April 2013 • Published by Decisive • A CommsDay publication
Super-fast broadband Are the beneﬁts really worth the costs?
African dreams Angola Cable’s ambitious plans to Africa’s comms hub IPv4 is dead, long live IPv4 Facing up to IPv4 address exhaustion Service provider SDN NTT Communication jumps into SDN Big data for telcos The challenges and opportunities The future of mobile Taking LTE to the next level M2M This time it’s the real deal
It’s time to change the conversation “We rely on our smartphones now – they just have to work. That’s it. I have so much going on with work, and a busy social life, and I need to be able to do whatever I want. It’s like water, or electricity. We click – and we expect it to just happen”. Christine Simmons, Theatre Producer, Nottingham We know that success in metro goes far beyond a good radio – it needs a comprehensive perspective. Alcatel-Lucent is the leader in Small Cells with the most commercial deployments. Discover the bigger picture about Small Cells. lightRadio Metro Cell Express. www.alcatel-lucent.com/lightRadio-metro-cell-express/ Small Cells. The Bigger Picture.
AT AT THETHE SPEED SPEED OF OF IDEA IDEA S™ S™
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8 SUPERFAST BROADBAND: Are the benefits really worth the high costs?
EDITOR: Tony Chan at Tony@commsdaymail.com GROUP EDITOR: Petroc Wilton FOUNDER: Grahame Lynch COVER DESIGN: Peter Darby WRITERS: Geoff Long, David Edwards, William Van efner, Grahame Lynch, Dave Burstein, Bob Fonow ADVERTISING INQUIRIES: Sally Lloyd at firstname.lastname@example.org EVENT SPONSORSHIP: Veronica Kennedy-Good at email@example.com ALL CONTENTS OF THIS PUBLICATION ARE COPYRIGHT. ALL RIGHTS RESERVED CommsDay is published by Decisive Publishing, 4/276 Pitt St, Sydney, Australia 2000
15 Can Angola Cable help Angola become Africa’s comms hub? 20 IPv4 is now exhausted but IPv6 has not been widely adopted. But the Internet has little risk of breaking. 26 NTT explains its SDN strategy 31 Telcos are adopting widely differing approaches to the rise of “big data” 34 LTE continues its spectacular rise. A ready reckoner of its different flavours 39 M2M is hitting the big time
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Westin Hotel, Sydney Tuesday, 9 April & Wednesday, 10 April 2013 VHA chief executive officer Bill Morrow on differentiation and competition in the Australian telecommunications market & meeting customer needs With 4G spectrum auctions scheduled for April, Australian Communications and Media Authority chair & CEO Chris Chapman outlines 2013’s agenda Market Clarity CEO Shara Evans reveals results from new ACCAN research on what the nation’s small businesses really think about telcos & their service offerings
Shadow communications minister Malcolm Turnbull outlines the Coalition’s plans for the NBN and the telecom industry should it win government later this year Telstra GMD, innovation, products & marketing Kate McKenzie on value based pricing and an industry approach to customer-lensed traffic management NBN Co head of product and sales John Simon will provide a status update: “National Broadband
Network—where are we at now?”
Telcoinabox chief executive officer Damian Kay looks at the history and future of telecommunications resale as the industry moves to an NBN world
Southern Cross Cable sales and marketing director Ross Pfeffer explains what’s happening in international bandwidth markets
Telstra Wholesale group managing director Stuart Lee will provide an update on what’s happening this year at Telstra Wholesale
Optus vice president, corporate and regulatory affairs David Epstein provides perspectives on a busy year for telecommunications policy and industry developments
Plus speakers from Amaysim, iiNet, Verizon, BT Global Services, Kordia, BigAir, Symbio Networks, LiveConnected, Booz & Company, Telsyte, Vertel & dedicated sessions on mobile & wireless, telecom regulation, broadband technology & deployment and data centres & the cloud
CommsDay Summit Dinner
7-10PM, Tuesday 9 April, Westin Ballroom Special guest speaker: Ruslan Kogan of Kogan Online
Tuesday 9 April
KEYNOTES: BALLROOM 1/2 9am VHA CEO Bill Morrow ● 9.25 Southern Cross Cable marketing director Ross Pfeffer ● 9.50 Telstra group managing director, innovation, products & marketing Kate McKenzie ● 10.15 US analyst/editor FastNetNews David Burstein 10.40 MORNING TEA sponsored by Overture Networks
MORNING PLENARY: BALLROOM 1/2 11.10 NBN Co head of product & sales John Simon ● 11.30 Cisco CTO, service provider segment, Asia Pacific Matt Kolon ● 11.50 Alcatel-Lucent global wireless division CTO Michael Peeters ● 12.10 Market Clarity CEO Shara Evans ● 12.30 Ciena vice president, product and technical marketing Mike Adams 12.50 LUNCH sponsored by Ciena: BALLROOM 3/4 STREAM A: POLICY & REGULATION, Ballroom 1 1.50 Ovum analyst David Kennedy ● 2.10 Squire Sanders’ Richard Pascoe on content regulation ●2.30 Cooper Mills’ Peter Moon on the TCP Code ● 2.50 TIO CEO Simon Cohen ● 3.10 Dr Bob Horton on ANZ implications from the WCIT ● 3.30 Refreshments ● 3.50 Allen Overy’s Michael Reede & Venture Consulting’s Justin Jameson on the NBN options open to the Coalition ● 4.10 ACCAN CEO Teresa Corbin ● 4.30 Internode founder Simon Hackett ● 4.50 Maddocks’ Brendan Coady on the NBN SAU ● 5.10 Booz & Company’s Ben Hickey on digitisation & prosperity STREAM B: BROADBAND TECHNOLOGY sponsored by F5 Networks, Ballroom 2 1.50 ADVA Optical Networking CTO Christoph Glingener ● 2.10pm Adtran director, product management Robert Conger ● 2.30 Symbio Networks CEO Rene Sugo ● 2.50 Eintellego Networks CEO Skeeve Stevens ● 3.10 F5 Networks service provider solution specialist Mohamed Tanana ● 3.30 Afternoon tea ● 3.50 Amdocs director revenue management, Guy Hilton ● 4.10 Verizon Enterprise Services’ Robert Le Brusque ● 4.30pm Callpoint Spatial MD Brian Beckor ● 4.50 Vertel MD Andrew Findlay on Carrier Ethernet 2.0 5.30 DRINKS 7.00PM OFFICIAL DINNER with special guest speaker Ruslan Kogan sponsored by TATA CONSULTANCY SERVICES in BALLROOM 3/4
Wednesday 10 April
KEYNOTES: BALLROOM 1/2 9am Australian Communications and Media Authority chair & CEO Chris Chapman ● 9.25 Telstra Wholesale GMD Stuart Lee ● 9.50 Shadow Minister for Broadband Communications and Digital Economy Malcolm Turnbull ● 10.15 Optus vice president, corporate and regulatory affairs David Epstein 10.40 MORNING TEA sponsored by Overture Networks MORNING PLENARY: BALLROOM 1/2 11.10 Comms Alliance CEO John Stanton ● 11.35 Juniper chief architect, advanced technologies Richard Bayliss ● 11.55 Telsyte analyst Foad Fadaghi ● 12.15pm Telco In A Box CEO Damian Kay ● 12.35 Ericsson Australia & NZ CEO Hakan Eriksson
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12.55 LUNCH: BALLROOM 3/4 STREAM A: WIRELESS & MOBILE STREAM sponsored by Sandvine Networks, Ballroom 1 1.50pm AMTA CEO Chris Althaus ● 2.10 Sandvine co-founder & CTO Don Bowman ● 2.30 Kordia MD Peter Robson ● 2.50 LiveConnected (MVNO) CEO Roshan Mahanama ● 3.10 AMAYSIM CEO Rolf Hansen ● 3.30 Refreshments ● 3.45 Broadcast Australia dir, corporate development Brett Savill on changing role of infrastructure providers in the wireless space ● 4.05 GQI Consulting partner Dominic Quai STREAM B: DATA CENTRES & THE CLOUD, Ballroom 2 1.50pm Equinix director, network & content, Asia Pacific Tejaswini Tilak ● 2.10 iiNet’s TransACT CEO Ivan Slavich on data centres ● 2.30 Truman Hoyle partner Shane Barber on the implications of data retention laws ● 2.50 BT Global Services head of Unified Communications & Contact Centre ANZ Phillip Zammit on the future of work ● 3.10 CEET's Deputy Director Kerry Hinton on energy inefficiencies in the cloud environment 4.30 CLOSING DEBATE, Ballroom 1 BigAir CEO Jason Ashton, CommsDay founder Grahame Lynch, Tata Consultancy Services Australia and NZ CEO Deborah Hadwen, analyst Kevin Morgan & FastNetNews editor Dave Burstein hosted by Phil Dobbie.
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THURSDAY 11 APRIL 2013 9AM-12PM, WESTIN HOTEL SYDNEY
GIGABIT AUSTRALIA Technology choices over the next 5 years
In this unique deep-dive workshop, learn about the telecom technology choices emerging over the next five years:
Your workshop leader Dave Burstein
FTTH, gigabit ready and available now Vectored DSL/FTTN: coming online next year HFC DOCSIS 3.1: ramping to a gigabit now LTE Advanced: heading toward a gigabit in 2 years
1: What are the costs, deployment timelines & product availability schedules for these options? 2: How can Wi-Fi be harnessed to enhance the NBN & LTE? 3: What will the tablet, smartphone & telematics revolutions mean for network choices? 4: Fixing NBN mistakes regarding pricing, cross-subsidies 5: Case studies from Europe, the US and Asia 6: What will 5G look like? How will small cells impact? ABOUT YOUR WORKSHOP LEADER Dave Burstein started DSL Prime and Fast Net News in 1999 when fewer than 50,000 globally had broadband. He’s actively reported as the network expanded to 600 million connections. Along the way, he’s written two books with Jennie Bourne (DSL: A Tech Brief and Web Video: Making it Great, Getting it Noticed). Dave’s next book is “The Path to Gigabit Wireless.” His work has been picked up by the NY Times, Wall Street Journal and publications around the world. Dave says “I report from New York City but the best ideas come from all over the world. By 2002, Korea passed the U.S. in broadband. Then Masayoshi Son in Japan brought in the mass market era with service at $20. Xavier Niel in France introduced the 30 euro triple play. Kenya may be the first in the world to create a 100 MHz block for gigabit LTE Advanced. China has twice the Internet users of the U.S. and Africa will soon pass the U.S. as well. Australia’s NBN is a great experiment. I’m glad to be visiting Australia and expect to share and learn a lot.” Burstein’s Fast Net Futures and Web Video Summit were breakthrough conferences that presented the technology becoming crucial today. Fast Net in 2004 featured the first public demonstration of 100 megabit DSL. In 2005 at Fast Net, John Chapman of Cisco presented the path to Gigabit Cable and John Cioffi of Stanford introduced vectored DSL. Both are coming to market in 2013. At Web Video, Microsoft presented the first demonstration of live 6 megabit HD video over the Internet. He consults for Vermont Telephone, building a gigabit fibre network and LTE throughout the state as part of the U.S. Broadband Stimulus. He contributed to the Columbia University “Broadband for America” report that influenced the U.S. Broadband Plan and did two workshops for the plan itself. For CommsDay, he reported the full two weeks of the ITU WCIT conference and the new ITR treaty. Australia and many others refused to sign.
