Most current residential broadband networks were designed to offer limited capacity “best effort” data transmission. With the foreseen addition of voice and video services in the broadband service portfolio, operators have to redefine their role and redesign their networks67. The migration strategy chosen not only affects the technical performance of the network, but can also have profound effects on the development and competition in service provisioning.
3.2.1. List of contributions
Tadayoni, R. and Sigurdsson H.M. (2007) Drivers and barriers for development of alternative broadband. Accepted for publication in Telematics and Informatics, Elsevier.
Alternative broadband infrastructures are emerging and developing fast. These networks are based on different technologies and offer assorted services, applied through
66 In reality this strategy is also an alternative for incumbents but as the chapter will demonstrate, telecoms tend to chose a different type of FTTH networks, based on passive optical networks.
67 As an example of this transformation is reported in TVinternational (2006) which reports that Danish incumbent TDC ‘is embarking on a major network upgrade to enable most of its system to support a triple play of video, broadband and telephony’.
various organizational structures, using diverse business models.
Due to their alternative nature, these emerging infrastructures are operated on other premises than within existing operators and face different potentials and challenges in their operations.
This article uses four detailed case studies from Denmark to identify the technological, economic and political/regulatory drivers and barriers of alternative broadband infrastructures, including the role of the government in fostering their existence.
Sigurdsson, H.M. (2006) Service Differentiation in Residential Broadband Networks, Revised version of paper originally published in proceedings of CICT's International conference on
“VoIP, Potentials and Challenges, Drivers and Barriers”, Copenhagen, Denmark.
This paper discusses the role of network access providers in multipurpose packet-based access networks and the available migration strategies for supporting multimedia services in digital subscriber line (DSL) based residential broadband networks. Four possible implementation scenarios and their technical characteristics and implications are described. To conclude, the paper discusses implications of alternative strategies on two currently experienced trends of i) vertically integrated business models and ii) open access.
Thorsteinsson, S.E., Richardsson, N. and Sigurdsson, H.M.
(2003) Home Area Networks, Yearbook of the Association of Charted Engineers in Iceland, Reykjavik, Iceland.
This paper describes home area networks (HAN) with a special focus on the development of customer premises equipment (CPE) and home gateways. The paper highlights the important role of HAN in adoption and use of broadband connections.
Contribution to "Second report on the multi-technological analysis of the "broadband for all" concept, focus on the listing of multi-technological key issues and practical roadmaps on how to tackle these issues", BROADBAND in Europe for All: A Multidisciplinary Approach ; FP6-IST-507554/JCP/R/Pub/D2.2-3.2, 2005.
This deliverable provides a multi-technological analysis of the
‘broadband for all’ concept, with an update of the listing of key issues, a first gap analysis, and roadmaps on how to tackle these issues. The deliverable also contains information on ongoing
regional and national broadband initiatives in Europe (EU25) and around the world. The information includes an analysis of the broadband market in these countries with overview of available technologies, infrastructures, operators, pricing,…. It also includes a summary of the broadband policy in these countries.
3.2.2. Literature review
During the late 1980 and early 1990 there was a strong belief that telecoms would take over video distribution through packet-based transmission over fibre (Maxwell 1999). According to Chen et al.
(1994) this was spurred by the FCC’s so-called ‘Video Dial Tone’
ruling in 1991. The result was that telephone companies started
”aggressively pursuing plans to enter the video distribution business”
(Chen et al. 1994; p. 102).
This spurred active research into different technologies that telephone companies could use in their access network evolutionary plan. Local Exchange Carriers (LEC) preferred fibre but to reduce deployment cost other proposals came forth such as Hybrid Coaxial Fibre (Green et al.
2001). Digital Subscriber Line (DSL) was also proposed as a
”technology to facilitate a graceful transition from copper to fiber”
(Waring et al. 1991).
Many of the proposed solutions were tested through operator driven multimedia field trials of the 1990s in Europe (AMUSE 1996), Asia (Song and Lee 2006), and the US (Lin 2006). Conccetto et al. (1999) describe the findings of the European Amuse project where in 1996 residential users were provided with interactive multimedia services, including VOD, News on Demand, etc.
While the field trials all demonstrated the functionality and availability of technological solutions capable of providing advanced multimedia services, Conccetto et al. (1999) describe experiences from the European Amuse project, where high cost of equipment, limitations of services delivery platforms, lack of standardisation, and immature user interfaces result in damaging effect on customers, which at the time were technology disenchanted.
But what sparked the technological development and drove the efforts towards diversification in the 1990s? The market was at the time dominated by national and incumbent operators that sat comfortably on
the PSTN market and made ample profits. Data services were in their infancy and therefore little evidence of demand-sided pull. Maxwell (1999) primarily accredits this diversification by telecom operators on competition from cable operators that in the early 1990s were threatening to implement telephone and interactive broadband services over the existing CATV networks (Maxwell 1999, p. 6).
Despite the ambitious goals of the 1990s neither the telecom nor the cable operators successfully diversified and the world has not witnessed any wide-scale upgrades to the existing copper access network yet68. As a result ADSL dominates the broadband market in all OECD countries apart from the US and Canada (OECD 2006). However, with increasing transmission demand ADSL is giving way to new DSL standards.
Kapovits (2005) draws on Eurescom (2005) study P1551 and reports that broadband access networks are reaching a new deployment phase.
According to him ”most operators in Europe are currently deploying ADSL2+ in their access networks and experimenting with VDSL2”.
In contrast to ADSL that can be deployed from existing structures over existing access networks, VDSL requires shorter copper loop and therefore more expensive deployment of fibre to the node (FTTN).
