A guilty admission

I readily admit that I’ve long been a cynic about BT’s reliance on ADSL technology for its roll-out of superfast broadband access.  And I’m certainly not alone in grumbling about the limited shelf-life of ADSL as a network solution.  But then there comes the real world matter of expediency…

I live in a small rural village in which BT has been the only viable ISP on offer – providing typical – and surprisingly respectable -download speeds of 6-8Mbps.  I watched with wry amusement the promises by my County Council that superfast availability would be “here soon” (under the aegis of a BDUK scheme), doubting whether the village’s older-age profile would make it a BT priority.  But, in the fullness of time, Openreach vans started to become prominent and the old BT cabinets were gradually replaced with their newer, much chunkier versions.  Still, the fact that my house sits outside the village centre and is served by overhead wires made me sceptical about its superfast prospects.  I was therefore hugely surprised to see that BT’s online checker suggested I might qualify for its Infinity service at speeds of up to 76 Mbps. Bah!!

A couple of weeks later, an unsuspecting BT engineer arrived on a sunny morning to install the service in my 15^th century home.  He faced not only the property’s “bizarre” telephone wiring but also an electrical system that bears all the scars left by the ‘enthusiastic amateur’ who sold me the house.  The poor man visibly wilted but settled in for what was clearly going to be a long day… He finally left at 6.30pm.

And the outcome?  Well, I’ve run several online speed checks and the results are pretty consistent: I’m getting download speeds at 73-75 Mbps, uploads at around 12 Mbps.  Interim technology it may be, but not half bad for a country bumpkin!  Hats off to BT.

God bless Canada

I recently mentioned the, possibly suspect broadband statistics which Prof. Christopher Yoo derived to demonstrate the superiority of US regulatory policies over those of Europe.  Well, the Professor has been at it again, using the same US/EU data to make some even more sweeping claims. For instance: 

“…the U.S. focus on private investment and competition has placed it far ahead of Europe in terms of Internet speed and access…. 

U.S. broadband was cheaper for all speed tiers below 12 megabits and is comparably priced at speeds between 12 and 30 megabits, which makes it easier for low-income families to become broadband users….

if the FCC were to impose European-style regulation, these studies indicate that the investments that have enabled such a healthy and vibrant U.S. broadband infrastructure may wane”.

As the above extract shows, Yoo’s argument rests heavily on his assessment of the (mostly) lower pricing of US broadband.  His own metrics concede that U.S. broadband costs are higher for services above 30 megabits but he argues that ‘that cost differential is justified by the fact that average U.S. households consume more than 50 percent more bandwidth than their European counterparts’.   

Does higher usage really justify a higher unit cost?  Anyway, I was interested to see that an entirely independent cost study came to a rather different conclusion on the pricing issue. The Canadian telecoms regulator, CRTC, recently published its own retail cost study, including a comparison againsth other G7 countries.  With apologies to CRTC, the extract below excludes Canada but includes the US, the UK and our nearest European neighbours.  All reported prices are expressed in purchasing power parity (PPP) adjusted Canadian dollars.  

Average monthly prices in PPP adjusted $CDN (2014)

Broadband – fixed access	US	UK	France	Germany
Level 1 (≤ 3 Mbps, 7.5 GB/month)	$62.5	n/a	n/a	n/a
Level 2 (4 – 15 Mbps, 30 GB/month)	$72.9	$30.2	n/a	$26.1
Level 3 (16 – 40 Mbps, 75 GB/month)	$79.8	$46.9	$51.2	$38.3
Level 4 (≥ 40 Mbps, 120 GB/month)	$103.2	$47.8	$56.0	$58.5
Broadband – mobile access t (≥ 3G)
Level 1 (2 GB/month)	$63.7	$21.9	$18.5	$34.4
Level 2 (5 GB/month)	$69.1	$45.9	$43.0	$49.7

 

While the UK prices might not be the best in Europe in every case, the comparison with the US looks pretty decisive in favour of Europe.  Slam-dunk…?

 

 

Ode to a louse

With apologies to Robert Burns for the English translation, his 1785(?) ode contains the following: 

“And would some Power the small gift give us
To see ourselves as others see us!
It would from many a blunder free us…” 

Anyone following this blog will know that I’ve never been a big fan of network unbundling.  Indeed, I’ve even shown some scepticism towards the argument that LLU might obviate some (most?) of the concerns regarding network neutrality.  This latter view was articulated as long ago as 2010, when Ed Richards  of Ofcom addressed that year’s Cable Congress: 

“In the US, limited competition, both at the network and at the ISP level, means that the potential for consumer detriment through traffic management is greater. In Europe, as recent research for the FCC indicates, the mixed model – investment in infrastructure complemented by unbundling of the local loop - has delivered a more competitive market structure from the exchange back into the network… Where competition thrives, the case for a highly interventionist net neutrality policy is harder to justify on the grounds of consumer protection.” 