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Is Superfast Broadband worth the cost? Governments are pouring billions of dollars into FTTH networks, citing future economic & social benefits. But some question whether it is worth the cost, reports Grahame Lynch
here have been three great revolutions in the delivery of fixed Internet access. As catalogued by Robert and Charles Kenny in a 2010 paper, the first was the advent of dial-up Internet in the mid-1990s. By 1997, for a $90 cost per line in an ISP’s modem rack, people had access to email, Geocities-type content, rudimentary e-commerce and online news. The next revolution came around the turn of the century, as DSL became deployed. For as low as $50 per DSL port, we saw the rise of a broadband economy. This brought us the utility and benefits of the likes of YouTube, Flickr, Skype, Hulu and iPlayer. The third revolution is now: the advent of super-fast broadband using FTTH promising 100Mbps and even gigabit speeds. One problem: it costs much more than $50-$90 to deploy. Try more like $2000 or even $5000, the proposed eventual overall cost per connection for the Australian NBN. This is more than an incremental leap in cost; it is a fundamentally greater order of investment than ever seen before in the telco world. Increasingly, markets have failed to invest at these levels at a level that governments would like to see. So across the world—in Singapore, France, Qatar, Malaysia, New Zealand and notably, Australia—they are investing billions of dollars in providing capital for fibre-based access networks. They are doing so on the basis of the notion that not to do so would deny their citizenry full
access to the benefits of a digital economy - while recognising that since it is an investment in a future that cannot be quantified, it is difficult to evaluate the extent of any eventual economic pay-off. But given the “unintended” positive consequences and benefits of past technological revolutions, many governments are betting on pervasive fibre as a lowrisk if pricey investment in their economic futures. Says Piotr Stryszowski, a technology economist with the OECD, “Calculating the economic benefits of the Internet today would be like sitting in the 1930s and trying to calculate the economic benefit of the telephone network 80 years in the future. It is doubtful that anyone 80 years ago could have imagined the phone network becoming what is now a big part of the Internet.” “Clearly, network rollouts are long-term investments and need to be considered as such when weighing the costs and benefits.” Yet a growing number of economists are beginning to ask questions about the uncritical advance of governments into fibre investment and are questioning whether the ‘build it and they will come’ mentality truly represents a wise emulation of past experiences with pervasive communications and power networks. INCREMENTAL ROLLOUT? New Zealand economist Bronwyn Howell of the Institute for the Study of Competition and Regu-
lation says: “It is worth remembering that neither voice telephony nor electricity networks were deployed ubiquitously in advance of demand for services. The build outs were incremental, even within households. First, in the living room for lighting, and only subsequently in the kitchen and laundry as appliances were developed.” “Electric refrigeration and washing machines were not invented because there were power points in laundries and kitchens,” she adds. “The power points came about as a demandside response to the presence of a value-generating actual application. Points were installed only when the benefits accrued from using the appliances exceeded the fixed costs of extending the reticulation network and the costs of electricity at the household level.” Robert Kenny, a former telecom executive at Level 3 and Reach turned policy consultant, says that pervasive fibre networks can be justified in markets where population density is high such as Hong Kong or places where la-
bour costs are low such as Eastern Europe. And he advocates it for greenfield builds as a clearly superior platform to copper. “But for most developed markets it has been very hard to make FTTH’s numbers add up the incremental cost is massive, the incremental benefits are small.” Informa Asia Pacific telecom analyst Tony Brown agrees. “If we are looking at the key FTTH markets of APAC then it would be very hard – at this stage – to definitively prove that there have been significant economic benefits from deploying universal FTTH that may not have been achieved anyway under existing broadband networks.” This is a key point to the growing dissent against the prevailing orthodoxy, most often expressed in Australia, that FTTH is a pre-requisite to generate economic benefits from applications such as telehealth, increased telecommuting and enhanced education services. “Most of these applications could be done on existing networks anyway, they did not necessarily need nationwide FTTH to be deployed,” Brown says. “Of course, going forward this could change, but at the moment all of the efforts that telcos have made in areas like telehealth remain in their very early stages and have made little impact on overall economic conditions. Moreover, it is important to remember that operators are not positioning services like telehealth as being delivered solely on FTTH networks, but operators like SK Telecom in Korea are looking to have them available on mobile networks as well.” WEAK EVIDENCE? Robert Kenny says that the argument presented for “positive externalities” of FTTH is “is very weak, and the papers claiming such externalities are astonishingly cavalier with their data.” He mentions a widely cited OECD paper making the case for
superfast benefits for power grids, which he claims confuses the bandwidth requirement for a single house with that for several thousand households. “Similarly, there’s been widespread telecommuting for many years—with the exception of a very few specialist jobs, the bandwidth needs for telecommuting are just not that high,” says Kenny. “It’s one of the puzzling things about the superfast debate— people make envious comparisons to the high speed broadband of Japan or Korea. But when you ask them what applications in these countries they desire, an awkward silence follows. Both countries have had superfast for many years, but it has not transformed healthcare, or suddenly made them into world leaders in web businesses. Bandwidth has no value in and of itself, it's only an enabler. And as the FTTH
“As the FTTH Council itself says, there is no really compelling application that requires a fibre connection.” Council itself says, there is no really compelling application that requires a fibre connection.” Bronwyn Howell agrees, pointing out that FTTH advocates often confuse incremental benefits with absolute benefits. “Many of the ‘business cases’ for fibre networks count the absolute benefits from using applications, which would be gained only if there was no internet infrastructure available at all in the first place. As this is patently not the case, the relevant benefits to count are those that attend only to the marginal additional benefits gained from accessing the application on fibre relative to the existing infrastructures. So video conferencing, for example, confers benefits only in relation to the addition of a video component in the discussion relative to the benefits of a voice conversation.”
NEW ECONOMIC MODELS But Piotr Stryszowski from the OECD demurs, saying that existing modes of analysis do not adequately capture superfast broadband’s economic benefits. “The economic impact of the Internet reaches beyond what one can measure using existing statistics. The Internet not only re-shuffles business models and intensifies competition in existing markets, but it also introduces new economic models whose impacts go beyond effects captured within the classical GDP,” Stryszowski says. “These broader welfare gains generated thanks to the Internet have been studied and include for example welfare gains derived from non-monetary transactions, impact on the environment, social capital formation and so on but many of the gains are still to come. In just one example, OECD countries are facing a looming demographic crisis and new technologies based on the Internet will enable older populations to live independently for longer on their own.” “This will have huge implications, both from an economic and social perspective.” However, dissenters to this view often claim that the extra costs incurred in obtaining these benefits are often not counted or airily dismissed. Bronwyn Howell points out that telecommuting might lead not to net savings but actually more inefficient single-passenger journeys or under-used offices. Tony Brown looks at the world’s most developed FTTH market, South Korea, to label teleworking as a still-born app for super-fast broadband. “In terms of telecommuting, for the last three years KT has tried to promote telecommuting by building regional work centres to make it easier for its workers to avoid coming into central Seoul, but this has not been substantially followed by other companies in Korea. Part of this is cultural: in both Korea and Ja-
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pan, companies place large emphasis on employees being present in offices – usually for quite long hours – so telecommuting needs to break through quite strong cultural barriers.” He says similar industrial and cultural issues are holding back telehealth. “We have seen a lot of effort go into this in Korea – with the three big telcos right at the heart of it and they are not doing this for altruistic reasons. The telcos want a share of the healthcare market – they are effectively trying to set themselves up as ‘middlemen’ in the healthcare market and the existing healthcare providers don’t want to let them in.” “In fact, before telehealth can really go anywhere in Korea – and this applies to lots of other markets too – there needs to be lots of new legislation passed to actually facilitate it – it is not a question of launching services and just sitting back.” TELEHEALTH A NET GOOD? Howell says early indications of telehealth indicate it may also simply increase health costs and not lead to the savings commonly forecast for it. “Studies of remote monitoring have suggested that hospitalisation rates increase, not decrease with such applications as new needs are uncovered, or uncertainties arising from data not previously available results in riskaverse practitioners taking a cautious approach and admitting the individual for manual observation. New data creates a fear that ‘evidence’ now exists of ‘something’ that might be used to assert negligence if no action is taken and ‘something’ subsequently occurs,” she says. It probably goes without saying that as a starting point, one essential test for the ‘build’ decision on a superfast broadband network should be a consumer willingness-to-pay for the faster and better services that are available over 24Mbps+ networks. Australia’s NBN, for example, hopes to wrest back much of its
$35 billion capital cost by charging higher amounts for speed increments ranging between 12Mbps and 100Mbps, as well as a volume charge for aggregated data bit streamed at the back-end. Under this plan, it hopes to double its ARPUs over the next decade. But present experience suggests that it may be hard for telcos to charge more for faster services. Says Tony Brown, “What we have seen from market so far is that subscribers are largely unwilling to pay for ‘superfast’ services, where there has been big take-up of these higher-speed services it has largely been when they are offered as the default option.” “When there is a range of options available subscribers mostly choose lower speed options and don’t take the more expensive higher speed ones available. The big difference comes when operators like HKBN in Hong Kong or LGU+ in South Korea offer 100Mbps services at the same price as lower speed services –this is when subscribers are willing to jump on board the higher speed services,” he observes.
