I tried to write a blog today, but as you can see my daughter’s kitten Benji, who came home with her from college has other ideas.
Merry Christmas to all!
Today marks the twentieth anniversary of CCG Consulting. It’s been an interesting ride and I’m glad to still be here. I started the company on this date in 1997, soon to be joined by my partners Bill Tucker and Mike Fox. Those two have gone on to other ventures – Bill to real estate investing and Mike is now teaching college economics and still doing some consulting.
Our firm hit it’s first big challenge a few years after our start when the large CLEC industry imploded in 1999 and 2000. Most of the large CLECs went under at that time and their demise brought down most of the consulting industry with them. But we always had a different philosophy of mostly working with small companies, and that choice made us one of the handful of consultants that made it through those rough years. Over the years we’ve worked with over 800 clients, most of them relatively small.
This past week also marked my 1,000th blog here on PotsandPansbyCCG. It’s hard to believe that I’ve written that much. I continue to add subscribers weekly and will continue to write as long as there is something interesting to say – and it’s hard to picture an industry facing as many concurrent changes as telecommunications right now.
I’d also like to note that I will be speaking twice next Tuesday at the NTCA convention in St. Louis. I will speaking solo on the topic of how new wireless technologies will likely affect rural markets. I’ll also be chairing a panel on the Internet of Things.
Today is the three year anniversary of this blog. I started writing this blog as a way to force myself to keep up with industry news. During the first month of writing the blog I worried that I would quickly run out of topics. But I underestimated then how dynamic our industry has become. The changes from just three years ago are amazing. Instead of running out of topics I often have to toss away topics because I can’t get to them fast enough.
I mostly write about the topics in the industry that I find most interesting, but I must be striking a chord because I pick up new readers to the blog daily. I now know that I am the only one writing daily about broadband and related topics and it makes me happy to see that others find these topics to also be of interest. Just since I’ve started this blog we’ve seen the following changes in the industry (and this is a short list):
An Activist FCC. The current FCC has waded into more new topics than any other FCC in my memory. The most significant one is the net neutrality decision that reclassifies broadband as a regulated service. But there have been many other rulings from this FCC. There was a time a few years ago when industry pundits predicted that regulation was dying, but it has done just the opposite.
Exploding Demand for Broadband. The penetration rates for broadband have continued to grow and in urban areas it seems like we are getting close to the time when everybody that can afford broadband has it. But there are still huge numbers of rural homes and businesses without broadband and they are starting to stridently demand it.
Growth of the OTT Industry. While Netflix has been streaming content a little longer than I have been writing this blog, the whole OTT phenomenon has really taken off in the last few years. Netflix now claims over 75 million customers and there is now a growing host of other OTT providers. Online video has completely transformed the Internet and video is by far the majority of online traffic.
New Products from the IoT. There are new products available to carriers for the first time in many years. I have a number of clients who are now successfully selling security and a number of them are getting into home automation and the many other related services associated with the Internet of Things.
Use of WiFi instead of Wires. It’s become recently obvious that the large ISPs have abandoned home wiring for delivering data. They now bring bandwidth into the home to a central WiFi router and don’t install wires to anything else. But a single WiFi router is already not sufficient for high-bandwidth homes and the next trend in this area is going to be the networking of multiple WiFi routers.
Services in the Cloud. More and more services are moving to the cloud. Carriers can buy voice and cable TV programming from the cloud today, something that was unimaginable just a few years ago. It was always assumed that expansive bandwidth made cloud cable TV impractical, but as bandwidth prices continue to tumble it makes more sense to buy programming from the cloud instead of building or maintaining a cable headend.
Public Private Partnerships. There were very few Public Private Partnerships a few years ago and now it’s something that everybody talks about. This is particularly relevant in rural America where communities are willing to kick in money to find a broadband solution. But we are even seeing this in urban areas, such as the deal just announced between Google Fiber and Huntsville.
Erosion of Landline and Cable Customers. Landline penetration rates are now under 50% nationwide and we are starting to see the erosion of traditional cable customers. The challenge for the next few years will be for triple play providers to find ways to replace these shrinking revenues and margins.
Massive Realignment of Rural Subsidies. We’ve seen subsidies shrink for small telcos. Access charges are being phased lower and the Universal Service Fund is being redirected from telephone to broadband. This has put a lot of pressure on some small carriers, but anybody who survives the end of this shift will probably be ready to succeed in the long run.
