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You searched for 'net neutrality'. Your search returned 33 results.

Nyquist 2007 Predictions Revisited

It’s time to take a look back at 2007 and see how our predictions fared. (See “Nyquist Predictions for 2007“)

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Who Pays for the Online Video Boom?

Inflation

Everyone talks about the explosion in Video traffic. Everyone talks about the explosion in the bandwidth required to carry it. No one talks about who is going to pay for it. There is one likely source: transit bandwidth inflation.

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Nyquist Predictions For 2007

Prediction is an entertaining activity better suited for stimulating discussion than providing an absolute outlook on the future. Therefore, the bolder and more controversial, the better. Keep that in mind as you read and respond.

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Net Neutrality War Heating Up

It’s pretty clear that the AT&T (T ) and Bellsouth (BLS) merger has turned into a proxy war over Net Neutrality, with Yahoo (YHOO) and Google (GOOG) spearheading the effort in a naked attempt to keep their distribution costs near zero. Correspondingly, Washington bloodsuckers lobbyists on both sides are gearing up.
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Peer to Peer - The Stowaway Traffic

Source: Cachelogic

Peer to Peer (P2P) traffic is the stowaway traffic of the net. It is latency and QoS insensitive and happy to fill broadband unused capacity. The big growth rate on the above chart gives P2P the illusion of being important- The reality is it is just being efficient.

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What Matters About The Apple iPhone

The big deal isn’t the iPhone itself, which is what the mainstream investment, gadget and tech media is focusing on. It’s the way that it will fundamentally challenge how carriers have coupled services with connectivity with a hardware distribution monopoly.

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SIPlified Content Distribution

Wading through my morning reading I happened upon an Acme Packet (APKTwhite paper that did a good job explaining my apprehension about Akamai (AKAM) and how their business might be commoditized. In the long term, do SIP and managed media sessions replace the media caching model?

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Net Neutrality Debate - Gilder Telecosm 2006

Gilder Telecosm 2006 - Net Neutrality

I woke up in SFO at 4AM to make sure I could get to Tahoe in time for this debate. I’ve written extensively on Net Neutrality and stopped once I realized it was unresolvable.

Broadband Brawl: A Debate Over Net Neutrality

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I’ve arrived here in Squaw Valley, Lake Tahoe at around 8AM. I haven’t been to Tahoe in 7 years and forgot how beautiful it is up here.

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Amazon Unbox Could Unbundle Too

unbox1.PngAn interesting piece of news speculates Amazon (AMZN) may be partnering with Tivo (TIVO) to use their DVR platform.

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The Cablecos are Waking Up to Reality

The WSJ today has an exclusive look (free version of article here) at a report to be released by CableLabs that outlines the potential need for cablecos to undertake a massive infrastructure upgrade in order to stay competitive. Unfortunately, the report is not yet available to non CableLabs members, though we would sure like to get our hands on one (HINT HINT HINT) and CableLabs has informed me it never will be.

The report, which has been reviewed by The Wall Street Journal, warns that at present growth rates cable operators’ existing technology may not be able to compete efficiently with Verizon on Internet services. “At some point, optimization of the (cable) network becomes more expensive than simply deploying” fiber directly to homes, the report warns.

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Verizon’s G-Man on Net Neutrality

Interesting interview in Businessweek on Net Neutrality with Verizon’s VP of Public Affairs (aka he works in Washington DC) Thomas J. Tauke.

It would appear that Verizon has finally found someone who can make a clear case as to why Net Neutrality legislation is anti-market, anti-competitive, and a expropriation of corporate property. This guy mixes the Kool-Aid extra sweet…

Should Internet content providers pay extra to reach customers at higher speeds?
It depends. There is no business model yet that we are aware of where the content providers are paying. But as these networks have increased capability, and as new companies emerge, we think new models will develop.

So let’s say, for example, that you’ve purchased 5 megabits of service, and you are a gamer. And the XYZ gaming company develops a new game that needs 25 megabits of service. They could come to you as a consumer of their products and say: “Go to Verizon and buy 25 megabits.” Or they could come to Verizon and say: “When he logs on, we want you to up the speed so that he will get 25 megabits.” So this would be a way in which they could jumpstart their business by making sure that when you purchased the game from them you also got the high-speed capability.

Is there a gaming company that is doing that now? No. Should we prevent a gaming company from doing that? We don’t see why, because it obviously is easier for that gaming company to come to us and say, “When one of our customers needs this speed, we’d like to give it to them,” rather than to have them go and convince every one of their customers that they should pay for this high-speed access on a monthly basis.

