Technology Leadership Perception Drives Gigabit Broadband Deployments

Broadbandtrends (www.broadbandtrends.com)  recently conducted a global service provider survey of broadband operators regarding their plans to offer Gigabit Broadband Services.  The 2014 survey analyzes results from 88 interviews with ILEC, CLEC, Municipalities, Utilities and Alternative over-builders in all four major regions.

This survey provides insight into timing of deployments; key drivers; key challenges; technology selection; service offerings (current & future); pre-registration requirements; Gigabit Broadband availability (2014-2018); and anticipated Gigabit Broadband take rates (5 year period).  In addition, the survey features operator ratings of key FTTH vendors across multiple criteria.

Importance

 

Key findings of the survey include the following:

  • Technology Leadership Perception was the #1 driver and rated the highest in importance for offering Gigabit Broadband
  • The majority of operators are focusing Gigabit Broadband on Business and Institutional customers first; followed by residential
  • Cloud-based backup and support for Ultra HD (4KTV) showed the most promise for emerging services over Gigabit Broadband
  • GPON is the favored technology for residential Gigabit Broadband Deployments; while P2P Gigabit Ethernet is favored for businesses and Institutions
  • The #1 challenge for offering Gigabit Broadband Services was unclear customer demand
  • A surprising low percentage of operators are using “pre-registration” to determine build priorities
  • Operators expressed a significant amount of uncertainty in anticipated take rates for Gigabit Broadband, particularly ILECs
  • Calix is perceived as the top FTTH Vendor for Gigabit Broadband by respondents, followed by Cisco and ADTRAN.

For additional information, please visit http://www.broadbandtrends.com/2014_reports  to download the report summary or to place an order.

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AT&T Expands Digital Life Capabilities; Going International in 2015

AT&T showcased its Digital Life home (yes, the actual home!) at the 2014 CTIA show in Las Vegas, demonstrating its many capabilities beyond just Home Security and announcing that it would launch Digital Life care – a service focused on the aging population (elder care).  It also announced that Telefonica would be licensing the Digital Life platform to launch services in Europe in 2015.

Its been a little over 2 years since AT&T announced the Digital Life product, which is now available in 82 markets. The Digital Life platform is an all-IP based, 100% wireless solution currently offering home security and home automation services.

The platform has operated as a “wall-garden” with a select group of partners to ensure the highest level of quality of experience for the customer.  However, during 2014, AT&T has developed an API program that will allow for more devices and capabilities.

To do this there will be a separate platform to serve as the service layer for third party integration to interact with Digital Life. This service layer sits between the cloud and AT&T’s ecosystem with foundational modules that include security and customer management.

AT&TOpenAPI

Digital Life Care

AT&T announced its plans to launch a new in-home monitoring service focused on assisted living/elder care – called simply enough – Digital Life Care.  The intention of this type of service is to help those that need extra care to safely and independently remain in their own home and provide peace of mind for their family.

In this type of application, sensors are typically placed throughout the house to monitor a person or persons.  Depending on the application, a family member or caregiver are alerted when anything out of the norm occurs.

According to AT&T,  the platform is a customized solution that adapts to the changing needs of the caregivers by providing real time monitoring and accurate alerts related to their loved one’s eating, personal care, mobility, medication schedule and more.

AT&T expects to trial this service to employees in Atlanta and Dallas this year.

Broadbandtrends conducted a global operator study on Smart Home services at the end of 2013.  We asked operators which services they currently offered and which services they were planning to offer in the future.  As shown, Home Automation and Home Security ranked the highest.  While only a small percentage – 23% planned to offer Elder Care/Assisted Living services.  According to some respondents, there are liability concerns regarding this type of service, so it will be interesting to see exactly what AT&T will support when it launches commercially.

SmartHomeServices

Telefonica – The first of many service provider partners

AT&T also announced that Telefónica will license its Digital Life platform for limited trials in Europe.  According to Telefónica, the first tests are likely to be in Madrid or London, however, the technology is currently being examined by European regulators.  Regulation for security and home monitoring (such as fire/water detection) services varies considerably from country to country – particularly if it is a professional service. 

Per Telefonica, the trials will cover approximately 750 customers.

According to our 2013 survey, the overwhelming driver for deployment/offering of smart home services was new revenue opportunities, followed by customer retention.  The same is true for Telefonica, which is looking for new revenue opportunities as demand for other services slow.

