From: Merhawie (merhawie@gmail.com)
Date: Wed Dec 09 2009 - 15:44:40 EST
http://arstechnica.com/tech-policy/news/2009/12/the-coolest-isp-in-the-world.ars
How to be the world's greatest ISP
We're not always aware of it here in the USA, but there are many ISPs out
there in the world who do things quite differently than what we're used to.
Some of these ISPs ideas are even really good. Ars surveys the global ISP
landscape and paints a picture of what a dream ISP might look like.
By Rudolf van der Berg | Last updated December 8, 2009 11:30 PM
Internet Service Providers are a modern day necessity, but that doesn't stop
many of us from hating them sometimes. In many nations, broadband providers
top the consumer complaint charts. If complaints aren't about delivering the
promised speeds, they're about the crappy customer service, billing
problems, frequent outages, and the impossibility of switching to another
without being cut off from the Internet for months.
So what would it take to craft a truly "cool" ISP, one that attracted
legions of adoring customers who sing its praises to everyone they meet?
Fortunately, ISPs around the world are doing innovative things at prices
that will make your jaw drop. Join us on our worldwide quest to find the
coolest ISPs in the world, then get ready to write your own service provider
a strongly worded note once you know what else is possible.
Business models
When it comes to business models, it's clear that customer complaints aren't
the only area where broadband providers the world over are equal. It seems
that almost all of them offer the exact same thing; Internet access and
telephony, often combined with television and some generic services like
e-mail and space for a website. Some ISPs can offer hundreds of different
combinations by varying speeds, prices, and content packages, but it's
essentially the same "triple play" offer.
In fact, making a triple play offer difficult in many different ways seems a
prerequisite for becoming a telecom marketer.
It's surprising (and refreshing), then, to find a quite different business
model like plus simple operated by French ISPs. French broadband providers
like Free.fr, Numericable, and SFR have just one offer. It costs €30/$45,
and for that you get everything:
Cable and DSL internet at 20-30Mbps (and DOCSIS3 or fiber at 100Mbps in some
towns)
Free telephony to 100 nations (mostly to fixed lines; calling mobiles costs
more)
HDTV with a HD-DVR (Some ISPs like Numericable and France Telecom/Orange
have offers for €20 for Internet + telephony, or Internet + TV, but the
majority of customers choose a €30 pack.)
This isn’t all you get. More is included, like free access to WiFi hotspots,
music jukeboxes, computer games, your own personal television channel for
live TV, etc. We'll touch upon these innovations in more depth below.
The pioneer of this business model was Free.fr. Led by its maverick CEO
Xavier Niel, it introduced the plus simple model in 2002 into what was then
considered a lagging broadband market. Now Free is the second largest ISP in
the country, it is profitable (with 4 million subscribers), and it boasts
extremely low churn rates below 0.01 percent a month. One could almost say
that Free’s subscribers only give up their subscription upon death or moving
outside of the service area.
Of every two new subscribers in the French broadband market, one chooses
Free.fr.
The philosophy of this extremely cool ISP is that competitors should be
denied the possibility to compete on 1) price or 2) bandwidth. Consumers are
influenced mostly by headline speeds and price, so Free makes sure that they
know they get the best deal in town.
Compare this to the philosophy where consumers are best left as confused as
possible, and it's difficult to know when you're getting the best deal. "One
size fits all" not only saves the customer headaches, it also simplifies
internal IT. Getting billing and customer relations right for hundreds if
not thousands of product combinations has turned out to be too hard for most
ISPs.
Furthermore, acquiring the customer is expensive, so good ISPs make sure
that once subscribers sign up, they never want to leave. This is achieved by
continually improving the service offered, introducing small innovations
every couple of months. Not every customer will use or even like every
service that is offered, but it doesn’t matter because they are free
add-ons. If the services are unique and well-liked, competitors will have a
tough time poaching customers. Furthermore, giving customers what they want
may turn them into happy customers who promote the ISP’s service to their
friends and family, further reducing acquisition costs.
