Archive for the News Category

Would you invest in a business that loses money? Probably not. Or, at least, you are more likely to invest in a business that makes money. That is why investors read the numbers reported in the press, and rely on auditors to check financial statements. What if you already own the business, and were considering investment in some new machinery? Again, you might buy the machinery if you thought it would generate profits, but not if the cost outweighs the returns. That is why accountants go to a lot of trouble to map costs to assets, and hence determine which assets are driving profits, and which are not worth keeping. So would you make a major investment decision, knowing you will be ignorant of the returns generated by the investment? That is exactly how most telcos are run, according to a new report from the TM Forum. Net global capex network investment is estimated to have cost USD354bn in 2014. In response, the TMF’s Network Asset Management team conducted a survey into how telcos track and manage their network assets and the returns they generate. The findings make for grim reading, including the fact that 57% of surveyed telcos had no data on whether existing assets were generating a positive return or not.

I found the survey results to be confusing in some respects. For example, 29% of telcos stated they do not bother to measure any returns generated by assets, after they have been deployed. But what are the other 71% measuring, if more than half of telcos have no data to determine if an asset is underperforming? Perhaps they are measuring returns across a class or category of assets, which may be some help but still fails to provide sufficient detail to improve future investment decisions.

The conclusions about data integrity were equally grim. On average, respondents believed their network inventory records and fixed asset registers were only 74% accurate. Their expectations were also low, believing that accuracy levels below 90% would still be ‘acceptable’.

Reading between the lines, I draw my own conclusions from the messages about poor data quality and scrappy methods for measuring returns. Determining the profitability of a network asset would involve a lot of hard work, so mostly we do not bother. This is understandable from the perspective of the poor schmo who is asked by his unreasonable boss to generate numbers without receiving the data, tools, and thanks that such a task demands. But from a collective, corporate perspective, this blind spot in decision-making is nothing less than insanity. How many of you have worked in a telco where the stationery cupboard was locked to prevent people using too many staples, or where your phone calls were scrutinized to determine they were all made for genuine business reasons? These things are controlled because they are easy to control, but the values involved are trivial. In contrast, the amounts spent on network capex are enormous, but hardly anyone can say where the money was best spent, or where the telco failed to generate the results it hoped for. If we do not gather the knowledge, we cannot learn from the past. In the case of network asset expenditure, that means we are doomed to repeat our most expensive mistakes.

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It is funny how governments get really keen to protect their people, when this coincides with threats to the amount of tax they collect. Ghana’s Communications Minister, Dr. Edward Boamah, has promised a crackdown on simbox fraud; you can read the story at GhanaWeb. Boamah said he was keen to screw more tax money out of people making phone calls… ahem, I mean he promised to keep the cost of international calls artificially high because it is a great way to make money… ahem, I mean he was deeply concerned that…

People are losing businesses because when you receive a call it appears [with a] Ghana number… sometimes you think it is somebody calling you to ask for [a] favour so you don’t even pick, so you miss an important call.

Yeah, right. Who would doubt that missed calls caused by inaccurate CLIs is a top priority for Ghana’s government?

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Are some mobile operators pushing their luck, when they ask victims to pay huge bills after criminals steal their phone? That is the conclusion of Richard Colbey, a British lawyer who recently took up the case of Osian Rhys Edwards, a schoolteacher who fell victim to the criminal gangs that target tourists in Barcelona. You can read the full story in The Guardian.

Vodafone barred the stolen handset after GBP15k (USD23k) of premium rate calls were racked up, within just hours of the theft. Rhys Edwards claimed he informed Vodafone of the crime but the operator said it had no record of his call. Instead, Vodafone pursued payment in full, and then offered to reduce the bill to GBP10,500 (USD16,440) whilst allowing Rhys Edwards to pay it off over many years. Vodafone also threatened to damage his credit rating. But given that Barcelona is known to be afflicted by this criminal scam, does it seem reasonable to allow such heavy premium rate use, before the telco intervenes?