Brown says the reality is that – right now at least –there are no applications out there that require subscribers to have 100Mbps or 1Gbps connectivity, meaning that unless these speeds are offered for the same price as existing services, subscribers are not bothered about taking them. Shara Evans, CEO of Australian telecom consultancy Market Clarity, says that, in this light, governments need to take a close look at pricing structure on super -fast broadband to ensure they get maximum pay-off from positive externalities. Says Evans, “A price structure that penalises the take-up of high speed services could undermine some of the external benefits, such as remote health care, especially if the target populations for these services are in lower socio economic brackets. There are ways to get around these hurdles, such as health care subsidies that underwrite some/all of the high speed broadband service cost, but this needs to be considered as part of the economic cost/benefit assessment.” “More broadly, the presence
Who really benefits from FTTH? Not the telcos One of the most common arguments made for super-fast broadband is that it allows telcos to enter the lucrative TV and online video market. But as Informa’s Tony Brown points out, an FTTH rollout is only the beginning of the challenge for telcos to make it big in TV. “The fundamental problem with IPTV is that you are trying to muscle into a market where an incumbent – in Korea and Taiwan it is cable MSOs – is already making money and can defend its business by blocking the telcos from content,” he points out. “So, the idea that telcos can trigger a huge revenue flow from simply rolling FTTH is nonsense, there are incumbent operators in place who will defend their market share vigorously and aren’t planning on going anywhere. The reality is that the main beneficiaries from FTTH deployment –putting the subscribers themselves to one side – are the OTT players, who get a huge amount of bandwidth suddenly made available to them.” Brown judges that Samsung has been a bigger beneficiary of pervasive FTTH than Korea Telecom with its connected TV services and the like. “You are now seeing the same thing happen with the terrestrial broadcasters in both Korea and Japan, they are getting their act together in the online space and putting together their own IPTV services – with the people who deployed the networks getting no benefit from this at all.” “So, what’s really interesting is when you see someone like Randall Stephenson at AT&T comment that he is quite relaxed about OTT players – mainly because AT&T have kept their investment in FTTN relatively modest so it doesn’t have to generate huge extra revenues."
of superfast broadband is often cited as an accelerator for innovation. Whilst I have seen evidence of this, the service needs to be affordable to a broad section of society for wide-spread economic benefits to accrue. One of the metrics that I look at to assess affordability is household income minus housing costs and other essentials. This provides a concrete upper limit on household expenditure on discretionary items, and allows one to put into context the cost of various broadband service offers.” Australian economist and academic Henry Ergas has been one of the most vigorous advocates of greater scrutiny of the economic case for government investment in super-fast broadband. He says it is not as difficult to assess the cost/benefit payoff for broadband networks as some claim. “Assume an FTTP line costs $100, FTTN costs $60 and those are the relevant alternatives. If heart rate monitoring can be secured by both, it cannot justify spending the additional $40, as it is not a benefit obtained in one scenario but not in the other. However, even if it can only be secured under FTTP, you still have to ask how much it costs to achieve it that way, and whether the benefit exceeds the cost.” :So if heart rate monitoring is worth $1, that is all you can attribute to FTTP as an offset against the $40 in added costs,” he argues. But the process doesn’t end there, he says, pointing to the fact that FTTH advocates often seem to believe there are infinite resources to expend on networks and applications. “At the margin, there are some interventions that have benefits that exceed their costs but which are not undertaken because of budget constraints,” Ergas says. “Then you have to ask, as well, if I gave health decisionmakers an additional $1, is this
what they would spend it on? Is this, in other words, the most efficient way of improving the nation’s health spending? Of course, no one has addressed any of these questions,” he laments. WILLINGNESS TO PAY Ergas says that willingness to pay is the right standard for decisions such as these that centre on tradeoffs about alternative means. “Benefits should be determined by regard to willingness to pay, again subject to the caveat of distortions and market imperfec-
“Just because lemmings follow each other over the cliff does not mean that the first one made the correct decision to jump in the first place.” tions. Here the relevant distortions or market imperfections may reflect situations where society places a different valuation on benefits than individuals themselves -- for instance, setting the valuation of violent pornography or of offensive and possibly dangerous computer games below individuals' willingness to pay, while setting that for access to health improvements that efficiently replace other forms of health expenditure at more than individuals’ willingness to pay.” “But that must be done in a disciplined and evidenced way, not by throwing meaningless numbers around, as proponents of the NBN and of every network dream, from ISDN to the HFC-
based ‘information utility’ before it routinely do.” However, others see the issue in simpler terms and argue that these arguments over costs and benefits ignore the lessons of history. Says the OECD’s Piotr Stryszowski, “The Internet offers a myriad of externalities and societal gains that may not be captured in a traditional “willingness to pay” context. There are spillovers that benefit all and need to be counted. A similar example is roads. How many roads would be built if their construction would depend only on individual drivers’ willingness to pay?" He adds “networks are expensive to roll out and will likely need to be amortised over long periods of time. Their desirability as investments will largely depend on the investment timeframes of investors. In some cases, governments have chosen to co-invest as a way to ensure the networks reach their targets.” But Bronwyn Howell says that Korean researchers have struggled to find benefits anywhere near to the level of the costs incurred to build the networks in that country. “They are only just starting to put this lens across their networks. However, their reasons for building a nationwide network were different from those in Australia and NZ – it has been a wonderful ‘reference site’ to demonstrate the capabilities of handsets, appliances and networking equipment exported by Korean manufacturers to the countries trying to emulate the ‘Korean experience’,: Howell observes. “Just because lemmings follow each other over the cliff does not mean that the first lemming made the correct decision to jump in the first place.” “And if the first lemming‘s reason for jumping was not shared by those who followed, then what objective were the followers serving when they jumped?”
Inside Angola Cables’ ambitious plan to become Africa’s communications hub. Tony Chan reports.
ngola may not be a household name when it comes to the telecommunications sector, but that is about to change if Antonio Nunes, the CEO of Angola Cables, realises his vision of turning the country into a major international hub. Angola Cables – formed out of all five major telcos in the country – has launched plans to build what could very well be the world first South Atlantic subsea cable. The South Atlantic Cable System, or SACS, will connect Angola to Brazil over 6,000 kilometres of the South Atlantic. When complete, SACS will provide the shortest and most direct link between the two continents, and serve as a new path for traffic going from continental Africa to much of the internet content hosted in the US. “This will be the first South Atlantic cable, which means it will bridge a gap in the industry and provide a new connection in the southern hemisphere,” Nunes says. The company has issued a tender for the system, and has received initial technical responses from vendors. A formal contract is expected within weeks of publication of this article, with the completion date for the system set for the latter part of 2014. SACS will add to Angola Cables’ existing capacity on the West Africa Cable System, in which it is a major investor.
Combined, the two systems will allow Angola to reach both Europe and across the Atlantic. More importantly perhaps, Nunes asserts that the project is fully funded with the full backing of the Angolan government and the company’s shareholders, the five biggest operators in Angola: Angola Telecom, Unitel, MSTelecom, Movicel, and Mundo Startel. The project is also backed by the Brazilian government and Brazilian carrier Telebras, which will own 15% of the system. “The SACS cable between Angola and Brazil is not only a commitment from the companies, Angola Cables and Telebras, our counterpart in Brazil, but it is a real commitment from the governments – the Angolan government and the Brazilian government,” says Nunes. “The MoU was signed by both ministers, and it is a very strong commitment by both governments. In terms of the financing of the cable, the funding will come from the shareholders, but the government is backing us up – all the guarantees and all the support, the payment terms, are backed up by the government.” NEW PATH Nunes’ plan, however, is not just about a new cable system. He intends to create a nexus for global network traffic inside one of the fastest growing African economies – the third largest economy
on the continent in terms of Gross Domestic Product behind South Africa and Nigeria. It is an ambitious plan to say the least, but there’s more to the plan than just a cable system, and more to Nunes' ambition than just connectivity. For starters, Nunes points to Angola’s strategic location as an ideal hub site. Angola, he notes, is the one of the closest African countries to South America – some 6,000 kilometres away, making it a most logical site from which to cross the South Atlantic. It is also located midway on the continent, making it an ideal traffic aggregation point for African traffic. The SACS cable will be a strategic asset not only for transporting traffic between Africa and the Americas, but also between all major continents, Nunes says. “It’s a new route, it’s diversity, and it’s a direct route from South America to Europe. It will really be a completely new way to look at how traffic behaves today.” The obvious benefit is that it dramatically shortens the path be-
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tween Africa and Latin America, a route that currently requires going up to Europe before crossing the North Atlantic and then down through the US. In a similar fashion, it also shortens the path from Africa to the US and vice versa. According to Nunes, Angola Cables is now exploring options to extend its network from Brazil to the US. “We are now in the phase of deciding whether we will go there on a new cable system – partner with a new system [between Brazil and the US] – or whether we are going to buy capacity on an existing system,” says Nunes. “For us, Miami is a very important point because if you reach Miami, you can be connected to all of the Latin American countries, but also up to New York… all the business and financial processes are coming to New York. We are studying now what will be the best connectivity point in the US.” In the future, such a path would also benefit traffic going from India and South Asia to Latin America and the US – although there needs to be a lot more development between those regions and Africa for this to work. A secondary characteristic of this path is that it would allow Europe and much of the rest of the world to reach Latin America without going through the US. That’s increasingly important, because strict US traffic monitoring regulations are beginning to cause concerns for non-US corporations. Conversely, it would allow Latin America traffic to reach the rest of the world without US interception. At the same time, SACS will provide diversity for the host of North Atlantic cables, Nunes says. “Finally, you have a completely new alternative to the North Atlantic cables – if we have a catastrophe on the North Atlantic for any reason, you have another route on the South Atlantic. I think the big boys in the industry are really quite enthusi-