A third important element of Free’s strategy is to make good use of open
innovation. Most of its internal operations and many of the things it offers
are based on open source software and open standards. Apart from the savings
in license fees and the possibility for Free to adapt the code to do what it
wants, Free also allows its customers to work with the code and build on it.
There is an active community of Freenauts (yes that’s what their customers
call themselves) developing and improving various bits of the services.
A fourth element, and one of the prime reasons you won’t see this offer
elsewhere anytime soon, is that Free lacks marketing managers. There is only
one product to manage and new services are added based on whether there is
budget and whether the service is deemed cool enough. There is therefore
little place in the organization for marketing managers complicating service
offers and thinking up new services with fake projected take-up numbers in
order to "make" the business case for the new service. Unfortunately for the
rest of the world's ISPs, the fact that their marketing managers are the
ones responsible for proposing new business models means that a business
model that eliminates marketing managers will never get proposed.
But what would the hypothetical "coolest ISP in the world" offer using the
business model described?
Network
To provide Internet service, the provider needs access to a network. It
doesn’t need to own the network, though; it can be somebody else’s so long
as the ISP can tweak the service parameters.
FTTH offers the highest speeds available. There is a Swedish mother with
40Gbit/s of service, but she's just lucky that her son is Peter Lothberg.
The fastest commercial service available for consumers currently seems to be
1Gbps. Residents of Hong Kong and of Stockholm and Lund in Sweden can get
these speeds now.
In the Netherlands, many FTTH users receive a second fiber in their home
that will carry the analog and digital broadcast television signal. This
way, the indoor coaxial cable wiring for television can be used and every TV
can have access to the analog signal even though not all use the digital
signal.
A cool ISP wouldn’t restrict itself to just one network. It would try to
provide you with Internet connectivity anytime, any place, anywhere. The
integration of fixed and (mobile) wireless access has proved elusive, and a
full integrated offer is not on the market.
Change is coming, though. ISPs like BT, SFR, and Free.fr now offer shared
WiFi access using WiFi hotspots integrated into broadband routers, even
those of other customers. Subscribers can securely access the WiFi access
point of millions of other customers.
SFR and BT cooperate with FON so that their customers can use it all over
the world where FON is used. BT has faced some flak from customers worried
that their connections would be overloaded by the visitors, but in France
this seems less of an issue. It might be that because the Brits generally
only have 8Mbps broadband, they fear congestion more than the French, who
are used to receiving 20Mbps or more. The question is whether we will see
networks agree to roaming agreements for WiFi hotspot usage between
different networks.
A variant on the same theme is the Vodafone Access Gateway, which is a 3G
femtocell you can connect to your home broadband connection. It will give up
to four users secure access to Vodafone’s 3G network. At $265 it seems a bit
expensive to fix what is essentially a hole in Vodafone’s network coverage.
It can, however, be imagined that every ISP will in the near future add a
3G/4G/Wimax femtocell to its routers and farm these out to wireless networks
needing some extra coverage.
Another example of the coming fixed-mobile convergence is the combined
packages of fixed broadband Internet and a mobile wireless solution via a
dongle or integrated in a netbook. At the moment, these offers seem nothing
more than two subscriptions with one bill, but maybe they will integrate to
one subscription with multi-mode access for multiple devices.
But what good is bandwidth if you're stuck with a download (or upload cap)
so you can’t actually use it? The OECD once published a table (PDF) with
burnrates, which showed that in countries like Australia, customers could
actually burn through their purchased amount of bytes in under a minute.
Interestingly enough, the countries that have high bandwidth networks
available don’t have heavy caps. For instance, NTT in Japan has a 900GB
upload limit but no download limit.
It may be good business to forget about caps altogether, as there seems no
real reason for them to be there in the first place except perhaps as a
deterrent to some of the heaviest users.
Kenjiro Cho has written several excellent papers on the average broadband
use of Japanese broadband users (PDF), where FTTH has become commonplace.