In effect, net neutrality legislation would eliminate a carriers ability to offer variable pricing.

Update: This interview was a sidebar to a longer article lamenting the Bell’s lack of innovation. I’ve also made some comments following up on a Techdirt post that I disagreed with.

Scott McNealy on Net Neutrality

Scott McNealy, ex-CEO of Sun Microsystems (SUNW) talking about Net Neutrality (term defined) (my opinions here) in an interview with the Washington Post:

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Net Neutrality Double Standard

Spent today working outside in the yard wishing I was out cycling. Had a lot of time to think.

What I find funny is the same people who pound the table about how the internet was born a wild, free, medium, how this is it’s biggest advantage, and how this is the manifest destiny of the network now cry foul when the internet might evolve into paying for multiple tiers of service.

Folks who make an argument for government mandated net-neutrality are asking to halt the untethered evolution they proclaim to be essential. That’s pretty funny.

Net Neutrality - Rearranging the Deck Chairs

The Net Neutrality ship continues to sink with the recent removal of wording from legislation that would have removed the right of carriers the to tariff based on application.

I’ve always felt Net Neutrality is a concept that expropriates the property rights of carriers in order to allow media and content companies a free-ride on their infrastructure. Google, Yahoo and other media and content companies lack ownership of a layer-one digital right of way to the consumer- so the easiest approach is to legislate the theft of it.

Anyone who thinks this is a reactionary opinion should consider what Rep Ed Markey said about the failure to pass the bill. From the CNET article:

There is a fundamental choice. It’s the choice between the bottleneck designs of a…small handful of very large companies and the dreams and innovations of thousands of online companies and innovators.

What if this debate was over a privately owned road? Would Mr. Markey feel the same way?

The good of the many is more important than the good of the few. But there are laws that cover the taking of private property rights - if you determine the greater good requires that the few forfeit their deed of ownership then you should compensate them for it.

When it comes to “fundamental choice”, I’ll go with property rights over government re-appropriation any day.

Additional Observation: Note the title of the CNET article - “Republicans defeat Net neutrality proposal“. As it’s prospects wane, the debate on Net Neutrality is moving from a technical and economic argument to a political one. Never mind that 4 of the 11 Democrats on the committee voted against the provision - nothing like a little political fire-stoking to keep debate rolling.

Das Steigende Telekom (The Rising Telekom)

Deutsche Telekom LogoThe WSJ Heard on the Street column ($$$ link) looks at Deutsche Telekom’s (DT) valuation. I’ve included a good summary of the metrics at the end of this post for those who don’t have access to the online WSJ - courtesy of Seeking Alpha’s Telecom Stock Blog.

The WSJ article makes the case that even though the valuation of Telekom is attractive on paper, the continued price erosion in wireless and expanding competition in broadband will cap revenue growth.

What the article misses is the groundswell in Europe to deregulate the Telecom sector further in order to spur deployment of next generation broadband infrastructure. Regardless of what the Digital Elite want you to believe, the US is ahead of France, Germany, Spain, Italy and the UK in broadband deployment. And the gap in next generation services is growing. From the article:

In a bid to separate itself from the pack, Deutsche Telekom is spending €3 billion ($3.64 billion) to build a broadband network that will connect residential customers to the Internet at a much faster speed than is currently available and allow it to offer a “triple play” of high-definition television, wireless and Internet access. But regulators in Brussels want to force the company to share the network with rivals at imposed rates, and high-definition TV is expected to remain a marginal business in the near term.

Spanish and French carriers are agitating with the EU to remove the requirement to share the network (UNE) on the basis that it will stifle new broadband infrastructure deployment - I think they are right and that they will get their way. The German Government is throwing it’s weight around the EU and the last thing the Europeans want to do is fall further behind the US in broadband deployment.

Expect to see Deutsche Telekom secure more, not less market share once this happens, and expect higher, not lower margins when it does. People will get advanced broadband, but they will have to pay for it. Es gibt kein freies Mittagessen.

Take this trend, and combine it with the competitive advantages of a carrier offering both fixed and mobile services and Telekom has distinct advantages, not disadvantages over it’s rivals. Softbank bought Vodafone’s mobile business in Japan for this exact reason, and I think it’s a winning strategy. Check out my thoughts on the acquisition.