Elnegaard and Stordahl (2002) propose real options methodology to evaluate deployment strategies available to incumbents under service competition. The real options approach is adopted from financial theory where investment opportunity (real option) has an analogy to a call option in the financial world. In this way they capture the value of flexibility and uncertainty in future VDSL rollout strategies. This value is generally not incorporated in traditional techno-economic frameworks where discounted cash flow and net present value are calculated for static deployment scenarios. They show that for the case of optimum predicted by static profit maximisation may shift when real options are considered.
68 During the late 1990s and early 2000s there was a considerable HFC deployment by telecom operators around the world but these network plans did not live up to their expected success in broadband provision and are not treated in this thesis. For introduction to HFC see Green and Dutta-Roy’s “The emergence of integrated broadband cable networks - an overview of cable modem technology and the market perspectives”
Along this way, but using a game theoretic model, Woroch (2004) shows that in a race between two firms, the firm that is more eager to deploy, will deploy first but not necessarily at the time that yields maximum profits. Instead, it deploys an instant before its rival finds it preferable to be the leader rather than being relegated to the role of the follower. This highlights the importance of strategic deployment decisions that aim at forestalling or delaying entry.
Vendors, such as Alcatel and Ericsson provide subjective (but often good) white papers on advanced DSL systems but in general there is a lack of textbooks covering advanced DSL networks and services (probably due to the fast paced development). Rauschmayer (1998) and Bates (2002) provide rather tedious overviews of DSL from technical perspectives, focusing on practical issues such as crosstalk. More interestingly (for this study at least) Maxwell (1999), NRC (2002), IST-BREAD (2005) and Chlamtac (2005) provide an overview of DSL technology and put it into perspectives with services, usability, and regulation.
Empirical evidence also shows that FTTX deployment is finally taking off, lead by Japan that now has 6.3 million fibre subscribers, outnumbering total broadband subscribers in 22 of the 30 OECD countries (OECD 2006). Literature provides a better and more up to date account of this trend, of which the technology review of Green (2006) and deployment overview of Lin (2006) can be recommended.
These neutral accounts are balanced by vendor reports, of whom Alcatel Telecommunications Review was most consulted.
What emerging DSL and FTTX technologies have in common is that they follow the general structure of Next Generation Networks (NGN).
Knightson (2003) provides a general overview of the trends and concepts that NGN is comprised off. EURESCOM (2001) goes to the depth with implementation analysis of the technological aspects of NGN as well as service provisioning. Elixmann and Schimmel (2003) and Devoteam Siticom (2003) look at the regulatory implications of NGN and finally, in Sigurdsson (2003; 2004d) the author analysed the financial consequences of implementing Next-Generation-Networks in Iceland.
Despite increasing deployment of fibre in access networks, optimal architectures and technologies are still being debated. The current technical and vendor literature has focused on network architectures and data protocols. The current debate is largely focused on Ethernet
over Active Star, Asynchronous Transfer Mode over Passive Optical Network (PON) and Ethernet over PON architectures. On the future horizon Dense Wavelength Division Multiplexing (DWDM) over PON is seen as a means of increasing the capacity of PON.
Industry reports of deployment show that when incumbents decide to deploy fibre, they predominantly choose PON. In 2006, German incumbent, Deutsche Telekom, presented plans to connect 2.9 millions homes in 10 major cities in Germany with FTTN + VDSL2.
Furthermore, at year-end 2006 France Telecom (FT) announced plans of extending existing FTTH trials in Paris, and from June 2007, to 12 other French cities. By the end of 2008 FT plans to have spent €270 million in CAPEX to pass 1 million homes with its fibre, and have between 150,000 and 200,000 customers hooked up to the network (expected take-up rate of 15%-20%) (LightReading 2006f).
The technological solution that FT chose is a GPON architecture, with 64 customers provisioned by a single fibre, as that approach is according to FT the most CAPEX efficient and saves on operational costs at the central office. The service offers a 100-Mbit/s symmetrical broadband connection, high-definition TV (HDTV), unlimited VOIP services, and connection and support services for €70 per month. FT says that among the main services and applications used by those that signed up were HDTV, video on demand, photo storage, and the
"sharing of user-generated content." (LightReading 2006f).
A broad body of literature discusses and proposes quality of service mechanisms that can facilitate multimedia services in residential broadband networks (Courcoubetis 2003; Ram 2004; Mandjes 2003).
However, there are practical concerns about realising these proposals, as well as criticism that many of the proposed schemes are ”overly concerned with congestion control to the detriment of the primary pricing function of return on investment” (Roberts 2004, p.1389). In line with this, equipment vendors have proposed more simple and inexpensive ways using a combination of bandwidth over provisioning and service differentiation (Alcatel 2004c).
The chosen service delivery model is also affected by the role that network access providers assume in the broadband value chain. An ideal position for customers is to have open access to different service providers for different types of content. In theory, this should increase service selection, innovation, and competition (Bourreau and Dogan 2003). In a commercial networking context, this is likely to happen
when the viability of the network access provider is assured by the sale of transport services. However, in the case of dominant Incumbent Local Exchange Carriers (ILECs), they also act as competing service providers. Because they are guarding their own interest at the service level and also determining the future structure of residential broadband networks can cause conflicts of interest and affect the path of network and service evolution.
This chapter assumes that the choice of migration strategy of residential broadband networks is intertwined with the role that network access providers assume in the broadband value chain. By analysing the technical requirements of multimedia services and putting them into context with possible implementation scenarios, this chapter tries to describe the likely deployment path of multimedia services in residential broadband networks.