“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 Norton Senior Policy Adviser UK Institute of Directors Former Director UK Cabinet Office PIU e-Commerce team www.profjimnorton.com

Issues to be covered • 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

Why is broadband access key to e-business? 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 … Source: UK Broadband Stakeholder Forum

ADAPT ABSORB ADOPT Benefit Time • Speed up processes • Fast always-on access for e-mail and web • Improved communications • Improved productivity • Improved staff satisfaction • Reduced costs • New processes • Address new markets • New business models • Outsource non-core functions • Reduce office space • Adapt processes • More efficient procurement • More flexible working • More e-Learning • Adapt sales & mktg. • Exploit VoIP Broadband impact on e-business processes 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 http://www.theisociety.net

Broadband can be about taking it easy Source: UK Work Foundation - iSociety programme - James Crabtree http://www.theisociety.net

Dial-up “Anxious Time” Watched and Counted Restricts Experiences Controls the internet user Broadband “Timeless Time” Ignored and Assumed Broadens Experiences Internet user is in control Broadband time is different Vs. Experiences Relaxed enjoyment Realisation of potential Smooth & reliable Experiences Rushed annoyance Limited utility and impractical Periodic & anxious Source: UK Work Foundation - iSociety programme - James Crabtree http://www.theisociety.net

Broadband doesn’t do what it says on the tin - it is not perceived as always on… Source: UK Work Foundation - iSociety programme - James Crabtree http://www.theisociety.net

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

What we mean by ‘Broadband’…Speed Large business has had access to broadband for many years, only mass market, affordable broadband is new… 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 Broadband services are ‘always on’ and charged simply by rental or by volume of data shipped not by connected time… Source: UK Broadband Stakeholder Forum

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… Source: UK Broadband Stakeholder Forum

What we mean by ‘Broadband’…Platforms 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 Source: UK Broadband Stakeholder Forum & T-Mobile

Broadband access: A working definition “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.” Source: UK Broadband Stakeholder Forum - Jan 2004

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

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

UK affordable broadband users: Exceptional satisfaction scores… 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 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 Scale: 1 is negative and 10 is positive Source: UK Trade Association Intellect and NOP Sept ‘03

Benefits of Broadband Connectivity UK ICT SMEs Time saving Cost efficiencies Employee satisfaction Smarter working Customer satisfaction New business Client satisfaction Currently, the main benefits of Broadband are on internal processes, with a smaller percentage of the base seeing external benefits Source: UK Trade Association Intellect and NOP Sept ‘03

Generally speeded things up We are more efficient Use Internet more, for research Faster communications Easier to share info Increased business activity Speedier business processes Staff can work remotely Speedier connection Easier data-file transfer Cost savings Effect on Business Processes - UK ICT SMEs Source: UK Trade Association Intellect and NOP Sept ‘03

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: • 56.7% has up to 9 employees; • 23% had 10 to 49 employees; • 11.5% had 50 to 249 employees; and • 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? 84.3% of respondents cite productivity improvements from broadband access. 64% of respondents see a direct link between broadband and increased profits. Base: 325 respondents who use broadband for business purposes. Source: Nildram/IoD October 2004

Many respondents believe that broadband access brings very significant business benefits 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 Transforms way of working. Speed and ability to work anywhere in the World Quick access to worldwide web with huge increase in use at low fixed monthly cost. Source: Nildram/IoD October 2004

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… Base: 325 respondents who use broadband for business purposes. Source: Nildram/IoD October 2004

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… Base: 325 respondents who use broadband for business purposes. Source: Nildram/IoD October 2004

Broadband access: Top 10 countries Source: Point Topic 3Q05 http://www.point-topic.com

Broadband access: Top 10 countries by lines added Source: Point Topic 3Q05 http://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 2004 http://www.ofcom.org.uk/research/cm/cm05/comms_mkt_report05.pdf Financial Times 30 December 2005 and Point Topic Jan 06.

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… 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 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…. Source: Jim Norton - Speech to Cambridge 3G

MMDSFWA 802.16 802.11abg… 1 - 4 Mbps 802.20 802.16e Broadband CableDSL Satellite Speed 802.15 BWA WiFi 700kbps Bluetooth WCDMA, CDMA2000 64 - 384kbps 3G 3G GPRS 2.5G 2.5G Dialup Narrowband GSM IS54 IS95 2G 2G Wide Area Local Area Fixed Mobility Wireless and Cellular Access Landscape Source: British Telecommunications (BT)

Wide Area Network Emerging TechnologyEmerging Standards No Current Market Standards and market mature in circa 5 years 802.20 Metropolitan Area Network Emerging Market Standards and European Market Mature in 18-24 months 802.16 WiMax Immature TechnologyProprietary Solutions Local Area Network Mature Technology Standards Based Solutions Maturing Market 802.11 WiFi Personal Area Network Mature Technology Standards Based Solutions Immature Market 802.15 Bluetooth UWB The Broader Wireless Story Source: British Telecommunications (BT)

Mobility & Range: Opportunities Mobility & Range High Speed Vehicular Rural Vehicular IEEE 802.16e GSM Urban Pedestrian UMTS Indoor IEEE 802.11a IEEE 802.11b BRAN DECT Fixed urban Hiperaccess Personal Area BlueTooth 0.5 2 20 155 Mb/s • 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 Source: British Telecommunications (BT)

2G GSM 20Kb/s 2.5G GPRS 40Kb/s EDGE 200Kb/s 3G UMTS 64Kb/s 3G evolution, WLAN, WABB 1-2 Mbit/s Service Evolution Roadmap Source: UMTS Forum

report report video clip video clip report video clip web photo GPRS report video clip E-mail web photo PSTN 28.8kbps report video clip E-mail web photo GSM 9.6kbps Speed is important: User perception in 2005 WiMax 1- 2Mbps photo 3G 128kbps 44kbps 0 10 sec 1 min 10 min 1 hour Transmission Time Source: British Telecommunications (BT)

A scenario for communications in 2010… 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. By 2010, the idea of being tethered by cable to any kind of physical infrastructure will seem remarkably quaint… 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. • 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. Source: A little informed speculation!

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

“Winning in the race for e-business”