“Winning in the race for e-business”

“Winning in the race for e-business”

Lecture Two - “Broadband and mobile access matter”Presentation to Sheffield University Management

School MBA Students

28 February 2006

Prof. Jim NortonSenior Policy Adviser

UK Institute of DirectorsFormer Director UK Cabinet Office PIU e-Commerce team

www.profjimnorton.com

•Affordable broadband access is vital for e-business.

•What do we mean by ‘affordable broadband’?

•Affordable broadband in the UK.

•Global affordable broadband development.

•The future importance of mobile access.

•Key messages

Issues to be covered

Why is broadband access key to e-business?

Source: UK Broadband Stakeholder Forum

A key mistake in early e-business adoption was to have a sales site hosted by an ISP (and thus ‘always on’) but not to have the ‘back office’ permanently online and linked in real time to the sales site….Affordable broadband allows:• cost effective ‘always on’ linkage between ‘front’ and ‘back’

office systems ensuring that what is sold is genuinely in stock and can be delivered…!;

• genuine participation by SMEs in the ‘extranets’ built around industry supply chains;

• access by customers into the company’s core systems for design and configuration

Broadband access reduces the asymmetries between large and small companies …

Broadband impact on e-business processes

ADOPT ADAPT ABSORB

Speed up processes• Fast always-on access

for e-mail and web• Improved

communications• Improved productivity • Improved staff

satisfaction• Reduced costs

Adapt processes• More efficient

procurement• More flexible working• More e-Learning • Adapt sales & mktg.• Exploit VoIP

New processes• Address new

markets• New business

models• Outsource non-core

functions • Reduce office space

Time

Ben

efit

Source:

UK Broadband Stakeholder Forum

Some results from “My Broadband” A UK joint Work Foundation iSociety / BSG

research project. UK’s first ethnographic broadband research (as

far as is known). Investigating use, perceptions, experiences &

drivers/barriers. Understanding the place of Broadband Internet

in everyday life. Numerous research findings published as iSociety

/ BSG report.

Broadband isn’t just about speed…

Source: UK Work Foundation - iSociety programme - James Crabtree

http://www.theisociety.net

Broadband use is not just about speed… Broadband is sold as if users only care about

speed. It is sold as a sprint, but experienced as a saunter. But users experience it as unhurried &

unpressurised. Doing things ‘quickly’ on the internet is not

necessarily a user objective. Real fulfilment of the ‘speed’ promise depends on

data heavy internet use. Everyday uses of the internet … are more

mundane.Source: UK Work Foundation - iSociety programme - James Crabtree


Broadband can be about taking it easy



Broadband time is differentDial-up “Anxious Time”Watched and CountedRestricts ExperiencesControls the internet user

Broadband “Timeless Time”Ignored and AssumedBroadens Experiences Internet user is in control

ExperiencesRushed annoyanceLimited utility and impracticalPeriodic & anxious

ExperiencesRelaxed enjoymentRealisation of potentialSmooth & reliable

Vs.



Broadband doesn’t do what it says on the tin - it is not perceived as always on…



Broadband is not always on

Broadband is meant to be always-on, but for most normal users it isn’t.

This is because always on does not equal always there.

Household PCs are are switched off, shut away, out of sight, out of mind, under used, and undervalued.

Always on broadband must be always there: an always available resource at the centre of household life.

Source: UK Work Foundation - iSociety programme - James Crabtree http://www.theisociety.net

Always On = Always There

Always On The appropriated

language of broadband marketing

The PC is switched off A PC hidden from view:

furniture or totem Always on: states a fact

about internet, but doesn’t encourage an increase in use

Always There Pliant, always available Accessible A real household hub A PC at the centre of the

home: incorporated into everyday life

Stressing ‘always there’ encourages a different type of use

Source: UK Work Foundation - iSociety programme - James Crabtree http://www.theisociety.net






•Key messages


What we mean by ‘Broadband’…Speed

Mass market broadband is a journey. There is no simple, single definition that holds over time:


Stage Typical Speed Typical Application

1st Generation 256kb/s - 2Mb/s Fast Internet access

2nd Generation 2Mb/s - 5Mb/s Applic. Serv. Prov.

