The Future of Broadband CPE: Part I

At Stake: Who Controls the entire home, the service provider or the web company?

The network-terminating CPE device provided by the access network service provider is at an inflection point: it’s at the intersection of service providers’ business drivers and emerging technologies. What’s at stake is control of the entire home and all the revenue generating up-sell opportunities, including emerging Internet of Things services. Access network service providers must decipher this paradigm or risk being usurped by the web companies.

Customer Premise Equipment or CPE historically meant customer owned equipment. In the case of a T1 circuit the service provider would terminate the network with a CSU/DSU and would connect to the customer-owned access router. If there was an issue, the SP would perform a loop-back test to the CSU/DSU and if it passed the test they were done with support. The same is true with legacy home telephony. If there’s a dial tone at the Network Interface Device, the gray box attached to the outside your home, the telco is “done.” If you still have issues beyond that it’s your home wiring, which the ILEC’s no longer manage (for free anyway).

In the early days of broadband, the service provider, telco and cable company would terminate their connections with a DSL or cable modem. The premise facing interface was Ethernet (Layer 2 interface). When consumers wanted to connect more than one device to the Internet they would acquire a Wi-Fi router (Layer 3) through the retail channel.

Today, service providers are combining the modem functionality with the Wi-Fi routing functionality in to a single device. Interesting to note is the SP is taking ownership of the Wi-Fi network, something historically they were loathed to do and could not do for regulatory reasons. The more functionality an SP takes ownership of the more they are responsible for. This leads to the inevitable increase in help calls.

Competition is forcing them take ownership of the total customer experience. A poor experience combined with lackluster customer support is the number one reason for customer churn. Now the CPE or broadband gateway is taking on the dual role of terminating the network and controlling the home network and ultimately the devices and things in the home.

This is not without precedence. The set-top box has always had this dual personality. It terminated the SP’s video network and controlled the home video experience. This is even more prevalent with whole home DVRs. As far as cable companies were concerned the STB was part of the network when it was convenient and CPE when that was convenient.

Now and in the future the SP provided CPE device needs to do two things well. First, it must terminate the access network (Layers 1 and 2), hence the term “network terminating CPE”. Second, it must control and manage the entire home experience (Layers 3-7+). It can and will do the network terminating part well, but it also MUST do the home experience well or risk churn where competition exist or having a web company usurp them.

In future articles I will address numerous issues including:

1. Virtualization Options and Realities
2. IoT and Smart Home Implications
3. Distribution of Intelligence (Cloud, Network and CPE)
4. Distribution of Intelligence (CO/HE, Outside Plant and CPE)
5. Wi-Fi & LTE Convergence
6. Business Models, Value Chains and the N-Dimensional Ecosystem Dynamics

If you would like us to help you navigate the future of broadband CPE industry-wide dynamics and opportunities contact Greg Whelan at gwhelan@greywale.com

Wi-Fi – “the toy that grew up”

Reprinted from the Wireless Broadband Association: Industry News Roundup

Wi-Fi – “the toy that grew up”

Historically, Mobile Network Operators (MNOs) looked at Wi-Fi as a toy, a low-end technology that was great to off-load data from networks. Now Wi-Fi is having a strategic impact on MNOs across the globe. Now the question is LTE or Wi-Fi: remind me which one’s for off-load?

Yet, as with many technical innovations, the low-end always wins. Wi-Fi is a classic example of this theory. Through a combination of Moore’s Law, economies of scale, R&D investments and free market dynamics Wi-Fi is king of the hill. In most developed countries people and things can access a Wi-Fi network in 80% of locations. Companies, such as Devicescape, have created virtual networks based on “ambient’ Wi-Fi networks. Hotspots are so ubiquitous that Opensignal launched an application to find the best one out of the many available.

Wi-Fi and Hotspots are becoming strategic to all carriers (fixed and mobile) as they have realized the importance of keeping traffic on their network for quality of experience and billing purposes. The market for carrier Wi-Fi gear continues to grow as carriers look to exploit these opportunities.

Today, high- speed access to the Internet is as fundamental as indoor plumbing. People expect it and city and national governments view it as mandatory for many economic development and quality of life issues. With the ubiquity of Wi-Fi enabled devices and the simplicity of Wi-Fi deployments it is no surprise that Wi-Fi is a leading candidate to achieve this. Even in remote,rural and under-developed regions, Wi-Fi leads the ways.

