universal web to the dream of a world without rulers or social and economic classes.

What Contribution Does FTTH Make to AT&T?

AT&T added a million fiber-to-home fiber-to-home accounts in 2021, the fourth consecutive year the firm has done so. AT&T says it boosted broadband revenues up 5.4 percent  with average revenue per user  growth of 4.2 percent. 

Consumer fixed network revenue climbed 1.4 percent, adding $3.2 billion in additional revenue. 

To be sure, AT&T still makes most of its revenue from mobility services. In the fourth quarter of 2021, AT&T earned $41 billion in revenue. Mobility represented $21 billion of quarterly revenue, or about 51 percent of total.  

Business fixed network revenues were $5.9 billion, or 14 percent of total. 

source: AT&T 

Consumer fixed network revenue was $3.2 billion, or about eight percent of total revenue. 

Warner Media generated $9.9 billion, or 24 percent of revenue.  Latin America contributed about $1 billion in revenue, or two percent of total. 

Direct business and consumer revenues driven by access and other fixed network services amount to about 22 percent of AT&T revenues, compared to mobility at about 51 percent of total. 

Just how much revenue contribution overall hinges on the AT&T optical fiber network is a matter of some interpretation. To the extent that the optical fiber distribution networks supports the small cell mobile network, which will grow in importance over time, the value of optical fiber investments is more than what is shown by direct business and consumer service revenue. 

Indirectly, the FTTH investments also support the Warner Media streaming content business. 

Still, to the extent the fixed network now supports the key mobile business, plus supporting the business and consumer fixed network business, the relative revenue contribution from FTTH arguably understates the strategic value of those investments. 

Perhaps consumer FTTH, by itself, does not double consumer segment revenues. But investments in consumer FTTH also support the small, medium and enterprise portions of the business market, plus underpinning the small cell mobile network that will be increasingly important going forward. 

Still, the argument can be made that the fixed network retail business hinges on home broadband. To have a business at all--simply to “keep the business”--AT&T and other telcos have to shift to FTTH. 

In its competitive battle for home broadband customers, AT&T’s fortunes depend on three key drivers: fiber to home coverage; take rates and any average revenue per account gains that could supply, with the primary variable being coverage. 

The reason is simply that AT&T cannot challenge dominant cable TV providers for installed base and market share until the company has much-greater FTTH coverage. Simply put, AT&T and most other local exchange carriers cover too few homes to go head to head with cable home broadband. 

To be sure, AT&T and other telcos are pushing FTTH deployments at an accelerated pace. AT&T expects to have 30 million home locations passed by FTTH by about 2025, up from about 15 million to 15.5 million at the moment. 

source: AT&T 

Keep in mind that AT&T passes a total of about 57 million homes. So the company’s current FTTH coverage is between 26 percent and 27 percent of its total passings. 

AT&T will not be able to go head to head with cable, across the full range of home broadband speeds, until it has FTTH available to most homes in its fixed network footprint. By 2025, when AT&T expects to  have 30 million FTTH passings, it will be able to compete head to head in about 45 percent of its footprint. 

Take rates are arguably the second most-important variable, as there is a difference between an active account and a location able to buy. Over the past year, AT&T has boosted its FTTH take rate from 34 percent of passings up to 37 percent of passings. 

The goal is to approach 50 percent take rates, which would exceed the general take rate of about 40 percent telcos have been able to garner over the past couple of decades. 

Finally, it remains to be seen how average revenue per account changes as more customers take FTTH home broadband services. At the moment, AT&T’s bottom tier FTTH home broadband service (exclusive of taxes) runs about $55 per month. The mid-range tier costs about $65 a month, while the top gigabit tier sells for $80 a month.

In addition, AT&T has added two premium tiers offering 2-Gbps symmetrical and 5-Gbps symmetrical access for $110 and $225 per month, respectively. The mix of accounts could strongly affect AT&T revenues. 

The lowest FTTH tier--offering 300 Mbps--covers more than half of the U.S. home broadband buyer base. Another 17 percent of customers buy services operating between 200 Mbps and 400 Mbps. 

source: Openvault  

Assuming lower-income households take advantage of support programs, those households reached by AT&T could have internet access at 300 Mbps for about $25 a month. 

