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A European Perspective
Each of Europe’s major telecom operators has employed a slightly different approach to NGN. Some have been audacious, while others are treading a little more cautiously. Opinion is divided as to who is on track, and who is following the road to folly.
Jan Davids, Senior Strategist at Dutch carrier KPN, is confident that the company is well placed in terms of its triple-play progression. He confirmed “We are now rolling out VDSL and Fibre-to-the-Curb. Once this is completed, which should be within the 2010 timeframe, we will be in a position to offer full triple-play services to all our subscribers.” When asked whether the long term goal would be to combine the mobile network with this, and thereby offer a fully integrated quad-play solution, Davids voiced the opinion, “Merging the mobile and fixed networks is not a goal in itself. KPN will integrate fixed and mobile services only when there is true customer demand for it.” “The coming years will show how far fixed-mobile integration of services will go” he explained. Though he would not comment on how KPN should be judged in comparison to other NGN roll-outs elsewhere in Europe, he did state that “KPN was one of the first European telecom operators appreciate the value of IP as a driver for technical innovation. Our ‘All-IP’ programme, which aims to implement a fully packetised basis for all services, will ensure that we are one of the leading operators in NGN.” It has not been tempted to follow the same route as BT, and try to redefine its business model to generate new revenue streams by providing content. “KPN has no intention of becoming a content provider. It will concentrate on generating new revenue streams with services related to access.” Davids concluded.
France Telecom (FT) have chosen to stay very guarded about what they will discuss when it comes to NGN, Jérôme Henique who heads up the firm’s Home Services Division, would not comment on what other major European operators
were doing, nor make comparisons between FT’s NGN strategy and those of its counterparts. All he would say is, “Triple-play offers great potential for providing a whole new generation of multimedia services to our customer base, we are making strong investment into this area, and expect to take up a leading role in its implementation.”
Andy Lewis, Manager of the BT Division of Huawei Technologies is highly complementary of what is going on in the UK. In his opinion, “the rest of the incumbents around Europe aren’t tending to be so ambitious in the way they tackle this. Generally they are looking at things like DSL overlays, seeing that it is better to add more lines and connect more customers first, rather than trying to upgrade from the ground up.” The firm is playing a major part in several NGN roll-outs across Europe, and has been the main facilitator in KPN’s migration to a packet switched system, as well as one of BT’s initial eight partners on 21CN. “BT are clearly confident that by simplifying everything into a single all encompassing network, the savings made in operating costs and the opportunity to add new services quickly and easily will justify this huge effort” he concludes. So although they are being more bullish than their opposite numbers on the Continent, he believes that this is a gamble that could pay off.
But others disagree with such comments. Stephan Pruecklmayer, who heads up the Wire-line Communications Division at German semiconductor leviathan Infineon, feels that the reason for BT’s heavy financial outlay on its network infrastructure is that years of neglect have left it in such a poor state. “It is no secret that BT has seriously underinvested in the past, when compared to its main competitors across Europe. This has left it with a lot of ground to cover” he conjectures “so even though 21CN will appear to be a major advance, much of it is simply down to having to catch up with what has happened elsewhere over the last decade.” However, Pruecklmayer does concede that, “At the same time they are the first to make the really big jump of transferring fully to an IP-based methodology, and this is commendable. Every one else will be attempting to attack triple/quad-play on several fronts at once, with one portion of operations
in fixed line telecom, one in Internet, one in mobile, and so on.” As all these separate units work isolated from one another, carriers have to maintain three networks rather than one. “By bundling all of these together” he states “BT will be in a position to make more revenue per customer, and overall the services should improve.”
Potentially, however, couldn’t this lead to providers concentrating on just making sure that the key attractions (like video content) are done well, and just scrimping on its efforts when it comes to the other services (like voice and data). Pruecklmayer feels this is unlikely to occur, “No question, it is content that will attract customers, but it is the quality of service that will keep them, so this needs to be done well. If you can’t cover this part of the equation, the good work you do elsewhere will count for nothing” he argues.
He sees a great deal of activity from carriers across Europe trying to ensure that they are not squeezed out of the market that they are effectively creating, by the established content providers. He explains, “Mobile and Internet service providers are starting to collaborate, and operators like Telefonica are already buying up companies that will help them to add additional content. Deutche Telecom took some time to get involved, but it is now offering triple-play bandwidth to its subscribers, with a choice of six or seven different package options, depending on preferences in level of content.” So does this mean the end for a lot of firms, will there inevitably be consolidation? Pruecklmayer certainly thinks so, “It is already starting to happen, with many ISPs and smaller mobile providers being killed off, because they simply cannot compete.” He expects that there will be heavy casualty figures here, and Europe will end up with just two or three big players per country.
The opportunity is clearly there, but so is the risk. Carriers could end up making all the expensive technological developments needed to allow triple-play to be realised, but miss out on the financial rewards. He notes “Free, a French CLEC, now offers a package service that means, for little more than Euro 30,
subscribers can get close to a hundred TV channels, mobile service, and international calls, and more recently France Telecom has followed suit with a similar offering. If everyone has to keep cutting their price, while maintaining content and quality of service at high levels, they may cross the thin line between being cost-effective and simply haemorrhaging money.”
Pruecklmayer envisages that “Things like VoIP and IPTV will be standard features of course, they are not hard to support, so they won’t be easy to charge heavily for. It is likely that dual-mode or instant messaging services that go across the whole telecoms spectrum will be highly sought by subscribers.” As for mobile TV, he feels that the jury is still out here. “It has potential, but will it be as big as all the hype that has surrounded it?” he asks “I am not sure. I see it more as an occasional thing, rather than a regularly required feature. If you want to catch the end of a show, but are have to go somewhere in a hurry, then there is an attraction. Also the opportunity for video sharing will clearly a big draw for customers. It will mean that we can participate in our friends’ experiences.”
Agilent Technologies’ Olivier Grimaud, who is in charge of the company’s IP Convergence Division, appreciates that it is not simply here in Western Europe that changes are afoot. As he points out “Regions such as the new EU countries, Poland, Hungary, Czech Republic, etc, as well as the Middle East, will be in the enviable position that they don’t have a great deal of old infrastructure in place, and can start off with a blank canvas on which to deploy fully IP-based networks from the beginning.”