With an average of 2GB per customer per day of network usage, the cost of
buying transit would be lower than $0.80 per month. Of course one could
argue that savings can be made in the internal ISP network if traffic was
lower, but even then we’re not talking high numbers.
So the end result could be that a cool ISP would just give its customers
1Gbps and not bother with offering lower tiers, as it isn’t worth the hassle
and it wouldn’t affect costs much anyway. The customers would benefit from
extremely low latency and quick downloads.
But many nations will be broadband laggards for years to come. What could a
cool ISP do in such places? Plusnet, a UK ISP, provides an example of how
traffic shaping could be implemented. The UK has been plagued by extremely
high costs for backhaul bandwidth and low speed access networks. Consumers
therefore will hit the bandwidth limit regularly.
Plusnet communicates transparently about what it is prioritizing and on what
package. If the line is free, then all packets flow unprioritized; if the
line is full, VoIP and gaming get platinum service, whereas Usenet may be
treated with best effort or silver service, depending on your package.
Not only does Plusnet say what it prioritizes, it also informs customers
about increases in its backhaul capability and it will regularly blog on the
effects that events and new BBC TV series have on its network. It may hurt
to see some applications restricted, but at least this way you get a feel
for why and how this is done.
Interesting services
ISPs become even cooler if they offer simple services that make their
customers' lives easier. E-mail and personal websites were early examples of
such services, where the ISP saved you from having to set up your own
mailserver, webserver, etc.
These days most ISPs also offer telephony and television as part of their so
called triple play offer. Cool ISPs go beyond such standard offers and
integrate these services better with each other and also offer other
features that make life easier.
One of the first places to start is to expand the functionality of the
router provided by the ISP. A cool ISP will not only provide you with a
cable modem or DSL router, but will equip that device with some other
options, like WiFi, a switch to connect multiple computers, and USB ports to
connect printers and USB storage. This way, the home router becomes the
central hub, print server, and network attached storage device. The AVM
FRITZ!Box is an example of a DSL router that offers many of these innovative
services, which you can buy to replace your ISP’s modem if it doesn’t
provide such services.
The Digital TV-decoder/ DVR can also be turned into a home media gateway.
Its functionality can easily be expanded, for example, by allowing computers
in the home to access the content recorded on it.
BT and Free.fr offer an innovative way to have your computer, DSL router and
its DVR (called Freebox) to connect, by using 200Mbps powerline
communications in the home. This saves the customer from difficult wiring
problems. Free.fr has also equipped the Freebox with Universal Plug and Play
to allow the customers to access content available over the internal network
either on their PC or on the TV. It also allows the storage of the DVR to be
extended by hooking up additional USB hard disks.
Standard services like telephony can also be greatly improved by a cool ISP.
Simple things like receiving voicemail messages in your e-mail are nice to
have. But good ISPs go further. Some alert you on your TV about incoming
calls, voicemails, and e-mails. Others, like Free.fr, are offering full
SIP-based VoIP. Their customers can use laptops (or some mobile phones) to
make and receive phone calls anywhere in the world, like they would at home.
In France it has also become standard for ISPs to offer free calling to
(mostly fixed lines) in up to 100 nations in the world. Other features that
a cool ISP would offer are tools to screen and divert calls and faxes
(ingoing, outgoing and to and from e-mail services).
The way the television is used and content is watched can be changed, too.
Free.fr allows laptops and PCs in the home to access the content on the DVR
and to watch television using software like VLC. It is even possible to
watch a type of Web-TV on your laptop. Verizon FIOS, Comcast, and Time
Warner in the USA actually take it a level higher and allow access to
content when away from home through a new program called TV Everywhere.
Verizon FIOS also offers customers a way to remotely configure the DVR to
record shows.
Where innovation still seems much needed is in providing and improving
online and remote backup and access services. There are some ISPs offering
online backup services, but often at price points that make them less
attractive. What would be really cool is ISPs offering backup software that
integrates with a NAS that you make using a USB port on your router, or that
backs up to the DVR and easily integrates with a remote backup function
provided by the ISP.