That is why the pace of FTTH upgrades matters so much for AT&T. To reach parity with cable TV operators, which AT&T defines as market share greater than 50 percent and installed base approaching 50 percent. Without nearly-ubiquitous FTTH deployment, those goals are likely unreachable. 

To be sure, competition at the lower speed levels--up to about 100 Mbps, is an opportunity for Verizon and T-Mobile. Verizon has a limited fixed network footprint of U.S. homes while T-Mobile has had zero share of the home broadband market. 

Even if those two firms use fixed wireless to reach the lower and middle tiers of buyers, that is about 65 percent to 70 percent of today’s home broadband market. 

For AT&T and other telcos, though, the pace of FTTH deployment will be the story. 

AT&T FTTH Metrics Improve, But Deployment Pace and Take Rates Really Matter

In its competitive battle for home broadband customers, AT&T’s fortunes depend on three key drivers: fiber to home coverage; take rates and any average revenue per account gains that could supply, with the primary variable being coverage. 

The reason is simply that AT&T cannot challenge dominant cable TV providers for installed base and market share until the company has much-greater FTTH coverage. Simply put, AT&T and most other local exchange carriers cover too few homes to go head to head with cable home broadband. 

To be sure, AT&T and other telcos are pushing FTTH deployments at an accelerated pace. AT&T expects to have 30 million home locations passed by FTTH by about 2025, up from about 15 million to 15.5 million at the moment. 

source: AT&T 

Keep in mind that AT&T passes a total of about 57 million homes. So the company’s current FTTH coverage is between 26 percent and 27 percent of its total passings. 

AT&T will not be able to go head to head with cable, across the full range of home broadband speeds, until it has FTTH available to most homes in its fixed network footprint. By 2025, when AT&T expects to  have 30 million FTTH passings, it will be able to compete head to head in about 45 percent of its footprint. 

Take rates are arguably the second most-important variable, as there is a difference between an active account and a location able to buy. Over the past year, AT&T has boosted its FTTH take rate from 34 percent of passings up to 37 percent of passings. 

The goal is to approach 50 percent take rates, which would exceed the general take rate of about 40 percent telcos have been able to garner over the past couple of decades. 

Finally, it remains to be seen how average revenue per account changes as more customers take FTTH home broadband services. At the moment, AT&T’s bottom tier FTTH home broadband service (exclusive of taxes) runs about $55 per month. The mid-range tier costs about $65 a month, while the top gigabit tier sells for $80 a month.

In addition, AT&T has added two premium tiers offering 2-Gbps symmetrical and 5-Gbps symmetrical access for $110 and $225 per month, respectively. The mix of accounts could strongly affect AT&T revenues. 

The lowest FTTH tier--offering 300 Mbps--covers more than half of the U.S. home broadband buyer base. Another 17 percent of customers buy services operating between 200 Mbps and 400 Mbps. 

source: Openvault  

Assuming lower-income households take advantage of support programs, those households reached by AT&T could have internet access at 300 Mbps for about $25 a month. 

That is why the pace of FTTH upgrades matters so much for AT&T. To reach parity with cable TV operators, which AT&T defines as market share greater than 50 percent and installed base approaching 50 percent. Without nearly-ubiquitous FTTH deployment, those goals are likely unreachable. 

To be sure, competition at the lower speed levels--up to about 100 Mbps, is an opportunity for Verizon and T-Mobile. Verizon has a limited fixed network footprint of U.S. homes while T-Mobile has had zero share of the home broadband market. 

Even if those two firms use fixed wireless to reach the lower and middle tiers of buyers, that is about 65 percent to 70 percent of today’s home broadband market. 

For AT&T and other telcos, though, the pace of FTTH deployment will be the story.

U.S. FTTH Payback Model is Changing

This chart showing AT&T fixed network average revenue per user for AT&T consumer connections might surprise you. 

At the end of 2020, the chart shows, AT&T had about 14 million broadband customer accounts in service and had some five million FTTH connections. 

