“Under NG-PON2, it is most likely there will be no WDM-PON,” asserted Klaus Grobe, principal engineer at ADVA Optical Networking, who presented an update on standards and research projects.

To find out why, read the rest of my guest blog post for ADVA Optical Networking.

Perhaps you think the title of this post is a little overstated, but I doubt that the subjects of these videos would agree with you. For them, FTTH has dramatically improved their work-life balance, saved them money in business and fostered independent living well into retirement.

This first clip is about a film director in the tiny town of Kilafors in Sweden (about 1000 inhabitants), who created collaborative software tools so that he could run a data-intensive film-editing business remotely (using four computer screens simultaneously, no less).

More video clips are available on the FTTH Council Europe website.

The target for availability called for every citizen in Europe to have access to 30Mbps broadband by 2020. The target around uptake was even more ambitious: the European Commission wanted half of all subscribers to be taking 100Mbps services by 2020. As Chris Holden, president of the FTTH Council Europe, pointed out at the time, such a high penetration would require almost ubiquitous availability of 100Mbps services – something that FTTH is well placed to deliver.

So how are things looking one year later?

This is the intro to my first guest post for ADVA Optical Networking, so you’ll need to pop over there to read the rest of it.

Download the guide

The guide is a project that I worked on for the Independent Networks Co-operative Association (INCA). I gathered information and contributions from industry experts and next-generation access projects in the UK, and then distilled the key information into a short, accessible summary of the broadband scene in the UK. This information is accompanied by information to kick start broadband project development, and I’m very pleased that BDUK is now referencing the guide as a resource for community groups looking to bid into the Rural Comunity Broadband Fund.

The second edition, published 18 months after the first, brings things up to date in terms of technology, policy and market development – it’s amazing how much has happened in such a short space of time.

Malcolm Corbett, chief exective of INCA, said: “This guide is a great primer to the issues surrounding next generation broadband and is accompanied by an in depth, expert Knowledge Base. We welcome your comments on and input to both products.”

Barry Forde accepts a cheque from B4RN's first shareholder. Credit: Lindsey Annison

To get to this point, B4RN asked people living in the project area to register their interest in getting hooked up to a new fibre network. The business plan depends on at least 50% of residents being prepared to pay £30 per month to receive an ultrafast broadband connection. The registration scheme launched in July and by the end of November had over 700 sign-ups: and B4RN was go!

In Phase I of the project, money raised by the share offer will be used to connect 1452 homes across nine parishes. Some have questioned whether such a small project really matters. But CEO of B4RN Barry Forde, who has spent the last two years putting the plans together, set them straight immediately. “It does matter; in fact it’s life or death for the countryside,” he told the launch meeting at the Storey Arms in Lancaster this afternoon.

The risk of leaving rural areas without adequate broadband provision is that all the jobs are sucked away into the cities. Communities will be left without essential services, both as a direct result of not having access to the Internet, and as an indirect consequence of the slow exodus of people and skills, he says.

Few people can doubt the truth of this statement, yet the problem of delivering rural broadband remains very much unsolved at the present time. BT is rolling out superfast broadband across the UK, but the catch is that they are only going to reach two-thirds of the country with their own money. The government has made another £530M available to expand superfast broadband coverage to 90% or maybe a little more. But both government and industry say the remaining 10% of homes are too expensive to serve.

“The state piggy bank is empty, there are a lot of conflicting demands on government cash, so it’s down to us guys,” said Forde. “The only way that we’re going to get superfast broadband in rural communities is if we get together and make it happen.”

Forde and the rest of the B4RN team think they can build a fibre network for a lot less than any of the big telecoms firms by exploiting the distinctive features of the countryside – soft earth and a strong community spirit. They want to create a network that’s built by the community, owned by the community, for the community. And they say that they will “move heaven and earth to make sure that money spent on the [B4RN] subscription gets spent again in the community.”

When they say “built by the community”, they really mean it. The plan hinges on local residents – from housewives to major landowners – giving permission to dig across their land free of charge, and then doing most of the actual work themselves. Forde says they will send local people on a course to learn how to splice and connect optical fibres, and will rely on them to come out and fix the network in the event of a fibre cut.