From Seeking Alpha:

  • Share Price: DT shares have dropped 10% over the last year on the background of general telco weakness in Europe and falling revenues from fixed-line services. Its dividend yield, therefore, is 5% higher than peers Vodafone (VOD) and Telefonica (TEF)
  • Enterprise Value/EBITDA: EV is 5.4X EBITDA, compared with 5.8X for European telcos (Goldman Sachs estimates). Juan Carlos Acitores from Spanish firm Ahorro Corporación Financiera SV has higher earnings estimates for DT resulting in a 4.8 EV/EBITDA multiple, one of the lowest in global telecom.
  • P/E: DT is currently trading at 12X expected 2006 earnings, slightly higher than competitors’ P/E. According to Acitores, who has a ’strong buy’ recommendation on DT, “The stock is significantly undervalued.”
  • Falling Operating Earnings: Thomson Financial reports that earnings per share are projected by analysts to be €1.14 in 2006 and €1.21 in 2007 (2005 earnings were €1.31 per share). Analysts expect Vodafone and AT&T, on the other hand, to grow earnings by more than 9% in 2006 and 2007.
  • Falling Revenues: DT’s domestic revenue-the source of more than half total revenue-dropped 1.6% in 2005. Wireless prices are expected to fall up to 20% this year, and the company has lost substantial market share in DSL (from 83% in 2004 to 62% in 2005).
  • Tough Restructuring: DT slashed net debt from €74 billion in mid-2001 to €38.6 billion. The current restructuring plan calls for eliminating 32,000 jobs over three years at a cost of €3.3 billion. And according to the WSJ, “some analysts say that even the 32,000 job cuts wouldn’t be enough to get operations sufficiently lean.”
  • T-Mobile USA: With a 27% increase in revenue last year, DT’s US mobile offering provides a glimmer of light. However T-Mobile’s ARPU has been declining faster than rivals’, and churn has been a bigger issue as well. “Because T-Mobile doesn’t have the same amount of spectrum as its competitors, it can’t offer expensive third-generation services to its customers. The unit will have to spend several billion dollars in the next couple of years to upgrade its network.”

Net Neutrality Will ‘Fossilize’ the Internet

Martin Geddes (Blog: Telepocalypse) delivered a rare dissenting opinion at the Jeff Pulver “Freedom to Connect” net-neutrality love-fest conference today. I was not there, but I can’t imagine it was a friendly audience. Earlier in the day Michael Copps, FCC Commisioner, delivered a keynote outlining the risks of net neutrality. (Note I will link to speech when text is online).

Here’s a highlight of Geddes’s speech:

An open, free net is an emergent outcome, not an a-priori input to be legislated into existence. We need to capture and accellerate the experiments in how networks are built, financed and sold; and protect those experiments from incumbent wrath until the results are in.

But most critically, don’t fossilize the network in 2006 by adopting network neutrality.

My thoughts on the subject can be found by searching for “Net Neutrality” in the search box or simply clicking here.

Expropriation is Not Competition, Even in France

The Wall Street Journal published an article on CLEC activity in France which praised the efforts of the French equivalent of UNE regulation and highlights the ‘competitive’ environment it has created. Yesterday the WSJ covered (and we commented on) the German government and Deutsche Telekoms efforts to have UNE rolled back.

UNE, like Net Neutrality, is a confiscatory government policy that expropriates an asset from it’s owner.

The article focuses on the ’success’ of a French CLEC called Iliad.

One telecom company in particular has exploited the changes and created competition in France — a start-up called Iliad. Over 1.1 million French subscribers pay as low as €29.99 ($36) monthly for a “triple play” package called Free that includes 81 TV channels, unlimited phone calls within France and to 14 countries, and high-speed Internet. The least expensive comparable package from most cable and phone operators in the U.S. is more than $90, although more TV channels are generally included.

And this is how Ilaid’s model works, for those who need a quick into to what UNE regulations are all about.

France Telecom had to allow alternative providers like Iliad, Neuf-Cegetel, and Telecom Italia SpA’s Alice to install their own equipment in the massive underground centers that collect thousands of phone lines. Regulators determine how much France Telecom could charge providers to rent its lines and how many days France Telecom has to fix service problems reported by competitors’ customers.

The reality? The fantastic broadband performance figures Iliad delivers are from a subset of users that happen to be close to central offices. Using UNE, Iliad can decide which customers they can market to, claim those lines from the incumbent telco, and then leave the high cost/low margin business to the incumbent.

CLECs like Iliad are only as good as the infrastructure they can free ride on.

