It was a tale of two telcos taking different routes to the same end game: merged wireless and wireline services that give them viable four-play offerings to compete with both OTT providers and cable operators. Both telcos – BT and Verizon – presented their road maps during keynote addresses at Genband Perspectives14 in Orlando Tuesday.
Clive Selley, CEO of BT Technology Services and Operations (TSO) and CIO of the BT Group, noted that BT is the “world’s oldest telecom company.” Selley, in his address, said that the company sold its wireless service “at a low point” in the company’s history in 2002 in a decision that has haunted BT in the European and international markets in which it operates. In the past 12 years, he said, the carrier pushed hard into television services built upon a fiber-rich network that it believes will cover 90 percent of the U.K. in “just a few years” and will now use a wireline-based inside-out strategy to get back into the wireless business in a disruptive way.
Pay TV, Selley said, has been such an attractive part of the company’s business that it bid for and won the right to make sports (“killer TV content” Selley called it) a preeminent part of its package, but it doesn’t provide the full package required for today’s telecom space.
“We will return to the mobile business … in an innovative and disruptive manner,” he promised.
That will include using its 5 million Wi-Fi hotspots for wireless broadband service, leveraging spectrum it has acquired to build out an LTE offering delivered to homes and businesses via femtocells and brokering MVNO partnerships to cover what Selley estimated are about 30 percent of the calls that won’t fall in home and office coverage areas.
This “inside-out strategy” should be operational in two years, he noted, leveraged on a wireline service and an attention to the details of upgrading traditional voice into “future voice.”
Following on the heels of Selley’s presentation, Kyle Malady, senior vice president of operations at Verizon, provided an “outside-in” vision for Verizon’s growth. The U.S. telco, he acknowledged, has a powerful wireless platform that became even more powerful with the acquisition of Vodafone’s minority ownership stake. Wireline, on the other hand, is another matter—as the millions of customers saddled with what’s been called “FiOS envy” can attest when the carrier offers nothing better than copper-based DSL in their markets.
The move to modernize copper-filled wireline networks is coming in several stages, starting with a fiber switch-out policy that feeds FiOS customers in existing markets and ending with the death of the POTS system that has been an anchor for the telco.
“I don’t see the copper going away in my lifetime,” Malady admitted, even though “the copper is aging and it takes a lot to maintain.”
There are, he said, hurdles that go beyond the technology of changing ATM, DSL and TDM infrastructure into networks driven by advanced GPON.
For one thing, while “many customers don’t really want a POTS line anymore,” some do and their concerns about reliability and service have the attention of regulatory bodies set up to make certain that every citizen is served.
Additionally, he said, “there are a lot of archaic services out there that customers have never gotten off of” but that don’t necessarily scale well for replacement.
Superstorm Sandy inadvertently provided a route to change from the old to the new when it essentially “ruined the whole (copper) plant” in Verizon’s Lower Manhattan service area.
Rather than repair the aging infrastructure, the carrier pulled out enough copper to build three Statues of Liberty and reinserted fiber. Not surprisingly, when the changeover was completed, complaint calls dropped significantly compared to copper plant, he said. Verizon also “learned we’re able to deal with (changing out customer CPE) in the affected areas as well.”
But Sandy, many on the East Coast at least hope, was a hundred year storm and certainly a factor that will drive Verizon to tear out its copper throughout its footprint. That means that copper-to-fiber migration will proceed at a slower pace following an outside-in road map drawn by a wireless business that has successfully migrated customers in stages from analog to LTE with steps in between.
“They’ve been doing this in wireless forever,” Malady said. “We want to take a page out of their playbook and do it with wireline.”
Altruism won’t be a factor. Any plans Verizon may have had to supplement its fiber-based broadband and video offerings with LTE wireless are not going to happen.
“We just don’t have enough spectrum,” he said.
Which means, like it or not, fiber has to replace copper if Verizon is to stay competitive in the bandwidth race and hold any edge as a four-play service provider. To accomplish that, he said, Verizon will wring out cost efficiencies from its networks and network facilities, including reducing HVAC power consumption and water consumption for cooling.
“There’s a lot of revenue in there,” Malady said.
About $1.3 billion, across the whole telecommunications space, David Walsh, Genband president-CEO said in his opening keynote where he said that in addition to saving money, telecommunications providers “have to be very aware of our environment” and the damage all this power consumption is doing.
On the whole, not speaking directly to either of the other two speakers, Walsh urged incumbent service providers to move forward.
(Incumbent) “service providers have a huge advantage but they have to think like a competitor” and hold onto voice customers and migrate them to newer services, he concluded.