Even with fierce competition from ZigBee and other alternatives Wi-Fi is also a leading network technology for applications using IoT technologies. Wearables are no exception. LG smart watches use Wi-Fi and researchers are looking to Wi-Fi for an entire body network. We could all become Wi-Fi access points.

Yet success breeds challenges. Wi-Fi uses attractive unlicensed frequency bands and the licensed crowd wants in as the LTE community is looking to use the same 5 Ghz frequency band. Trying to head off a battle royale, the U.S. FCC has already entered the fray.

Wi-Fi, the toy that grew up, continues its momentum to solve real problems for consumers, businesses, service providers and governments. It was often said never to bet against Ethernet, I’d like to add never bet against Wi-Fi.

Greg Whelan, ACG Research

To discuss this and other strategic technology issues impacting the global service provider market please contact me

Access Insights™ At the Intersection of Service Provider Business Drivers and Emerging Technologies

What is “access”?  Simply put, it’s people and things accessing the cloud and each other. 

Access is no longer Fixed or Wireless.  Access is about connecting people and things to each other and to applications and service in “the cloud”.   Thus, access is about Fixed and Wireless.  It’s about having the right combined architecture on a neighborhood-by-neighborhood basis.  This “combo” trend is having, and will continue to have, major impacts and disruptions in the access market and in the entire service provider ecosystem.  New technologies, architectures and business models will emerge. Market realities are forcing carriers to offer (up to) gigabit speeds and incumbents have billions of dollars in deployed assets and architectures.  All this makes Access challenging for both technical/architectural and business decision making.    

I’ve determined that attention deficit disorder (A.D.D.) is a truly global phenomenon.  Therefore, I will present my points in terse salient bullets :-)

Top Access Insights to Ponder

1. The future of Access is Fixed and Wireless… not “or”
   1. SPs need to adapt organizations, so do vendors!
2. Gigabit Deployment Strategy
   1. Is timing everything? Plus...real strategic implications to the @$# Speed Test.
3. Next Gen Broadband CPE architecture and business models are being disrupted...
   1. Big risk to incumbent service providers and Vendors
4. Wi-Fi: The “toy” that grew up: Strategic implications abound
   1. Wi-Fi: Further proof that the “low end always wins”
5. Voice over Wi-Fi
   1. Nothing but upside to Cable Companies. Nothing but threats to MNOs.
6. LTE vs. Wi-Fi
   1. Remind me which one is for off-load?
7. Next Gen Cable Access Networks …
   1. PON Greenfield is redundant, DOCSIS Greenfield is an oxymoron
8. CPE vs. Carrier Gear (Plastic vs. Metal)
   1. Plastic companies building metal?
9. SDN-NFV in Access
   1. It’s coming… contemplations begin…
10. What’s the value of vendor incumbency at inflection points?
    1. Is Access different from any other industry?

There’s, hopefully obviously to the reader, a lot of thought behind each of these points.  I’d welcome the opportunity to discuss them in more detail.  Please contact me if you’d like to schedule some time explore how these insights impact your strategies and how we can create actionable plans to address and exploit them.

Greg Whelan gwhelan@greywale.com

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Nokia and Alcatel-Lucent: Who Should Buy Who?

Seeking Alpha reported that Nokia confirmed it is in talks to acquire all or part of Alcatel-Lucent and it is no surprise the companes are quibbling over valuation. Alcatel-Lucent has gone through some tough times and appears to be executing well on its Shift plan. Arguably, they are undervalued but investors are waiting for more tangible results, which will indicate that the plan is working. Current shareholders and employees can sense this positive momentum and are remiss to “sell-out” before the results of their hard work and commitment are fully realized. 

Consolidation in the equipment market is not unexpected. Communication service providers are consolidating too and are getting bigger. When this occurs large equipment providers tend to consolidate as well as they have fewer large customers and need economies of scale to be successful. This is truly a zero-sum game. Either you get 70 percent of the business, 30 percent as a second, keep the first one honest, source or you get zero percent. With the inherent complexities of SDN, NFV and virtualization, particularly in multi-vendor integration, it may be years before the “second’ source is even added.

Driving this buyout could be Huawei. The company is disrupting the entire global telecommunication equipment market. The industry has been aware of the company’s “grey area” business practices such as outright appropriating technology and intellectual property to giving eNodeBs away for free, with customers just paying the yearly maintenance fees (with a bonus of dozens of undocumented back doors). Although this is disturbing to the industry what really is of concern is Huawei’s huge product portfolio, their ability to throw “armies” at initiatives and their ability to take a long-term view to market (and global) domination.