Net Neutrality: I am thankful for the net neutrality ruling, more as a consumer than as someone in the industry. From what I can see the largest ISPs and cellular companies had a big bag of nasty tricks waiting for all of us had it not passed. I feel like this ruling took back some of the power in the industry from the ISPs with the FCC as our watchdog. Now we need to wait a while more to see if the courts uphold the FCC. On the other hand, I am not so glad that net neutrality seems to have taken the Federal Trade Commission out of the picture for telecom. They were starting to take a hard look at monopoly abuses and one can hope the FCC will take up where they left off. There is some reassurance that the FTC says they will still play a role, but that role is clearly diminished.
Municipal Competition: I was glad to see the FCC tackle the prohibitions against municipal telecom. As somebody who works mostly with rural broadband issues, we need to encourage anybody, including cities and counties that are willing to tackle bringing broadband to rural places. I can understand why the large ISPs don’t want competition from municipal entities in big cities, but that still has not happened anywhere larger than Chattanooga and probably won’t. I have a harder time seeing why the large ISPs fight so vigorously against competition in rural areas where they don’t spend any capital to maintain their networks. These smaller communities are waking up to the fact that if they don’t take care of the broadband gap themselves that nobody else is likely to do so.
Inching Towards More Privacy: In this last year it became apparent to everybody that the NSA and a ton of commercial companies are spying on all of us. I love the parts of the industry that are taking the side of privacy. There’s Apple that is encrypting everything in a way that even they can’t decrypt. There’s a number of companies working on block chains and other forms of peer-to-peer communication that ought to be immune from snooping. And there are a number of web sites that now promise they aren’t tracking you. We have a long way to go, but it looks like people are starting to care about their privacy.
DOCSIS 3.1: I am thankful for technologies that are making broadband faster. The DOCSIS 3.1 technology that the cable companies are starting to implement will probably help the largest number of Americans get faster broadband. Several of the big cable companies are promising that they will offer faster speeds across the board. I think cable companies have finally awakened to the fact that it doesn’t cost them that much to give out more speed and it shelters them from the competition. And there s a slow but steady growth of fiber with companies like Google and CenturyLink leading the way. You will hear me whoopin’ and hollerin’ in this blog if somebody brings an affordable gigabit to my neighborhood.
Technology is Getting Better: The speed at which technology in and near the industry is improving is mind boggling. It seems like I hear about something new almost every day. This year saw 10 gigabit fiber terminals that are cheap enough for home and small business use. We’ve seen a plethora of improvements in OTT boxes like Roku and the gaming systems. 4K video has made it into the mainstream conversation in the last year. The speed and processing power of cellphones has literally doubled in the last year.
And My Readers: This marks my third Thanksgiving with this blog and I don’t seem to be running out of topics. I am truly thankful that people read this from time to time. I started writing this blog as a way to force myself to stay up with current events in the industry and it has done that in spades. I seem to learn something new every day, and for that I am most thankful.
I have been thinking a lot about the things my father taught me. My father was never a great communicator, instead he taught me mostly by example. Probably the biggest lessons he taught me were the value of hard work and of showing up and being there. I don’t think my father ever missed a day of work until he was into his 50s and had a leg injury. He got up and went to work, come rain or shine or illness.
And I learned that lesson well from him. I work from home, a setting that might make it easy for many people to find excuses not to work. But I get up and start work early every day and stay busy until quitting time. Over the years it is probably this discipline that has been one of the major factors in my success. If you put in the work and the effort good things happen.
He taught me other lessons in life. My father was big on pithy sayings. I think the one that I remember the most was, “it doesn’t cost anything to be polite.” It turns out the rest of the family doesn’t remember this one, so perhaps I was the youngster in the most need of this advice. But throughout life I have been polite. I say “yes, sir” and “yes, ma’am” almost universally, and I think I often surprise young people when I say this to them.
One of his lessons that I try to practice daily is to be pleasant to everybody you meet. I always said that my father could have been the mayor of his town had he wanted because he always greeted everybody he met with a big grin, a big hug, and a good joke to get them laughing. It’s hard to think that there was anybody who didn’t like my father. I have met very few people in this life who had such a genuine affinity for people. I certainly will never be as natural about this as he was, but I genuinely like talking and working with people, which is a major part of the day for a consultant.