astic on this new route, because for them, it’s really about another path.” NEW HUB Together with its investment in WACS, SACS will serve as the critical enabler for Nunes’ grand plan to expand Angola’s presence on the global network map. “The objective of Angola Cable is to be one of the telecom hubs in Africa – that is our main goal,” Nunes says. “Starting from that point of view, what we are doing, and developing, is the infrastructure to become a hub. We’ve built first what we call AN-
“Miami is a very important point because if you reach Miami, you can be connected to all of the Latin American countries, but also up to New York City” GONAP, which is our main POP and where all the operators will be linked together – this will be the meet-me point for everybody. We are hosting the operators, the national ISPs, and we are also hosting the internet exchange, and the domain name .ao; all the national operators are colocated there.” Expanding ANGONAP to support the rest of Africa will be a key initiative, since Africa is obviously in dire need of a communications hub. Africa today is like Asia a decade or so ago. Much of the traffic between even neighbouring networks is routed via distant exchange sites. In the case of Africa, much of the traffic is exchanged in Europe, as opposed to the US for Asian traffic back in the early 2000s. According to one global exchange operator, all of the African carriers are connected to its exchange either in Frankfurt or London, where much of the continent’s internet traffic is handed over. The tromboning of traffic not only results in lengthy latency delays that can
impact performance, but also carries extra cost for African carriers, who need to backhaul to Europe. And while the situation has improved by leaps and bounds with the launch of many coastal subsea cables, it is far from efficient. NEW CONTINENTAL LINKS To attract and enable African traffic to reach ANGONAP, Nunes’ plan also calls for additional connectivity within Africa itself as a way of aggregating traffic onto its international cables. “We are looking to help African connectivity. Today, the countries on the coastline have international connectivity, but the countries inland still have difficulty connecting,” he points out. “We are looking to play a big role in that connectivity.” This aspect of the plan consists of both terrestrial and subsea components. “We are studying two ways to do that. One is to cross the continent and to have a land connection from the west coast in Angola to the east coast of the continent… this cross-African land bridge will automatically drive traffic. We are already in negotiation with our neighbouring operators in order to build that infrastructure,” says Nunes. “The other way is, as I said we have connectivity on WACs, and then we have brought capacity on existing cables like SEACOM, EASSy, and going as far as Malaysia on SAFE.” Nunes is not alone in his ambition to drive connectivity in and out of Africa. Another African firm, eFive Telecoms – which also has a South Atlantic cable, South Atlantic Express in its plans – has also unveiled an ambitious scheme to connect up the continent’s coastal regions through a combination of subsea cables that spans from the Mediterranean, down the west coast to South Africa, and back up to the Middle East along the east coast. It is potential competition for Nunes’ plan, but not competition
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that he is concerned about despite the importance of the firstmover advantage in such a new market. “I’m not worried about it,” Nunes asserts. “We know why we are building the cable, so we don’t have to be the first one,” In fact, he says the business case for his projects is driven only partly by commercial reasons. “If the financing for our project comes from the purchasing of [bandwidth from] the buyers, we would never build the project. We are not forced to do things in that way. Our financing is coming from other sources, and that’s the reason why we think we are much more secure in terms of financing.” NEW ECONOMY Nunes’ confidence in the numbers comes back, once again, to Angola. He points to the government’s strategic focus on developing its digital economy, as well as the country’s surging economic ties with markets such as Brazil and China. Domestically, the Angolan government has identified telecommunications as a strategic area for development, while the population itself is ripe for digital services. “We are all Googlers,” he says, highlighting the country’s young population. Official statistics
from the government put 44% of the country’s population at below 15 years of age, no doubt a reflection of the devastating civil war that lasted more than quarter of a century until peace was achieved in 2002. “We have a very young population, we don’t have any legacy telecoms infrastructure.” And while internet penetration is still low at around 15%, mobile phones are increasingly becoming popular, and 4G networks are being rolled out. “We have deployed 3G networks all over the country, and we have al-
“The reason why we are trying to drive traffic, from Asia, and African traffic that goes out to the Americas with this infrastructure, is to make the business case possible” ready 4G networks operational… The reason why we have deployed 4G is because the guys are asking for more capability, more capacity, and this is one of the main reason we invest so heavily in fibre optic systems… the demand is getting so big. We have developed fibre opticS all over the country, all the major cities are interconnected with fibre optics.” Another theme to Angola’s
story is its growing economic ties internationally, a direct result of the country’s significant natural resources. The country is already Africa’s biggest producer of crude oil, 40% of which it exports to China. The country is also rich in diamonds, gold, copper, phosphates, iron, and minerals. Brazil, at the other end of SACS, holds a special affinity with Angola. “We have very strong cultural relationship and we have a very strong business relationship. A lot of things going on like the oil fields in Brazil and also in Angola. Oil, agriculture, education and so on, you name it,” Nunes says. “Iron is very strong in Brazil and also very strong in Angola, we have the biggest iron company from Brazil also working in Angola now, so mining is quite big.” OLD RISKS But investing in such a major project carries big risks, even with all that Angola has going for it. While the final costs of the SACS cable has yet to be made public, it will likely run into the hundreds of millions of US dollars. At the same time, the massive capacity offered by today’s subsea cable technology will likely be much more than Angola and even Africa can use up. As Nunes admits: “We are not able to fulfil the capacity of the cable only by ourselves. The reason why we are trying to drive some of the traffic, from Asia, and African traffic that goes out to the Americas with this infrastructure, is to make the business case possible.” With prices continuing to decline, albeit at a slower pace across the North Atlantic, SACS could find it hard to charge more than a slight premium over existing routes/ That situation could get even worse if eFive’s SAex cable also gets built, which could double the supply on the new route. Then again, Angola is growing, and Africa is a big continent. Surely it deserves at least one, or even two, dedicated network routes across the Atlantic.
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Running on fumes The exhaustion of IPv4 addresses has come and gone. Now the industry must face up to the realities of trying to proceed without an essential resource. Tony Chan reports.
sia Pacific Network Information Centre’s pool of IPv4 addresses is all but depleted. Since April 2011, APNIC has been down to its last bloc of IPv4 addresses, or about 16.7 million, which it now metes out carefully in lots of 1024 (/24) or 256 (/32) addresses. The internet is not broken, nor will it break any time soon. But IPv4 address exhaustion has entered the minds of the mainstream network engineering community, with increasingly heated discussions on what can be done to sustain continued development of networks and accelerating deployment of services. While the topic of migration to IPv6 is gaining traction, a number of challenges remain – including justifying the cost of migration, developing appropriate skill sets, and actually carrying out deployments. At the same time, IPv6 adoption continues to be stunted, offering no relief for those looking to adopt an all-v6 strategy. In the meantime, the scarcity of IPv4 addresses has resulted in a growing sense of urgency for those rolling out new networks and services. Some have resorted to the aftermarket for addresses. Others are appealing to APNIC itself to find those unused addresses for the purpose of redistribution. Some have even accused APNIC of squandering IPv4 resources in the past. The industry has gone over
the edge of the proverbial cliff and is feeling the effects of free fall, says Geoff Huston, chief scientist at APNIC. “At this point, there isn’t anything anyone can do about gravity, it’s a fact of life.” “We have gone to a bad place where we have run out of addresses. Not having implemented v6 across the industry has placed us in a very, very strange situation, where yes, some folks have very real business problems, simply because they have to try to make a business work in v4 as well as v6… if you try to set up a new business, it is extraordinarily challenging,” he said. GONE, GONE, GONE For all intent and purposes, v4 addresses are no more, Huston asserts. With the last block of /8 v4 addresses, APNIC will still hand out some addresses, but far from enough for most business applications. According to APNIC’s “/8 policy,” those seeking addresses will only get a maximum of 1024, once. “Instead of handing out all the addresses we have till we had no more, we handed out all except the last /8 – 16.7 million addresses, and those ones we hand out very, very differently,” says Huston. “The rules that we work under and that were given to us are that anybody who can demonstrate a need for addresses gets
between 256 and 1024 addresses – depending on their need – and that is as much as they ever get. Once they get 1024 addresses in total, they can never get any more, ever.” The allocation is virtually meaningless for large operators, and only a small reprieve for smaller companies. “For a large company like China Telecom or Telecom New Zealand, with millions of customers, it’s not clear how far those 1024 addresses are going to get them. In other words, it won’t make a lot of difference. 1024 addresses are indeed a splash in the ocean. If you are big, there nothing that can help you,” Huston says. “New entrants really do have a problem now, because there’s no more available v4 addresses… because as the Registry, we are not able to give them out at this region. There are still a small number of addresses that might allow you to run some form of network address translation (NAT), but that’s all you can really do with 1000 addresses.” ROCK BOTTOM There are no more IPv4 addresses that will magically appear, warns Huston. “The idea that APNIC should herd up all the addresses that can’t be seen advertised on the internet in Asia Pacific, reel them in and seize them, seems just a little bit naïve to some extent,” he
says. “The true story is it is far more complex than that. Not the least of which is agreements and contracts and so on. Reclamation is not intrinsically an easy thing to do, nor is it necessarily the right thing to do.” Spending resources to find unused IPv4 addresses in order to prolong the life of IPv4 is too little, too late. “As some voices have pointed out, even if you spend an extraordinary amount of time doing this, the million or two addresses that you might reclaim in such an effort pales into insignificance when you think of the true extent of underlying demand, if history is anything to go by. In the peak year in the Asia Pacific region, 2010, members of APNIC in this region received 120 million addresses in one year. If that is the scale of demand, how much effort should one put into reclaiming 10 or 20 million addresses?” queries Huston. “After so many years, there’s so much computing around that this whole idea that somewhere, somehow, there’s a stash of unused addresses is a lot like the myth of El Dorado: that somewhere, somehow, there’s this mountain of gold. In both cases, I think it tends more to mythology than true fact.” Even if such an effort was launched, there is also no way to clearly identify which v4 addresses are actually being used, or sitting idle. “What many folks fail to understand is that APNIC and all the other Registries are not just address registries for use in the internet, they are address registries for the use of IP addresses,” Huston explains. “It is certainly quite consistent with all the address allocation policies used throughout the years to use these addresses in private contexts. So if I can’t see an address on the internet being routed, for me to claim that it is no longer in use is not an easy claim to make – because quite frankly, it might very well be in use.”