3rd Generation 5Mb/s - 50Mb/s Real time video

Large business has had access to broadband for many years, only mass market, affordable broadband is new…

Broadband services are ‘always on’ and charged simply by rental or by volume of data shipped not by connected time…

What we mean by ‘Broadband’…Technology


There is no single ‘magic bullet’ technology for the provision of broadband services. Genuine pervasive provision will draw on a range of options including:• xDSL - delivered over the existing ‘copper’ local loop used

historically for voice services. Wholesale from carriers and retail from a wide range of ISPs (512Kbits/sec to 50Mbits/sec);

• Cable modems - enhancements to existing analogue or digital cable TV systems. Potential for up to 30Mbits/sec per home.;

• Fixed Wireless Access - up to 8Mbits/sec (or perhaps 70Mbits/sec with WiMax) and

• Satellite - available almost universally but with a high connection/terminal equipment charge, plus latency…

Many variations of cost, speed, symmetry, contention ratio, and so on…

What we mean by ‘Broadband’…Platforms

Source: UK Broadband Stakeholder Forum & T-Mobile

Conventional telecommunications fixed network platforms are not the only options. Alternatives include:

• Third generation mobile services at 384 Kbit/s and above, 3.5G offers 8Mbits/sec by 2008 and 3.75G 70Mbits by 2011;

• Interactive digital television with ‘return paths’ via satellite or telecommunications networks; and

• Some five to ten years hence, ‘High Altitude Platforms’ effectively static dirigibles at 60,000 feet with an enormous coverage area.Wide area delivery technologies will also be complemented in homes, shops and offices by ‘local’ broadband technologies such as Wireless LANs and Bluetooth

Broadband access: A working definition

Source: UK Broadband Stakeholder Forum - Jan 2004

“Always on access, at work, at home, or on the move provided by a range of fixed line, wireless and satellite technologies to progressively higher bandwidths capable of supporting genuinely new and innovative interactive content, applications and services and the delivery of enhanced public services.”

Complementary delivery channels give Europe an advantage….

Simple screen based computer access cannot provide full population coverage. European leadership in Interactive Digital Television (iDTV) and early roll out of GPRS and 3G mobile systems provides a unique opportunity for genuinely pervasive access…

UK has the highest digital TV penetration in the World

Following introduction in Japan and Korea, 3G services are starting to gain momentum in Europe.

3.5G service is being trialled in the Isle of Man…






•Key messages


>99% of households and SMEs have ADSL availability.

48% of households (11.5M) and SMEs have cable modem availability .

13% of households are in areas covered by FWA (Firstnet)

At the end of Dec 2005 the UK had 9.8M Broadband Internet Users, becoming Europe’s broadband leader. The global total exceeeded 200M.

UK Broadband coverage is increasing

Source: Source: UK regulator Ofcom 2005 Market Report (July 2005) data to end Q4 2004http://www.ofcom.org.uk/research/cm/cm05/comms_mkt_report05.pdf Financial Times 30 December 2005 and Point Topic Jan 06.

http://www.ofcom.org.uk/research/cm/cm05/comms_mkt_report05.pdf

Wireless MANs for affordable broadband access IEEE 802.11b/g is already

being used for localised delivery (backhaul still a challenge) and in experimental mesh networks.

802.16a - WiMax offers great potential as a backhaul solution but spectrum availability unclear.

802.20 (pending) - active antenna technologies for portable wireless DSL (PWDSL).

UK affordable broadband lines: The adoption growth curve

Source: UK Ofcom, Office of National Statistics & Financial Times

UK has passed the “knee” in its adoption curve and is likely to continue to see dramatic growth… UK passed 9.8 million broadband access lines in Dec 2005

UK affordable broadband users: Exceptional satisfaction scores…

60%

34%

4% 2%

Very satisfied Quite satisfied Neither/Nor Quite/very dissatisfied

Data from NOP’s UK Broadband Internet User Profile Survey, June 2003

Source: UK Trade Association Intellect and NOP Sept ‘03

UK ICT Sector SMEs: Affordable broadband access satisfaction & importance

Scale: 1 is negative and 10 is positive

Mean score

Importance of keeping Broadband connection

Ease of integration into existing IT framework

Ease of installation

Effect on staff satisfaction

Effect on staff productivity

6.8

7.3

7.8

8.5

9.4


5%

7%

14%

21%

28%

33%

60%Time saving

Cost efficiencies

Employee satisfaction

New business

Smarter working

Customer satisfaction

Client satisfaction

Benefits of Broadband ConnectivityUK ICT SMEs

Currently, the main benefits of Broadband are on internal processes, with a smaller percentage of the base seeing external benefits


Effect on Business Processes - UK ICT SMEs

7%

9%

9%

9%

9%

12%

12%

12%

14%

19%

26%Generally speeded things up

We are more efficientUse Internet more, for research

Increased business activity

Faster communications

Easier to share info

Speedier business processes

Staff can work remotelySpeedier connection

Easier data-file transfer

Cost savings


IoD Policy Unit broadband survey

• Policy Unit questionnaire published in June edition of IoD News and on IoD.com

• 409 IoD members responded.• Small businesses dominated:

o 56.7% has up to 9 employees;o 23% had 10 to 49 employees;o 11.5% had 50 to 249 employees; ando 8.1% had more than 250 employees.

