“Survival is not compulsory and one model which I believe must not survive is the existing vertically integrated telecoms model of owning both pipes and services. It is an anathema to the politician who aspires to open access government, to the mayor who cares about competitive advantage of the municipality and it adds inertia to the development of a creative innovative society.”
European Bank for Reconstruction and Development (EBRD), UK
Think of it like this…..
The social life of every human on the planet from the very beginning has broadly been lived out in the context of four inter-related ‘territorial’ domains:
Daily life moves and merges fairly seamlessly across these four domains and in recent decades, this inter-connectivity has been enhanced and advanced by the emergence of the three seminal low cost digital technologies of the second half of the 20th century:
a) the silicon chip
b) fibre optic cables and lasers
c) cognitive radio
Connecting ‘people’ and ‘devices’ both within these domains and between and across them, is proving ever more important to individual citizens and society at large. Such ‘digital connectivity’ is delivering ever greater socio-economic benefit to citizens, institutions and corporations – enhancing life, work and play today and opening up new opportunities tomorrow for enhancing a civil society.
Each of these three basic technologies and the products derived from them are arguably subject to the miracle of Moore’s Law – doubling in power or capacity every couple of years with a commensurate drop in cost. For example, in 1976, a gigabit of hard disk would have cost £350,000, by 2011 this had fallen to 3.5p; or 1 Mb of RAM memory costs less than a penny today, but in 1976 that would have set you back £20,000. Everything, including the cables and radio components that enable devices to be connected, have been similarly impacted by increasing power and falling costs.
This means that to benefit from high capacity connectivity in ‘my private domain’ or home and work domain, all that is required is access to these ever cheaper components which, when linked together, create a ‘network’. So syncing an iPhone with a laptop in ‘my private domain’ or sending a page of text from a PC to a printer over the home or work network simply requires direct access to the hardware components – there is no need for a ‘middle man’ or ‘service provider operator’ to effect connectivity. Once these physical components are in place and financed, the digital stream of data is sent, processed or stored as nothing more than 1’s and 0’s. A billion dollar loan note, as far as the network and its connectivity components are concerned, is indistinguishable from Mozart’s 40th Symphony, a picture of the Taj Mahal or an email saying that you will be late home tonight.
This principle of ‘network neutrality’ ought to underpin the ‘networks’ which provides the digital connectivity across and between the four domains identified above. But one of these domains is starved of Network Neutrality – the LOCAL public access network that should connect our communities, towns and cities. Throughout the world, this local access network remains entirely under the ‘closed’ and captive control of the cartel of telecoms and cable TV service providers. Communication beyond the home or office to anywhere, including access to the Public Internet, is entirely under their control and subject to payment of a hefty ‘toll’ charge, entirely unrelated to the underlying cost of the physical infrastructure deployed. The world pays over $2 trillion dollars a year for the privilege of dealing with this local network capture.
The global cartel of telecoms and cable TV service providers persist (with the help of flawed public policy) with the same vertically integrated business model which underpinned their success in an earlier but now extinct analogue era:
- investing in network infrastructure
- operating and maintaining that network
- monetizing the network by retailing service, applications and ’content’ to end users
So, while connectivity in our private, home and work networks as well across the public internet, becomes ever faster, easier and cheaper – thanks to open access to the digital technologies identified above – there remains the missing link of local connectivity around our communities and cities. Connectivity here remains under the control of what is, in effect, a class of state supported ‘private toll booths’. These ‘service providers’ seek, within limits imposed by a sector specific ‘regulator’, to monetise the ever increasingly abundant capacity of these digital technologies. It is the OPLAN Foundation’s contention that the greatest wealth creation opportunity and general economic benefit is derived from financing, structuring and operating these three functions independently (as is already the case of the ‘net-neutral’ public internet and our home and office networks).
It is widely recognised that the 1.5 billion copper telephone wires in the world connecting everyone’s phone and computer to the local telephone exchange and the internet will be replaced by optical fibre. There are a number of factors driving this:
- the voracious appetite in a connected digital world for ‘more bandwidth’
- £1 invested in optical fibre has the capacity of £28,000 of copper
- a fibre local network is 80% less costly to operate than a copper network
As already inferred, the OPLAN Foundation and many others, believe that the greatest wealth creation opportunity and general economic benefit (including to the shareholders of the incumbent telcos) is derived from this multi-trillion investment being undertaken in accordance with a new ‘open access’ business model.
In simple graphic terms, the two figures below show the radically different topography of existing local access networks compared with the OPLAN model.
Over the years, OpenPlanet has accumulated substantial understanding of the ‘must have’ and ‘must avoid’ elements of the complex mix that goes to deliver an OPLAN to a particular city or community. While there is no absolute definition of an OPLAN nor ‘blue-print’ for delivering one, OpenPlanet has developed a list of what it regards as the key defining characteristics of an OPLAN.
The key defining characteristics of an OPLAN
- is a network of truly ‘broadband’ capacity – i.e. where the bandwidth capacity is dictated by nothing other than physical characteristics of the deployed technologies (fibre or wireless) : no artificial creation of scarcity by tariffing mechanisms
- is dedicated to serving a local geographic community – usually defined by administrative boundaries
- provides abundant low cost access to connectivity on an ‘end-to-end’ and symmetrical basis throughout that community
- is a ‘public utility’ in that it is available for use (on equal terms) by any party located within the community it serves: public and private, business and residential – the 4th Utility©
- affords global connectivity (inc. to the public internet) through offering ‘open access’ to competing third-party carriers and service providers
- does not differentiate between ‘content creators’ and ‘content consumers’ and their ‘bits’ i.e. ‘service providers’ are not treated as a specific category of user … thereby the artificial ‘wholesale’ and ‘retail’ divide is eliminated
- provides infrastructure which is open to all and is owned and controlled independently of any service or content using it
- is structured, financially and legally, and configured with management and governance measures which serve the ’common local public good’ and ensures the primary short and long term ‘value and benefit’ rests locally and with users of the network
- periodic ‘access’ charges are broadly based on servicing capital, and maintenance and upgrade cost-recovery
- is primarily funded by the private sector and market driven – the OPLAN model is not a backdoor to re-nationalisation or state ownership. The strategic commitment of the local authority and the covenant of the public sector and its various agencies as long term users of the OPLAN are essential to its success and constitute the primary public sector inputs
- subsumes the incumbents’ obsolete copper local network – thereby delivering optimum residual value to its shareholders and affording the ‘incumbent’ lowest cost, future-proof connectivity to exploit its strong franchise with its existing customers by developing and marketing new bandwidth-hungry services and content – albeit in competition with others