B4RN will need to use some professional services (to take down and rebuild stone walls for example) but the JFDI approach (which I’m reliably informed means Just Farmers Doing It) will reduce labour costs dramatically. Labour as payment in kind is expected to account for about one third of the total project cost.

Neelie Kroes tweets her support

People donating their time won’t go uncompensated. B4RN will issue two classes of shares, with Class B being paid for “by sweat rather than swag.”

Class A shares, on the other hand, require an investment of between £100 and £20,000, and the willingness to tie up your money for four years with no dividends – B4RN is registered as a community benefit society with the Industrial & Provident Society, which means that any profits must be reinvested in the community. To make the share offer commercially attractive, however, B4RN has designed it to be compatible with the Enterprise Investment Scheme, which allows tax payers to claim back 30% of their investment from the Inland Revenue.

“So long as we deliver on our business plan, you’ll get your money back with a much higher level of interest than if you’d stuck it in a bank at 0.1% interest,” Forde told prospective shareholders at the meeting this afternoon.

And that’s the crux of the matter. After months of planning, the B4RN team will now have to do what they said they were going to do. Digging should start early next year – although maybe not in January because the ground will either be frozen or sodden, they said.

The B4RN project has amassed a huge following of well wishers and supporters in recent months. Local landowners and MPs have written letters of support. David Collier from the National Farmers Union tweeted: “#B4RN could be the model for rural community broadband projects,” adding that the NFU would offer practical support.

The project has also drawn international attention. Neelie Kroes, vice president of the European Commission responsible for the Digital Agenda, has tweeted about it. And Gigabit City, a group representing Google’s planned FTTH network in Kansas City, sent a short video message that was played at the meeting in Lancaster. To have its plan compared to that of Google: that’s an auspicious start for such a small fibre network.

Plenty has happened in the past year, but not in terms of deployment.  No superfast broadband connections have been enabled by any of the pilot projects; in fact none of the four projects has awarded a contract yet, even though at least one of them was at a fairly advanced stage of planning when originally put forward.

The report concentrates instead on what has happened in the early stages, from initial set-up of the project and preparation for procurement as well as parallel activities around demand and awareness.  There are 83 administrative counties in England, the majority of whom are working out how to spend the money coming their way via BDUK, so any information that helps speed up and streamline the process is valuable.

Here’s my interpretation of the key findings:

Good things come to those that wait work extremely hard: BDUK expects local bodies to develop clear objectives, a funding strategy to deliver them, get concensus on these issues from all local political bodies from parish councils upwards, gather the data needed to ensure state aid approval, create an information pack for potential suppliers, and set up an accountable body to manage the delivery process. Phew! “This has proved to be a challenging process involving a significant and unpredictable time commitment,” the report notes. As a result, all of the pilot projects took longer to commence their procurements than was originally envisaged.  Project mobilisation takes a minimum of 6 months even with adequate resources, says BDUK.

Projects don’t come cheap in terms of resources or salaries: BDUK says that, as a minimum, projects require a dedicated project director, a commercial lead, a technical lead and legal support as well as wider project support, which might include administration, finance, marketing and procurement experts.  Demand stimulation activities are particularly demanding in terms of resources, the report notes.  One way to minimize the financial and administrative burden is to team up with other local bodies, as Herefordshire and Gloucestershire have done (forming the Borders Broadband project).  Local bodies are also expected to establish a project board for governance.

All projects have adopted the competitive dialogue procedure: This is a very time and resource-consuming procurement process reserved for only the most complex projects. The pilot teams adopted this approach, says the report, because “while they could define what they want, they cannot assess the technological viability to deliver it, or the likely ‘gap’ in funding to address market failure without engaging in dialogue with potential suppliers.” The process takes around 12 months minimum, which means that first contracts are likely to be awarded next summer.  Bidders will be selected on the basis of the most economically advantageous proposal, which is likely in practice to mean making trade-offs between the quality and cost of the proposed solutions.

The preferred commercial model is the investment gap-funded model: Three of the pilots have asked bidders to propose solutions under the gap-funded model.  The fourth, North Yorkshire, also gives bidders the option of a special purpose vehicle.  This option was rejected by the other three because it would require them to commit to an ongoing investment risk, which they were not prepared to do when the total cost of the project was still unknown.  In future where local bodies opt for the gap-funded model, they will be expected to take advantage of the procurement framework that BDUK is setting up.  BDUK has already approved broadband plans from four projects expecting to use the procurement framework.