Vodafone’s behaviour so outraged Colbey that he agreed to represent Rhys Edwards for free. His comments on Vodafone’s legal position are worth reviewing.

Vodafone’s position looked legally flawed for several reasons…

What I thought particularly outrageous was that Vodafone was threatening to report Osian to a credit reference agency without first getting a court judgment. The power large organisations have to do this gives them an unfair advantage in any dispute with consumers…

I set out Osian’s case in a forcefully expressed letter to Vodafone’s “General Counsel” (a US term for chief lawyer), demanding, somewhat unrealistically, a complete capitulation and compensation for the stress within 24 hours… We huffed and puffed in emails as litigation lawyers do, and within a few days had reached agreement that Osian would pay nothing for calls after his phone was stolen, but wouldn’t actually get any compensation. I expect a judge would have reached the same conclusion…

To its credit, and slightly to my surprise, Vodafone did not insist the settlement was subject to a confidentiality agreement. I hope that this will encourage others faced with similar claims by phone companies to stand their ground.

The issue has trundled on for a decade and no company has yet wanted to test its position in court. This is almost certainly because the companies are getting legal advice largely in line with my own view that they could not win, and they would have no choice but to change their policies once a precedent was established.

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The UK Revenue Assurance Group is holding their Winter meeting tomorrow, and the theme will be Big Data, with a packed schedule featuring speakers from the UK, USA, and even Australia! Everyone who has an interest in revenue assurance is welcome to join us in London – if you have not received an invite, then there is still time to contact the organizers and get yourself added to the guest list.

Tomorrow’s keynote speaker is Julian Hebden, Head of Big Data at Telstra. He will be joining us by videoconference to answer this question: is assurance the killer app for Big Data? There will also be talks by British Gas about the implications of smart metering, from Cartesian about new opportunities for data analytics, and from Elutions about asset and power management. The day closes with two speakers from the USA. Peter Mueller, CTO of ATS, will give his views on what Big Data will teach telcos, and how telcos might be surprised by what they learn about their customers, and about themselves. Finally, Dan Baker of TRI and Black Swan will give his overview of the range of Big Data solutions now being marketed. Phew! For a ‘small’ meeting of revenue assurance practitioners who do not like to publicize themselves, the RAG always delivers a great agenda! Factor in the splendid lunch, lively debate, networking, coffee and doughnuts, ultra-modern real-time surveys, old school gossiping, and an after-hours trip to the pub, and it is no wonder that RAG is the must-attend event for every RA pro within range of London :)

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Let me begin by apologizing to everyone who does not live in the USA. Sometimes, when discussing the internet, you have to discuss what is happening in America.

And let me also apologize to everyone who prefers to avoid politics. Sometimes, when discussing the internet, you cannot avoid politics.

Phew. It is a relief to get the apologies out of the way. Maybe only 20% of you are still reading. I congratulate you for making it this far. The title for this piece includes the name of the current US President, the name of a high-profile Republican Senator who would like to be US President, and the words ‘net neutrality’. These subjects encourage people to have strong feelings, and fixed opinions, sometimes before they acquaint themselves with relevant facts. But if we, as professionals, do not understand how the net neutrality debate is fundamentally about the pricing of communication services, and what the real issues are when setting those prices, then there is little hope that the general public will ever share that understanding, or that governments will make the best decisions. The vacuum of ignorance creates the potential for politicians to say all sorts of things, take all sorts of policy positions, without caring if they help anyone but themselves. And if you are not interested in how prices are set for the internet, and who gets to decide those prices, then perhaps you are in the wrong line of work.

This article is about a very short speech given recently by US President Obama, and the reaction it provoked. But before I discuss Obama’s words, I want to show you an image. It is an image that people saw, before they heard Obama’s words.

This video is buffering - or is it?