It seems that this European view, which sounded rather complacent at the time, is gaining increasing acceptance in the US.  There, the debate over network neutrality has, if anything increased in intensity, several ‘experts’ arguing that the neutrality proponents have got it all wrong, while others contend that the ‘experts’ themselves have misunderstood the debate.  But the European argument, that regulatory intervention may be the answer, appears to be gaining ground. An op-ed in last week’s ars technica, admittedly by a British expat, explains the recent shenanigans between Netflix and Comcast/Verizon like this: 

“The reason that these ISP policies are so troublesome, and the concerns over network neutrality so grave, is that the ISP market in the US is remarkably uncompetitive… The solution is to attack the monopolies head on…” 

The article then goes on to rehearse the familiar arguments for service-based competition, even citing the UK as a good exemplar of its benefits: 

“This is a model for telecommunications regulation that works. It provides the safeguards against poor performance and ISPs trying to promote their own services (or punishing competing ones) that the net neutrality proponents want, and it uses market power to do so”.  

While I retain my scepticism, I have to admit that two recent findings have rather dented my confidence in the argument that deregulation encourages network investment.  First, Vox magazine has been looking at what appear to be declining levels of recent infrastructure spend by the US Cable operators.  Its findings are quite likely to be challenged by the industry trade body (NCTA) but Vox makes the following assertion: 

 “Now needless to say the fact that investment is falling doesn't prove that NCTA is wrong about net neutrality regulations. But if you think the light regulatory touch is working because it's leading to an investment boom, you are mistaken. The industry is acting like a low-competition industry, scaling back investment and plowing its profits into dividends and share buybacks and merger efforts”. 

The second piece of evidence concerns the level of congestion in the access network (the source of the original Netflix dispute), specifically whether this is related to the nature of the local ISP market.  Might not similar congestion problems arise in the UK, for example?  Some very enlightening data from Level3 suggest otherwise: 

“We have [only] six peers with congestion on almost all of the interconnect ports between us…where our peer refuses to augment capacity. They are deliberately harming the service they deliver to their paying customers… Five of those congested peers are in the United States and one is in Europe…All six are large broadband consumer networks with a dominant or exclusive market share in their local market. In countries or markets where consumers have multiple Broadband choices (like the UK) there are no congested peers”.  (Emphasis added) 

As the man said:

“O…to see oursels as ithers see us!”

Uncle Sam knows... or maybe not.

For reasons I don’t fully understand the US has often seemed unreasonably obsessed with its international broadband ‘performance’, the debate swinging between ‘the sky is falling’ rhetoric of the likes of Susan Crawford  and other, more Chauvinist voices.  I was therefore rather relieved when I saw that yet another academic - Christopher Yoo, a Professor at the University of Pennsylvania, had waded into the debate, promising to provide a definitive judgement.  His is a substantial report but, for what it’s worth, Professor Yoo believes that his data are incontrovertible and his analysis comes down firmly on the optimistic side regarding US performance, e.g. 

“The answer is clear and definitive: as of 2012, the U.S. was far ahead of Europe in terms of the availability of NGA. The U.S. advantage was even starker in terms of rural NGA coverage and with respect to key technologies such as FTTP and LTE”. 

A bit more controversial is Yoo’s analysis regarding transatlantic differences in regulatory policy.  He uses mapping data to correlate the degree of unbundling (measured by the DSL market share of non-incumbents) against NGA coverage in the USA and Europe.  The methodology (especially causality) looks suspect to me on a number of grounds and it appears as though the results have been driven largely by the historical dominance of the US cable industry.  But Yoo is nothing if not bullish: he concludes: 

“The evidence… is fairly definitive (sic), confirming that facilities-based competition is more effective in terms of driving broadband investment than service-based competition”. 

For a coup de grace, Yoo sums up with this linguistic triumph: 

“These data stand as a major landmark with which anyone asserting otherwise must come to grip”. 