It’s interesting how all of us carry forward things from our parents. I guess it’s human nature to emulate those who had the biggest influences on you when you were young. But I carry traits from both of my parents into my daily life and these traits have served me well.
In case you are wondering, my dad died of a decade-long fight with Alzheimer’s. In the last few years a lot of what he had been was gone or diminished, but I guess some of what he was lives on in me and my siblings. And in my dad’s case, he hopefully lives on in all of the people that he hugged every time he saw them.
An FCC Chairman that Talks the Talk. We have a new FCC Chairman in Tom Wheeler who seems to talk the talk. He has said the right things about a whole range of topics. He wants to increase the definition of broadband to 10 Mbps. He wants to allow municipalities and anybody else to build fiber networks. He wants to make net neutrality apply to wireless as well as landline data connections. He has speculated that Comcast and Time Warner are too large to merge. He has even talked about allowing competitors to use unbundled fiber networks.
There was a big worry when he took office that he would support large cable and wireless companies due to his history as the head of those industry groups. And he still might. While he has talked the talk, nothing he has talked about has yet come to pass. All that will matter in the end is what he does, not what he says. But for now I am at least thankful that he is talking the right talk.
Moore’s Law Has Not Yet Broken. It seems like for the last fifteen years that some expert always predicts the end of Moore’s Law – the one that predicts that computer processing power will double every 18 months. But this year alone I’ve seen dozens of incremental improvements in computer power and it doesn’t look like we are anywhere near to the end of technology history as the pessimists have often predicted.
Data Speeds are Getting Faster. Network technology is improving so quickly that the incumbent providers find themselves increasing data speeds almost in spite of themselves. Of course, some of the data speed increases we have seen are the result of competition. But we are seeing gradually faster speeds in many other places as Verizon FiOS, Comcast and Time Warner have all unilaterally increased speeds.
We have a long way to go with data speeds, but as we can see In Austin, TX, the cable companies are capable of delivering 300 Mbps, but they only do so under stiff competition. Even AT&T can be prompted to build fiber when faced with losing a major market
The Country Is Waking Up to the Digital Divide. The digital divide is no long just between those who have computers and broadband and those who do not. The wider digital divide is now between communities stuck with relatively slow broadband and those with fast broadband. More and more communities who are on the wrong side of this divide are starting to demand faster broadband. Many of these communities thought they had solved the broadband issue a decade ago when they got 3 Mbps DSL or cable modems. But a decade later they find themselves with that same technology and speeds, which are no longer acceptable (and which soon may not even qualify as broadband per the FCC).
The Brains of the Network Are Moving to the Cloud. We now have the ability with software defined networking for the more expensive functions of the network to move to the cloud. One of the hardest things about bringing broadband to a rural area is that it’s not cost effective to also bring voice and cable TV. But we are seeing the beginnings of having voice switching, cable TV headends and even cellular headends moving to a cloud. This is going to turn these functions into services rather than capital requirements.
Technology is Making Everything Better. You can barely read the trade press without seeing some new technology breakthrough that will improve telecom. This year alone I have seen a dozen announcements about ways to increase the speed and efficiency of fiber. There are constant improvements in chips sets, batteries, use of spectrum, materials and processes that make it easier to deliver telecom products.
My Cellphone. I am not a sophisticated cellphone user. I don’t run dozens of apps and my main computing tools are still my desktop or my laptop. I don’t play games on the cellphone or watch videos on it. But I use my cellphone in the typical ways of keeping connected when I am away from the office. It is so convenient to be able to answer an email or look something up on the web from anywhere. But I am also thankful that I am not one of those people who sit at a restaurant with my head on my cellphone.
This Blog. I am first thankful that there are people who find this interesting enough to read. Thank you all! I I am mostly thankful for the discipline that this blog has given me and the act of writing daily has reinvigorated my creative drive.
Happy Thanksgiving to all. May you also be thankful for many things!
Today is my 365th blog entry, and while that has taken over a year and a half to publish that represents a full year worth of short essays. I am going to use this personal milestone to step out of my normal daily blog and talk about something that has been on my mind. It’s still something that is somewhat tech-related but it’s also quite personal and I bet most of you reading this will see yourself in here somewhere.
