Tag: Carphone Warehouse

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Business internet ofcom

Martha Lane Fox, Queen of the Digitally Excluded

The Government’s Digital Inclusion Champion and my newest Facebook friend, Martha Lane Fox, gave a speech at yesterday’s Parliament and Internet Conference in Westminster.

There is a group of 4 million people, including the elderly and families living on the breadline, who do not have access to the internet and who run the risk of losing out in the digital economy. Moreover the children (20% of families don’t have internet access) face being left behind their education as other children forge ahead with modern life skills.

Aside from her inspirational case studies a few points interesting points arose:

Research suggest that if internet was provided to all families currently without then it would add £10Bn to the economy.

Cost was seen to be the significant barrier to internet access amongst the poor. We were told that these same families would be able to save £300 a year by accessing cheaper products online – if they were able to do so – a tangible incentive.

Earlier in the day Carphone Warehouse strategist Andrew Heaney, in discussing the 50 pence Digital Britain tax on analogue lines, said that CW had estimated that they could lose 100,000 customers as a result.

I put this point to Martha and she agreed that there were conflicting government goals here. On the one hand wanting to reach the digitally excluded whilst on the other hand raising the barriers by increasing prices.

Note I take Andrew Heaney’s comments with a pinch of salt. The former Ofcom executive has very firmly established himself in the anti-regulation camp here – gamekeeper turned poacher!

In walking the corridors of Westminster there is definitely a feeling of the last days of empire. However MLF has a two year remit which seems likely to span different flavours of Government. Her appointment appears non political with support from both sides of the House of Commons and so her role will hopefullybe safe under the Conservatives (should they win the election 🙂 ).

MLF will have to use all her powers of influence and persuasion to make her mark here and we all wish her every success.

To conclude, MP and Communications Group co-chair Derek Wyatt came up with the idea of getting industry to help educate the digitally excluded by providing help with training. This met with the universal approval of the meeting and is an initiative that is well worth everyone’s support.

Categories
broadband Business internet mobile connectivity

O2Be and the Ever-Growing Complexity of the Broadband Service Landscape

Met with O2/Be last week to discuss their LLU broadband play. O2 has been winning awards for their consumer broadband service. They have an ADSL2+ solution that already supports Annex M.

For the uninitiated Annex M allows a service provider to trade some downloading speed on a broadband service in exchange for a faster (up to 2.5Mpbs!?) upload.

O2/Be have unbundled around 1,240 exchanges and so have one of the largest LLU footprints in the UK. They also claim to have 500,000 customers so in understanding the options for the provision of broadband service in the UK they are one of the companies that need looking at.

A complex web is being woven in the UK broadband landscape. Clearly O2 is serious. When they bought Be the LLU estate numbered no more than 30 or so exchanges. A lot of cash has been expended to turn it into the figure it is today.

O2 is telling the world it wants a seat at the table and is willing to put up a stake. It does have a different approach to Carphone Warehouse, the leading LLU player in terms of size, in that it only offers the broadband connectivity. Currently O2 relies on Openreach for the underlying analogue line.

Having looked at the economics of LLU myself it makes a lot more sense if you are taking the voice path as well as the ADSL. There are other benefits with LLU in that an ISP can tailor its own services and thus offer a differentiation in a crowded market. It still needs subscriber numbers to make it pay and at the consumer end it is unlikely that the service provider will want to offer too many variants – simplicity of broadband service means lower costs to sell, provision and support.

This brings me on to another point and that is that BT is now introducing FTTC which at 40Mbps down and 5Mbps up blows all the LLU operators ADSL2+ offerings out of the water, at least in terms of speed. There are then only two players in the game – BT and Virgin with their cable proposition. Other players will have to line up behind one of these two as a wholesale customer and note that Virgin does not yet have a wholesale proposition.

Now FTTC is in its early days of rollout but the footprint is likely to be the same Market 3 footprint as the unbundled exchanges, ie the densely populated parts of the country that make business sense.

So I think for the moment that LLU players have a market window that is probably no more than two years for their unbundled services. Two years will scream past, if the past five at Timico are anything to go by.

Coming back to O2/Be their play thus far has been very much into the consumer market. They look to be a solid player and I have heard good things about them from peers in the ISP community. Their sortie into the business market is through an L2TP play with relative newcomer Fluidata. I have nothing to say against Fluidata, not having worked with them but they are small and O2, if it is serious at the wholesale, game will want to do it in-house.

