Fighting for fibre

Dave Curry, president and CEO of World Wide Packets visited the Middle East to comment on triple play trends he has observed and warn incumbent operators of the infrastructure challenges they will face with increased competition.

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By  Simon Duddy Published  July 12, 2005

|~|Curry,-Dave_m.jpg|~||~|Dave Curry, president and CEO of World Wide Packets visited the Middle East to comment on triple play trends he has observed and warn incumbent operators of the infrastructure challenges they will face with increased competition.

Network Middle East: What trends are you seeing in triple play worldwide?

Dave Curry: About four or five years ago when World Wide Packets was launched, adopting triple play was deemed a highly unlikely scenario by service providers (SPs). In the intervening years there has been a gradual, and in some cases begrudging, acceptance of the need to be in a position to deliver triple play. A lot of the reluctance was related to the inadequacy of networks. But with the rise of cable TV companies, especially in the US, the need for service providers to support triple play has become imperative. In many cases, their survival depends on their ability to deliver these services. Cable TV companies in the US have their own infrastructure into the home and are finding it easier to deliver the services that the local exchanges carriers have traditionally delivered – voice and data - than the phone companies are finding it to deliver video.

This has led them to investigate video services over copper but copper’s limitations are well known – distance, bandwidth and quality of service (QoS).

Now a number are looking beyond copper to fibre.
Ethernet is emerging as the protocol of choice for last mile networks the world over. The rise of Ethernet is inexorable, it’s the cheapest, most scalable way to deploy next generation networks. We’re seeing it extend from the local area network (LAN) to the wide area network (WAN), to carriers.

There are also some major competitive threats looming on the horizon for all SPs. Recently in the US, Direct TV announced a plan to launch satellites over next few years. The satellites will deliver 1,500 HDTV (high definition television) channels, with has huge bandwidth implications. Cable companies and telcos will be challenged to compete with this increased capacity.

NME: What is driving triple play in the region?

DC: The Middle East is a market we’ve been in for three years. We received a phone call out of the blue suggesting there was an enormous market. Resulting from that call, we started to invest in what we believe is a very significant opportunity. We got some business early on such as the Dubai Marina project with Emaar. We have made a commitment to the market in terms of resources and now have over 10,000 subscribers using our technology to support the delivery of triple play and our optical Ethernet last mile solutions are delivering 100Mbytes/s of symmetrical bandwidth to residential and commercial subscribers.

NME: What part does World Wide Packets play in triple play?

DC: We build customer premises equipment (CPEs) including the device in the home that allows users to connect telephone, PC and TV to the internet protocol (IP) network. We also provide devices that carry traffic back to the head-end where services converge.

NME: Who are your competitors?

DC: There are a number of companies that have come from enterprise networking, such as Cisco, that were among the early companies to come out with products to support triple play. The main challenge they’ve had is to move from an enterprise model to a carrier model. Some of the most important attributes of a carrier grade solution are five 9s reliability, and being able to deliver a service 24 hours a day, 365 days a year. All of these companies have struggled to meet that quality level. What we do differently to the enterprise companies is design a solution and engineer a product set with carrier grade attributes from the beginning.

If you crack open the box on networking components from different companies, it’s all the same. We all buy many of the same components. Our intellectual property comes as a result of the operating system (OS) and management software we have developed. With multiple pieces of hardware and aggregating many subscribers, it must behave as a single solution and the only way to do it is through software. It is not sufficient to take a standard Ethernet switch and plug it into another switch from another vendor, with a different OS. It is necessary to approach it from solution perspective, only then can you meet the challenges. It is not sufficient to deliver bandwidth, you also need to support maintenance, inventory and other services.

NME: What customers are you aiming for?

DC: We are looking to extend our footprint beyond Emaar to Dubai Internet City (DIC) and major carriers. Etisalat and Saudi Telecom Company (STC) are realising they need to be able to offer triple play services. Some are looking to leverage their copper footprint, but they are also starting to see interest in fibre.