I want to talk about how I grew up with music and how the web has changed that experience. I was prompted to think about this a few days ago when on the last day of my recent vacation I played four Beatles albums end-to-end. That’s something I haven’t done for a while because the modern music experience doesn’t favor listening to whole albums.
I did this using a modern music web site, Spotify. This music service provides millions of songs on their service but also lets me import and integrate my own music library. I generally let Spotify mix up my music and use it like a radio station, but instead I listened straight through Magical Mystery Tour, Revolver, Rubber Soul and Sgt. Pepper’s Lonely Heart Club Band. And as I listened I got that old feeling of listening to music linearly like when we plopped albums onto a turntable and listened to them end-to-end. The satisfaction of listening this way came from the fact that I knew the words to every song, having listened to these albums many times, but I also always knew what song was coming next. My brain not only stored all of the lyrics of these Beatles songs, but also the play order on the albums.
This was refreshing to me since I hadn’t done this for a while. It was like meeting a long-lost friend. But it made me think about the difference in the personal experience of music today versus music back then. When I was young we obviously did not have millions of songs at our disposal. What we had instead was the radio, music stores and friends with album collections. Radio was pretty vibrant in those days, particularly when I moved to Washington DC, and it introduced you to a lot of great music. You would listen as much as you could to the radio or to friend’s collections to see what you liked and then you made an investment in buying an album. Since none of us had unlimited funds, the choices you made became the music that you listened to over and over (and over). You got to know certain artists really well.
I remember the great satisfaction once a month when I had enough excess funds to make a trip to the music store. This would always be on a Friday night and I would linger from bin to bin making the choices that I knew I would have to live with. Whether I had enough money to buy one album or half a dozen, these trips were one of the highlights of every month. And while buying a few albums at a time was somewhat limiting, it didn’t stop me over the years from migrating from classic rock, to punk, to folk, to reggae, and to new wave with many other side trips.
But then jump forward to today. Spotify, iTunes and other music services are more geared to songs than albums. I look at my daughter’s play list and she has one or two songs from hundreds of artists rather than a lot of a stuff from a few of them. And to some degree I have jumped on the same bandwagon because there is such an immense library of music available, including many of those things that I almost bought years ago on a Friday night buying trip. I can now indulge every musical whim.
But this smorgasbord of choices makes our music into a personal radio station. What I notice is that my daughter and wife drop and add songs all of the time, making their play list fresh and different. Artists are sampled and if something tickles their fancy it gets added to the playlist, and if it gets boring it goes. This is so different than the linear experience where you listened to an album with its good songs, bad songs and great songs and you came to know and love them all.
I’m not being nostalgic because I love the options that Spotify offers me. One of my favorite activities when I have a spare hour is to just leap from song to song, from artist to artist and listen to music I’ve never heard before. That is a freedom that was not there in the analog days. But I do lament the loss of intimacy and commitment that came from choosing an album and choosing an artist. That became your music and you listened to it and you learned it and it became ingrained in your mind and in your soul. Every person’s album collection was different and we each created our own personal soundtrack to accompany our lives.
Derrel Duplechin of CCG and I will be in Austin this week at the Broadband Communities Summit. We will be putting on a seminar on Wednesday afternoon on the topic of Revenues Beyond the Triple Play. If you happen to be coming to the convention we’d love to see you at the session, or look us up.
I feel lucky to have gotten this topic to discuss. If you have been reading this blog you know that we at CCG feel strongly that every triple play provider should be putting energy into developing new products. The revenues we derive from voice are continuing to decline and cable TV is headed down the same path. The time to react to this eventual train wreck is now, while you still have the margins from those products, and not wait until your cash is squeezed.
Every triple play carrier is going to face a pretty simple choice at some time in the near future – either retract your company and become an ISP and sell nothing more than fast data pipes to your customers, or else start implementing new products to replace the sinking triple play products. If you choose to become a dumb pipe provider your future is really simple. You’ll need to strip out employees and systems and become a pure ISP and do nothing but provide the fastest pipe you can create.