LAST RESORT It’s bad news for those with a genuine need for new addresses. “Obviously, the internet hasn’t stopped growing. Equally obviously, while NATs can do an awful lot of stuff, you can’t use a NAT everywhere,” says Huston, pointing to secure websites that use SSL. “While it is possible to share an IP address across multiple secure sites, most folks find that distasteful. The tenets of security typically don’t like sharing. Typically those types of websites have a very definite requirement for their own dedicated IP address. Of course, this hasn’t stopped, so the demand for that kind of addressing continues as long as folks continue to use v4, and just because APNIC is not able to meet all those demands all of the time doesn’t mean that those demands gets turned off. They get expressed in other ways.” The only source of IPv4 addresses left, besides the meagre and one-time only allocations from APNIC, is the resale mar-
“this whole idea that somewhere, somehow, there’s a stash of unused addresses is a lot like the myth of El Dorado: that somewhere, somehow, there’s this mountain of gold” ket. Trading of IPv4 addresses is now a commonly accepted practice, according to Huston. “Obviously, transfer and trading, where monetisation comes into the equation, is certainly part and parcel of [the situation],” he says. “So when folks want to transfer addresses, APNIC, these days, will allow that to happen. There are some policies and procedures around that, but they are not overly onerous. We are not the broker, and APNIC does not conduct the sale. We don’t deal in the money, it is nothing to do with us. But if two parties come along as say, ‘we’ve
just performed a transfer, the addresses are in my name, and I’d like you to move them over to that other party’s name’… we will do that.” Pricing on the hand is much less transparent. While there are pricing figures floating around industry forums and on websites such as IPv4 Market Group, which range from around US$10 to as high as US$22 per address, it is far from an open market. “I’ve heard prices being paid at about US$10 per address… the major source of that price is a strange one. In the bankruptcy court in America [when] the assets of Nortel were disposed of by a liquidator, as part of that liquidation they liquidated a large number of addresses, and an area of Microsoft brought them – the payment was around US$11 per address. That bankruptcy proceeding has been one of the price benchmarks that has fuelled this aftermarket,” Huston offers. But the lack of transparency is a worrying trend, he continues. “In many other markets, including the share market, open pricing is a predicate to an efficient operation of an open market. And when you get hidden pricing, many economists raise concerns, and many market regulators immediately talk about the dangers of potential collusion or secret pricing, because it does leave the potential for market distortion.” NO RESPITE Despite the exhaustion of IPv4 addresses, IPv6 adoption is still progressing at a snail’s pace. The result means that even if service providers want to deploy IPv6, they still have to deploy IPv4, because the vast majority of users on the internet still can’t reach IPv6-only sites. “The more frustrating metric is measuring the users, and the simple question is – as a percentage, how many users can reach you using v6? So if you set up a website with only v6 – no v4 – and if you get everyone on the
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planet trying to reach you, how many people will get to you? Now two or three years ago, you’d find that number was fractions of a percent – three years ago it was kicking around 0.2% of users, which is not very good. These days, what we are currently measuring is that if you set up such a site, you can probably get around 1% of users who can reach you in v6,” he said. “It’s a lot better than .2%, but on the other hand, the other 99% can’t, and that’s a problem, and that’s why folk can’t walk away from v4 yet.” “If it was 80%, you’d be tempted to say that’s good enough, the other 20% will come quickly, v6 alone is viable. But even at 50% you might scratch your head and say, ‘not good enough.’ At 1%, it’s a clear ‘no, it’s not good enough’.” 149M THINGS BEHIND NATS The interim solution has been NATs, or network address translators, which according to Huston have been the main enabler for the roll out of new services and networks since the exhaustion of IPv4 addresses. “In some ways, if there is only a finite amount of things you can do today – the choice is set up a NAT, or set up v6 – then business sense says ‘I’ve really got to set up a NAT today, I just have no choice because that’s where our customers are.’ 99% of the customers are on v4, I’ve really got to do it,” he explains. The situation is escalating to the point that the vast majority of new services are now powered by NATs. “There is more NATing every day,” says Huston. “Last year, APNIC handed out not 120 million v4 addresses, but 1 million. Now if the growth factor in the Asia Pacific region is of the order of magnitude of around 120 million in 2010, and we only get bigger, let’s make a conservative estimate of 150 million addresses needed last year. And we’ve only handed out 1 million, and since you can’t route v6 only, then it’s pretty ob-
vious that 149 million things are now behind NATs. And that’s only one year, and the growth hasn’t stopped.” GLIMMER OF HOPE If there is a light at the end of the tunnel, it is the fact that there are many IPv6 addresses already allocated to the market. Despite the slow rollout of v6 on the internet, APNIC statistics show a growing demand for IPv6 address resources. And because each v6 allocation consists of exponentially more addresses than in v4, it translates into a lot of addresses out there. “The thing about v6 addresses is that they are vast. In v4, the primary entry point was basically a /24 – 256 addresses. In v6, the base entry point is what we called a /32, so it’s 32bits of provider space at 96bits. Now that’s a lot of addresses; 2 to the power of 96
“IPv6 is almost optional because these days, NATs aren’t optional. If you are in the Asia Pacific, and your business is growing, you just have to get hold of v4 addresses firstly, and secondly, you just have to use NATs.” is a very, very big number. And even if you use a typical address plan – ‘I’m going to give all my customers a /56’, well’ that leaves you 24 bits of customers space,” says Huston. “In other words, with a single allocation, instead of getting 256 addresses, you get 2 to the power of 96 addresses, which can easily service 4-5 million users from a very basic /32. If you work really hard, you can probably get it as high as 10 million users.” Together with more addresses per allocation, more people are also asking for v6. “Back in 2007, APNIC handed out 63 IP address allocations. Last year, we handed out
600… how much address space did we hand out? I’ve said that each v6 /32 can handle up to 10 million users – we handed out 3,807 /32s in the Asia Pacific alone. So a lot of IPv6 addresses are heading out there.” RISKY BUSINESS This doesn’t necessarily mean people are migrating to v6, however, because their first priority is still NATs. On the other hand, it’s a start – and offers at least the opportunity to start a migration to v6. “The issues we are facing are with the dynamics of this business, and the economics of this business. Because NATs are viable, no one sees ‘v6 or die,’ they say ‘v6 or NATs’,” says Huston. “IPv6 is almost optional because these days, NATs aren’t optional. If you are in the Asia Pacific, and your business is growing, you just have to get hold of v4 addresses firstly, and secondly, you just have to use NATs.” “Let’s just hope that when they do set up their NAT, they’ll spend 10 minutes to work on their future, to work on v6, then things might work out ok.” “But if they don’t work out like that, if they don’t do v6 pretty soon, then the next few years look pretty bad, because we can take NATs a certain part of the way, but we don’t know when they will break.” While there is no certainty that the internet will break as a result of the continual use of IPv4 and its reliance on NATs, it is certain that v6 is the future. “Now our assessment of future risk is normally pretty bad,” Huston says, citing people who choose to live in California as an example. “The pressure on addressing is enormous. And at some point, v6 is the only logical point out of this. But in the meantime, we are just trying to stuff it all into NATs without really knowing when it will be – when the one more thing that we stuff in it will cause it all to break.”
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NTT: deploying SDN in the service provider network Software-defined Networking promises to revolutionise communications networks by abstracting the control layer from the hardware, allowing all network functionality to be handled by software. By separating the software and hardware, SDN has the potential to centralise network controls to accelerate service provision, development, and rollouts. SDN can also turn networks into programmable platforms, much like the average personal computer, to support standardised application development.
oftware defined networking is a development that has captured the attention of much of the industry, including NTT Communications, which has jumped on the bandwagon with real-world SDN deployments. CommsDay spoke to Doug Junkins, CTO at NTT’s US subsidiary NTT America, about the operator’s SDN strategy, CommsDay: What SDN initiatives have NTT Communications implemented so far? Doug Junkins: I think we are the first operator to deploy SDN in our enterprise cloud services in Hong Kong and Tokyo. It is going through final deployment testing in the US and in Europe, so we are actually deploying that with SDN technology using OpenFlow switches. CD: How is NTT Com using SDN? DJ: We aim to really accelerate our services deployment using SDN. From our perspective, there are two significant things with SDN. There’s the SDN where you use it for your IP infrastructure, where you are trying to drive down your capex and opex
cost by automation. From a carrier perspective, that’s not really new for us. In our network de-
ployment, for 15 years, we’ve used centralised configuration management, where we make our
routing policies and network topology stored in a central database, and we generate configurations for our routers. We’re not necessarily populating the forwarding tables of those network elements, but we’re centralising the management and the configuration of those devices so that we can scale to a global network without a very large operating team. So we’ve been doing that sort of programmatic management, software management, of our network for a while. The way we do it is we’ve abstracted the policy from the natural vendor and we can make that configuration in our database and then generate it out. For example, if we move customers from one device to another, the system will automatically translate to the correct configuration. We’ve done that automation for a while, and it’s the only way we can scale to a global backbone the way we have and keep an efficient operating team. When we talk about SDN – similar to what OpenFlow is doing in the data centre – it’s making the management all of the network devices in a data centre be more centralised and automated. That’s kind of where we are leveraging OpenFlow today. But the bigger promise of SDN is when you can actually start providing APIs to your customers, so they can actually start managing their own network services, rather than having the operator make every configuration change for the customer base on a service order form. So we’d like to be able to do, both in our data centre and on our WAN, is to create those APIs so our customers can tie their own orchestration systems into the network. And if they need additional bandwidth between two points on the network, they can then programmatically bring that bandwidth up. We account for that with usage based billing, and when they turn it back down, it goes back into the pool of available bandwidth on our network.
So we are trying to look at how we can really take the model that cloud service providers have driven with their APIs to customers and extend that to the entire WAN as well. That’s really where the focus of SDN has really been a game changer for the industry.
R&D resource, so they are doing a lot of research into SDN today. We are still trying to figure out how to incubate that into our production network, but we will have innovative technology coming from our R&D.
CD: Is OpenFlow all that there is to SDN?
CD: Is SDN living up to its promise from your experience so far?
DJ: OpenFlow is still an immature protocol, but for the way we are deploying it, it has sufficient capabilities for the basic task that we are asking it today. And we want to gain the experience of moving forward with OpenFlow and be able to develop the software that is necessary to
“Today, the deployment is actually nothing revolutionary in terms of what SDN is able to offer us.” be able to manage an OpenFlow type of network, not necessarily OpenFlow as the end all of all networks with SDN technology, but to understand that what it offers now, should start to offer us more capabilities in the future. CD: One challenge that has come up with operator SDN developments is the lack of software expertise inside telcos. Has NTT Com come up against this? DJ: We’re a little bit different in that we’ve had a very robust set of OSS tools that we’ve developed in-house. I mentioned our configuration system – that has all been developed in-house. So a lot of things that we are trying to do is figuring out – the biggest challenge for us – is how to expose those controls to our customers in a safe manner. The underlying network technology is technology that we’ve had programmers deal with for a while. We are a little lucky in that respect. And one of the nice things about being the world’s biggest telephone company is we have a quite robust
DJ: Today, the deployment is actually nothing revolutionary in terms of what SDN is able to offer us. We are looking at investments into a platform that will be extensible in the future through software development rather than having to rely on vendors for features. I would say that we are taking incremental steps, we’re deploying SDN on our base infrastructure today, and the goal is to start expanding the type of services we are offering on the SDN technology. A lot of the focus that we are looking at is around recovery-as-aservice, where from our cloud deployments we’ll be able to turn up bandwidth to recovery sites for incremental backups. Also, for making changes in the case of a failure, being able to add SDN signals to the network that the protection site for a particular service has migrated from one location to another – so that rather than having to go through and manually reconfigure the network to be able to do that, we can have a programmatic solution. We are looking at it as ways to take the services that we offer today, and be able to automate those. CD: When do you expect to see those services come online? DJ: I think we will start to see some basic services that we are leveraging within the network in the next 12 months. One of the things about SDNs is that this is not a project where we see there is a start date and a stop date, it’s a technology that will enable us in the future as a new way to de-
velop services. So once we have the basic infrastructure deployed, we see that as the point where we can shift our product development focus to a software development cycle, rather than a hardware deployment cycle. CD: Do you think SDN will commoditise the network? DJ: I think there will be some standardisation, there will be a base layer of functionality that everyone will offer through a standard API, much like what has happened with cloud services today… but I think one of the interesting things about SDNs will be what is beyond those common APIs. You’ll have service providers that have particular niches, or particular focuses – there will be extensions for special things that the service provider will be able to offer customers. It will provide better services for customers that have a particular need, and also some stickiness for the carrier that may have a particular market focus. The nice thing about APIs is that they are very extensible – it’s software. CD: Will the hardware become just dumb boxes? DJ: I would disagree. We’ve always been very hardware agnostic and we’ve always supported multiple vendors in our infrastructure from a network element perspective, and that’s why one of the reason we had our configuration tool that we developed, where we had policy descriptions that we translate to whatever particular vendor is being used. We are constantly looking at what vendors are out in the market, what routers are out there in the market. One of the first things we do when we get a router into our lab is to add it into our configuration tool, to make sure that they device can be managed, the same way we can man-
age everything else. We’ve already taken that abstraction out of the dependence on any particular vendor. The idea that network hardware will become commodity devices that are extremely cheap per port, I would disagree with that. I think so much of the network infrastructure depends on those devices, that there will always be requirements for very high quality devices that are very resilient. CD: So is SDN, and what OpenFlow is proposing today, ready for service provider environments? DJ: The type of OpenFlow technology where the device is very ‘dumb’, I think that type of device will be prevalent inside a data centre, but I don’t think that it will replace routes in the WAN, just because we’ve spent 15 years refining the protocols that we use
“The idea that network hardware will become commodity devices that are extremely cheap per port, I would disagree with that” to manage the internet and the WAN. And given the latency for our global backbone, the distributed protocols that we have today are much better suited for management of routing information on a WAN. Trying to compute from a central location, or a set of locations, and push forwarding tables around a global network, with latencies of hundreds of milliseconds, just won’t work. I personally feel that it just won’t replace the distributed protocols used today. CD: At this stage, where do you see the biggest benefit from SDN for service providers?