Well, they may not be ‘asserting otherwise’ but a couple of independent voices have this month bemoaned the state of so-called infrastructure competition in the US, in particular the hegemony of the cable operators.  First, FIBEREVOLUTION  picked up on research by consulting group cg42, showing that ‘US Cable is reviled by its customers’.  Apparently, 73% of those questioned in a customer survey agree with the proposition that ‘I feel cable companies are predatory in their practices and take advantage of consumers’ lack of choice’.  Moreover, within the same survey, 53% said ‘I would leave my current cable company if I actually had a choice’. 

Putting a more satirical slant on the dissatisfaction story, ‘the Onion’ ran an article this week announcing that: 

“Offering no justification for the action aside from their own desire to do so, executives from the nation’s leading cable companies announced plans Wednesday to take $100 from every one of their subscribers”.

 

The European model of service competition may well have proved less effective in terms of promoting investment in broadband networks but there are times when it’s reassuring to know there is at least a regulator keeping an eye on quality-of-service issues.

End of term report

I’ve not always been a big fan of Neelie Kroes, largely because of her fondness for consumer-centric views on competition – see, for example, here  and here.  But as Neelie approaches the end of her term in office, even I was taken aback by the venom of Andrew Orlowski’s damning assessment in The Register.  The title of the piece  gives you the general idea: 

“So, farewell then Steelie Neelie: you were worse than useless”.   

Orlowski accuses Kroes of ‘a wide-eyed pandering to fads’ and, as a result of paying too much homage to Silicon Valley, a failure to establish ‘a distinctly European vision’.  There’s certainly some truth in that but I thought the following was unjustified: 

“”If anything Kroes has made progress more difficult by polarising debate and institutionalising stupidity”.

Whatever else she did, Neelie always had her eye on the need for new investment in network infrastructure and she regularly made attempts to understand the obstacles to that (such as her series of ‘round tables’ with European CEOs). Just this week, her Office drew attention to new rules on state aid, aimed at reducing red tape and easing the provision of public support for investment in broadband projects.

 

So, perhaps less effective than she wished but Neelie was consistently well-intentioned.

Waiting for Dido?

Typical! You wait years for a new fibre initiative, then two (three?) come along together.... OK, the old adage may be a bit overworked but I was genuinely pleased to discover this week that the prospect of widespread gigabit networks might have come just a little bit closer.

The exciting news in the UK was of course the announcement by TalkTalk that it wants to extend the fibre network planned for York to reach more than 10m homes.  When news of its York joint venture with Sky and City Fibre first emerged, TalkTalk said it would be followed by at least two other cities but the company now says it wants to enlarge the fibre network substantially.  It apparently plans to do this by launching a national city competition along the lines of the strategy adopted in the US by Google Fibre.  According to Dido Harding, the CEO: 

“We believe the economics of our approach to FTTP could prove highly attractive, with a combination of scale and low cost build technology delivering a significantly lower cost per home passed than for the current FTTC infrastructure.” 

Sceptics have been lining up to pour cold water on the announcement.  They point out that similar claims in the past by CityFibre have come to nothing, or that the trial is really just a negotiating tactic in TalkTalk’s continuing attempts to challenge BT’s wholesale charges.  But I for one refuse not to be encouraged by Ms. Harding’s bold assertion that ‘We have a long term vision to build infrastructure’. 

Elsewhere, the ‘fibre initiatives’ I’ve spotted are a little more obscure.  The first popped up amid the ongoing media consolidation in the US.  There, AT&T has offered a number of commitments to regulators to sweeten the pill of its proposed acquisition of DirecTV, and one of these is to provide broadband access to 15m new customers – including homes outside its existing footprint (partly using fixed wireless technology).  A pious hope, maybe, but perhaps the combination of this US initiative and TalkTalk’s fibre project here will persuade Liberty Global (Virgin Media) to consider new broadband coverage in the UK… 

Finally, I must acknowledge the Labour Party’s new on-line policy and discussion forum, Labour Digital.  Already, a loyal supporter has proposed a ‘national Scheme to deliver 1 Gbps broadband to all’.  Maybe he should speak to Google…

 

 

 

Postscript

I referred in the last posting to the FCC’s proposed new rules on network neutrality.  Predictably, there has been a huge amount of comment and criticism of the proposed new regime but by far the best analysis I’ve seen is quite a short article by Kevin Werbach and Philip Weiser. Its main conclusion is as follows: 

“How to defend and implement network neutrality is not as simple as banning all forms of paid prioritization… What really matters is ensuring that the broadband environment continues to provide space for tomorrow's innovators to develop new, disruptive offerings. When the FCC releases the proposed rules for comment, we should all focus on that criterion to evaluate whether they are sufficient and effective”. 

I thoroughly recommend reading the rest.