This was captured two seconds into the playing of a video taken from the White House’s official YouTube channel. Let me be clear: it is not a graphical representation of any actual buffering that occurred before the video started playing. This is a frame of an animation that is part of the video itself. It suggests that buffering is taking place, but there is no buffering. Play the same video over and over, and this pseudo-buffering animation will always look identical, always last the same duration. It is a simulation of the graphics sometimes displayed when buffering occurs. Why include this animation before a seemingly important announcement by the most powerful man in the world? A generous answer would say it illustrates the speed of the internet, in a way that people can relate to. I think that answer would be too generous. This animation is very short, and no subsequent attempt is made to clarify that people were shown a simulation. Most people will wrongly believe they waited a few seconds for some buffering, before the video of Obama actually began. Public understanding of net neutrality is poor. Leaders should explain complicated issues fairly and honestly. That President Obama’s communication team decided to use this deceptive animation before Obama spoke on the topic of net neutrality creates a very bad impression of their sincerity, and their transparency.

So what did Obama say about net neutrality? Here is the 2-minute video, and I analyse the transcript below.

Hi everybody. Ever since the internet was created, it’s been organized around basic principles of openness, fairness, and freedom.

It would be more accurate to say the internet has been disorganized since its creation. Obama makes it sound like thoughtful people sat around a table, and made a conscious decision that the internet should be open, fair and free. On the contrary, the character of the internet has been driven by the absence of authorities that could impose their values – whether benevolent or otherwise. The TCP/IP protocols direct how data moves around a network; they contain no mystical insight into the concept of fairness. Businesses that laid cables did so because they wanted to charge others for using them, not because of a holy devotion to increasing liberty.

There are no gatekeepers deciding which sites you get to access.

This is no longer true. It was true during the very early days of the internet, but ever since governments started censoring and curbing the use of the internet for a variety of reasons – to stop child pornography, to combat terrorism, to protect copyright, and so on – there have been gatekeepers who decide what content you can access. Maybe you always agree with their decisions, but gatekeepers definitely exist.

There are no toll roads on the information superhighway.

Except for the most obvious one, paid by every consumer. We all pay an access fee, in order to use the internet. What is that, if not a toll? This particular toll road runs over the final mile, connecting our home (or our mobile phone) to the rest of the network. What Obama means is that, after you pay for access to the network, there are no further tolls that might influence your journey.

This set of principles, the idea of net neutrality, has unleashed the power of the internet, and given innovators the chance to thrive.

Or rather, the internet is it what is, and allowed innovators to thrive. Later on, some people started talking about principles, and gave names to them. In this case, the reality of net neutrality existed before the idea of net neutrality.

However, I recognize that you could take a different view, and argue that net neutrality means nothing more than implementing networks so they manage the flow of traffic in a neutral manner. In that sense, I would agree that the internet was designed to be neutral. However, the neutrality of a network is not the same as the neutrality of all networks. Some confusion can occur here. Suppose I build two, completely separate, neutral networks. One has high bandwidth, one has low bandwidth. They are both neutral, in the original technical sense, because no traffic prioritization occurs on either network. Now suppose I choose to connect person A to the high-bandwidth network, and put person B on the low-bandwidth network. The political and economic issues that Obama refers to as ‘neutrality’ have more to do with this scenario – who is serviced by which network, and whether that leads to some inequality of practical outcomes – than by the conception of neutrality in its original technical sense.

These arguments get very confused because we can be very unclear about the subject of conversation, when we talk about a network. In some senses, the internet is just one network. But by analogy, that would mean I should think of the North American road network as just one network, and not as many different roads. I can drive a car from any part of the road network to any other part of the road network, and the internet is similarly connected. However, concepts like fairness cannot be realized simply by asserting that the same rules should apply to every part of the North American road network. I must also understand that if an inadequate highway connects two towns with growing populations, that road will get increasingly congested. At the same time, some authority might decide to waste money by building an unnecessary road elsewhere. It is meaningless to talk about the rules being fair, if the practical reality is that one driver speeds along a road which only he uses, whilst many other drivers are stuck in jams for hours on end. Managing the relationship between infrastructure and use requires more sophisticated thought than that offered by dogmatic, but ultimately meaningless demands for fair rules. In this context, fair treatment is tied up with practical issues that cannot be reduced to a few simple rules.