SmartHomeDrivers

 

Smart Home Services offer a potentially lucrative revenue stream for telecom operators. These types of services can not only differentiate the operator from the competition, but they proving to be “quite sticky” with respect to customer retention.

Additionally, Telecom operators are well positioned to offer these services due to their trusted relationship with their customers, a skilled workforce, billing relationship, etc..  As such, we expect to see many more operators look towards AT&T for potential licensing arrangements.  

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The Gigabit Conundrum

Check out our latest post over at ADVA Optical’s Technically Speaking blog.  We take a closer look at the current state of gigabit broadband click here to read

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When Politics and Progress Collide: The Battle for Community Broadband

Maybe “we the people, for the people” should read “I’ll scratch your back, if you scratch mine” – because the influence of politics on the progress of community/municipal broadband has never been more evident then in recent days.

Last week, both the EPB and the City of Wilson petitioned the FCC to preempt state laws which restricts both utilities from providing services adjacent to their service areas.

However, prior to these petitions, Congresswoman Marsha Blackburn (R-TN)  offered an amendment to the Fiscal Year 2015 Financial Services Appropriations Bill that would prohibit taxpayer funds from being used by the FCC to pre-empt state municipal broadband laws – which passed the House with a vote of 223-200.  Chances are slim that it will pass the Senate, but it does signal that changes to the laws of 20 states that currently have restrictions on Telecommunication broadband services are not likely to occur anytime soon.

What is perhaps most disappointing about this action is the fact that those who voted for this amendment clearly do not seem understand the impact that robust broadband infrastructure can have on economic development – let alone improve educational and healthcare resources, job creation and provide more choices for both residential and business customers.

In the case of  Tennessee, many of these communities that have requested service from EPB are not only underserved in broadband, but completely unserved.

EPB

According to Section 706(a) of the Telecommunications Act of 1996, Congress commanded the Commission and the States to encourage the deployment of advanced telecommunications capabilities on a reasonable and timely basis to all Americans, using all regulatory methods at their disposal to remove barriers to broadband investment.

In Section 706(b), Congress also required the Commission to take affirmative action to acquire information about the pace of deployment of advanced telecommunications capabilities, to decide whether such deployment was occurring on a reasonable and timely basis, and, if the Commission ever answered that question in the negative, to act immediately to remove barriers to infrastructure investment and to promote competition.

In the state of Tenessee, broadband of at least 768kbps is available to 96.29% of households, with 93,000 households currently unserved.  If we move up to 3Mbps, the number of unserved/underserved nearly doubles to 174,000.  The question is whether the state has a goal of 100% connectivity or even a “broadband” speed target.  If it does, what is the timeframe for acheiving this?

More importantly, per TA96 – what is considered a “timely basis”?

Under current Tennessee law, EPB is authorized to provide telephone services anywhere in the state.  However, territorial restrictions prohibit EPB from using the same infrastructure (fiber optics) to provide advanced services such as broadband internet and video services outside its electric territory.

According to the petition filed by EPB – the cost of deploying services outside its electric power territory would be covered by service revenue, contributions in aid of construction, or other capital or operating support, including the use of Universal Service Funds.

However, without the ability to provide all communications services, including video programming services, it would not be economically feasible for EPB to expand its broadband network into adjacent areas.  Voice services alone would not justify the investment in new infrastructure.

So now this issue is in the hands of the FCC as they are currently soliciting comments through August 29, with reply comments due September 29.  Although FCC Chairman Wheeler has stated the following – “I believe that it is in the best interests of consumers and competition that the FCC exercises its power to preempt state laws that ban or restrict competition from community broadband. Given the opportunity, we will do so.” – it remains to be seen how quickly they will act given their current slate of high-profile items (mega-mergers, Connect America Fund, spectrum auctions, etc.).

Regardless of the FCC, this may be the call to action necessary for some of these states to revisit their current telecommunications legislation and ask some hard questions about what they want from their states and communities.  It doubtful that any state representative would say ” we don’t want growth or additional tax revenue” – but that may be the very position they find themselves in if they continue to impede progress.

Yes, there are alot of angles here and yes, there have been some poor implementations of municipal broadband in the past.  But there are also more success stories than failures and there are more tools available to help these communities and municipalities make educated decisions and develop realistic business plans.

For over-builders like Google Fiber – the ability to leverage existing infrastructure is a key element of its decision to enter markets – but if state laws prevent entities from investing in this type of infrastructure – everyone loses.