Source: Nildram/IoD October 2004

What quantifiable benefits are you seeing

in your business use of broadband access?

Base: 325 respondents who use broadband for business purposes.

84.3% of respondents cite productivity improvements from broadband access.64% of respondents see a direct link between broadband and increased profits.

84.3

61.5

33.517.5

7.1 3.1 1.80

102030405060708090

100

ProductivityimprovementCost savingsImprovedcustomersatisf'nRevenueincreases

Other

No benefitsDon't know

% Respondents


Better and faster R&D. Better information for decisions

Can now do jobs we would not have contemplated four

years ago. Couldn’t do business without it.

Improved communications with/for outworkers

Quick access to worldwide web with huge increase in use

at low fixed monthly cost.

Many respondents believe that broadband access

brings very significant business benefits

Transforms way of working.

Speed and ability to work anywhere in the

World


If your organisation uses broadband and has used the same

service for a year or more, which have you seen over time?


Respondents are not seeing falling service quality as more customers join…

24.6

11.4

47.4

0

10

20

30

40

50

60

Rise Decline No changeChange in service quality

% Respondents


What measures do you take to protect your home (or home

office) PC against viruses and other security threats?

There are still significant vulnerabilities with 10% of respondents not using a firewall and 23% not regularly installing security updates…


89.896.3

76.6

0.30

102030405060708090

100

Firewall installedVirus checkersoftware

Suppliers'security updates

regularlyinstalled

None

% Respondents







•Key messages


Broadband access: Top 10 countries

Source: Point Topic 3Q05http://www.point-topic.com

Broadband access: Top 10 countries by lines added

Source: Point Topic 3Q05http://www.point-topic.com

On-line applications used by UK broadband and dial-up users

Source: Source: UK regulator Ofcom 2005 Market Report (July 2005) data to end Q4 2004http://www.ofcom.org.uk/research/cm/cm05/comms_mkt_report05.pdf Financial Times 30 December 2005 and Point Topic Jan 06.

http://www.ofcom.org.uk/research/cm/cm05/comms_mkt_report05.pdf






•Key messages


First assertion – Whatever starts uni-directional becomes bi-directional…

19th Century: the first UK application of telephone technology was for one way “narrowcasts” of live theatre performances;

• 20th Century paging gave way to the short message service (SMS); and

• 21st Century data traffic may well be dominated by peer to peer transfers (music, video….) rather than simple uni-directional streaming.

History suggests that, in telecommunications, whatever we start doing as a uni-directional service we ultimate seek to use two-way….and to the broadest of bases. Source: Jim Norton - Speech to Cambridge 3G

Second assertion – Fixed operation always leads to mobile demand…

Telegraph and telex gave way to paging and SMS; Fixed line phones overtaken by mobile phones

(As of January ‘05, UK business and residential fixed lines 34.31M, UK mobile lines: 58.04M - Source: Ofcom Feb ‘05)(for comparison mobile phone penetration in Luxembourg 115%! - Source: FT quoting EU report 9 Nov-03)

US Laptop/Palm computer purchases overtake desktops. (US consumers in May 2003 for the first time spent more money buying notebook computers than they did on desktop PCs, highlighting a shift to mobile computing devices that has been accelerating in the past few years - Source: FT 3 July 03.)

History suggests then that, in telecommunications, whatever we start doing through a fixed infrastructure, we will inevitably seek to do with complete mobility.

Source: Jim Norton - Speech to Cambridge 3G

Third assertion – New applications are pioneered on the fixed networks first…

They have been pioneered - and the first customers trained to demand them – in the tethered world. This should not be a surprise - historically cost and capability have favoured the fixed environment – However, this may change in the future with location based services, mobile wallets and RFID….