That might be low. AT&T itself reported it had 5.5 million FTTH accounts in service at the end of the third quarter of 2021.  

Other estimates for the same period suggest AT&T FTTH passed 15.5 million home locations in late October of 2020. “Passings” mean a customer can buy. AT&T says it had a take rate for FTTH passings of 34 percent in 2020. 

In 2021 take rates seem to have climbed, and might have reached 37 percent.  

source: Digtl Infra 

Keep in mind that AT&T had about 57 million total homes passed in its fixed network footprint in 2021. Even if AT&T spends less than $1375 per active account location, and perhaps in the $500 to $600 range for passing (but not activating) a home, the payback model almost certainly has to rely on a number of subtleties.

In some cases, AT&T may already have usable fiber-to-node facilities in place, which should reduce the cost of extending fiber to the home. It is possible that in some locations government subsidies could amount to perhaps $300 per line. 

But some of the financial value also has to be attributed to enterprise, small business and small cell deployments that can use much of the same distribution fiber. Presumably some of the payback will come from lower operating expense as well. 

Still, with overall ARPU for combined copper, FTTN and FTTH facilities at just $58 a month, once has to assume some amount of voice and video entertainment revenue is involved. 

At a high level, AT&T has been saying FTTH payback models work at $50 a month ARPU and penetration of 50 percent. 

If one assumes that the mainstay has to be home broadband, with average household broadband spending of about $40 to $50 a month, with digital subscriber line unsustainable longer term at about $40 a month, then one is almost forced to assume that a substantial portion of AT&T’s FTTH revenues (stand alone, with zero voice or video contribution) will be closer to $60 a month. 

AT&T FTTH charges for 300 Mbps service already are at $55 a month (ignoring taxes). Service at 500 Mbps costs $65 a month and 1-Gbps service retails for $80 a month.  

Even assuming every FTTH customer only buys service at 300 Mbps (more than half of all U.S. homes buy service between 100 Mbps and 200 Mbps), revenue with zero contribution from voice or video would be above $50 a month.

Will Connectivity and Cloud Resources Eventually be Sold Through Exchanges?

Many ideas in the connectivity business do not catch on immediately. Some of you may remember Enron Broadband and its effort to create a bandwidth trading exchange. That attempt failed, partly because of criminal behavior, partly because the value proposition for potential partners was not clear, partly because all the costs of creating liquid exchanges had not developed to the point where it was easy and affordable. 

But Moore's Law operates. All of the computing resources we need get cheaper with time. Open source has become ever more present as a networking concept. 

Cloud computing and connectivity have grown increasingly intertwined. Networks are becoming virtualized. Newer tools such as blockchain change the certainty and ease of settlements between trading partners. 

Where we might well be headed is the creation of connectivity and cloud resource ordering and provisioning that is very much akin to the way e-commerce sites work generally. 

It should not come as a surprise. The goal of networking for 50 years has been "bandwidth on demand." Now computing is available on demand. 

Perhaps nobody in the business denies, in principle, that over time, we will move towards services and applications on demand. 

This is a precursor. 

Physics Operates--Though it Seems Impossible--When "Noseriding"

Some things we know are possible, such as “noseriding a long surfboard, have physics that seemingly remain unexplained. Since a rider’s center of gravity on a longboard is normally somewhat back of the center of the board, a nose ride visually looks as though it is the prelude to a disaster. 

Obviously, physics is at work, allowing one hundred to 150 pounds--or more--to be on the extreme leading edge of a nine-foot board that otherwise requires a balance point center to slightly center rear. 

Still, it is possible, and happens all the time. It is the Coanda effect, achievable only when the board is moving relatively fast, on a wave that is moving relatively fast. You cannot do this on a slow, mushy wave. 

In other words, much as an airplane wing creates lift, the Coanda effect creates enough lift to allow a rider to do something that otherwise would result in falling off as the board dips its nose into the water and ends the ride.

The design of the board can enhance the ability to nose ride, creating more lift under the nose and drag on the tail that counterbalance the apparently-unbalanced position of the nose rider. 

source: Reddit