DJ: I would say SDN will be deployed by service providers inside data centres, and possibly in the metro – we’ll see SDN really take off where you’ll have relatively low latencies to all the network elements, and failovers can happen fairly quickly. If you are talking about SDN being the OpenFlow definition of SDN where you have a central controller that is pushing forwarding information out to all the network elements, I don’t foresee that taking over the WAN, but the aspect of providing APIs where customers can influence the network services that they are purchasing, I believe that will become prevalence across all network services. CD: So what actual services have you rolled out with SDN? DJ: The way we are looking at our SDN deployment is we have these data centres scattered around the world, we have our SDN and cloud in them. We are building an overlay network over our IP backbone to link those data centres together with SDN gateways at each end. So if we have a particular path on our WAN between two data centres, customers can reserve and use bandwidth on those automatically through SDN. We are not relying on SDN for all the forwarding of those links across our WAN, we are relying on our underlying MPLS network to route those links. If there’s a failure on our WAN, we will rely on MPLS and its rerouting capabilities to keep the network between our data centres connected, rather than relying on SDN for that. For SDN, it is responsible for the provisioning part, the dynamic bandwidth allocation for customers, for example, where they may have a need for a backup for a limited period, they can allocate bandwidth for that backup.
Are telcos ready to cash in on big data? ‘Big data’ is the latest buzz running through the telecoms industry. But while some telcos have already embarked on a strategy to exploit their massive volumes of customer data, others are yet to formulate a business case for implementation. David Edwards reports.
ow big is big data? An IDC study published in December 2012 projects the “digital universe” to reach 40 zettabytes by 2020. But while the big data benefits lie in successfully extracting value from large pools of data, the majority of new data is “largely untagged file-based and unstructured data, which means that little is known about it,” according to the analyst firm. “In 2012, 23% (643 exabytes) of the digital universe would be useful for big data if tagged and analysed. However, currently only 3% of the potentially useful data is tagged, and even less is analysed,” IDC says. So there is no doubt that the amount of data – unstructured or otherwise – is growing at an exponential rate. But the question on everyone’s lips is: ‘how do we leverage it?’ Telsyte senior analyst Rodney Gedda says that there are plenty of opportunities for telcos who choose to explore big data analytics, ranging from network monitoring to marketing and locationbased services. “Telcos are also using big data applications to better understand what drives people to churn to another provider. If they can successfully detect a customer is
looking to switch providers they can send them an offer to keep their business. Analytics is the essential piece between big data and business benefit,” he explains. In the Australian telco market, it seems Optus is blazing a trail when it comes to big data. Optus business intelligence director Matt McKenzie said that Optus is using big data to discover, for example, whether a customer is up for a contract renewal, or whether they have moved to a suburb with 3G or 4G services in order to find out what products and services to offer them. “It’s all well and good to have a big data strategies… but the real reason we do it is to get a clear understanding of who our customers are, what their behaviours are, their likes and dislikes, what are the most appropriate plans for them, handsets for them… to sell them stuff to make more money,” he says. Optus rival Telstra has also begun tapping into big data, according to comments last year from chief architect for information and corporate systems Mark Kortink. Kortink said that Telstra has already done some “very smart stuff” with big data in marketing,
Ma McKenzie of Optus
asset management, network management, fault management and network planning; he added that some algorithms that the company used to run over the course of a month now took mere minutes. “[Like] proactive assurance – before your phone doesn’t work for you, we’ve already fixed it, but we knew it was broken! All that kind of stuff, like very sophisticated marketing; now, we’ve got all this mobile data coming in, wanting to make use of that. Location data coming in, we can make use of that. Machine-to-machine data, we can make use of that; that’s going to flood everything. We get two billion mobile data records a day… we know what to do with it, but it’s a matter of setting it up so we can make some money!”
Beyond the confines of the Australian market, one company taking a keen interest in big data projects is BT Global Services. The firm has developed a computing system called ‘Saturn’, which takes information from every single device on the BT network and crunches the numbers before loading the results into a visualisation tool. “During a demonstration [of Saturn], we saw this big red thing on the visualisation tool and we clicked on it, and it was in New York, and it was lunch time in New York, we clicked on it and it took us into the site and it identified that it was an office block on 42nd Street,” BT Global Services VP for customer innovation and solution design Steve Masters explains. “Then it told us that it was occupied by a number of clients hooked into the software, and out of those tenants, one was a dry cleaners’, two were solicitors, and one was a computer company, so it was more likely the hack was coming from the computer company, rather than the dry cleaners’, but not necessarily. It would be a hacker working out of either premise, but that level of visibility is immensely powerful.” Masters says that while big data is everywhere, people are spending a lot of time collecting and moving the data to analyse it, only to run out of budget once they’ve got all the data in one place and ready for exploitation. “So that’s why it’s about applying the analytics, and only consume the data you need,” he adds. It’s a sentiment shared by Optus’ McKenzie. He says that the firm is not keen on keeping big data for too long because “it gets stale.” “You do big data for a reason… and typically it needs to support your business case – in our case, to reduce churn and increase revenue, straight up,” he says. “We are looking at maxi-
mum capture, minimum retention.” McKenzie adds that he’s highly reluctant to massively invest in building new teams to handle big data because there are still too many unknowns. He says, however, that the local reach and enterprise customer base of Optus’ partners has opened things up for the company. Generally speaking, Ovum research director of financial services technology Denise Montgomery says that there is a shortage in skilled information workers – particularly data scientists – across both the structured and
“You do big data for a reason and typically it needs to support your business case in our case, to reduce churn and increase revenue” “unstructured” big data areas, with some organisations turning to either crowdsourcing to remedy the shortage or looking to source capabilities from offshore. TELSTRA’S PATH For Telstra’s part, Kortink said the company is finding its own way to bring together the right skillsets for data analytics, which he described as a very different activity involving “science, mathematics and statistics.” “You need to form teams, with your mathematicians and your statisticians and your IT people and your business people as your data scientists. It’s not so straightforward,” he said. Then there’s the thorny, often treacherous issue of privacy. And while Optus is certainly keen to cash in on the benefits of big data, the company remains wary of the privacy aspects involved in gathering customer information, according to McKenzie. He says that Optus is acutely aware that “we’ve got responsibili-
ties as well because the privacy aspect of telco is [compounded] by the Telecommunications Act.” “Therefore, there’s a lot of internal caution in how we gather this data,” he added. For example, SingTel recently acquired mobile advertising firm Amobee, which has since been integrated into the Optus business. However, McKenzie says that Optus cannot use “implied consent” to push ads to customers. “We specifically have to ask customers whether they agree to it. It is a bit of a minefield sometimes,” he says. For his part, Norton Rose partner Nick Abrahams says that some organisations are simply unsure over what they can and can’t do in regards to direct marketing. “At the end of the day I always take a pragmatic view, in that if you’re in a business relationship as Optus is with its customers… if you’re providing them with an offer you genuinely they’d be interested in, which isn’t a third party provider, you’re pretty close to getting implied consent, I think,” he says “The last thing we need is more regulation [because] that’s not going to solve anything. But we need to remember that direct marketing is only one aspect of big data.” Telsyte’s Gedda says that when it comes to the privacy implications of big data applications, the best form of regulation is often transparency, which provides people with a clear understanding of how their data is being collected and managed. “I would not recommend regulation squarely focused at the concept of big data as that could stifle innovation and development,” he says. “Let’s keep regulation where it makes sense – how all our data is collected and managed, not just that managed by big data tools.”
The new frontier for LTE Mobile operators across the world are forging ahead with commercial LTE deployments. But as the demand for mobile data continues to soar, both carriers and vendors are exploring new technologies to push LTE further. Petroc Wilton reports.
over three years since its J ust earliest commercial deployments, LTE is growing explosively. At the time of writing, the Global Mobile Suppliers Association had counted 156 operators with commercial deployments across 67 countries; 98 of those firms had launched their services in the last 12 months. And a total of 357 operators had made “firm deployment commitments” in 113 countries. But faced with the relentless increase in demand for mobile data, and constrained by strictly limited amounts of radiofrequency spectrum, operators and equipment suppliers are already looking for ways to push LTE further. While the commercial LTE market is expanding fast, it is also still relatively young – and right now, telcos are placing their bets on some very different methods for boosting performance, at a point when backing the right technology could mean the difference between dominant market share and second-tier status in the years to come. LTE-A Perhaps the best-known upgrade is LTE-Advanced, or LTE-A. While the standard offers support for a broad collection of technologies, such as enhanced MIMO capabilities and interference reduction, one of its key advantages is carrier aggregation: it allows the combination of both contiguous and non-contiguous
spectrum bands to allow much wider bandwidths. Huawei claimed a world first with the launch of a commercial LTE-A network in Moscow last year, for Russian operator YOTA Networks, promising transfer rates of up to 300Mbps. A wide range of chipset manufacturers and network hardware vendors have declared they have produced or are working on LTE-A equipment, and many carriers are trialling the standard or planning commercial deployments. Sprint and T-Mobile in the US have highlighted their respective upgrade paths to LTE-A; Australia’s Telstra is trialling it. Minoru Etoh, MD of R&D strategy at Japan’s NTT DoCoMo, says that his firm will introduce LTEA in combination with an overlaid system of macro cells and small cells within two or three years. Some observers question whether the use of carrier aggregation alone should technically be sufficient to label network as LTE-A-capable, but it’s certainly true that the use of multiple spectrum bands can result in some impressive bandwidth boosts. After all, telcos are already refarming spectrum used for legacy 2G networks to make room for extra 4G capacity; why not combine that with other bands to get even more punch? That still leaves the question, though, of which combination of bands should be used and how.
