First, a shout-out to my peeps (@bytemarks, @billso, @drthomasho and others) who are following my tweets and coverage of this conference. Here’s the page for today’s events.
Introduction
PTC Exec Director Sharon Nakama welcomes everyone and thanks the sponsors.
David Lassner, President and Chair of Board of Governors for PCT, also VP Info Technology and CIO of University of Hawaii (and @dlassner) welcomes the new Chair, John Hibbard. Also notes that PTC is financially stable and will continue to carry on their work.
Stephan Beckert: We’ve come a long way in 30 years, but no shiny suits and jet packs yet. Theme “Collaborating for change” is timely and relevant to many industries. Acknowledging work of people in PTC and all who work behind the scenes to assemble agenda. Thanks too to Richard Taylor, co-chair of conference.
Richard Taylor: welcome and thanks for coming.
(darn. Server error just took out a bunch of coverage, and no backup.) Continuing…
Jidong Zhao: Collaborating for Change
Last year represented China Netcom, now China Unicom, now #1 player in global telecom market (following Beijing Olympics).
New advantages: comprehensive capabilities of ten northern provinces, development of international resources (U.S., Germany, UK, and Tokyo). Is largest shareholder of certain undersea cables.
(sorry, another server problem. Not happy with current web host today.)
Stephen McClelland introducing William Barney
William Barney: Collaboration: The Catalyst for Growth
His 17th conference. Agenda: intro, a look at telecom history and collab, why, future.
Introduction: quote from Darwin on innovating. Why: innovate, reduce risk, diversity of products, reduce costs… US Auto industry a good example of collaboration. Strategy for growth in economy (CEO recent article) indicates collaboration as key factor in success in down economy. Telecom services in early days too expensive not to collaborate. 3G mobile not so much.
Telecom over history: pre-’95: regulation, growth around 10%, dividends paid, management had 20-30 year history, career for life. Recession-proof stocks.
One world, one global carrier: non-reg, millionaire engineers, CEOs = billionaires. No earnings, EBITDA and swap invented to create revenue. New growth darlings on Wall St w investors getting 50+ return. Maxed out in 2000, lost 90% of value in a couple of years. Following that: 31 Chapter 11s, 1.6T lost, assets writedown and HR loss. Also operational carnage and perception that Internet is free. Built a lot of network that didn’t need to be built.
Why collaborate: calling for a new model. Not completely redundant on our own (Taiwan 7.2 magnitude earthquake recently). Also bits are getting bigger (Hi quality vid conferences at 100 Mbps and Ultra HD, super hi-vision at 240K Mbps). Guys carrying bigger bits are multiplying–think of YouTube last year vs this year: 50% growth, 2-3% a month). Can’t afford it alone: NNI Interconnections, cable builds, current economic scene at S&). Asia online population doubles every 3 years (geometrical progression). Also: collaborate to continue efforts now.
Future on collaboration: last mile opportunities, content delivery (as bits increase), unified communications and new/managed hosted applications.
Lots of opportunities in collaboration models, will be “new world order.”
Stephen McClelland calls for panel members with Bill Barney (BB), Claire Paponneau (CP), and Vinod Kumar (VK).
Why collaborate? Bill: people will be forced to and customers will be everywhere. VK: Settling to happy medium between private cable and groups. Carriers realizing it’s not possible to do it on own. Multiple initiatives pulling the industry apart, collaboration is way to succeed, price pressures will require companies to act more responsibly.
SMC: Coming from old lways: CP would have added that since past 2 yrs is that collab is happening outside of industry and how we work with these players has changed. Money transfer is example. Mobile requires collaboration with banking system.
SMC: last 120 days? (Bank in Iceland? money vaporized) aftershocks of finance industry. Rewriting of financial system. How to progress forward? BB: dark period for next 6 months in capex ($). We’re not seeing much of a change from growth in Asia and from mobile users, less capital spent over next year. VK: market will slow down before it gets better, US/Europe is recessionary, we’re taking very cautionary approach, cutting investments and expenditures. Demand behavior not changing, but changes to enterprise clients. Collaboration will be forced. CP: if forced, is working together not collaboration. Concern for spirit of survival vs spirit of collaboration.
