Open Networks- Paul Budde - DEI Working Group - 28th October 2008

Unlocking economic growth potential

The main reason for the present debate around the concept of open telecommunications networks is that the current ‘closed’ networks are perceived to be the natural state of affairs. It is time we broke away from this mindset, which stems mainly from the technological limitations that existed in the past.

Open networks are the next step in the evolution of telecoms infrastructure as it gives users full control of the services and applications that can be made available over high-speed broadband infrastructure. Open networks also means a democratisation of the telecoms infrastructure. Most of the current limitations (bundled products and services, portals, high access charges) are artificial because of the vertically-integrated nature of the closed network operators; they prefer to control absolutely everything related to their networks – even end-user devices were, until recently, under their total control. Open networks will give the control back to the users.

Compare telecoms to electricity infrastructure, the utilities don’t have any say about what devices users connect to, or what services they use. Why couldn’t this also be the natural order of telecommunications infrastructure?

As we have said many times, open networks don’t mean that anarchy will reign, or that the valuable national infrastructure will be raided by rogue operators. This is what some of the incumbents would like us to believe. Electricity is not free – nor are hospitals, schools, roads, airports, etc – still we have figured out the financial structures necessary for those types of infrastructure, some private, some public and many hybrid in nature.

Again, despite what incumbent let us believe all forms of national infrastructure involves regulation and governance. If there was still doubt about this, the financial crisis is teaching us all a lesson here.

Why open networks?

Open networks in telecoms are more of a concept than a well-defined set of technologies or regulations.

The aim should be to provide a universal communications service, the parameters for which will need to be set according to what is to be delivered over the infrastructure.

For example, as a national asset it should be used to enable basic video monitoring services for medical purposes – services that should be made available to everyone, independent of Internet or telephone access (e.g. totally unbundled). Obviously the quality and the nature of such services would need to be debated, policy makers can certainly set the broad parameters for such services but politicians should never pick technologies. The conditions should be technology-neutral and it should be left to the infrastructure providers to ensure that whatever they build is able to deliver the basic e-health services as described by the policy makers. Similar policy parameters can be set for tele-education, smart grids, basic video entertainment, etc.

The topology and the architecture of the open network should be such that infrastructure, service and content providers all can also offer higher quality and different ‘premium’ products and services. Similar structures exist elsewhere – public health and private health, public education and private education, public and private transport, public roads and tollways, and so on. While this might stir up the net neutrality debate, it must be clear that the basic national high-speed broadband service should be defined at such levels as to provide sufficient quality to satisfy the people who are using it. This will also change over time – as with other public services, what was seen as a good service ten years ago will require a review every so often to make sure it still meets the expectations of the users.

Interconnected networks

Existing networks from telcos, utilities and others could be interconnected to form the core of an open network structure – this should be considered partly because this is a far more efficient way of looking at utilising these assets and partly because it leads to a healthy mixture of public and private assets forming part of the national infrastructure.

Once the basis for open networks is in place BuddeComm is convinced that commercial structures will be built without too much regulatory interference. While it may appear a daunting prospect at the beginning (particularly as the incumbent telcos will try to block any open network developments) things will start looking up once the reality of open networks is accepted, and opponents will recognise the new business opportunities that will arise from that point. Good examples here are now starting to emerge in Europe.

Less regulations required

After the initial regulations have been set up for the establishment of open networks, we should step back and identify the bottlenecks and where infrastructure is missing or upgrades are needed that will not take place without government funding.

With the vertical business structure gone infrastructure operators will become far more prepared to cooperate and investigate how to interconnect with other infrastructure, rather than to continue with the ‘overbuild-at-all-costs’ scenarios they indulge in under the vertically-integrated model. Vertical-integrated networks are approx 30% more expensive to develop and to run as open networks. Obviously this infrastructure will require good governance, both on a regulatory and a technical level. By removing the economically unviable competition elements from at least the basic national infrastructure we should be able to get really good cooperation between the infrastructure players’. This allows for their key engineers to take a more independent role and as such they should be able to govern the technology, security, reliability, provisioning, IPv6, investments, etc.

Open networks require significantly less public funding

Only infrastructure projects that are not economically feasible will need government funding, and it is amazing how little funding is actually needed once the vertical structures in the industry are dismantled.

Around the world there is an increasing consensus on the social and economic benefits of high-speed broadband infrastructure, and this allows governments to step in and fund the gaps. A cleverly designed national network can lead to a much better, faster and more efficient network than those built by individual telcos. (Please note the stress on ‘clever’. Networks are rarely well-designed when the goal is to protect an infrastructure monopoly.)

Will Open Networks lead to a telecoms Nirvana?

While true open networks would be the ideal outcome, it won’t solve all of our problems. But, then, do we have an ideal healthcare, education, public transport system, etc? This is the nature of national assets. But with a good interconnection between public and private, which the technology can now make possible, we can come up with a very good result. It won’t be easy, but we have so many good technologies, applications and ongoing innovations that we should be able to build incredibly good infrastructure – that is, if we all set our mind to it and move in the same direction, and with the incumbent monopolies that is not yet always the case.

How is it done in other infrastructure industries?

From a users’ point of view we can take a lead from the electricity infrastructure. What, in the end, matters is that users have total control over the end-user devices, and that their user experiences take place around these devices, and not the infrastructure or the basic electricity supply. Only when the supply falters will users worry about the infrastructure.

In the case of broadband the trouble is that the infrastructure is so poor in so many places that it is the only issue that is debated. Obviously a better environment is needed – one that places less end-user focus on the infrastructure itself, users should be able to concentrate their attention on the applications that can be used over it.

To return to the comparison above, there are very few end-user issues around supply in the electricity industry. From their experience perspective supply is unlimited (we are obviously not addressing issues such as climate change here – we have made separate analyses for those developments).

The same applies to costs. In general everyone can afford electricity, and there are systems in place for people who can’t.

If smart grids were to be added into the mix, distributed energy would become part of the electricity infrastructure; end-user solar panels, electrical cars and wind turbines will be interconnected into the one national/state infrastructure system.

In telecoms we are already seeing that some people want to have there own (dark fibre) connection and they may be prepared to install this themselves. Examples include projects such as Fibre-to-the Farm in the Netherlands, DIY fibre in Stavanger Norway and muni-networks should be looked at from that perspective. Mesh networks in wireless broadband are even going a step further and make end-users active infrastructure providers.

So there is no need to reinvent the wheel – there are plenty of issues that are unique to telecoms but we can also learn from other infrastructure how best to create open networks in telecoms.

Paul Budde
Communication Pty. Ltd.
5385 George Downes Drive
Bucketty NSW 2250 Australia

http://www.budde.com.au
http://www.buddeblog.com.au/the-17-national-broadband-network-principles/