Local broadband projects must have scale: Both project teams and their bidders wanted to make the procurements as large in scale as possible — another reason for local bodies to work together. Suppliers in general were happy with aggregation where it reached between 100,000-300,000 target properties, according to the report.  The Highlands and Islands and Borders Broadband projects considered going for geographically restricted pilot areas initially rather than jumping in with both feet as a county-wide procurement, but rejected this option on the assumption that lack of scale would diminish the bidder’s business case. Both sides like demand aggregation activities because it gives them more confidence in the projected revenues, which could reduce the gap funding required.

BDUK is trying to avoid a procurement bottleneck: “The evidence from procurements currently under way is that suppliers have the capacity to address a relatively small number of procurements at the same time. There is therefore a risk of market overload at a national level if too many procurements take place simultaneously. Consequently BDUK will manage the flow of projects through the procurement process to ensure that the number of procurements at any one time is manageable for interested suppliers.” Nuff said.

Community broadband projects should fit in with county-led plans: Local authorities are also being asked to support and involve community broadband projects. They are expected to take any existing community projects into account as they develop their local broadband plans and share information about whether the projects are in an area that will not recieve superfast broadband (even though they may not know this yet). Ideally, local bodies should set up a framework for community projects to work within. In North Yorkshire, they have set up such a framework that allows communities to bid for funding from the Performance Reward Grant.  In Cumbria, the council has been exploring a “build and benefit” model, but the outcome of this is still uncertain.

There’s a lot more detail in the report itself, from job descriptions of the project team members to a list of potential funding sources that the projects have tapped into. You can access the 49-page report here.

Here is a project in Norway to make the invisible visible. Hat tip to Dick Willis.

The Council really excelled itself this year with the speaker program, starting with Professor Carlota Perez, an expert on technological revolutions, and ending with Neelie Kroes, vice-president of the European Commission responsible for the Digital Agenda. In total, there were more than 80 presentations running in three parallel sessions over two days, plus an additional day of pre-conference workshops for the truly dedicated.

The conference has grown even larger, attracting more than 3,100 delegates from 80 countries, and keeping its crown as the largest FTTH conference in the world. It’s also a wonderful opportunity to meet both familiar and new faces: thanks Florence, Guy, Chris, Albert, Karin, Richard, Benoit, Costas, James, Martyn, Brian, and Lindsey, to name but a few.

For me these were the take-home messages from the event:

Europe needs to speed up on fibre: Europe is still the poor relation in the FTTH family, with just 3.9 million subscribers at the end of 2010, according to the latest update to the FTTH Ranking. This is hardly a new message from the Council, but this time they had heavyweight backing from Neelie Kroes, vice-president of the European Commission responsible for the Digital Agenda. “The current rate of new connections – now down to 25,000 a day – is simply not enough to meet our 2020 targets,” she said. To the delight of everyone in the room, she underlined just how important fibre is to the European Commission, warning that: “It not possible to maximise access while failing on fibre.”

Effective public policy on high-speed broadband is vital: Keynote speaker Carlota Perez is an economist, whose work focuses on the socio-economic impact of technological change in a historical context. It’s hard to do justice to her work in a short paragraph, but I’ll try. We are in the middle of the fifth major technological revolution, based on information and communications technology (ICT). Financial market instability and the struggle to adapt old business models to new technology are characteristic of the turning point of a technological revolution. When the market eventually moves past this stage, it enters a “golden age” of productivity and growth. But the shift to a more stable market does not happen without a push; as in the past, it will need sound public policy and regulation to shape and broaden markets. The best way to encourage the shift to a “golden age” of ICT, says Perez, is to make high-speed internet access as universal as electricity.

National regulators should play by the rules: The publication of the Recommendation on regulated access to NGA networks last year provided clear guidelines for national regulators to follow, but some regulators are ignoring core provisions in the Recommendation – and Commissioner Kroes is clearly unhappy about this. “These provisions strike a good balance between investment incentives and the need to protect competition,” she said. “It took long and intense discussions with stakeholders to agree on these principles. So in my view, everybody should now play by the rules.” Variations in local conditions are no excuse for the highly diverse national approaches to regulation, she added. “Europe does not need 27 approaches to NGA.”

