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.