If an incumbent feels threatened by someone like EPB – I would say it would be fair to give them a chance to put up – otherwise it is time to shut up.  They had their chance.  And for those of you in states that continue to have these restrictions – it time to start asking your representatives some very hard questions and if you don’t like the answer – maybe its times for new leadership.

 

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Netflix’s Plans for Global Domination May Hit a Few Speed Bumps

In its 2Q14 Earnings Release Netflix stated its plans for a major European expansion will begin in September 2014 – adding Germany, France, Switzerland, Austria, Belgium and Luxembourg to its list of available countries.  By the end of 2014 – Netflix services will be available in 13 Western European countries, representing 76% of total broadband subscribers within this region.  The only notable missing countries are Italy, Spain and Portugal. On a global basis, Netflix’s service is available to 39% of Fixed Broadband Subscribers NetflixAvail Netflix has been steadily increasing its reach for its service since its initial international launch in Canada in November 2010, which coincided with the launch of its stand-alone streaming package. Netflix In the U.S. market, Netflix has nearly 36 million streaming customers (approximately 37% of fixed broadband subscribers) and has set a long-term goal of reaching 60 million to 90 million U.S. subscribers – giving it a penetration of greater than 80% – a lofty goal indeed.

The question is whether or not that is even possible.  Yes, it has the best brand recognition of any streaming service available, but it definitely faces some strong competition from Amazon Prime as well as services such as Comcast’s Xfinity Streampix – which will be available to a large portion of customers – at little or no charge – if Comcast and Time Warner Cable do merge.  And let us not forget the potential AT&T/DIRECTV merger – which will also likely result in offering a streaming services available to its subscribers.

From an international perspective, Netflix supports nearly 14 million subscribers and is expecting more than 100 million long term – a fairly challenging goal.  Even if it hits 30% penetration in both its current and expansion markets – by 2018 – that is only around 55 million subs.

International Markets Have Different Challenges than U.S.

The biggest advantage Netflix has in the U.S. – is limited competition and strong brand recognition. However, from an international view – the challenges can vary significantly from region to region and even country to country.

Within the European continent – its biggest challenger is Amazon Prime, which is available in multiple countries.  Although Netflix is viewed to have a better selection of content – Amazon Prime is beginning to secure some exclusive content on its own to boost up its catalog.

In France – the challenge is not necessarily competition, but content rights.  In fact, Netflix has already sold the rights to its own in-house production – House of Cards – to Canal Plus.  Additionally,  French regulation prohibits the online release of films until at least three years after theatrical release and as a distributor they have to help pay for film production in France to comply with national rules.

In Germany, it faces competition from Sky Deutschland’s Snap service – a recent entry into the streaming content market as well as strong VOD content from T-Online.

In CALA, Netflix is facing increasing competition – not only from incumbent Pay-TV operators, but also the pending AT&T/DIRECTV merger – who will bundle a broadband service together with its own streaming service to attract subscribers – not to mention offering live sports – such as FIFA World Cup – which are higher in demand than other types of content.

So what is Netflix’s strategy?

When I think back about my own Netflix experience – it was all about the movies and being able to see first run as soon as it was released on DVD.  However, when they introduced the streaming service – the content was substantially different.  At that time, only about 10% of my queue was available for streaming.

Today – while 1st run movies are still available (albeit in a much later release window) – much of the streaming content is focused on television series, including an increasing library of originally developed content. This original content development will play a key role in Netflix’s international growth – as they will be able to develop content that has specific appeal within each country.

Additionally, Netflix plans to place more emphasis on exclusive content – with the “intent to expand the content library meaningfully” – investing $3.2 billion globally on content, with the content selections moving toward higher-rated and exclusive titles.  However it will not include any live content or sporting events at this time – per CEO Reed Hasting at the recode Technology conference this week.

Another path Netflix is exploring is partnering with mobile operators to offer its services – as it recently has with Vodafone UK.  As of July 2014, anyone signing up or upgrading to a Vodafone Red 4G plan can opt for Netflix as their entertainment pack of choice.  The downside is that streaming Netflix will definitely count against the monthly data cap – using up most monthly data limits in record time.  In this scenario – Wi-Fi remains a much better option than most mobile data plans.  

But the reality is that in order to reach that 100 million subscriber mark outside the U.S. – it will likely have to make a move into the Asia Pacific market – most notably Japan (where Hulu is currently available and now owned by Nippon TV) and Korea where strong broadband penetration and fast speeds are the norm, and both countries have a proven appetite for streaming content.  And with its recent announcement regarding 4K content – these may be the right markets to target. Most likely, Netflix will need to continue to form partnerships with Pay-TV operators in order to get its service in front of as many potential eyeballs as possible – whether cable, telco or satellite.