The big issue for either Nokia or Alcatel-Lucent is who is going to compete with Huawei? Communication networks are a fundamental asset to nation states. They drive economic development, entertainment, education, national security, etc. Perhaps it’s time all governments treat them as national assets.

Cloud (Network) PVR Discussion

After a delay due to legal review, which was settled favorably to the SPs’ network, DVR/PVRs (N-PVR) are being deployed in earnest by all SPs. N-PVRs are becoming mainstream: In addition to improving the consumers’ experiences they also offer numerous business values to the SP. N-PVRs are also a great step toward virtualization and the move to everything on demand. Simply put, an N-PVR is a DVR that resides in the cloud. When a viewer stores a program, instead of it being stored on a hard disk drive located inside the set-top box, the program (or metadata) is stored on a server or CDN cache located in the service provider’s network.

N-PVRs benefit both the service provider and the consumer. Service providers benefit substantially on both CAPEX and OPEX. Service providers have a love-hate relationship with the set-top box. They love them because they provide a managed service enablement platform in each home, yet they hate them because they account for about 50% of total CAPEX. Interesting to note is providers argue they are part of the network when it is convenient and argue that they are CPE when it is not. The latter is because of regulator ambiguity of TITLE VI in the U.S.

By eliminating the hard drive from every set-top the cost of the box is reduced, directly impacting CAPEX. Hard drives, being mechanical devices, will fail. The elimination of the drive thus increases the reliability of the box and reduces angry customer support calls and truck rolls. This directly impacts OPEX. Without a hard drive the set-top box will consume less energy, supporting the SPs’ goal of meeting the voluntary energy reduction agreement the industry and the U.S. Department of Energy (Note, not the FCC) signed in early 2014.

N-PVRs store consumer “save” programming in the cloud. This simplifies whole home DVR and video everywhere service offerings. With N-PVR all consumer playback originates in the network and not the primary set-top box. Although newer homes have coax cable widely installed throughout the home the bulk of homes do not. All in-home technology deployments are challenging to the SP because of the high variability in both the housing stock and in consumer sophistication. With the N-PVR all video streams are delivered from the network as “just another” channel.

N-PVRs benefit the move to TV everywhere or TV to all devices. In the home consumers watch TV programming on all of their devices. Because Wi-Fi is the common fabric connecting every device, N-PVR based video programming can be sent via the broadband connection and over the Wi-Fi network to all devices. Thus, consumers can view stored programming on all their devices, and the SP does not have to contend with home networking issues.

The N-PVR takes this concept out of the home as well. Consumers can view stored program from anywhere on any device with a broadband connect. This also applies to the delivery of programming on smart phones via 4G/LTE connections. In each of these cases, the stored SP programming is treated as over-the-top (OTT) and facing the same challenges pure OTT suppliers face such as quality of service and data usages. Equally, they can benefit from the innovation in the OTT marketplace.

This everywhere DVR experience also presents a new revenue opportunity to the SP. Targeted advertising and local ad insertion take on new meaning. For example, if a Boston-based consumer is watching a stored program from San Francisco, why show the ad Boston-based car dealership? Similarly, with smart phone location-based services being widely deployed, the SP can insert a targeted ad based on the user’s real-time location.

As illustrated, N-PVRs not only offer consumers a better video experience, they offer the SP real business value: reduction of both CAPEX and OPEX and creation of new revenue generating opportunities. Properly deployed, the N-PVR infrastructure will create the foundation for everything on demand and the move to virtual set-top boxes. Given these factors, SPs should deploy N-PVRs aggressively with the caveat that they must take a long-term strategic approach of viewing N-PVRs as the first application of the platform and not the only application. 

To discuss this please contact me at gwhelan@acgresearch.net

IoT Success: Batteries & Backhaul...& Transparency

The Internet of Things (IoT) is riding high at the peak of the Hype Cycle.  Is it a $17 Trillion market or merely a $10 Trillion market?  Depends on what you include in your definition of a "thing".  The more you include the bigger the market.  

IoT applications have a basic common architecture as shown in Figure 1. IoT digitizes some analog parameter and sends it to the "cloud" for analysis and possible action.   The primary factors that all IoT or M2M applications must address are Batteries, Backhaul and Transparency.   

Let's address the transparency issue first.  In quantum physics there's the "uncertainty principle".  Simply put is says that whenever you measure a system you disturb it.  Since most IoT applications measure a real world analog phenomena (e.g., temperature, pressures, et al) the "thing" must do so with minimal impact on the system you are measuring.   Transparency parameters include cost (CAPEX and OPEX), size, weight, aesthetics etc. 