The important question is not “why fibre?” but “how fibre?” Chris Holden, president of the FTTH Council Europe, highlighted this fundamental shift in perspective in his introductory message. The debate on “why fibre?” has largely been won. The big questions now are around the business models and financing to make this happen, given the high cost of digging to get fibre in the ground. For the first time at this conference, there was a session focused on investment models for FTTH. The European investment Bank explained how it is willing to bankroll well-thought-out business plans that help to meet European policy objectives (like the Digital Agenda). Another interesting presentation came from the fund manager of the Rabo Bouwfonds Communications Infrastructure Fund in the Netherlands, which is buying up cable TV networks, separating the ownership of the assets from the provision of services, and then upgrading the infrastructure with fibre. The aim of the fund is to secure long-term capital growth for its institutional investors, mainly pension funds.

Decisions made today about network topology will have long-term consequences: The workshop on European-funded technology research projects was an eye-opener. FTTH is heading off in two opposing directions, depending on whether you’re an established operator looking to economise on fibre use and consolidate central offices, or an alternative provider building an open access, point-to-point infrastructure where it makes sense to cut back on internet transit by keeping local services local. This session wasn’t very well attended – perhaps because technology isn’t considered a barrier to FTTH deployment – but it should have been, because these developments take the debate about point-to-point versus passive optical network (PON) to a whole new level.

Another highlight for me was seeing a little of the beautiful city of Milan. My taxi driver obviously thought that I looked good for another €10 and took me on the scenic route through the centre of the city. But thanks to him I saw the luminous duomo – otherwise Milan would have become yet another place that I’ve visited without actually seeing anything of it other than the inside of a conference centre.

These are just few of the high points of an event that also covered new services and applications (one room was set aside as a showcase with vendors demonstrating next-generation services like remote healthcare and home automation), case studies and success stories, technology and standards development and more. To appreciate everything that this conference has to offer, you had to be there (duh and all). Next year’s FTTH Conference will be held in Munich, Germany, on 29 February and 1 March 2012 – its got a tough act to follow.

Pauline Rigby: Hello Adrian. Tell us about JON and why it is needed?

Adrian Wooster: Internationally we’re used to this idea that in any one country there is one operator that is a monopoly supplier for access connections for people’s homes and businesses, but as you start to look at the way that next-generation services are being rolled out, particularly around Europe, it’s not like that anymore. At the end of last year Heavy Reading published a report that showed that only about one third of next-generation services are being delivered by incumbent operators; two thirds are coming from municipalities, local authorities, councils, utility companies – mostly electricity companies – or from completely new entrant providers.

In most industries that sort of diversification and innovation is welcomed, but we have an industry globally that’s geared around this single supplier model. If you think about the UK model, that single relationship with BT, which is so efficient, has not just lead to price competition, it’s now got to the point where we’re talking about the smartest way to give something away.

Any model that moves away from a single supplier suddenly becomes complex, difficult and expensive for the service providers. Commercially, setting up 50 or 60 different bi-lateral service agreements with different service contracts, different ways of working, different billing requirements and all the rest of it, it’s just not going to happen. It’s that space the JON Exchange is trying to fill.

PR: So this is going to be really important for local access networks that want to follow the open access model.

AW: Right. And BDUK when they issue their tenders in the autumn have a legal requirement to make sure that the networks that they’re paying for are fully open access, and they’ll need to put a clause in their tenders that says something like “you will make sure that you have service providers that represent more than 50% market share”. Well if they put that in today, only BT could win. Of course they can’t do that because it’s not a competition anymore and the EU would probably get upset, but equally they couldn’t say one or more service providers because then BT would challenge it. For us to come in and be able to provide a mechanism that allows almost any network builder to deliver service providers is quite important in that process.

PR: Do you need to have a physical network to connect these two parties?

AW: No. And from our point of view it was quite important that we didn’t. In the UK there’s quite a rich market of middle mile and backbone companies, and it’s as important for us to unlock the potential for them as it is for the access networks. Some of the big companies like TalkTalk and Cable&Wireless already have lots of network of their own, so being able to reach local access networks is doable for them. We know, for example, Cable&Wireless wants to be able to provide a sort of BT Wholesale platform and they’re not alone. Having a bit of competition and innovation in there is important for the industry too.

