Archive | February, 2017

So squeezed they stopped squeaking to each other

22 Feb

Oft-lamented short-term pressures drive the search for ‘asset efficiencies’.   With the benefit of hindsight, the making of unforeseen consequences seems to be rooted in a disregard for fairly obvious but difficult-to-measure policy impacts.

In corporate careers, management brownie points seem often to be awarded for displays of macho discipline encouraged by ‘perverse incentives’. Whatever the motivations, it is surely a matter of good governance that that short-term wreckers are not allowed to destroy values that underpin future sustainability.

Question Marks And Man Showing Confusion Or Unsure

But still it happens. Whatever presentational flavor of austerity or efficiency or asset utilization is used to justify the squeeze, the consequences are inherited by the next generation – or at least the next elected set of policy makers.

Or is that really so?

A recent article in The Economist takes issue with the conventional theories around short-termism.  A McKinsey study had argued that 73% of firms were short-termist and the ‘elite’ 27% actually performed better. However, the Schumpeter columnist begged to differ; questioning the evidence and doubting both the causality and relevance of labelling firms as short-term or long-term actors in our very dynamic market environments.

The Economist writer does, however, point out that many big firms ‘wallow in lucrative stagnation’ where profits are high but investment seems not to be boosted by the currently low cost of capital. Rather than label them short-termist and urging them to invest, the real need is for more rigorous competition policy to target ‘fat’ incumbents and boost new market entrants.

Such competition policy rigour might not be immediately popular amongst the self-regarded leaders but it is evident, in one sector at least, that this strand of policy imagination has already taken root. Hence the Chancellor’s autumn statement to inject funding into new entrants deploying ‘full fibre’ networks and also the recent indications coming from Ofcom of an urgent need to deliver ‘at scale’ the sort of infrastructure required to sustain a post-Brexit economy and enable (beyond 2020) an entirely future-proof collaborative architecture to support 5G Mobile.

So despite the common interpretations of austerity, efficiency, cuts, the general woe around short-term follies, narrowband thinking, or ‘squeezing until the pips squeak’, the more mature lesson seems to have been learned that those who are ‘too big to fail’ probably should.

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My, how you’ve grown

15 Feb

(Musings from Marseille)

The time-lapse shock of grandparents is guaranteed to annoy their youngsters. Much the same effect can be evident when delegates turn up at their annual conference. While they’ve not been paying attention this past year, the world has moved on. And it’s no longer ‘their’ world.

That shock is very much on display here in Marseille at the annual FTTH Council Europe conference. And yes – the youngsters do get annoyed, not least because it takes time and great effort to turn around those giant oil tankers that plough on not noticing (or caring) that that the tide has turned.

But make no mistake; the tide has more than turned. The seas we are navigating have been redefined. The assumptions that have driven businesses along straight lines probably never envisaged buffers at the end of the track.

Here at this fibre-fest the proponents of G.Fast to interconnect with old copper networks inside buildings (not an interconnect from some point halfway to a distant hub) are hearing that the Passive Optical LAN (POL) brigade are intent on eliminating even that last copper thread.   For corporates and campuses, the drivers are two-fold – future bandwidth flexibility and vastly reduced energy consumption.

That latter driver is major. Whilst IT departments have been urged to find ways of cutting datacenter energy costs, the internal networks to desktops have been ignored. Optical Networks may reduce energy demands by 80% and that immediate saving has great appeal for the property management sector. It has long been obvious that pushing signals through copper is more difficult than using glass. In the wider networked world, are any network providers offering ‘Green’ access tariff options as are found in energy packages?

Putting a value on future bandwidth flexibility is more challenging but, at marginal cost, few enterprises would choose a cul-de-sac. Come back next year and we’ll probably find that tech-competent extended families will want to create their own software-defined and very private virtual wide area networks – and manage their interconnections with the global web as they wish. And then they’ll not tolerate providers unable to envisage integrated fixed and mobile elements within a shared virtualized infrastructure.

But that’s not all. Even long-standing fibre enthusiasts are finding ‘surprising’ (AKA blindingly obvious) applications that they’d never dared predict. The caution of some investment models has been blown apart by the major service providers – leaving network operators to wonder who will pay for investment in access networks whilst not paying heed to what their customers really need. Do they not realise that once connected (and properly connected) users will use it? No. Provide some half-baked, semi-skimmed, highly asymmetric broadband connection and, surprise, it doesn’t turn them on.

Nowhere demonstrates this as well as Sweden’s 162 local access networks – and wholesale dark fibre opportunities for any enterprise that needs nationwide branch operations. The returns to the investors (often local municipalities) are a godsend to citizens – nobody likes paying taxes. And where did Facebook decide to locate its datacenter? In Lulea, up near the arctic circle, but every bit as well networked as Stockholm and a great deal cheaper. Even their energy bill is reduced in that cold climate. The region also pioneered FTTCP – Fibre to the Car Park – it makes life so much easier for nurses onboard the mobile clinic or library assistants visiting schools. Remote mammography with consultants on demand is way ahead of small UK pilots where (perhaps) a hospital may hook up using Skype for triage work with care-homes and prisons – dramatically reducing the A&E load.

But all that was very evident during our first Study Tour to Sweden in 2013. It takes time for others to hear the messages. If and when they do they’ll probably pronounce themselves ‘”shocked” at the appalling lack of service in, say, rural areas.

The real surprise is that these laggards are, at last, waking up. The truth is out. And the truth is that future optical connectivity is something completely different – with little or no relationship with a past littered with copper wires deployed for some other purpose like analogue telephony.

No wonder the youngsters get annoyed with the ‘so-called’ grandparents. Despite any superficial (or imagined) resemblances, these youngsters were surely born of different stock.