Abandoning these principles would threaten to end the internet as we know it. That’s why I’m laying out a plan to keep the internet free and open.

Which is fine and dandy. Except it is not clear who, exactly, is threatening to ‘abandon’ these principles. Or whether there is any evidence that they intend to do so.

Note the importance of what we mean by ‘net neutrality’, and how different meanings are given to the phrase by different people. If we stick to the original, narrow, technical meaning, then two customers could be connected to two neutral networks, and be charged very different amounts for very different quality of access over those networks. When Obama talks about ‘abandoning’ net neutrality, he is talking more about prices and economics than about the technical aspects of neutrality.

Please keep in mind that if we treat neutrality like a religious dogma, then we would never discriminate between a personal email and unwanted spam, between a video of cats falling over and the streaming of hardcore porn, or between the purchase of an ebook via Amazon and the purchase of heroin via the Silk Road 2.0. We need to ask hard questions, about what politicians mean, when they use words like ‘free’ and ‘open’.

And that’s why I’m urging the Federal Communications Commission to do everything they can to protect net neutrality for everyone.

They should make it clear that whether you use a computer, phone or tablet, internet providers have a legal obligation not to block or limit your access to a website. Cable companies can’t decide which online stores you can shop at, or which streaming services you can use.

Forgive me, but at this point I can no longer take Obama seriously. The history of electronic communications, and the commercial interests of the businesses involved, has yielded no evidence that communication providers want to censor or restrict communications. They make money by selling access, not by limiting access. The few times that comms providers have experimented with restrictive models, such as when mobile providers pushed users on to walled gardens, the free market has rapidly forced them to abandon their foolishness. Internet providers give unfettered access not because of government protections, but because customers want it, because rivals will offer it, and because customers can switch suppliers if they do not get what they want.

On the other hand, there are plenty of examples of internet providers being criticized for being too free in allowing access. Who criticizes them? Who wants to impose restrictions upon them? Very often it is politicians who want to limit access. In some cases those politicians are backed by other kinds of big business. Whether we are talking about anonymous online financial transactions using crypto-currencies, or controls that stop youngsters from seeing pornography, or darknet markets for illegal drugs, or obstructing P2P traffic in order to reduce piracy, typically communications providers are vilified for not doing enough to control the traffic that flows over their networks. Many times they have been accused of indirectly profiting from crime, if they do not stop their customers from doing unlawful things. At such times, politicians often present themselves as white knights, riding to the rescue. But then it makes no sense to damn internet providers for interfering too little, whilst whipping up fears that the same companies may interfere too much.

And they can’t let any company pay for priority over its competitors.

This is the real issue: who pays for what. Obama misled the public, by pretending that corporate censorship poses a threat to net neutrality. His real concern is over payment, and if he really wanted to explain the issues to the public, he would have concentrated on this topic.

To put these protections in place, I’m asking the FCC to reclassify internet service under Title II of a law known as the Telecommunications Act.

Title II is economic in character. It follows a long-established model used in other sectors, as well as telecoms, to prevent monopolistic behaviour by controlling prices. For all Obama’s guff, it would be unbelievably crude to deploy this mechanism just to prevent websites from being blocked. There would be a hundred better ways to impose rules to make every websites available to everyone – and whatever the rules are, they would need to be reconciled with those occasions when the government mandates the blocking of websites.

The FCC is the US communications regulator. If the FCC applied Title II to the internet, they would have far more control over the prices and payment for internet services. Obama wants them to control prices. If Obama wants the public to understand the issues, he should make an argument for increased price control, not by telling scary stories about websites being blocked.