The same situation existed in the USA until the Brand X decision was handed down, and that led to the rapid unraveling (2003, 2004, 2005) of domestic UNE regulations. The result? AT&T (T ) and Verizon (VZ) have now committed billions of dollars to build state of the art infrastructure.

OECD StatsThe fact is broadband penetration in France and Germany is less than the USA, and real deployment of advanced FTTH infrastructure is nil in Europe with the exception of muni fiber in Amsterdam.

The real result of the ’success’ of Iliad and other CLECs is France Telecom isn’t deploying any new advanced infrastructure because they don’t want to be forced to hand it over to a CLEC. Deutsche Telekom, France Telecom, and Telefonica are all refusing to build new infrastructure until the obligation to allow another to free-ride on top of it is removed. This has pitted them against the wishes of the EU- which was the focus of my post yesterday.

Companies only invest risk capital when the potential returns warrant it, regardless of the wishes and magical wand waving of pundits and politicos in Brussels or Washington DC. Telcos will simply refuse to make new investments in technology if the upside rate of return is regulated by a government entity and the downside risk is left unlimited.

The only solution is to create an environment where multiple providers are financially incentivized to build competitive access infrastructures.

Here’s a summary of the blogosphere. Not surprising, everyone confuses expropriation with competition.

Ich bin ein Broadbander

Deutsche Telekom LogoThe WSJ on Saturday covered efforts by Deutsche Telekom (DT) to seek deregulation of policies similar to UNE-P regulations here in the US.

Europe’s largest telecommunications company is investing €3 billion ($3.6 billion) to connect residential customers to the Internet at speeds up to 50 megabits per second — more than eight times as fast as its quickest offering so far and faster than any other connection available in German homes. The move is crucial for Deutsche Telekom’s ambitions of offering a “triple play” of services spanning telephone, Internet and television at a time when its traditional business of phone calls is being shaken by major technological upheavals.

It looks like they managed to get a copy of Verizon’s (VZ) and AT&T’s (T ) playbook…

The German incumbent is lobbying to be spared such interference, arguing that it is creating a new service and already faces mounting competition from cable, Internet and other telecom companies. It has threatened to scrap the spending plan and lay off more workers if regulators impose too many restrictions.

The German government supports the removal of UNE-P like rules and has increasingly distanced itself from regulating the telco sector. Why? Concern over a broadband gap! According to the OECD, France, Great Britain, and Germany all lag Japan, Korea, and the USA in broadband penetration, particularly in next gen technology deployments.

Another quote from the WSJ article:

The government argues that there are three steps in fostering competition: privatization, regulation and deregulation. “The third step is the one that needs the most courage,” says Joachim Wuermeling, Germany’s secretary of state for the economy. That stance, however, puts Berlin on a collision course with European Union regulators in Brussels who are responsible for setting the terms of industry competition across the Continent.

As it turns out Telefonica and France Telecom want the same deregulation, and the EU is concerned that allowing Germany to deregulate would be a precedent for the entire continent. All of these carriers are making deployment of next gen broadband networks contingent on a release of obligations to lease the new infrastructure to competitive carriers.

I do not understand the mechanics behind the EU and how it represents the interests of corporations and individuals in member states, but it seems ridiculous that a sovereign country no longer has control of how a company can operate within its own borders. Who are the EU regulators looking out for? Themselves?

Companies only invest risk capital when the potential returns warrant it, regardless of the wishes and magical wand waving of pundits and politicos in Brussels or Washington DC. Telcos will simply refuse to make new investments in technology if the upside rate of return is regulated by a government entity and the downside risk is left unlimited.

I am frustrated the hypocrisy of those who lament broadband availability and technology, but at the same time refuse to allow those who make the risk capital investment to reap the benefits- instead they advocate confiscatory policies like Net Neutrality, and UNE-P.

The good news is that these debates are taking place, as we may be lucky enough to see the same destructive UNE-P legislation that was removed in the USA eradicated from three of the largest states within Continental Europe.

Thanks to Om Malik for some good data (.pdf link, in German) on German broadband policy.

Lightreading has a good quote from Scott Ford, the CEO of Alltel Corp. (AT) on Net Neutrality.

I’m here to advocate that we have grocery store neutrality. You can come to the grocery store, pay $50, and you can have just whatever you want, take a cart, just load up on it. Or Taco Bell neutrality — it’s $25 a month, I can drive up and I can have a taco or whatever, or I can come with all those people in the Verizon commercial… bring them to load up on Taco Bell.

Taco Bell neutrality, grocery store neutrality, Net neutrality… They all make the same amount of sense.