PR: So the JON Exchange will be mostly about software?

AW: It’s actually entirely a software platform. It will provide an API set to service providers that they will plug their business systems into once, and then on the other side there will be a similar API that allows all the network providers to expose the inventory and assets that they want to trade on the marketplace, and for them to be able to present their offer in a standardised way.

Instead of become a simple aggregator that buys everything up and then presents it once, what we’re trying to do is create a marketplace with some of the lessons learned from other exchanges, stock exchanges, cocoa markets, all those sorts of things. We’re hoping it will lead to more differentiation in the market place than we can achieve today.

But also ideally we’d like to get to a point where the market can set its own price for wholesale assets. One of the goals of this – in fact it should be a goal for the whole industry – is to get to a point where we’re able to set our own price without Ofcom having to regulate that.

PR: What would be traded on the market place?

AW: One of the key things that would be traded is Active Line Access VLANs. A bunch of things in that are mandated by the standard, so that will come up as standard on the system, and then there will be a structured language that allows you to define your extras, what differentiates you from other networks. We’re trying to make it as structured as possible without masking some of the innovation that’s going on underneath.

PR: Isn’t Active Line Access still a work in progress?

AW: The reference documentation is pretty complete now. With all these things they’re never finally finished, but actually you could implement quite an exciting platform today on Active Line Access and you wouldn’t have to start tearing things out in another six months as it evolved. I know that the interface, for example, between Cable&Wireless and IFNL today is based on Active Line Access, so it is something that can be built.

But you’re right that there’s still work to be done. Active Line Access is not next-generation friendly yet. For instance, it has a process that describes how migrations happen, but it doesn’t have a process that manages migrations in a multiple VLAN environment. There’s some additional work to be done and that needs to be agreed by the industry, so we don’t have a situation where you migrate from, say, Sky to TalkTalk, and the assumption is that your existing services get switched off, one of which was your heart monitor.

PR: On the software side of things, do you have to start from scratch?

AW: We’re looking to buy an existing BSS/OSS type tool set – largely because we want to move quickly so the last thing we need is millions of lines of code being beta tested in public. What we need is a software platform that’s already tried and tested that we can rely on and that people have some confidence in and we just develop some additional features that fit around it. This also allows us to move fast, otherwise there’s no way that we could launch in the first quarter of next year. At the moment the most likely partner for that is NetAdmin. They’re a Swedish company; they have already built a platform specifically for managing open access networks.

PR: How many people are involved in setting up JON?

AW: There are five of us altogether at the moment, a number in Sweden, a number in the UK. Software development will be done externally, so we’re never going to grow into a huge organisation. It’s mostly around strategy, commercial work, the legal and regulatory side of things. At the end of the day what are traded are contracts, so one of biggest line items is our legal bill [laughs]. But we have a very, very good company of lawyers, in fact they hosted the launch event last week, and they’ve been absolutely fantastic, but I suppose they see the future in this from their point of view.

We recently appointed a CEO, a chap called Torbjörn Eriksen. He’s still based in Sweden, and he had quite a lot of experience from the way the Swedish market has evolved. One of the surprises to us, is we thought we were developing something that is peculiar to the UK market and we’re now finding that most of the markets that are fragmenting around Europe have this problem as well. We just have it bigger because we have a more consolidated service provider market. So soon after we launch in the UK, we’re planning to launch in Sweden and the Nordics and that’s what Torbjörn is going to be leading.

PR: I must admit I was a little surprised when you said Sweden. I would have thought that if any country had solved this problem it would be Sweden.

AW: Not as surprised as I was. I started travelling up there to understand how the market had evolved because I think that we’re probably going to take a similar path. When I got there I could see they had made a lot more progress, there’s no doubt about it, but in part it was because they still have a lot of the smaller tier service providers that were happy to get involved in smaller projects, and the big players either got involved in smaller projects where it was politically expedient, or because they were trying to learn something. Actually for them to be able to deploy nationally is just as big a problem for them as it is for a UK service provider. We’ve opened a fairly serious dialogue with the Swedish Open Network Association on how we can work with them to do this, and we plan to start launching a market in probably the second or third quarter to do the same there as we’re doing here.