Will Netflix dominate the Pay-TV landscape?

It certainly has the potential to have the most paying subscribers of any Pay-TV provider and it has most definitely impacted the business models of nearly all of them.   Consumers may no longer want their MTV, but they definitely want their Netflix.

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Conscious Uncoupling and Broadband

Check out our latest posting over at ADVA Optical’s Technically Speaking blog.  We are taking a look at uncoupling broadband from the bundle – what it means to operators and what they can do build customer trust and loyalty  http://blog.advaoptical.com/conscious-uncoupling-and-broadband/

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Global Survey Confirms Importance of DSL Acceleration Technologies to Telcos

Broadbandtrends recently conducted a global service provider survey of Telco operators regarding their plans to deploy VDSL2 Vectoring and G.fast.  Both DSL Acceleration technologies employ noise-cancellation technology that enables operators to significantly increase the speeds offered over their existing copper infrastructure.

Key findings of the survey include the following:

  • 57 percent of respondents are actively deploying VDSL2 vectoring technology or are  in trial and plan to deploy by the end of 2014
  • The overwhelming driver for deployment of VDSL2 Vectoring is to offer faster speeds; with most operators planning to offer speeds of 50-75Mbps
  • CPE compatibility remained the greatest challenge facing operators as they deploy VDSL2 Vectoring
  • Operators have low expectations for self-installation of VDSL2 Vectoring, with only 19 percent expecting 60 percent or more of their customers to self-install
  • The #1 challenge addressed by specialized software-based management for VDSL2 Vectoring was Qualifying customers for service 
  • 42 percent of respondents are currently evaluating G.fast technology, while 52 percent are unsure of its impact on VDSL2 Vectoring deployments
  • Alcatel-Lucent is perceived as the top VDSL2 Vectoring DSLAM vendor by respondents, followed by Huawei and ADTRAN

KeyDrivers_2014

“DSL Acceleration technologies – whether VDSL2 Vectoring or G.fast offer an economic alternative to Fiber-to-the-Home –  providing an interim solution that can  offer customers faster speeds in a much shorter timeframe and at a much lower cost than FTTH”, notes Teresa Mastrangelo, principal analyst with Broadbandtrends

Broadbandtrends VDSL2 Vectoring Deployment Strategies and Vendor Leadership survey analyzes results from interviews with 36 incumbent and competitive operators in North America, EMEA, Asia Pacific, and CALA about their plans for VDSL2 Vectoring deployments.  The respondents, from all major regions, represent 31 percent of all deployed DSL lines at the end of 2013. In addition, the survey features operator ratings of 8 vendors (Alcatel-Lucent, ADTRAN, Calix, ECI, Huawei, Iskratel, KEYMILE, and ZTE) on 5 criteria.

For additional information or to purchase the report, please contact Teresa Mastrangelo at 540.725.9774 or teresa@broadbandtrends.com or visit http://www.broadbandtrends.com/2014_reports to purchase online.

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Is Google Fiber Coming To YOUR town? GoogleFiber Talks Expansion.

The pressure is mounting on incumbent operators to step up to plate with its broadband services – as Google Fiber announced that it was in early discussions with 34 cities in 9 metro areas around the United States to explore what it would take to bring a new fiber-optic network to their community.

GoogleFiber_Map2014

Google plans, as early as next week, to send teams to these potential cities to meet with city officials and begin the two-part planning process.

  • Part 1:  Provide checklist to cities to help make them fiber-ready – including providing information for planning and construction as well as being the permitting process
  • Part 2:  Begin detailed city study:  Google Fiber will begin the cost and timeline analysis which includes topology assessment, housing density and condition of local infrastructure.

Each of these markets is home to either major universities or high-tech industry.  In the case of Salt Lake City – Google Fiber will likely take advantage of the UTOPIA Network which is in place to 14 communities within the area.

Google Fiber plans to announce the next city (or cities) by the end of 2014.

So what’s the Impact of this announcement?

The competitive pressure is on!  Although, nearly every incumbent operator has essentially blown off Google Fiber as a competitor – but clearly they are keeping an eye on activity – as was evidenced by AT&T matching Google Fiber in Austin, TX for 1Gig services last year.

