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Computer Transactions, Not People, Are Driving the Need for All-Fibre Networks

Ever since we first became involved in developing policies and strategies for countries relating to what are now known as national broadband networks, we have argued that those taking part in the strategic decision-making processes of designing these networks should look, not at what broadband can do now, but at what high-speed broadband can do to assist countries to create the best opportunities for future developments.

Key to this has been our prediction that high-speed broadband will be the catalyst for enormous changes in the economy and society in general. We have talked about e-health, e-education, e-commerce and so on. We said that in the not-too-distant future the majority of traffic will be based on IoT and M2M—this driven by developments in cloud computing, data centres, data analytics, smartphones, wearables and other computing devices. We also mentioned that the overall development of the highways for the digital economy has little to do with the traditional telecoms network and we urged the policy-makers to treat these networks, not as just another telecoms network, but as digital freeways essential for new economic and social development.

Assisted by the new ICT developments, this new environment will be what we call ‘trans-sectoral’ in nature—it will cut through the vertical silos in business, government and organisations such as healthcare and education and create instead far more collaborative and sharing business structures in a horizontal configuration. These transformations need to be led by government and business leaders from the top—hence ‘trans-sectoral’ and not ‘cross-sectoral’.

This being the case, for the last decade we have been suggesting to those in charge of national policies and the strategic design of such infrastructure that these networks need to provide:

  • affordable and ubiquitous access
  • enormous capacity
  • low latency
  • robustness
  • symmetric access
  • very high levels of reliability, quality and security

The combination of these requirements points in one direction only: all-fibre infrastructure.

Unfortunately, new network development is still mainly driven by the telcos which in most cases have successfully lobbied the politicians to support them in protecting their old and ageing infrastructure—and the old business models related to this—rather than building the highways of the future. They failed to build new high-speed broadband networks based on these principles in any timely way; instead they concentrated on their old business models and their old broadband services and used ‘access speed’—and their estimate of the need for it—as the guiding principle in designing the network.

An interesting exception is Australia where Telstra, the incumbent telco, favoured an all-fibre FttH/FttP network. But the government in its infinite wisdom decided instead to continue to use the ageing copper and coax infrastructure. It is clear when one listens to the government’s rhetoric that it still fails to understand why such infrastructure is needed. They still talk about ‘speeds’ and video downloads and believe that 25Mbs is all that users need for the foreseeable future.

Interestingly, just looking at video streaming requirements alone the arrival of Netflix led to an increase of more than 30% in network capacity. Very few had envisaged such a massive uptake, yet video streaming is not even where the longer-term real game is being played.

If we look at the elements mentioned above, as well as the sharing economy and other developments mentioned below, in order to manage the computing power traffic generated by services, apps, M2M, IoT, wearables and smartphones, the digital infrastructure requirements of the future will have to be measured in terms of gigabits.

Slowly but surely most governments are starting to see the importance of the digital economy, and are accepting the reality that fibre is needed to properly develop this. What we didn’t envisage when we started to talk to governments about such policies in the early and mid-00s was the extremely rapid development of all of this—mainly thanks to the smartphone (computer) and the subsequent explosion of mobile apps and the consequential pressure on network capacity. Many telcos faced severe network problems with coping with the additional traffic. It is here that we really see how quickly the digital world around us is changing.

Those with the right vision have started to develop policies that will lead to FttH/FttP. The FCC policy in the USA that allows municipalities to bypass the tardy incumbents and build their own FttH networks is one example of this. Similar city-based developments are taking place in the Netherlands and now also in Germany. The smart city concept is slowly becoming another key driver of digital infrastructure.

Thanks to government leadership, Estonia is the first all-fibre country in the world and several North and East European countries are not far behind. Spain is leading the rollout in southern Europe. The biggest deployment of fibre network is in China, taking nearly half of all of the global connections.

Competitors to the telcos also see the future as being-fibre driven by organisations such as Google and Free in France. But whether on mobile or fixed networks the new services are increasingly seeing that traffic on the network is generated by these apps and services, without any direct involvement of the user. By simply becoming a user of a service—and by giving the provider their consent to use certain data—these apps and services are continuously online to provide whatever they are set up for.

In parallel, services that have been arriving in recent years include collaboration tools, CRM, ERP, transactional apps, virtual desktop (cloud computing), video, trading desk and imaging apps, many of these are P2P services. Every action taken on any screen now triggers an avalanche of computer-to-computer transactions, all happening thanks to the internet backbone bus. It is clear that symmetry and low latency are key here.

The economic value of broadband is also becoming clearer. The more social economic activities that can be shared the higher its economic value, and broadband is facilitating this—people are taking to it like ducks take to water.

It comes as no surprise that other developments are happening in parallel here: the sharing economy is really taking off. The traditional passive way of consuming is giving way to one where sharing is beginning to play a bigger role. This went from sharing ideas and content and remixing some of that to crowdfunding, and now to sharing people and assets (Uber, AirB&B, Divvy, BikeShare, CarShare, Freelancer, eBay, etc.) and a whole range of other services around P2P services. This will further develop into ownership sharing. Such a sharing economy requires ubiquitous access, otherwise one half of the population can participate and the other half cannot—or, at best, can only do so at a second-rate level.

This is also the key area where new jobs and new wealth is being generated. It is feared that the digital economy is shedding jobs faster than it is creating new ones. We tend to disagree with that but the sharing economy is definitely the key area that governments should foster to see the creation of new jobs. The other reality is that more new jobs will be based on people taking a much greater role in the ownership of that job, rather than relying on traditional employers offering new jobs.

In relation to wealth creation, the most valuable companies in the world are those who are the leaders in this economy. They themselves are low in assets and low in staff, building their models around the sharing economy and empowering their users.

It is interesting to see that because of the rapid pace of developments the old vertical structures mentioned above are being destroyed by these new ‘trans-sectoral’ structures, driven by community and other grassroots developments. It is clear that in many situations the traditional sectors failed to show leadership in establishing these trans-sectoral structures themselves. The Uber case illustrates this, with massive protests from traditional players around the world, trying to stop this aspect of the sharing economy (using the tactic of Fear Uncertainty and Doubt). Obviously their attempts will be futile—in the end the sharing economy will make sure that any negatives will be adjusted. And since people like the model it will prevail, perhaps for some time to come—alongside the traditional models, which will obviously now need to change more quickly if they are going to maintain their relevance in the market.

Policy-makers and business leaders will need to look at the broader picture of all of these developments; and they will have to develop far more holistic policies and business strategies in order to reap the social and economic benefits that they are generating. The ICT tools are there. They won’t go away and many will use them, leading to massive transformations. This will happen with or without national policies and strategies, but developments where the two can be aligned will increase national prosperity and create more and better jobs. It will empower people and create a better lifestyle for all.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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