Batteries, or more generally power, is a critical parameter within IoT applications.  If you require grid power you lose some transparency and limit your ability to deploy the thing.  Not every location will be close enough to the grid to be able to be powered by it.  Remote sensors will require batteries.  These batteries must last many months and even many years.  

Even IoT applications within the home must address the battery issue.  Take a simple motion detector.  The ideal placement is in the corner of the room near the ceiling.  Not many power outlets near by.  Thus the customer can either install an outlet close by, move the sensor close to the outlet (i.e., near the floor) or have to see the wire dropping down to the nearest outlet.  Batteries solve this problem.  However, if they need to be replaced every month the value and transparency quickly depreciates.  What if this motion detector is part of a security perimeter for a high value asset (e.g., power plant).  If the good guys need to replace the batteries periodically it will show the bad guys where these "hidden" sensors are.  Thus, batteries are critical to the success of the application and can make or break a business case.  

The "I" in "IoT" is for "Internet", meaning internet protocols (IP).  The digital data of the analog phenomena must be sent to the cloud via some type of network. This is referred to as Backhaul.  Networking options are plentiful  and include 2G/3G/4G/LTE, Wi-Fi, Zig-Bee, Satellite, Blue Tooth, Ethernet and local broadband options.  The technology selected depends on the application and on parameters such as data rates, latency, cost and what's available.  The more remote the thing is the less options are likely available.  The selection of a backhaul solution must address both transparency and battery issues discussed above.  

There are other issues and parameters that need to be address to make an IoT application successful.  For example, the cloud solution (e.g., "big data" base, analytics, heuristics, et al) are not trivial yet they are solvable engineering problems.  The same is true for the "thing" or sensor. For most all you have to do is go to the Analog Device catalog and select a chip.  Again, non trivial but solvable.  Thus, batteries and backhaul and transparency are critical make-or-break parameters to ensure success of your IoT application.

To discuss this please email me at gwhelan@greywale.com

Other articles can be found at greywale.com

The Next Cord Cutting: Real Cord Cutting

Today "cord cutting" refers to consumers who stop paying for TV and go broadband only from the cable or telecom company.  This is more accurately called "cord shaving".  The economic impact is significant but it's more of a redistribution.  More money to "Netflix" and less to the service provider for video.  Yet, more to the latter for higher capacity broadband that provides higher margins.

Tomorrow's "Real Cord Cutting" refers to consumers who completely stop all services from a wired service provider.  The go completely wireless.  We've seen the prequel with the elimination of a "home phone".  This next generation cord cutting has consumers relying on their 4G/LTE service for all broadband services.  This can be accomplished by simply turning their smart phone into a Wi-Fi access point when in their home.  The economic impacts of next generation real cord cutting are severe. The fixed access service provides not only lose all service revenues they lose customers entirely.

As 4G/LTE deployments expand and as more small cells get deployed the average bandwidth per device will increase substantially.  When the Netflix threshold (e.g., when the quality of streaming video is acceptable) is only a matter of time.  Slowing down real cord cutting will be the price of mobile data plans which will eliminate the intended savings in the first place.   Service providers with wireless assets will be in a strong position to succeed in this future scenario.  Other, such as cable MSOs will need to address their pricing plans which are driving customers away in the first place.  They can also compete with unique content, primarily "Sports and Wars", (i,e., live programming) and push for better quality video such as emerging 4K technologies.

Today's cord cutting is growing significantly especially in the under 30 demographic.  Tomorrow's real cord cutting will occur and will have substantial economic disruption for the entire ecosystem.


For past article please visit greywale.com 

Network PVR a Win for SPs and Consumers

Moving the "storage" function out of the Set-top box and in to the network is a win for both the service provider and for the consumer.  This article, written in ADD solving terseness,  will give the read an overview of the salient points of the benefits of deploying a network-based DVR or N-PVR.  Comments/corrections/suggestions are always welcomed.

What is N PVR?

1.       Network Personal Video Recorder (a.k.a. Network DVR)

2.       A DVR in the Cloud

3.       A user’s programming or content is stored on a server located within a service providers facility instead of stored on a hard disk drive embedded in a set-top box.