If you look at the competitive environment in the potential cities – you see that AT&T and Comcast (including the future acquired TWC properties) will be impacted the most – as they both serve the majority of the potential cities.

GoogleFiberCities

For AT&T, we could see a possible shift in strategy away from FTTN towards FTTH, particularly in key markets such as Atlanta and Charlotte.  For Comcast, the pressure will be on pricing.  Yes they can offer 105Mbps across all of their markets – but can people afford to buy it?

Developing the Blueprint for FTTH

Another key impact is the knowledge gained from these deployments – which has been instrumental to other communities as they plan, build and market their networks.  Understanding what is required to make the business case (% of customers, ARPU, OPEX) before building is critical to success and clearly the pre-registration process is proving to be a key element being adopted by other providers.

Be Careful of Overcommitment

The big concern right now is overcommitment on the part of Google Fiber.  Although they have not provided any updates on the status of Kansas City – they appear to be behind schedule on the original build.  Additionally, it appears that the process of assessing Austin is taking significantly longer than expected. Yes, Provo is off the ground, but they didn’t have to do much – which is why I suspect they will choose cities with ALOT of available infrastructure for their next city.

Drumming Up Consumer Excitement…and Frustration

Judging by the comments on articles, twitter and Facebook after this recent announcement demand for Google Fiber is far greater than I believe most of these operators have anticipated.

Dissatisfaction with the quality and price of their current services has consumers grasping for an alternative – and who can argue with $120/month for 1Gb connectivity and 200+ HD channels – no incumbent operator can even come close to offering this type of package.

It is unlikely that Google will ever become a major operator on the scale of AT&T, Verizon or Comcast – but they are a disruptor and a catalyst for change and their impact will likely be far and wide – from more innovation in pricing and packaging to the improved quality of broadband.

According to Netflix, Google Fiber offers the best streaming  experience during primetime and with 28 million streaming customers – it would behoove broadband operators to provide a good experience for Netflix because that translates into a happy customer and one that is less likely to churn.

usa

Undoubtedly, Google Fiber is making waves in the U.S. market.  But they are also illustrating what can be done and how to do it.

 

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1-800-FREE-DATA – The Future of Mobile Billing?

Broadbandtrends is guest blogging over at ADVA Optical’s blog “Technically Speaking”  on AT&T’s Sponsored Data Plan.  To read the post, please click here.

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2012 FCC Broadband Data: 55% of Fixed Broadband Greater than 10Mbps

The FCC issued its latest Internet Access Services report for the period ending December 31, 2012, which provide details on fixed and mobile broadband in the United States.  Total broadband connections were 261.7 million, consisting of 92.6 million fixed and 169.2 million mobile broadband connections.

Some highlights from the report include the following:

  • 55% of fixed broadband subscribers receive download speeds > 10 Mbps (up from 48% in 1H12 and 46% in 2011);
  • 59% of mobile broadband subscribers receive download speeds < 3.0Mbps (down from 69% in 1H12 and 78% in 2011)
  • Mobile Broadband experienced the strongest year-over-year growth at 19 percent, followed by FTTH at 45 percent, while overall fixed broadband grew by 4.8 percent
  • Total FTTH Subscribers were 6.726 million

The impact of 1GB networks was neglible during 2012.  In fact, at the end of 2012, there were only 200,000 subscribers with speeds of 100Mbps – almost evenly split between cable and FTTH (with Cable edging out FTTH).

Surprisingly, the majority of FTTH subscribers (63%) receive speeds of 10-25Mbps.

FCC_BB_2012

The most notable takeaway from this most recent report (2012) was the growth in higher speed connections.  For the first time, more than 50 percent of fixed broadband connections exceeded 10Mbps downstream, while the number of mobile broadband subscribers with speeds 3Mbs or greater grew by 125 percent within the past six months.

Although these newer FCC reports do provide additional granularity, we believe they continue to miss the opportunity to provide a more well-rounded view of the market by eliminating useful information that was included in past reports such as segmentation of broadband subscribers by operator type (RBOC, IOC, CLEC, etc.).

Additionally, we believe the following granularity would also be useful to fully assess the U.S. broadband market:  residential versus business by type of broadband; downstream/upstream information by type of broadband (right now they only provide downstream); average downstream/upstream speeds by state to better understand just how big the bandwidth gap is from state to state; as well as pricing by region/zip code to better understand the affordability factor.

Finally, it will be interesting to see if the FCC will add a speed category for 1Gbps – given its “gigabit challenge”.

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