It will be very difficult for an incumbent to compete with a new carrier trying to deliver services over copper. For example, the new operator will compete against Etisalat for business like the high-end property development ‘The World’. Etisalat is not going to build copper when the new carrier will build fibre, it’s not competitive. We’re seeing the rise of ADSL+ but it still has limitations in terms of distance and is not symmetrical. Fibre is the way to do it. Content will also drive revenue for providers and the way they increase revenue is by having a bigger pipe, which allows more content. It’s all about how much average revenue per user (ARPU) a carrier can generate.

NME: What is your business strategy in the region?

DC: Our business model involves selling solutions through partners and we have a local relationship with US Telecommunications, who add value in terms of integration and service fulfillment. It is the early stages of deregulation and we’re seeing more opportunities than when we arrived here three years ago. We’re also seeing other countries in the GCC emulate the UAE. We’re pleased to have an established foundation here and are looking to replicate that in other countries in the region.

NME: Is it easier for telcos in the Middle East to roll out triple play solutions than for telcos in North America and Europe?

DC: The Middle East has a significant advantage in deploying last mile networks. Consider North America, where copper is widely deployed and telcos are forced to look at brownfield builds. It is very expensive. In the Middle East there are a lot of greenfield deployments and very low labour cost, so the cost of deploying networks is a fraction of what it costs in the West, so capital cost per subscriber is considerably less. Therefore, the revenue threshold is correspondingly lower.

NME: What about quad play, with the added element of mobility?

DC: Not every service provider is going to be able to do that. Some service providers can bundle together services if they have a wireless licence. Its all about stickiness and share of wallet. Bundling fixed and wireless creates stickiness. As far as we’re concerned it’s a marketing issue rather than a technology issue. We can work with WiMax, Wi-Fi and cellular wireless.

We don’t sell wireless technology, but if a customer wants to add wireless, it can be achieved easily. While we’re a firm believer in the merits of fibre, we’re agnostic, we can support wireless and copper. We can deliver 100Mbytes/s symmetrical bandwidth over Cat 5/6 copper for 100 metres. What we won’t do is use DSL copper infrastructure for the last mile.

To date, wireless not been very important because of QoS
issues, after all pure bandwidth doesn’t deal with sandstorms
or rainstorms.

NME: Why is IP important?

DC: It’s cheaper, scales and is more manageable. We are seeing an orderly transition from the circuit switched world to IP. It is the way that carriers will build networks in the future. It’s starting in the core and moving closer to customers. We have seen IP for data services for some time. Now we are seeing it move into access networks and it will also support service delivery for residential customers. In my opinion it can’t happen fast enough.

There are some major projects going on, notably British Telecom’s (BT) 21st Century Network. BT is investing in an all-IP core, which will result in a major reduction in the number of network elements by orders of magnitude. BT will cut operating expenses massively and without IP it could do it.

However, BT is not addressing the last mile, it believes it can be competitive on copper ADSL infrastructure. The jury is out on that, it remains to be seen if they can compete with combined efforts of NTL and Telewest cable. They deploy fibre last mile infrastructure throughout the UK. It will be interesting to see how BT responds.

NME: Are telcos in the region clinging to circuit based technology too much?

DC: What drives incumbent operators to invest in new infrastructure is competition. There is now competition in the region, although it remains to be seen how much that competition affects behaviour. I think there are many lessons that can be learned by looking at what happens in very competitive environments such as USA and Europe. It’s amazing how quickly cable companies have emerged on top of the heap in terms of competitive position. The hurdles to deliver data access and VoIP are much lower than the incumbents have to lay fibre to compete with them.

If you are Etisalat or STC you don’t have to look further than those markets. But if you don’t have competition, then you don’t have the pressure. With the World Trade Organisation (WTO) requirements, competition is there and Etisalat will have to invest in a fibre last mile infrastructure or it could lose business to a new carrier.||**||

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