Benefits for Service Provider and Consumer

1. Enables SPs to remove costly storage in every STB.
1. One less device to fail.
2. Reduces cost per STB,  less stranded capital
3.  Reduces power consumption of STBs
1.   Helps achieve goals set in voluntary agreement (see: http://greywale.com/wp-content/uploads/2013/09/greywale-communique-STB-010614.pdf)
2. Makes whole home DVR simpler
1.  All traffic originates from the network to any device (TV, PC, Tablet, Smart phone et al.)
2. Transparent to user
3.  Simplifies home networking, re-use existing networks such as WiFi,  No need for a new technology.
3. Enables TV-Everywhere or video everywhere and advanced video services
1. A single seamless video experience across all devices/screens.
2. Pause on one screen; resume on another screen is simplified.
3. Watch “save” programming on any device at any location.
   
4. Enables location-based targeted advertising
1.  Ads can be “re-inserted” to location user is actually watching stored content.
2. No need to play Boston Ads if user is watching Red Sox game in San  Francisco.
3. Enhances advertising packages to ad buyers.
4. Enhances viewing experience of consumer since ads are more relevant.
5. Increases ad revenues
5. Reduces usage and congestion of upstream bandwidth
1.  Eliminates the need for Sling Box
1. Sling box clogs limited upstream last mile channels
2. N-PVR eliminates Sling Box zero revenue traffic
6. Enables SPs to take advantage of innovations in Content Delivery Systems and advanced caching technologies.
1. May already be implemented for Video on Demand.
7. Enables smart phone to become DVR controller
1.  Guide on smart phone delivered from network
2.   “record” in network
8. Leverages investments in cloud infrastructure
1.  ROI of data centers investment will be enhanced with the addition of N-PVR application. 
9. CAVEAT
1.  As N-PVR rolls out, cache’s and servers may find themselves in facilities that aren’t as friendly as purpose built data centers.  These may include regional and local facilities such as central offices and head ends.
2.  Energy issues (e.g., heat) should be addressed.
10. LEGAL Issue
1. The Cablevision litigation in the U.S. has been resolved in Cablevision’s favor.
2. Content providers argued it violated copyright laws.
3. Cablevision argued it’s the same as a DVR just a different location.
4. After a number of rulings and subsequent appeals the U.S. Supreme Court refused to hear the case ending the litigation.
5. Recommendation to SPs…Deploy! 
11.  Technical Issues
1.  SP’s will need to have the stored programming in numerous formats applicable to specific devices.  i.e., different resolution and data rates for an HDTV verse a smart phone via 4G/LTE.
2. Do you translate and transcode on demand or ahead of time? 

   To discuss these issues please contact me at gwhelan@greywale.com

   For a list of previous articles please see   http://greywale.com/articles

Set-top Box Energy Efficiency Standard Goes Into Effect

Validates Greywale Service Provider Energy Strategy Business Drivers!

(go to http://greywale.com/greywale-communiques for additional information)

KEY POINTS

1.       It was a voluntary agreement.

a.     Agreement was made between the US Department of Energy (DOE), Natural Resources Defense Council, the American Council for an Energy-Efficient Economy, the Appliance Standards Awareness Project, the Consumer Electronics Association and the National Cable and Telecommunications Association (NCTA)

  2.     It is a “Non-regulatory” standard

   a.     The non-regulatory agreement provides a framework for the DOE and pay-TV industry   to work together on efficient, high-performing set-top boxes that leverage technological improvements.  It achieves what would otherwise be done through regulatory standards.

3.     It sets numerical targets

a.      The target improvement in STB efficiency is 10 to 45 percent, depending on the class of the STB device,  by 2017.

4.     It requires reporting and auditing

a.       The agreement requires the industry publicly report specific set-top box energy use and requires an annual audit of service providers by an independent auditor to ensure boxes are performing at the efficiency levels specified in the agreement.

5.     Originated from non-traditional telecom agencies.

a.     The impetus for this came from the U.S. Department of Energy not the F.C.C.

6.     It has wide industry support

a.        From the U.S. Department of Energy

                                                       i.      “Agreement signatories include pay-TV providers (listed according to number of customers) Comcast, DIRECTV, DISH Network, Time Warner Cable, AT&T, Verizon, Cox Communications, Charter Communications, Cablevision Systems Corp., Bright House Networks and CenturyLink; and manufacturers Cisco, ARRIS (including Motorola), and EchoStar Technologies. Energy efficiency advocates Natural Resources Defense Council (NRDC), the American Council for an Energy-Efficient Economy (ACEEE), and the Appliance Standards Awareness Project (ASAP) are also signatories to the agreement.”

(go to http://greywale.com/greywale-communiques for additional information)