FTTH Council Europe: “Get down with the kids” vs “This is business not philanthropy”

Posted by Julian Herbert Thursday, February 12th, 2009

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Along with four other colleagues, I’m attending the FTTH Council Europe Conference in Copenhagen. It seems busy: at least as busy as last year in Paris, if not actually busier. There is no shortage of enthusiasm for broadband access over fibre either, though one or two presentations this morning cooled the ardour of the enthusiasts and proselytes.

It all started well. Keynote speaker Don Tapscott the author of Wikinomics, Paradigm Shift, Grown Up Digital and other well known works which have since passed into cliché, talked for an hour about the benefits of self-organisation. He urged the world to embrace new learning through collaboration. He talked about the on-going discussion he has been having with fellow academic Mark Bauerlein, whose book The Dumbest Generation contends that Americans kids (or at least the generation which has grown up with the internet) have smaller brains because of the internet.

Tapscott counter-argues that the internet has created the first ‘global generation’ in history which collaborates and innovates more than ever before. It was a clarion call to ‘get down with the kids’, to understand how this generation is using the internet and being innovative with it, to learn, to organise and to reduce carbon emissions. The irony of his standing in front of 2,000 telecoms executives in person, rather than as a hologram, and lecturing us all, was not lost on him. He has to make a living and anyway, he is in Copenhagen en route to Toronto from hob-nobbing with world leaders at the WEF in Davos.

The internet is not an unconditional force for good – he recognised that. We still need representative democracy, we still need to have human contact, we still need to go outside and kick a ball around and we still need restraint on the sort of content which can be available to the young and vulnerable. However, he urged the conference to keep the faith, to go forth and to promote high-speed networks, capable of delivering things like high definition YouTube.

So that was the visionary bit and in keeping with the visionary tone he was amusingly dismissive of unimaginative employers who have blocked access to Facebook, but who hadn’t heard of MySpace. He quite understandably avoided unpleasant detail like who pays for high-speed networks. It was an entertaining and motivational 60 minutes for a group who can now go back to their day jobs safe in the knowledge that the reason telcos aren’t all deploying FTTH is because they are a bit dim or because there is a colossal global recession which is making those at the top of the broadband food-chain a bit twitchy.

It is true that FTTH is not yet taking over the world; we forecast that xDSL subscriptions will outstrip FTTx for the foreseeable future. But there is a good reason, unconnected to recession, why this is happening. European markets, along with the USA and Canada, have all reached a plateau of penetration and are no longer the drivers of global fixed broadband subscription growth.

This growth has to date without exception, been based on existing infrastructures, be they incumbent copper or cable TV networks. High bandwidth applications such as TV and HDTV in particular, have only just left the starting blocks and face determined competition from alternatives, such as analogue cable, DTH and DTT. Current generation access networks are, by and large, fit for purpose; they do what people expect them to do and penetration has been driven not by speed, but on a trade off between speed and price. In the developing world, fixed broadband growth, which is three to five years behind the industrialised world, has just not yet picked up the slack. Japan and Korea, which arguably reached saturation over a year ago, are now seeing high growth in FTTx, as operators now migrate xDSL users in an attempt to prevent churn. This same pattern will play out in the rest of the industrialised world, once markets reach saturation.

The broadband world is simply experiencing a natural lull and the only unknown is whether current infrastructure owners will invest cautiously or aggressively and when, not if, they will. So recession is not the reason for the lack of FTTx; it is lack of current requirement on the part of the vast majority of operators.

This morning’s discussion was framed perfectly by Jens Julin Ibsen, CTO of Danish incumbent TDC. He acknowledged that fibre will happen. “Fibre is the technology of the future”, he said, “but the future is not today”. TDC’s network delivers 20Mb pretty much nationwide using ADSL2+. He described a “compound build-out strategy” which adopts a cautious approach to rolling out fibre networks, by taking fibre closer to the customer, over time, but not to deliver high access speeds at high cost, whilst there is no current demand for this level of bandwidth. “We have to be commercially responsible” he declared. The words on his closing slide reminded the audience how incumbents at least, viewed the world: “This is business not philanthropy” it declared.

It was to the credit of the FTTH Council Europe that commentary as sanguine as this was allowed to slip past the censor, pouring as it did, a few drops of cold water on Tapscott’s feel-good message, so soon after it had been delivered. I wonder if the GSMA will be as generous in Barcelona next week?