What their long term strategy is though is a difficult one to call. Owned by Telefonica they should have the deep pockets to play. Play what though? When there are likely to be only two players and one of them is BT then you either have to be satisfied with being a reseller of BT or Virgin or you buy one of them. I can’t see the regulator letting O2 buy BT, it would be ironic if they did.

They might let them buy Virgin though.  And then where does that leave Vodafone, a business that is only dabbling in broadband at the moment…

The UK communications industry has never been as exciting a place to be as it is now. Any informed comment/feedback to this post will be read with interest.

Categories
Business internet

Carphone buys Tiscali

I know this is big news in every single media outlet there is today.  CPW has bought Tiscali for £236m making it the second largest broadband provider.

So what can I add to all that is being said?  Whilst the “big six” is now the “big five” there are still hundreds of small ISPs out there serving niche, mostly business to business customers.  The time will come very soon I think that this base of hundreds of service providers will have to shrink. 

Many ISPs are now 10 – 15 years old having started during the initial dial up boom.  Most are “owner operated” with proprietors facing a difficult time ahead and the need to find capital to invest in new capacity and at the same time facing the cost pressures applied because of consumer ISP pricing strategy.

Another tier of B2B ISPs is going to emerge as clear winners.  Just being an ISP will not be enough. These will be specialist Communications Providers able to satisfy the complete range of business communications requirements. These companies already exist but the gap between them and the rest will become wider and the day will come where most of the small businesses will disappear.

Categories
broadband Business ofcom

Who Pays for Next Generation Broadband?

Interesting enough debate at the Waldorf Astoria hotel in London today with the latest Telecommunications Executive Networking bash. The subject was Next Generation (NGN) broadband and specifically who is going to pay for it.

 

The debate was prompted by the BT position that the UK regulator OFCOM does not allow the company to make return on investment to justify spending money on an NGN network.

 

Panelists included Andrew Heaney from Carphone Warehouse, Kip Meek from the Broadband Stakeholders’ Group and David Campbell, Director of NGA at Openreach. It is actually a complex and highly politically charged subject when you take into consideration that BT (Openreach) has Universal Service Obligations.

 

In short the assembled masses, the great and the good of the UK Telecommunications industry, concluded that they wanted an NGN network to be privately funded.

 

A few interesting points came out of the meeting. Of the two hundred or more attendees the majority of them were equipment vendors. There can’t have been more than ten or fifteen hands up from ISPs. I’d have thought that the ISP community would have been more interested than this turnout suggests. Perhaps this is because there are few (if any) ISPs who could afford even to consider investing £12 billion in a high speed broadband network. No one is going to be able to do it alone.

 

There seemed also to me to be a level of ignorance as to why a high speed (100Mbps) network might be wanted. What applications would drive this they were asking?  In my experience at Timico once people get given higher speed access they find ways of using it. The move from 2Mbps ADSL to 8Mbps (up to J ) ADSL Max prompted a large increase in average usage per tail.

 

Andrew Heaney could see that a NGN would be required but that this wasn’t going to be for some time to come. He intimated that he would be looking to begin looking at such a network in a 2 – 4 year timeframe. He also suggested that traffic was doubling every two years. This is slightly slower growth than others in the industry are forecasting.

 

Whilst the chicken and the egg come into this calculation to some extent my rough back of a beer mat calculation goes like this.  Traffic doubling every 2 years is the same as being given double the download bandwidth in the same timeframe. On this basis the arrival in 2008 of (up to) 24Mbps  should prompt the need for 48 Mbps in 2010 and 96Mbps in 2012. This isn’t particularly scientific but it does provide a rough guide to the way that market demand could go.

 

There isn’t a plan on the table today for 96Mbps but 50Mbps is available now from Virgin. If anything would be geared to make the board of BT press the investment button for Next Generation broadband it would be seeing their market share going to Virgin.

 

Practically everyone in the room said they would be prepared to pay the additional £8 a month for NGN broadband that the £12bn investment is supposed to mean. Of course this is easy for a room full of well paid company directors to decide, The Openreach position is that the value in the market has disappeared and that consumers have been lead to expect faster broadband for less money.

 

We shall see. Interesting times ahead.