In plain English, I’m asking them to recognize that for most Americans, the internet has become an essential part of everyday communication and everyday life.

In plain English: yada yada. I think the FCC is already aware of the importance of the internet, without needing to be told by Obama.

The FCC is an independent agency, and ultimately this decision is theirs alone. But the public has already commented nearly four million times, asking the FCC to make sure that consumers, not the cable company, gets to decide which sites they use.

It is true that the public has strong opinions. But if the public was asked to explain net neutrality, they would give four million different explanations, and many of them would be wrong. The public has a right to express all sorts of opinions on all sorts of topics, from how election finance laws should be changed, to who should win this year’s Nobel Peace Prize. Politicians often choose to ignore opinion, just as Obama did when the public was outraged by revelations that America’s secret services had extensively spied on private electronic communications, using them to track millions of law-abiding American citizens, and to monitor foreign allies like German Chancellor Angela Merkel.

Having torn into Obama’s verbal manipulations, I now want to succinctly state the key issue, which Obama omitted from his speech. The nature, and future of the internet, will be determined by whether differential pricing can ever be allowed. The point is not whether a packet gets treated the same as the next packet, but what is the right way to charge for the flow of those packets. At the moment, ISPs may charge the same monthly amount to two neighbours, though one uses the internet far more than the other. Meanwhile, charging for internet use differs greatly, depending on whether the final connection involves a wire or radio. If we want a society where the same prices are applied to all internet traffic, we must agree consensus answers to sensible questions about what it means to say one service is the ‘same’ as another. That has not happened yet, and most politicians have avoided such intelligent debate.

A simple but mistaken assumption is that the only conceivable reason to permit differential pricing is to allow internet providers to charge differential prices to their consumers. But this does not match the real-life examples raised by network providers. They argue that they want to negotiate fees from the big businesses that encourage traffic, not the individuals who consume the traffic. That way, a big business which requires a lot of bandwidth to thrive – such as Netflix – can be charged for having its needs satisfied. Instead of focusing solely on the final mile, as seen from the consumer’s point of view, pricing might better reflect the source of content. Obama’s intervention implies he does not want businesses like Netflix to receive tailored bills for a tailored service. Such a development would contradict neutrality, as Obama sees it, because it means not all users of the internet are treated the same.

Obama suggests that net neutrality is necessary to protect the little guys, in a struggle of consumers vs. big business. The truth is that this debate is more of a struggle between consumers, big businesses, and other big businesses. Aside from the network providers, there are many other large corporations who profit greatly from the internet, and who perceive neutrality regulation as a mechanism to keep their costs down. I will not express an opinion on how these businesses have influenced the debate, and whether their interests should be protected. However, I do believe it is despicable for Obama to use an emotional topic – censorship!!! – to justify price controls without clearly stating how some big corporations might benefit from price controls. In particular, if internet providers could levy higher charges from big businesses that rely on the internet for their profits, that would imply consumers would represent a smaller share of total revenues. Wherever the revenues come from, those revenues will ultimately determine the investment that is made in the internet.

For all the principles, platitudes and emotional language, it is not logically obvious that consumers must benefit from net neutrality, in the way Obama understands the idea. Consumers might be better off if more internet investment was fuelled by revenues from the big businesses that run the most popular, and most bandwidth-intensive, websites and services. At the very least, this is not an argument that can be resolved by loose talk about ideas, fairness and freedom. This is fundamentally a question of economics, and the relationship between prices, supply, demand and investment. In other words, this is the kind of topic that lots of people might express an opinion about, but unless they have some data that supports a coherent economic model that predicts investment in network infrastructure, then we should not be listening to them.

At this point I should mention the intervention of Senator Ted Cruz, who responded to Obama’s speech. Sadly, the Texan legislator and favourite of the Tea Party did not share an economic model that will forecast investment in network infrastructure. But he did tweet about net neutrality, and here it is.

