Tuesday, July 18, 2006

IMS: Investing Many Shekles

Is it just me or does any one else see that IMS is over hyped and too complex?  At the last two trade shows I attended, Globalcomm and the Cable-Tec Expo, all of the major vendors and many smaller ones too where hyping IMS as the next big thing.  What next big thing I ask?  I walked around from booth to booth asking vendors what services would justify the huge expenditure to purchase and operate IMS solutions.  I invariably received the reply that any service can be provided on any device.  That’s nice, but they did not describe a service or even a business model to increase ARPU.  Lucent Technologies demonstrated a roaming service for TV.  How often do you go to another person’s house and where they don’t have similar channels?  Are you going to pay extra for that luxury that is probably limited to your MSO?  Longboard announced yesterday “MediaRoam” that allows a video stream to roam between wired and wireless networks.  They tout that a person can be watching the news at home then continue watching the broadcast in their car as they drive across town.  MediaRoam can truly be the killer app for IMS—pun intended.

IMS is not needed for these fixed-mobile convergence (FMC) applications.  There are many ways to implement it without the complexity of IMS.  Voice is the most frequently discussed application for IMS because it has the most potential for enterprise and mobile users.  Voice FMC can be used by wireless carriers to replace wired connections in the enterprise saving companies the expense of maintaining a wired and wireless infrastructure.  Sprint-Nextel is charging ahead in this area as we speak.  Sprint can charge customers an extra fee per subscriber and for the dual-mode handset.  Although they are going to implement the service with IMS, it is not necessary.  

The case for non-business mobile users is less obvious because this group is looking to utilize free or cheap Wi-Fi access to reduce their minutes on the mobile carriers’ network.  These users can be tacked on as incremental revenue to the business case for enterprise users.  Sprint-Nextel can offer this service through its MSO partners as a feature on their digital telephone service.  Each member of the household can have their own number that rings their dual-mode phone over Wi-Fi when in the home or at a hot-spot.  The MSO can charge an extra $10 per month per person.

The true benefit to IMS is the delivery of all services over IP regardless of the underlying transport medium along with unified service creation, management, and billing.  The question is whether there is a positive ROI for this value proposition.  Providers of IMS products need to find a way to articulate the true value proposition for IMS instead of hyping all of sorts of cool applications that may or may not increase ARPU.  The current implementation of IMS by many vendors is complex because it is full of servers, software, and interfaces which screams complex to purchase, implement, and maintain.  Vendors need to take a page from their own slides on convergence and simplify the functions into as few boxes as possible.  Also, they need to simplify the message to carriers on the real value proposition and business case because now it reminds me of EU regulations comprising thousands of pages of documents.

Cool applications that improve the business case will eventually be developed to take advantage of the capabilities that a single silo service creation environment provides.  These applications will be multimedia in nature but evolve from applications that we use on our PC today.  Social networking and content delivery everywhere will drive IMS once it is deployed by mobile carriers. The vendor that understands this pragmatic approach will be the one most successful with their IMS products.

Tag: IMS, Sprint-Nextel, Lucent Technologies, Longboard

Monday, July 17, 2006

Net Neutrality Gets Emotional

The title is actually a misnomer because net neutrality has been an emotional issue from since Ed Whitacre uttered his famous statement in Newsweek. The latest round of the net neutrality battle is not taking place in the halls of Congress, but in cyberspace at the CNET site between Molly Wood and Scott Cleland. Molly takes off the gloves to present a more emotional than factual discussion of net neutrality. In her article she blasts Scott Cleland of NETCompetition.org and his blog of providing a false and manipulative interview on NPR. While I do not personally know Scott, I can say that he as built a sound reputation as an industry analyst which is why he often is interviewed by PBS, The New York Times, and other widely respected publications. His analyses are typically thorough, unbiased, and accurate which is why I find Molly’s attack emotional and incredible. Scott makes no mistake of disclosing that communications companies may sponsor his work and sites. If he was a lap dog for the industry as Molly proposes, would he have taken a shot at MCI calling it one of the largest failing CLEC when he surely knows that WorldCom was the failing CLEC that acquired MCI. I derive my revenue from the industry. Does this mean that I am an industry wag? I think not.

Scott’s arguments and web sites present a good discussion of net neutrality that are not often present is discussions by so-called journalists like Molly Wood. We both support net neutrality and no government regulation of the Internet. The absence of regulation has spurred innovation and investment in the Internet. Injecting regulation into the Internet just as we did with telecommunications is a recipe for disaster just like we have with current telecommunication policy.