If you elect to remain as a full-service provider you have a much more challenging task. No one or two or even three products is going to replace the revenues and margins you have been getting from voice and cable. Rather than have a few products that most of your customers buy, you are going to need a lot of products that only have a 5% to 10% penetration. There are no more big magic bullets. I offered to help one company look at their future was told that they would pay to have me come see them if I could tell them what the next big product is. That is exactly the wrong question to ask because there isn’t going to be one. The small carrier industry has frankly gotten a bit spoiled in that we had products that were relatively easy to sell. But those days are over and we are going to have to do what many other businesses do and scramble for every customer and every dime we can make
Both choices I have laid out are probably valid ones, and both are very different than what we do today. For instance, if you choose to be nothing more than an ISP you are going to have to dismantle most of your company and staff to stay profitable. It can be done. and if you want a model of what that looks like look at the many WISPs in the marketplace today.
But if you choose the full service provider route what will you sell? There are a number of potential products you can sell today and many more coming in the future. Today you can consider products like security, energy management, home automation, wireless MVNO, IP Centrex and OTT Video. You can also do what we call crossing the threshold, meaning that you make a product out of having your technicians do whatever businesses need in the telecom and computer space. We know companies doing each of these products and they can all be moderately successful.
There are also a lot of interesting things coming. Home automation is the very first step of getting into the Internet of Things. This is going to quickly grow into areas like medical monitoring, crop monitoring, flock and herd monitoring. And mostly the things that are coming we haven’t thought of yet as carrier products.
The biggest challenge of transitioning to many new products is to figure out a way to be efficient with new product development. You can no longer take a year or two to put together a new product. You have to roll them out quickly and learn how to sell them efficiently. You will have to do this in-house or collaborate with other carriers. If you can figure this out you will probably thrive and survive. But if you don’t do anything and stay blindly on today’s path, at some point you will no longer be viable and will fail. Our industry has never faced such a divergent set of options and this is both a scary time and an exciting time to be in the business.
Today marks the one year anniversary of this Pots and Pans blog. I must tell you that it feels like a lot longer, because I have a hard time now remembering when I didn’t write a blog every day. My new routine is to get up early, make some tea, feed the cats, walk the dog and write a blog entry.
As the year has gone on I have slowly and steadily picked up readers, and I thank you all. I have 114 people who get the blog every day by email and roughly fifty other people read the blog on an average day. I know that writing about telecom is only of interest to the few and I am pleased with those numbers. Many of the people who read this are my friends and colleagues and these blogs have led to some lively discussions.
I find that my brain has gotten good at thinking about the world in the format of the 500-word essay. My brain fought against this format when I first got started because I am an explainer. I want to tell you everything I know about a topic and that is impossible to do in a short essay. But the blog has taught me to get pithy and to get straight to the heart of a matter quickly. I have written enough blogs now that my brain composes my thoughts easily into the blog format, which is interesting all by itself.
That discipline of trying to write every day has been very good for me, both personally and professionally. Personally it has made me a better writer. The blog has also let me express myself. My first blogs were very factual, but over time I have allowed my opinions to come into the blog. I am certain that I am not always right, but I have strong opinions about many telecom topics, be they right or wrong.
Professionally writing this blog has forced me to read a lot more to keep up with what is going on in the industry. And in my job as a telecom strategic consultant, the more I know the better my advice. In the last year I have done a much better job of keeping up with the industry, but I also have expanded outward in my reading to learn more about all sorts of technology that tangentially affects our industry. For example, I find myself fascinated by the Internet of Things. I feel lucky to be alive at a time when human knowledge is literally doubling every few years. The stuff that scientists and engineers are working on is fascinating.
I try to write s blog every business day, but I don’t always succeed. I skip major holidays just because. And there have been a few days where I had the flu and my brain had a hard time remembering my name. I can only imagine what would have hit the page had I been dumb enough to write on those days. And once in a great while I just run out of time, particularly on days when I am traveling. But I somehow managed to get 241 of them done this year and I am proud of that.
When I started doing this I thought I would be out of ideas in a month. I see many other bloggers who only write a few blogs per month and suspect that lack of ideas is a problem. Early on it was a struggle every day figuring out what to write about. But now I have more ideas than I have days, because we work in an industry that is changing quickly. Almost every single aspect of telecom is different today or soon will be different than what we all grew up with.
I have no idea how long I can keep this up. But for now I love the daily discipline of writing this blog and I love the way this mental exercise is making me think. As long as I keep getting such positive waves from the experience I guess I’ll keep writing for a while.