The problem with this tweet is that it responds to Obama’s lousy analogies about net neutrality (we need to protect the principles espoused by the mythical internet founders by massively increasing regulation!) by offering an equally lousy, though opposing analogy. Obamacare was the President’s attempt to reform the provision of US healthcare. It essentially shifted some of the costs from those who most need healthcare, to other people who did not want to purchase health insurance. Because Obamacare is a kind of government intervention that influences the price of healthcare, there is a tenuous analogy to one implication of applying Title II to the internet. But beyond that, the two policies have little in common. One reason that Obamacare is unpopular is that it forces people to buy a service, even if they do not want it. Nobody is suggesting that people should be forced to invest in network infrastructure, even if they do not use the internet. Obamacare changes how much consumers pay for healthcare, and finds a new balance in who pays for what. The best objection to Title II is that it would prevent internet providers from shifting more of the cost away from consumers, and on to big businesses.

As a result of his poor analogy, Cruz has strengthened his opponents more than he has weakened them. Thousands of self-appointed net neutrality advocates have flocked to the web, to ridicule Cruz’s understanding of the internet. For example, The Oatmeal lambasted Cruz for not understanding net neutrality. That author made the following statement:

I’m going to… explain to you exactly how net neutrality works.

The author then proceeded to give a ludicrously simplistic explanation. This only proves:

  • it was written by a pompous clown with no idea of how net neutrality works; and
  • that it is impossible to give an exact description of net neutrality because so many people are so obviously talking at cross-purposes.

However, there are very many pompous clowns like this author. They believe they are experts because they have a computer and they like to use it. At the same time, they are clueless about the economic issues entwined with net neutrality. Many of them are so busy delivering sermons that they never hear valid opinions that differ from their own. That is why they make time to crucify Cruz, but seemingly failed to notice any errors or oddities in Obama’s speech – including that peculiar buffering animation. If Cruz wanted to exert a positive influence on the net neutrality debate, he should have taken time to explain the issues surrounding price controls in simple terms, and made them relevant to consumers. It is unfortunate he did not, preferring to throw out an attention-grabbing but unhelpful soundbite instead.

Is this net neutrality debate relevant to you? You are reading this on the internet right now, so you must care a little bit about it. And whilst you may not be in the US, you will be conscious of America’s influence over the internet, as well as the possibility that other governments will follow the example set in the USA. What makes net neutrality so significant to our line of work is that lots and lots of people – including the President of the USA – have revealed themselves to be complete asshats, spouting wild opinions about what fuels network investment, what leads to improved internet services, how to efficiently manage traffic, and how to set prices, without showing any data to support their beliefs. One reason they can get away with this nonsense is because the communications industry has traditionally been lousy at gathering and interpreting the relevant data for itself. Many important investment decisions have been justified by little more than gut feelings and guesswork, or by a herd instinct where one telco takes a lead, and every competitor follows. This is not a great way to run a multi-billion dollar collective enterprise that connects every person on this planet. We claim to be intelligent; we should use more intelligence when making decisions.

At the core of our difficulties is trying to understand the relationship between investments, and the returns they generate. Building network infrastructure is a long-term activity. Customers purchase communications services on a much more short-term basis. Infrastructure decisions will have lasting consequences, but a YouTube video is watched on a whim. For all the talk about Big Data in the comms industry, there can be no better use of data than to improve our understanding of which network investments will yield the best returns, and which prices generate the best profits. The debate about net neutrality sits right at the fulcrum of these issues, because it has the potential to change the dimensions of who makes which decisions, and why. Whoever makes these decisions, whether it is a private company or a public servant, the quality of the decision will depend on the quality of the data they used. To get the best results, we will need more than fine talk about principles, and simplistic analogies about fairness and openness. We need lots of data, and sophisticated forecasting models. Without them, we are all guilty of coasting in neutral, unable to drive investment in the right direction. That is because we lack the substance to back our talk, and to justify our decisions.

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