Check out Scott’s site and blog for some very insightful articles. The most amusing thing on the NETCompetition.org site is the counter of how many days without a net neutrality problem although I question the accuracy of the counter that changes every second for a day. Maybe Scott could clarify his algorithm. I do not agree that we have sufficient competition in the industry. In some areas like business services I would agree, but for residential and last mile access, I would like to see at least one more provider per market. If you are into the whole net neutrality debate, go on over to the CNET web site, read Molly’s editorial, then click on the TalkBack link to read the banter. Wade through the chaff to find a few tidbits of insight.

Tag: net neutrality, MCI, Verizon

Who Will Deliver Broadband to Small Markets?

I am going to take a break from the net neutrality discussion to talk about something else that is not happening where government should have a role.  I am talking about how to deliver broadband services to cities where the major telecommunications providers do not see a sufficient return on investment to build broadband networks.

For 20 years, I have been chasing the dream of delivering fiber-to-the-premises (FTTP) for various carriers and equipment manufacturers, and the case studies were always marginal at best in any situation except for Greenfield applications.  Equipment costs keep coming down and ARPU goes up with the inclusion of bundled services which make FTTH and FTTB an economical business proposition for fairly densely populated areas.  That is great for urban and surrounding suburban cities, but where does that leave cities with under 200,000 inhabitants not close to a major metropolitan city?

Small local exchange providers have banded together in places like Iowa to get economies of scale in purchasing FTTP equipment so they can prove-in broadband network deployment.  Home builders have seen it as a differentiator for their products, and they have partnered with firms that can engineer and build the networks.  I have come to believe that the best method to drive broadband in small markets is for the municipality to take an active role in creating a communications infrastructure framework.  Notice that I said framework not network.  The framework is an all encompassing plan that guides policy in delivering wired and wireless services to homes and businesses in the community.  It contains elements of public and private partnerships to deliver advanced broadband services to the city.  

Municipalities have the advantage of being able to take a long-term view to investments and payback.  Return on investment does not have to be measured strictly in revenue from the network.  There are benefits to the economic development of a community because the network can attract knowledge-based companies with higher paid workers.  Communications networks improve the ability to educate a community by allowing citizens improved access to schools and other educational institutions.  Government can be more efficient and transparent by taking advantage of the Internet.  These are the intangible benefits that a municipality can include as its ROI.

The question that the framework should address is who will build this network?  Early in the twentieth century when the electrification of America was a concern the government financed much of the wiring of rural America with the Rural Electrification Act.  Municipalities formed their own electric utilities and cooperatives to deliver energy to their community.  This act is still in existence today (Do bureaucracies ever go away?) and expanded to include broadband services.  Unfortunately it is not sufficient to serve communities with more than 20,000 inhabitants.  Communications is a part of a city’s infrastructure so the concept of a municipal communications utility is a valid one.  The purpose of this utility should be to develop a framework and act as a catalyst for the building and operation of a broadband network.

I carefully chose the word catalyst and not carrier because the government should not be in the business of selling communications services.  Actually some states, such as Colorado, have laws prohibiting a government entity from becoming a carrier.  So if the city cannot sell services, then how will they build and fund the network?  There are a variety of different business models that a city can utilize as its framework to build a broadband network.  Any network built by any public or private funding should allow for non-discriminatory access to any service provider.  This competition creates lower prices and greater utilization of the network creating economies of scale by amortizing any expenditure across multiple service providers.  

The exact content of the framework is dependent on a city’s objectives, demographics, geography, and existing infrastructure.  Architecture of the framework will contain a metro backbone and last-mile access.  Many cities built fiber rings as a metro backbone early this millennium paid for by bonds.  They leased bandwidth on these rings to carriers building out wireless and wireline networks to reach homes and businesses.  They receive revenue from the carriers utilizing their bandwidth, and the carrier delivers the service and bills the user.  Build-out of the last mile can be accomplished by a CLEC wanting to reach a business or a third-party working with home developers to build and sell triple-play services.  Mobile service providers can utilize the backbone to build their network to provide mobility services to users in the community.

This is just a few ways that a city can create an advanced broadband network without taxpayer subsidies.  The city may build and own some facilities funded by bonds and revenue from carriers, but they do not actually sell the service.  They act as a pipe for any service provider that sees an opportunity for their business in that community.  Incumbent and competitive carriers alike can take advantage of the facilities.  Where the city actually funded the network, it may eventually see a positive cash flow from service providers over time.  

Cities with less than 200,000 people can have a broadband communications network without spending taxes or waiting for incumbent local exchange providers to build it.  Establishing a communications infrastructure framework will guide the development of the network with the city facilitating the development with infrastructure developers and service providers.

Tag: municipal broadband networks