And that compounds an issue already complicating the use of single frequency bands, where different geographic regions are using LTE in different parts of the spectrum, or even using the same spectrum in different ways for uplink and downlink. (The US band plan for coveted 700MHz ‘digital dividend’ spectrum, for example, is not compatible with the plan for the same band from the Asia Pacific Telecommunity, which is gaining traction not just through APAC but also in Latin America.) “1800MHz [has] proved to be the largest deployed band now. The combination of 900MHz and 1800MHz, if you extend that logically… many, if not nearly all markets that have 1800MHz deployed for GSM that they have now refarmed for LTE also had 900MHz initially,” points out Ericsson Australia GM for strategy and government affairs Kursten Leins. “So it makes logical sense to look at that as an ecosystem, because you’ll find operators that have that spectrum asset of 1800MHz are very likely to have 900MHz as well.” “Beyond that, though, you’ve got LTE at 2100MHz, you’ve got more diversity of bands than, I think, we’ve ever seen before. So I think the next couple of years are going to be interesting, to see what those priority combinations are going to be.” One company that’s looking at carrier aggregation across re-
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farmed 900MHz and 1800MHz spectrum is Telstra, which was also one of the first to deploy LTE in 1800MHz. “For any band plan, you don’t want too many sub-fragmentations; that’s why I think 1800MHZ and 900MHz are logical, you’re having a common set of bands that are available over a broad area, [which] will make a big difference to the ecosystem,” says Telstra executive director for networks and access technologies Mike Wright. “But of course, the reality is we’re going to have a few sets of separate bands, just because of the history and the way spectrum’s been laid out in different countries. What we need to avoid is letting us get too far away from us – and I think we’re starting to see the emergence of a stronger set of bands, which will be helpful.” LTE-BROADCAST Telstra, along with firms like Verizon in the US, is also exploring LTE-Broadcast technology. In simple terms, that enables a single frequency network broadcast capability within LTE, so that the same content can be sent to a large number of users simultaneously, and with a much more effective use of network resources than unicasting to each user. But LTE-Broadcast – also known as evolved Multimedia Broadcast Multicast Service or eMBMS – is less a new evolution, more an idea whose time has come. “As a technology, it’s been around since 3G. In fact we ran some trials [in Australia] going back to 2007 or 2008. The technology has been proven to work,” says Ericsson’s Leins. “At the time it didn’t really find an application in the market… and smartphones really weren’t around when MBMS was first defined for 3G.” “What’s changed, a few years on now, is that there’s been a massive ramp-up in traffic, and increasingly that’s video-based; 60%+ of network traffic, whether it’s fixed or wireless, these days is video. Also, broadcast technolo-
gies fit in quite nicely with certain use cases… it’s of very strong interest, initially, for sporting stadiums and events; and Verizon is looking very seriously at how they use this in the US, and Telstra looking at that as a technology in the local markets,” he continues. “But if that’s where the technology applications start, [there are] other possibilities like mass push content… video is the obvious starting point, but really, any digital asset could be pushed.” “With tablets, and the way people are consuming more and more video on the road, it seems to us that… its time may have
“The reality is we’re going to have a few sets of separate bands, just because of the history and the way spectrum’s been laid out in different countries.” come!” agrees Wright. “We see the opportunity to do a bit more than just video. If it was video alone, it would be interesting – but if we can look at it in a broader context, there may be a stronger story there. We want to understand the technology, we want to understand what it would take to implement it and how much it would cost, and we want to understand the broad possible range of use cases that we could put it to. Because ultimately, it becomes more or less a network capacity tool that you could use in times of peak traffic – for video, obviously, but there may be other techniques you could use it for that would take traffic off the network.” Already standardised against LTE, LTE-Broadcast is something that operators could immediately deploy – with the caveat that users will require devices specifically compliant with eMBMS. “We’re certainly seeing the availability of the silicon, which will lead to the availability of the devices – and ultimately, it comes
back to the operators to see the opportunity, and signal to the OEMs that if they had that ability, we would use it!” notes Wright. TD-LTE Some might classify TD-LTE more as a complement to the dominant FD-LTE than an upgrade. Time Division Duplex allows for asymmetric use of unpaired spectrum, splitting the same frequency bands on a time basis between transmitted and received data, as distinct from Frequency Division Duplex which allocates distinct frequencies for up- and downstream data. An obvious draw is that it allows for the use of spectrum in different frequency bands from FD-LTE, helping operators get around existing resource constraints or the long wait for digital dividend spectrum in their respective countries. And it has certainly been gaining significant popular support. The Global TD-LTE Initiative now lists more than 50 carrier members, telcos including Softbank, Clearwire, and SingTel’s Optus subsidiary are trialling, using, or planning to use the technology; many key networks and handset manufacturers are coming on board; and this year’s Mobile World Congress saw China Mobile announce tests of its TDLTE network in over 100 cities, committing to a US$6.7 billion capex spend and 200,000 base stations by the end of the year. But a number of TD-LTE advocates are also pushing the technology as in some ways superior to FD-LTE. Japan’s Softbank is deploying both, but key strategic advisor Tetsuzo Matsumoto has said that it’ll put more emphasis on TD-LTE; the carrier is aiming for 97% coverage. Matsumoto has argued that, because the use of data services tends towards a heavy emphasis on the downstream, TD-LTE is actually more efficient than FD-LTE’s paired bands, which risk leaving frequency fallow on the uplinks
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side. He’s also said that FD-LTE needs to waste much more of its frequency on ‘guard bands’ between uplink and downlink. In Australia, SingTel-owned Optus has been rolling out an FD -LTE network for months but is also pushing ahead with TD-LTE, using the 2.3GHz spectrum it acquired in buying out fixed wireless player Vividwireless last year. In the short term, that will help Optus extend coverage in areas where it’s currently short of spectrum; longer-term, though, the carrier hopes to integrate both its TD and FD-LTE networks to deliver a superior service offering. “Given the really strong speed of development of TD-LTE and that both LTE technologies (TD & FDD) share the same base, we think interworking will be seamless as with 3G and 4G today,” commented networks MD Gunther Ottendorfer. “Really exciting for us was the very strong commitment to LTE and combined FD/TD-LTE from both handset (e.g. Nokia and Samsung) and all network vendors at MWC this year.” “We also see the device industry developing and catching up to the technology rapidly with Tier One vendors all offering TDD/ FDD devices through 2013 initially through pocket Wi-Fi, and smartphones later in the year, additional to the 6 smartphones Softbank is already ranging.” BATTLE FOR CONSUMERS Operators and vendors are also exploring other technology strategies and business models to push the LTE envelope. Telstra’s Wright mentions an LTE-D (LTE -Direct) standard, set to emerge
in a few years’ time, which could help devices communicate more directly with each other. 3GPP has started work on the latest evolution of LTE itself, Release 12, dubbed LTE-B (as distinct from LTE-Broadcast); key areas of focus include enhancements for small-cell deployments and specific use cases such as machine-type communications. Optus, together with US firm Connectem, is trialling a virtual packet core solution; the idea is that cloud-based resources could make it easier for carriers to dy-
“Really exciting for us was the very strong commitment to LTE and combined FD/TDLTE from both handset and network vendors at MWC this year.” namically shift packet core capacity to where it is most needed. And dozens of operators and vendors are pursuing heterogeneous networks or hetnets: networks of microcells tightly integrated with macrocell deployments. These offer a way to cope with traffic patterns that are often extremely geographically concentrated – and, while not limited to LTE, certainly provide a complementary strategy. But it’s important to keep a sense of perspective amidst the branching evolution of the LTE ecosystem. While different operators and vendors trial decide which of the many nextgeneration LTE technologies to trial or even back commercially, the end goal is the same: improv-
ing the experience for the enduser. Most of the punters buying mobile data plans may well not know or care about the latest round of technically complex network innovations helping to deliver their content. But they will be keenly aware if a mobile video stutters, a download fails or a Skype call drops out – and could vote with their feet. For operators, it may be less a question of picking overall winners amongst the divergent breadth of post-LTE technologies, and more about simply finding the best match for their specific situations, capital constraints, and geographic challenges to cost-effectively maintain end -user experience. “It’s not just about LTE – it’s about what you do with your existing networks,” points out Alcatel-Lucent Australia MD Sean O’Halloran, whose firm is now putting more emphasis on solutions for managing network traffic, mobile backhaul and more. “The more sophisticated these handsets become, and the more penetration they have, it just makes it even more critical for the network providers to focus on how they leverage the assets and how they get the best customer experience.” “Take it back to its grassroots drivers: people want to use these devices and to have a good experience. The expectation that it will work well just goes up with time,” says Telstra’s Wright. “[People] are putting their lives onto their devices, and so much of what they want to do is connected to them – so their expectations go up.”
While previously high expectations for machine-to-machine communications weren’t realised, the latest upswing in M2M activity is backed by real revenue and subscriber growth. In fact, by 2017 almost 30% of devices on mobile networks could be M2M. Geoff Long reports.
