Is broadband success a partner-or-perish proposition?

Felten admits he’s also specifically puzzled as to why telecom service providers aren’t offering videoconferencing services over their FTTH networks, noting the popularity of such an offering with older consumers who might not be looking for faster Internet services or more video content. “If you imagine the one application beyond healthcare that elderly people want is video to see their grandchildren. Even if it’s on-net only, this is a huge driver for your mother to subscribe to the same provider that you subscribe to.”

The other danger is spending investment dollars on services that don’t pan out, Felten said.

“Telcos don’t have the innovative structures to launch these things fast on the market,” he said. “What they don’t understand – or some of them don’t – is that the Internet has an ecosystem of services – it acts like a venture capitalist for you. There is one project that is going to soar and 100 that are going to die. If you are going to develop these yourself, you have to be willing to invest for the 99 projects that die to get the one that succeeds. Service providers who insist on doing this themselves haven’t faced the fact that they should partner with these people instead of trying to replicate what they are doing.”

Another mindset that needs to change is the prejudice against wholesale services on an FTTH network, Felten said. “Even the financial markets are convinced that if you have to share your network, you are going to make less money,” he said. “If you look at projects that are financially successful, which I would describe as break-even in five to seven years, these are projects with over 60% take-rate. Today, these are relatively small scale – up to a few million homes past. On the scale of a country or a large region, if you want these take rates, you can’t do it on your own. Wholesale may be a lower ARPU [average revenue per user] business, but it is a higher margin business, because costs are much lower.”

Coming next: The role of regulation in FTTH deployment globally