It is seldom the case that truly new applications appear first in the mobile world. Whether it is:• that wonderful euphemism “adult services”;• gambling;• multi user gaming;• health;• education; or• television

Source: Jim Norton - Speech to Cambridge 3G

Wireless and Cellular Access Landscape

Fixed Local Area Wide Area

Broa

dban

dNa

rrowb

and

Spee

d

2G

2.5G

3G

Mobility

Dialup

Satellite

2G

2.5G

3G

MMDSFWA

802.16

WiFi

802.11abg…

Bluetooth

802.15

WCDMA, CDMA2000

GPRS

GSM IS54 IS95

BWA

802.20802.16e

CableDSL

64 - 384kbps700kbps

1 - 4 Mbps

Source: British Telecommunications (BT)

802.11WiFi

Local Area NetworkMature TechnologyStandards Based SolutionsMaturing Market

Wide Area Network

802.20

Metropolitan Area Network802.16WiMax

Personal Area Network802.15BluetoothUWB

Mature TechnologyStandards Based SolutionsImmature Market

Immature TechnologyProprietary Solutions

Emerging MarketStandards and European Market Mature in 18-24 months

Emerging TechnologyEmerging Standards

No Current MarketStandards and market mature in circa 5 years

The Broader Wireless Story


Mobile radio access networks are designed to meet certain maximum requirements for grade of mobility and range

WLAN are designed for high data rates, low ranges and generally low mobility

WiMax (802.16e) will extend WLAN data rates to wide area coverage across cities

Mobility & Range: Opportunities

Mobility & Range

20 155 Mb/s

Indoor

Pedestrian

High SpeedVehicular

Rural

Personal Area

VehicularUrban

BRANHiperaccess

IEEE 802.11aIEEE 802.11b

0.5 2

UMTS

GSM

DECTBlueTooth

Fixed urban

IEEE 802.16e


Service Evolution Roadmap

2G GSM 20Kb/s

2.5G GPRS 40Kb/s

3G UMTS 64Kb/s

EDGE 200Kb/s

3G evolution, WLAN, WABB

1-2 Mbit/s

Source: UMTS Forum

Speed is important: User perception in 2005

10 sec 1 min 10 min 1 hour

Transmission Time

0

GPRS web photo videoclipreport

GSM E-mail web photo videoclipreport 9.6kbps

3G 128kbps

PSTN E-mail web photo videoclipreport 28.8kbps

1- 2MbpsWiMax

44kbps

photovideoclipreport

videoclipreport


A scenario for communications in 2010…

By 2010, the idea of being tethered by cable to any kind of physical infrastructure will seem remarkably quaint…

Handheld (thin client) network processors will be displacing PCs, laptops, mobile phones… Low altitude platforms will have solved the broadband access divide. Wireless PANs, LANs, & MANs will be ubiquitous. Key technology/market characteristics:• long duration micro fuel cells for portable devices;• separate screens based on flexible amorphous semiconductors;• continuous speech voice recognition displaces full keyboards;• multi-level biometric personal authentication;• Virtual Network Operators (VNOs) providing single sign on and

unified billing across multiple physical networks; and• bulk processing and storage sucked back into the networks

behind a professionally managed security perimeter.

Source: Jim Norton - Broadband Futures paper published March ‘04

How will the mobile phone change to become a true m-business device?

• Keypad - removed in 2005 - replaced by continuous voice recognition.

Source: A little informed speculation!

• Screen - upgraded by end 2006 - made as large as you wish using foldable amorphous semiconductor.

• Communications - upgrading:

• now nationally to 28.8 kbps (HSCSD) and 40 kbps (GPRS); and

• Now rolling out 3G to 384 kbps wide area 2 Mbps in building.

• Processing - by end 2006 as capable as as top of the range year 2003 laptop.

• Battery life - probably the biggest problem! Methane based micro-fuel cells by 2006/7.






•Key messages


Key messages…. Affordable broadband access, initially fixed,

eventually mobile, is a key accelerator of e-Business. Broadband enabled e-business often generates

business benefits way beyond costs. Interactivity based upon pervasive, affordable,

broadband access will have profound implications. UK has been a long way behind on pervasive

broadband, but is now a European leader. New and complementary delivery channels, such as

interactive digital TV and 3G mobile phones, will give the Europe a key role…

And remember the law of unintended consequences….

Questions & Answers

Slides (in portable document format) available to download from:

www.profjimnorton.com/shef06mba2.ppt

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“Winning in the race for e-business”

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