The moot at the inaugural Computerworld Fry-Up debates is that “Ultra-Fast Broadband will make telcos irrelevant to the end-user”, but the audience at the Wellington event yesterday took it as a cue for a wide-ranging discussion of the delivery of UFB and its consequences for the economy.
Opposition ICT spokesperson Clare Curran, introducing the debate, attacked the government’s lack of consideration (and public ignorance) of the risks and opportunities of a broadband-enriched economy but she acknowledged the Opposition had not yet formulated concrete counter-proposals.
In the event’s first heckle Donald Clark, CEO of research and education network operator Reannz, asked why the Labour party feels it has to wait for the shape of the UFB deployment to emerge before it can suggest its own ideas?
When Julius Vogel was developing road and rail systems for New Zealand people wouldn’t have had much idea what they wanted to use those for, said former government CIO Laurence Millar; “why do we have to have a discussion; why don’t we just get on and do it?”
Beginning the debate in earnest, InternetNZ CEO Vikram Kumar, for the affirmative, said the service providers are already becoming irrelevant to the user; “the only time I think of my ISP is when the internet is not working or when I breach my data cap.
Under the UFB plan the market structure will change, he said. “The fibres coming into our house will not be owned by the service provider.”
Competitive strategies will centre initially on distinctive products and services, with one or two low-cost basic service providers. A “red-ocean strategy” – providers fighting ferociously for a share of a limited market - will yield to a “blue-ocean” approach, seeing the market as open-ended. Low-priced and distinctive offerings can then co-exist.
Service providers will still annoy the customer but it will be easier to switch because the provider no longer has monopoly control of the physical link, Kumar said.
The public sector provider of basic infrastructure must still have a role in forming the market, argued Gabrielle Gauthey of Alcatel-Lucent, senior vice president and head of public affairs, who is visiting from France and took the lead for the negative. “There need not be a lot of public money invested,” but there should be public initiative to provide a uniform standard to urban and sparsely populated areas. In France billions of Euros have been invested in 50/50 public/private funding of open-access dark-fibre backhaul. Fibre-to-the-premises will take the same approach.
The public initiative helped the rise of Iliad, an originally free and still very competitive service which has dramatically changed the market in France. Iliad is close to becoming a vertically integrated incumbent which will in turn have to be reined in, Clark suggested.
“Service providers will still be relevant,” said Gauthey; “but they will have to change their mindset and not cling to their passive dumb pipes; they have to be proud to be pipes, but smart ones” Telcos will still be “the point of contact with the end-user.”
Lance Wiggs, for the affirmative, agreed with public/private joint investment but contended that this is irrelevant to the telco. Gauthey had not talked about telcos but “public” investment, he said. “Iliad sits on top of telcos, which proves our point; telcos are now irrelevant to the end-user.”
Once a fibre is in place, he said, anyone can provide internet, phone and TV; “all a telco gives you is the effect of hundreds of thousands of customers’ buying power.” That could come from a much more broad-ranging company, he said. “The real triple play is providing gas, internet and electricity.”
Some telcos have talked of being “the trusted path to the consumer,” but they would have to have “beautiful, elegant” billing systems that give you your current bill at any time and in any form, Wiggs said.
The ideal world for a telco, Wiggs said, is a walled garden where everyone shops at Ferrit (Telecom’s unsuccessful online mall) and uses a TiVo recorder rented from Telecom. That world is past. Today we have freely downloadable apps, phonecalls on Skype, business accounts processed on Xero “and stuff we don’t know exists yet.”
Impending death of telcos has been reported “as long as we’ve had them”, said final speaker, NZICT chief executive Brett O’Riley who was arguing for the negative. “Yet despite massive growth and deregulation, the big players still exist.”
They will continue as long as there are economies of scale. To bill and service customers competently scale is essential, he said.
Wiggs’ vision of a single “dumb fat pipe” is misleading, O’Riley contended. “Someone will have to provision that pipe and provide service.” In the telcos’ product and service department, which O’Riley called the “caves of Mordor” (a Lord of the Rings reference) – are thousands of workers coding away in the hope of appreciation from one user. Clark responded from his KAREN experience that supporting a broadband link is not especially difficult.
Former Tuanz chairman Chris O’ Connell said UFB and accompanying regulatory changes such as the proposed structural separtion, should be seen as a matter of easing Telecom into the real world, rather than the media-generated image of a punishment for the former incumbent.
Tomorrow (Thursday 2 December) the Fry Up breakfast debate in association with Alcatel-Lucent will take place in Auckland. The moot remains the same – UFB will render telcos irrelevant to end users – however three of the four debate participants will be different. Arguing the affirmative is Scott Bartlett, CEO, Orcon and Rosalie Nelson, IDC Analyst and for the negative Gabrielle Gauthey and Hayden Glass, Vodafone GM Public Policy
Further details on Auckland event can be found here.