We’re finding all sorts of surprises. Another one we’ve had interest from is the Netherlands. There are two big network builders in the Netherlands in Eurofiber and Reggefiber. That sounds like a simple enough environment, but actually it feels like there’s still maybe a job to be done in sewing that market together and, if our research is right, in the third or fourth quarter we’ll open something there.

PR: What’s the very next step here in the UK?

AW: We’ve announced a process. The rules of the market place need to be fairly democratic, so we’re quite nervous of just announcing on day one, this is how you trade and this is how you’re going to join us. We’re keen to get organisations that are definitely active in this field, the companies that are actually doing something, to start working with us to form the initial governance council and start formulating those rules.

We’re launching that process now. We’ve got a memorandum of understanding that people can sign up to. It just says that they’re joining this process; this is the goal of this process; and the rough timescale, so it doesn’t become an open-ended talk shop. We also recognise that the process may require companies to expose what they feel is commercially sensitive information to us. There is a non disclosure agreement linked with that so they can share that kind of information without risk. We want this to be as open a process as we can possibly make it so we can get this thing right.

PR: When do you anticipate that trading will start?

AW: During the first quarter of next year, we’ll be launching our trials. IFNL will be the initial tester from the network access point of view with Cable&Wireless and Gamma Telecom on the service provider side, and as those trials progress we’re going to introduce more networks and service providers to the point where, in the second quarter, we’re aiming to go live in the UK, ideally in time for when the BDUK pilots are getting ready to be signed and implemented. This is an agressive timeline but we have to keep moving because the market is not standing still.

Infrastructure sharing is one of the main planks of UK broadband policy. The Government aims to encourage fibre network deployment by mandating access to ducts, poles and other utility infrastructure; and BT, being the owner of the most extensive network in the UK, has an absolutely vital part to play.

BT was reluctant to share nicely until the regulator stepped in. In October, Ofcom concluded that a new market remedy was required, which it calls physical infrastructure access or PIA. BT is now required to produce a reference offer for ducts by January 2011 and for poles a few months later, with passive wholesale products being launched in the summer. But it could be too little, too late.

“We need to go to market and probably do that around February,” said Andy Lister, commercial director of NYnet, which is part of the BDUK pilot project in North Yorkshire. “If bidders don’t understand the cost base and can’t bid, then that’s a real problem for us.”

NYnet can’t afford to delay the procurement process, he said, because it would risk losing access to important European funding for its project.

In fact, lack of access to BT’s ducts and poles is the likely reason that two out of the three shortlisted bidders pulled out of the tender process to supply next-generation access to Cornwall – the contract was ultimately awarded to BT back in August.

“A tender process that only results in one bidder isn’t really working,” said Chris Smedley, chief executive of Geo, adding that he doesn’t intend to go through the expensive bidding process again until some of the issues around duct and pole sharing have been resolved.

Not knowing the details of pricing or processes for passive wholesale products is not the only issue, according to Geo. The current offer for PIA has significant restrictions on the way operators can use the duct and pole system.

PIA can only be used to provide customer connections; it cannot be used to provide backhaul for mobile base stations, wireless access points or to connect points of presence back to the operator’s own network. The end result would be “island networks” with operators relying on leased capacity, probably from BT, to provide the linking connections.

This also means PIA can’t be used to provide leased line connections to businesses. “That’s a key revenue driver that’s not available to us,” said Smedley. These sources of revenue are crucial to the business case in rural areas, where operators need to scale up the customer base as much as possible, he added.

Why are these restrictions in place? “We only had power to mandate access to ducts and poles in so far as there is a clearly identified downstream competition problem,” explained Gareth Davies, policy competition director, Ofcom. In other words, business connections were not part of the market that was under review.

Ofcom is keen to make sure PIA arrives on schedule. “We’re not intending to sit on our hands,” said Davies. “We require BT to produce a reference offer and we’ve given them three months to do it.” However, the exclusion of backhaul from PIA cannot be addressed until Ofcom carries out the Business Connectivity Market Review, which is due in 2011.

When asked if the procurement activity for the BDUK pilot projects would be delayed if exclusion of backhaul from PIA was a problem, Simon Towler, head of broadband policy at BIS, said simply that he “didn’t know”. All he could say was that BDUK had deliberately selected pilot projects at different stages of development, so the tenders would be drip-fed onto the market place, allowing lessons to be learned from each procurement process to be carried forward to the next.