achine-to-machine communications is said to have reached its tipping point, the fine line where awareness, supplier activity and demand suddenly meet to create a burgeoning market for new services. Many in the industry thought that M2M had reached this point a few years ago, but things like a lack of standards and inflated expectations meant that the technology didn't take off quite as envisaged. Now, not only is the potential recognised and growing, but analyst data and operator numbers are flowing through to confirm: this time, M2M is for real. In a panel session at this year's Mobile World Congress, ILS Technology CEO Fred Yentz said what many others were thinking – M2M is on every supplier and operator’s agenda. “The first thing is wireless and connectivity ubiquity, so the affordability and availability is there. The second piece is the supply chain and the solution set is getting more mature and the tools are getting better . . . and the third piece, which is really evident today on the floor of Mobile World Congress is the awareness – all the way from the business leaders and the C-suites trying to make their business run better to the vendor, of which almost everybody here has some sort of IOT (internet of things) or M2M message,” Yentz said. Mike Cihra, director of M2M and partners at Telstra, has also
witnessed the buzz around M2M this year, noting that it had been building for the last couple of years and is now accelerating. “Historically there has been probably some numbers that have been overly ambitious and they haven’t come to be, but I do believe over the last two or three years we’re starting to see not just predictions but actual returns and growth numbers that are fairly significant. So it’s starting to play out as a real growth opportunity,” Cihra suggests. Evidence of greater M2M activity appeared most recently in Cisco’s 2013 mobile visual networking index and forecast, which showed growth in M2M both overall globally and across most regions, with strong takeup in Asia Pacific. Robert Pepper, who heads up Cisco’s global technology policy team, said specific sectors of growth were in manufacturing, supply chain management, transportation and devices for the car. “We’re seeing a huge growth in machine to machine devices,” Pepper comments. “Most of them are not going to be high data rate, they’re going to be very bursty. When they talk, it's not going to be continuous but they'll communicate in bursts and they’ll communicate in mostly small amounts of data but a huge amount of them,” he explained. Pepper also notes that the countries that are considered advanced in terms of wireless were
also seen to have the highest use of M2M. Globally, Cisco is forecasting that M2M will account for 16.5% of all mobile devices on the network by 2017, although in advanced mobile economies including Australia, Japan, New Zealand and South Korea, that figure is closer to 30% of all devices. However, because of the low data usage, the data traffic from M2M will only be around 5% globally and around 8% in those countries with a high takeup of M2M such as Australia and New Zealand. In the global market, analyst firm Analysys Mason predicts that M2M is set to be one of the fastest-growing connectivity sectors in the next decade, in the process having far-reaching implications for operators, vendors and networks. “Some communications service providers are successfully implementing strategies to seize their share of the market, but others risk getting lost in the market or becoming afterthoughts,” the firm said in a recent report. It noted that large operators such as AT&T, Deutsche Telekom, Orange, Telefónica and Vodafone currently dominate the market with the largest M2M businesses in terms of the number of enterprise device connections. “They have shown themselves capable of co-ordinating large organisations, networks, partnerships, strategy and R&D,”
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noted Steve Hilton, principal analyst at Analysys Mason. “But there are smaller-sized CSPs that are creating successful strategies as well. These so-called ‘niche notables’ include Sprint and TeliaSonera.” Another key group of “notables”, many of them major players in the Asia Pacific region, last year formed an alliance for the global deployment of M2M. The seven mobile operators that comprise the group are KPN, NTT DOCOMO, Rogers Communications, SingTel, Telefonica, Telstra, VimpelCom and most recently Etisalat. The group bills itself as the largest mobile operator coalition in the world, with the aim of eliminating complexity for multinational companies associated with worldwide deployments of connected devices. According to the alliance, it aims to build the technical capability to simplify multi-network M2M solutions for multinational customers in the retail, healthcare, consumer electronics, transportation and automobiles and energy sectors and on a worldwide scale. At this year’s Mobile World Congress it demonstrated for the first time the alliance’s platform and single global SIM card. Ovum analyst Pauline Trotter comments that telco partnerships are the only way to go when aiming to tap into the key MNC market. “As no mobile operator has global wireless assets, a partner-
ship or alliance was always going to be required to serve MNC customers, whether this took the form of a global roaming partnership or an alliance between operators using common M2M platforms,” she says. GROWING PAINS While the growth and revenues are real, there is also no denying that M2M still has some teething problems as it emerges from its infancy. At a recent Australian Computer Society M2M briefing, most of the speakers alluded to the lack of standards as an area that can hamper adoption. Daryl
“It’s still a fragmented industry with a lot of small companies building small applications and there aren’t a lot of standards. So it’s still sort of a cottage industry in many respects.” Chambers, director of M2M Connectivity, said the lack of standards was particularly evident in the area of short-range RF technology. “We just can't get our head around how any of them are going to be the dominant standard today. It doesn't matter what the marketing person might say about a particular standard, there are so many out
there that we'll have five or 10 years of standards argument before we'll see a short range RF technology that works across appliances in the home or works within industry.” Telstra’s Mike Cihra also notes that standardisation is one of a number of issues that the industry is working to overcome. “There are things that are accelerating in the market and there are things that are still barriers to making it happen faster. It’s still a fragmented industry with a lot of small companies building small applications and there aren’t a lot of standards. So it’s still sort of a cottage industry in many respects. I think there have been some improvements over the last year or so but by and large there is still a fair way to go in terms of having a standards based approach to M2M,” Cihra notes. And while at events such as Mobile World Congress there tends to a lot more awareness of the technology, outside of the technology industry there is still a lot of education needed too. “I think the biggest blocker is just awareness in the market. We would think in Australia – and I don't think it's much different in other countries – there's still a tremendous percentage of the business community that doesn't know very much about M2M or what it can do for their business. It's the business of educating the market, making them aware as to what’s possible.” Even though awareness is at an early stage, Telstra has done a good job of tapping into its local market. Citi Research telecoms analyst Justin Diddams described M2M as the fastest growing part of the mobile landscape. Citi estimates the Australian market to be in excess of 1 million subscribers and generating annual revenue of $100 million, with Telstra's share of the market estimated by a number of research houses at between 70-80% and growing at close to 20% annually. In the company’s first half results
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for 2013, M2M generated $44 million, up 10% on the first half of 2012. While there have been some suggestions that M2M is a low ARPU service, Cihra contends that there are other advantages that make up for this. “The ARPU is considerably less than some of the other products that we have from a mobile’s perspective, but actually the acquisition costs and the costs to support and churn, those are actually all much lower compared with some of our other products. So if you look at margins and you look at overall profitability, it’s actually highly profitable,” the Telstra M2M director notes. He also wasn’t overly concerned about falling costs for M2M services. “I expect that just like everything else in terms of connectivity there will perhaps be continued declines in price for connectivity. I don’t expect that will be any different for M2M than it is for other parts of mobility. And actually in terms of what Telstra is doing we see it as an important step for us to develop more in the way of applications and solutions that complement the connectivity. So it’s not just about providing a SIM card it's also about providing maybe an application that’s provided in partnership with other companies, providing more of an end-to -end proposition rather than just the SIM card to drive the business and accelerate the market and to hopefully bring more value back to Telstra.” Of course Telstra won't have the market to itself – both Optus and Vodafone have also shown recent intentions to try to grow their share of the M2M market. Optus last month announced that it had signed a new vendor partnership with Jasper Wireless, whose management control centre is used by many of the major carriers focussed on M2M, including Optus’ parent Singtel and the members of the M2M Alliance (including Telstra). Phil Offer, Optus Business VP
of mobility and convergence, said the announcement signals Optus' commitment to expand its M2M capabilities locally and across the Asia-Pacific region. “With SingTel and Optus adopting Jasper Wireless as the common connected device platform, this enables more seamless regional M2M services to enterprise customers across the region. Meanwhile, Optus Business is leveraging the skills and expertise of our system integrator arm NCS to help our customers bring new M2M solutions to market,” Offer said. Meanwhile, Vodafone has been more active at the group level, with the parent company announcing a major push into M2M at this year’s MWC in Barcelona. In fact the company won a best mobile service award for the DriveNow service, which uses M2M as the basis for a premium car sharing service. DriveNow already has over 88,000 users and a fleet of 1,500 cars across Germany and the US. Vodafone Group also used MWC to launch its MachineLink 3G M2M terminal, which was developed in conjunction with Australian firm NetComm. According to Vodafone, the terminal can be integrated with any sort of IP/Ethernet type applications across a broad crosssection of industries. Meanwhile, a spokesperson for Vodafone Australia said locally the company's focus would be on enabling Australian business to expand globally with single connectivity solutions, with a number of announcements expected in the coming months around M2M.
MOBILE TRUMPS FIXED In all of the recent momentum in M2M, it’s obvious that nearly all of the activity is in the mobile/ wireless world. While there are still some installations of M2M on fixed networks, there numbers are being dwarfed by what's happening in wireless. Telstra is a good example of the dominance of mobile. “The vast majority of the business that Telstra has seen is mobile,” notes Mike Cihra. “We do have some customers and products today that service fixed telemetry needs of the market, so we do have that capability and we'll continue to provide it when the customer is asking for it, but I do see a trend by and large where more and more customers are looking to wireless. And the reason for that is it's just easier to deploy, it's faster time to market for them, and that's something that we're just seeing more and more of.” According to M2M Connectivity's Chambers, satellite networks are also growing in importance for M2M. “The reality is that satellite is a fantastic adjunct to cellular, particularly to extend coverage to places where cellular just doesn't go,” he said. But he suggested that the next growth spurt for M2M will be on the back of LTE networks. “LTE will be the network of choice for M2M,” he said, noting that the characteristics of the network are better for this type of communications, while the capacity of LTE will be needed to cope with massive growth predicted for M2M.
SAP’S SOFT PLAY FOR M2M: With much of the focus of machine-to-machine on devices and connectivity, independent software vendor SAP is perhaps a surprise name when it comes to M2M influencers. But the company has literally written the book on the subject – Beyond Connectivity: A Guidebook for Monetizing M2M in a Changing World. It has also teamed up with mobile vendor Ericsson to provide a cloud-based M2M solution for operators. Ericsson’s Device Connection Platform & Service Enablement platform is to be combined with SAP’s HANA platform in an offering to mobile operators that provides enterprises with end-to-end management of M2M solutions. According to Ovum telco analyst Steven Hartley, closer integration of the M2M operational ecosystem has been needed for many years and this is another sign that M2M is maturing.
The Australasia Satellite Forum 2013 Westin Hotel, Sydney, Australia
Monday April 8 2013
Just $797 inc GST for this unique annual event PLATINUM SPONSOR
REGISTER NOW AT: http://bit.ly/VP2pJv 8.00 Breakfast sponsored by IPSTAR Australia 9.00 Opening Address: Kevin French, Publisher, talk Satellite 9.05 Keynote: Luke Hartsuyker, Shadow Regional Communications Minister
9.30 Shaping Australasia’s satellite footprint: Satellite Operator Roundtable Paul Sheridan, VP, Optus Satellite Terry Beakley, VP Asia, Intelsat Adrian Ballintine, CEO, Newsat Glen Tindall, VP Asia Pacific, SES John Turnbull, O3b, Director Sales Pacific Patrick French, Senior Analyst, NSR (moderator) 10.30 Broadcast Panel: Video DTH, IPTV, OTT, Cloud Simon Farnsworth, CEO, Globecast Australia Sandeep Kumar, Head of Satellite Sales, Telstra Global Nell Payne, Director Broadcast Technology, Foxtel Richard Walshe, Business Development Manager – Asia & Pacific Newtec Simon Twiston Davies, Consultant, Satellite and Broadcast Services (Moderator) 11.10 Networking Break sponsored by Gateway Teleport 11.40: Telecom/Broadband Panel: Delivering services to the edge and beyond Nick Leake, Director, Satellite Marketing, Optus Oded Sheshinski, Regional Vice President, APAC, Gilat Satellite Networks. Michael Abela, CEO, Skybridge Matt Dawson, program director, satellite NBN Co Simon Bull, Senior Analyst, Comsys Keith Ramsay, VP Sales & Marketing, Gateway Teleport (Moderator) 12.20: Satellite Manufacturers panel: NGN Satellite Fleets Tony Colucci, Vice President, Space Systems Loral Eddie Kato, CEO of Thales Alenia Space North America Ted McFarland, Regional Vice President, Business Development, Orbital Sciences David Ball, CTO, NewSat (Moderator) 1.10: Keynote: Jean-Yves Le Gall, Chairman & CEO, Arianespace 1.25pm Networking Lunch sponsored by Gilat Satellite Networks 2.45: Keynote: Captain Vaughn Rixon, RAN, Australian Defence Force 3.00: Military Panel: Government and Commercial Satellite Cooperation Wing Commander Darren Ross. Australian Defence Force Don Brown, Vice President, Hosted Payloads, Intelsat General Todd McDonell, CEO, TC Communications John Ness, Chairman, EM Solutions Patrick French, Senior Analyst, NSR (moderator) 3.50: Networking Break sponsored by TC Communications 4.15 Enterprise solutions and applications Mining - Chris Hill, CTO and Country Manager, ITC GlobalCase Study, System and Application trends – Maritime - Paul Krzystoszek, Senior Manager, Products and Marketing, ASC 4.45 Regulatory Session Andrew Kerans, head of ACMA Spectrum Policy Simon Twiston Davies, Consultant, Satellite and Broadcast Services John Stanton, CEO Communications Alliance Bob Horton, Representative, GVF Grahame Lynch, CommsDay founder (Moderator) 5.45: Optus: Platinum Sponsor Speaker 5.55 Networking drinks sponsored by Telstra Global