SMC: Regional point? Some industries find it easier to collaborate (auto), is it difficult to achieve in cultural or management sense? BB: Industry was infiltrated with new thinkers in 90s, pendulum now swinging back. Now melding into new model, takes time to adapt. Forces of nature will move managers to adapt. CP: imagine in Europe, certain people are not supposed to be friends but co-invest because it’s quicker to deliver more to market, still is competition and sharing platforms. Just the beginning. VK: Last mile is how we’ll really see how industry behaves (50-60% of costs). Need to be practical about how far collaboration will reach, esp with vendors and non-direct competitors. Look for where economic benefit is.
SMC: Core assets of a company, are you advocating giving up things? BB: areas where people will still hold tight (core competencies), but other areas where they’ll expand and do things with partners. In 5 years, we’ll look back and see gradual changes.
SMC: Difficult to set things up on Mon only to find out carpet pulled on Friday afternoon. How easy is it to reconcile long term big projects with short term chaotic events? BB: planning and finances, economic hiccup every 3 years to ride out in infrastructure projects. We don’t know who will survive, is great for diversification.
SMC: spreading risk? VK: yes, working with others, but watch economic necessity. CP: increased risk, focus on fine tuning management. Major project (capacity far below needs) but dependent on minimizing risk, no crystal ball, careful investment today for tomorrow.
Question: any change that would open up last mile? VK: no regulatory changes that will make changes. SMC: would any of you prefer intervention, or is policy relevant? VK: policy is relevant, also a function of maturity of markets. SMC: radical policy shift? Progressive or interventional? CP: Consolidation might be forced or because of rationale of business where better to be bigger, it should happen.
SMC: 30 secs, what’s happening this year? CP: year of gentlemen first. VK: one or two fairly large bankruptcies in Tier 2 space, consolidated. BB: agrees, consolidations, changes of ownerships. Strategic investors, esp in US and Europe (carrier ownership).
Grahame Lynch (GL) interviewing David McGlade (DMG)
Exciting part going forward: 3D imaging. GL: Market in 2009? DMG: changes in business models, energy, military apps (comms on the move). Trains, planes, autos, entertainment needs being satisfied. GL: Asia packet 2009? DMG: good demand in Asia Pacific, good video with satellites, capacity for other apps. Simplifying offerings all over world in cellular networks.
Capacity requirements for backhaul carriers? Depends on where it is. Voice is relatively open. Revenues, profitabilty, company going forward? Has been a record year. Fastest growing revenue. Demand has been high, staying relevant in changes in tech.
Privatization of equity model, has it changed company? (2001) After company was sold to private eq firm, became more commercial, investments last few years, future is strong. Before, 80% of business was point to point, now less than 10%. Growth in different areas, video and other services.
Hot topics? WiMax and 3G needs to be done in rational way. Good victory, now fighting country by country. Some countries less aware of C band importance.
Some of the new competition in Pacific point to point? Certain apps are better for satellite. Optimized capacity for regional needs, more resiliency, co-existing with fiber. All can grow to reach all land-mass. Increasing expectations? Fiber comes into a country, helps country. Very important to co-exist in those areas. Mobility is key (e.g., tracking backs of cars).
Question: opportunity to expand network in areas re failures? Yes, also small smart investments and partners.
Move from collab to consolidation. In Pacific: only game in town. Past creative tarriff (granting service, class B grade w discount) but never granted. Int’l connectivity is still big concern. Any creative pricing strategies for Pacific islands? Still have pre-emptable capacity, accelerating deployment of older statellites, is part of strategy. Refresh capacity, price according to needs. Also price pressures (launch is more expensive by 2X also opeating costs). Must have a sustainable business model, esp with regard to cost of launching new satellites. Want to be sustainable with best efforts and innovations.
break!