Similarly, ISPs capable of offering simple and easy-to-use VPN services
would also offer their customers a service currently unavailable, but which
may be much appreciated. It could allow users to use their home network
securely, as if they were at home, while on the road. If provided correctly,
they could even print to the printer at home or access the home network to
play the songs held there. Also redirecting all traffic using a secure
tunnel first to home and then to the rest of the world over an unsecure WiFi
network (i.e. at an airport) would enhance security.
Worthwhile content
Though content isn’t king and certainly not the money-maker some ISPs
envisioned it to be in the past, it still can add greatly to the ISP’s
offer.
Content can be a difficult area for ISPs. It often is hard to secure the
licenses to give customers access to content for free or for a fee. Disney
is said to have once been heard saying at a conference that ISPs with less
than one million subscribers needn’t ask for a meeting on licensing of
content.
French ISP SFR has given its customers access to Music on Demand by giving
them access to a database with 250,000 songs
Content providers can also be picky. The BBC, for instance, has given Dutch
cable companies the exclusive right to broadcast BBC1, 2, 3 and 4 but denies
all IPTV and FTTH networks access to these BBC networks. Furthermore, the
content is the property of the content owner, so any excess profits enjoyed
by the ISP on content provision will quickly evaporate in the next contract
negotiations.
Last but not least, the ISP can easily be bypassed by the makers of media
players and television sets to give access to Youtube, Netflix, or iTunes.
If it realizes it’s role is primarily in facilitating its customers to
access and disseminate content in a legal manner, it can spark some real
innovation.
Another option is to try to get as many television and (Internet) radio
channels onto the platform as possible. IPTV providers especially have a
near unlimited capacity for TV channels. Some of them are using this
capacity to add obscure free-to-air and national public broadcasters to
their lineup of TV channels. Though most customers will never watch these
channels, some will appreciate the access. The same goes for pay-TV
packages: offering Nigerian or Indian content in a package may appeal to a
small group of customers, but if others networks don’t offer it, the
customer will remain hooked.
The same goes with Video and Music on Demand. British and Dutch ISPs have
integrated free access to past broadcasts of public and commercial
broadcasters in their set-top boxes/DVRs. It adds an extra dimension to
viewing if you can catch up with something that you haven’t recorded. The
same goes with free VOD content, like access to children’s series and
sitcoms. Most people don’t have a need to buy DVDs of Bob the Builder, but
when the neighbor's kids need babysitting on a rainy afternoon, it’s a great
way to keep them occupied. French ISP SFR has given its customers access to
Music on Demand by giving them access to a database with 250,000 songs.
User generated content has been all the rage on the 'Net in recent years,
but there seems to be only one ISP who has truly embraced user-generated
content. The often mentioned Free.fr enables its users to become their own
broadcasters. A user can attach any analogue video feed (like a simple
camcorder) to the DVR and have it converted into an IP-TV feed that is
broadcasted live over its IP-TV platform. This has sparked quite some
controversy, as people could literally broadcast anything. But it has also
added new meaning to YouTube’s slogan of "Broadcast Yourself," because now
people can do so live and on TV.
Games are another type of content that ISPs can use to improve their offer
to their customers. Free.fr recently equipped their DVR with the ability to
play games. Its remote control for the DVR was already styled like a
gamepad, so that this wasn’t too hard. The ability to play ROMs in emulators
is also an extremely cool addition. Unfortunately, it is quite possible that
the French will never be able to play top Nintendo titles on their DVR as
Nintendo is very much against emulators. But, who knows? Maybe someone will
give ISP customers access to a great online app store with all the old games
so they can be played in an emulator.
Another role ISPs may have is enabling game streaming on their set-top
boxes.
Conclusion
A truly cool ISP still has years of innovation ahead of it. There are still
so many ways ISPs can offer improvements to their customers' lives. The
French have shown the way forward when it comes to business models and new
services, and other countries can certainly change their mindsets and follow
their example.