Future services

Following my last post, I've been thinking what my current "future service" would look like. I say current, because I don't think it's possible to imagine what things will be like more than a few years out at the moment -- too much change going on.

Partially, I'm influenced by a new toy a friend and I were playing around with at the weekend. Stu works for Sandman. Basically if you have lots of money to spend and want a seriously cool audio or video solution - call Stu. He was playing with a Linux box that's hardwired with a TV card and a DVD drive. Basically a home theatre in a single box. It had a wopping great hard drive in it and he'd loaded all his CDs and DVDs into it. We plugged it into my Sky decoder and LCD monitor and away we went. Pretty cool, but a bit hard to use and a pain to load all that content onto.

Fundamentally, what I want is a one-stop shop for everything. Here's my storyboard ...

The first thing, is that it all just works. Everything is seamless. I don't know how it works (ok, being me I probably do, but I don't have to know unless I want to). When someone rings me, my phone rings. My phone is just a handset. It uses a mobile network if I'm out and about and bluetooth's (or whatever the flavour of the day is) off my fixed line at home if I'm at home. It's a personal phone and work phone with different rings. It does interesting stuff like automatically sends work calls to voicemail after hours so my weekends don't get interrupted unless I want them to.

I have a box in my house. It's where all the clever stuff happens. It's where everything comes into the house -- my internet, TV, stereo and phone all plug into this box. It manages my bandwidth requirements. But I dont' pay for bandwidth any more because I managed to get a fibre feed into my house by convincing all my neighbours that it was a good idea/

My house is "wired" so in any room I can access any service if I want to. I can surf the web or watch a movie in any room with the appropriate device. I have speakers in the ceiling, a big screen in the lounge, a small one in my bedroom. All my components might be different but they have standard cables/plugs. When my daughters can afford their own TV, they can have one in their room and can watch stuff separately from me - if they pay for it.

When I have friends over and I want to put some music on, I just punch a few buttons and get a selection. I don't have to load CDs. I don't have to worry about where to store all my old CDs, videos and DVDs anymore either. Storage is no longer an issue.

I'll almost certainly still have a PC in my office, but I can run all this from anywhere in the house.

I pay a fee to some provider for this access. I might pay other providers for other services (but probably not because I get a discount if I stay with one provider). I am in control.

There must be more. I'm sure I can make it cooler than this. I'll keep thinking.

Bandwidth

Alongside Moore's Law, there's a matching phenomenon for bandwidth known as Nielsen's Law, which basically states that end-user connection speeds grow at 50% per year. This has held true for some time and seems to be continuing. At the moment, I have a 2Mb down/128kb up DSL service. The best I'd get based on the technology installed in NZ is around 8Mb. If/when we get to ADSL2+, I could be looking at up to 24Mb, because I'm not too far from my local DSLAM. If we ever went with Fibre ToThe Home, I could be into the hundreds of megabits and over time it will (according to the law) just keep going up. Of course whether or not I can actually reach these speeds or use them is dependent on having the bandwdith through the core network and having services that require it - which is the topic of today's blog entry.

So what do I do with this bandwidth? Today I can surf the web, download average streaming video, listen to my old favourite radio station in the UK. If I want streaming TV, which is coming in other parts of the world, I need at least 15Mb. Then there's HDTV, which will require even more. But do I want internet TV? Will it be any better than broadcast TV - or what broadcast TV becomes in response? But what else is there? I dunno - for some reason TV just doesn't seem enough. There must be other stuff coming.

But what is it?

Where's the content? I reckon that's where the money is - bandwidth is becoming a commodity.

ULL - my argument

Fundamentally, I don't think that the government has done the right thing unbundling the local loop. I'm not saying that Telecom were doing the right thing either, but unbundling is not the solution.

In the last few weeks, Telecom's share price has dropped considerably on news of unbundling - not good for shareholders. However, it's also bad news for the country, because unbundling isn't going to solve anything. Definitely not in the short term (2-3 years) and I suspect not in the longer term.

Why is it bad?
It's bad because there's currently only one company in NZ with the financial power to undertake the investment required to really make a difference - Telecom. And the government has just removed their competitive advantage - oops. Without a reason to invest (i.e. to make money), no company is going to invest. That's what's happening in Australia where Telstra's major FTTN rollout is under threat.

It's bad because even with an unbundled local loop, it's unlikely that the smaller players can really afford the investment required to take advantage of unbundling. Sure the larger ones such as TelstraClear, CallPlus and ihug might manage it, but even then it will be in the larger city centres. It's unlikely that Fielding or Masterton or Gore or (enter small provincial city/town here) will see much investment because there's no money in it. Maybe a small player such as Inspire could manage something around Palmerston North, where it is based, but little on a national scale.

It's bad because investment in core infrastructure is required to support faster speeds - and that costs a lot of money and has a long payback period. To get to the speeds required for triple-play (voice, data and video) or qad-play (add mobile), you're talking 15-24Mb/sec downstream. That's ADSL2+/VDSL/VDSL2 type speeds. And you only get these speeds with very short copper loops (less than 1KM). From an NZ perspective, with its spread out landscape, that means a cabnetised network. i.e. Lots of 2m x 2m x 0.8m (ish) green cabinets dotted around the country that have copper from the house going in and fibre coming out. That means a lot of streets being dug up - a lot like when underground powerlines went in or when you first got gas in your street (remember those days). And it also means a Resource Management Act nightmare.

So what's the answer?
If we assume for the moment that faster broadband speeds is directly linked to economic growth (I'm only assuming it because I can't find a reference for it yet - I do think this is true), then it follows that it's in the national interest to improve it and is therefore a government problem. i.e. It's up to the government to solve it.

Because Telecom is a private company, its first responsibility is to its shareholders - so why do people get upset when they take actions that aren't necessarily in the best interests of the country? The business case for a large fibre rollout is hard to make. Ergo, the government (read "you and me") should pay. It's kind of like good roads or electricity or health. It's just got to be done and we can't and shouldn't ask a private/public company to take the risk.

So we've got to pay for it. I think the government needs to buy the infrastructure and fund the investment. Maybe they buy the appropriate parts of Telecom? But it needs to be:

1. Nationwide
2. Not expected to make a profit
3. but cost effective
4. Done quickly
5. State of the art
6. For the long term (i.e. kept up to date)

Well, that's what I reckon anyway (in summarised form)