Plenary Panel: Challenges and Opportunities in Wholesale
Ross O’Brien (ROB), moderating with David Nishball (DN) and Jack Waters (JW).
JW: 306M population in US, 112M teledensity, more devices than people. 16% of US don’t have phones. Market still growing, traffic growth at 50% at least. Video traffic huge growth engine, market over last 8 yrs is incredibly consolidated, no longer a CLEC industry. Looking forward, growth and economic environment will take a while. Consolidation is a risk and opportunity.
DN: in contrast, India landscape and stage of market development: 6-7M new subscribers every month. Stats very different, 4x as many people, broadband 1/64 of US market. Mobile less than 2%. Teledensity has picked up but people never had landlines in India. 364M subscribers to mobile, 10:1 compared to landlines.
ROB: what impact on consumer’s adoption of broadband? DN: High speed connections over mobile still not available, demand is for broadband at home and higher speed than what’s currently available. ROB: India’s path similar to consolidated US market? DN: no, different with new licensing, service offerings, government has issued new licenses, 3G about to be auctioned. How do we collaborate today, and how to avoid boom/bust cycle of other times/places.
ROB: Where the US market is now is natural state of telecom? JW: depends on capital markets. US at 10 yrs ago and Telecom Act of ’96, supposed competition combined with greatest capital market that world has ever seen — fueled where we are now.
ROB: Regulators see where we are now? JW: new administration, we’ll see. Consolidation and lots of opportunities are inevitable.
ROB: Given economic situation, why is everyone in such a good mood here? JW: we sell services that are fundamental to everyone on the planet, so people can communicate. Basic numbers: what industry grows at 50% a year? A ton of opportunity. Still businesses are underserved in US.
ROB: what’s downside of business in India? DN: no business is recession proof. Something unique about this industry, where communications has bright future. Minutes growth in India grew, domestic and international growth, also bandwidth growing at 120-150%. Risk is that we’re still thinking about yesterday and not tomorrow.
ROB: to what degree do you see growth in India as contributory re outsourcing? DN: about 20%, bandwidth is largely consumer driven. Focus on 25 largest cities. Big challenge is small bytes.
ROB: Future of last-mile in India? DN: Will rely more on wireless (10x fixed line penetration, more than 75K cell towers), more reach and ubiquity.
ROB: What could go wrong, and is telecom industry prepared? JW: stark difference between what went wrong in 2001 and now: oversupply then, not so now. More reason to work together now and not duplicate investments, optimize capital profile in industry. DN: most carriers have been prudent about building assets, plans to fill available capacity. Need to build infrastructure in both directions around the world. Will be much stronger in global wholesale space. Also India offers hubbing and global aggregation options, low labor costs.
Mark Hukill introducing Greg Wyler
Greg Wyler: mission to provide connectivity to the unconnected in an affordable level. Problem: submarine fiber network connected metropolitan networks, many carriers went bankrupt. Telecom carriers can provide broadband services in developed areas. Other parts of world: size is much larger than developed and connected areas.
Fiber over satellite, mid-availability and mid-speed compared to satellite and fiber. Latency (time lag) is an issue: 50ms local to 122ms long-haul fiber and O3b, geo satellite at 600ms. Area covered by 4 (to 
satellites: lower US to much of South America, much of Africa, and Pacific islands. Each satellite can connect to 10 points.
Customer terminals used for quick start and cellular backhaul or enterprise. Pacific Islands proposal (22 island nations), cable too expensive and only reaches capital city (not outlying islands), and too far for microwave. Nations should spend funds on internal development.
Fiber quality connections: STM-1 to main islands, 122ms latency, $600/mbps for core networks ($350K activation fee), first area: Tonga. If they cover the center (e.g., Micronesia, Marshall Islands), they can reach outlying islands as well.
System scales, can bring more capacity online for low cost.
Events, Identity, Policy PTC09