A new business model is making its debuts in the Fiber-To-The-Home market. In " Europe Fiber futures: 40 Gbps to offices & 100 Mbps to homes ", VON' European Editor Bob Emmerson explains what a Nordic telco, Lyse Tele, is currently doing with its customers. The real innovation : subscribers can lay the last meters themselves, in order to reduce the costs.
IMHO, this is the very first step towards a " Network 2.0 " approach, where the end-users will build their access networks according to their own needs. The technology is there, the tools are there.
Imagine the fiber network in your neighborhood as a giant loop, open, always on, delivering enough bandwidth for the common applications and services - say 100Mbps -, onto which you can plug your terminal at will.
We just have to do it (I will come back on that one later).
The parent company of Lyse Tele is a utility that had and still has a core asset: an established billing relationship with millions of electricity users. In April 2002, they formed a subsidiary to enter the IPTV arena, so while the activity was brand new, the name was not. Moreover, this was a company that the market could trust, and that is something technology cannot create.
The company started with a clean sheet of paper. There were no legacy investments or services to protect. But to compete, they needed a visionary strategy and an offer that was not merely different but radically different. All service providers employ the same technologies, so the radically different visionary strategy and offer had to come by way of marketing.
Selling Before Building
Their go-to-market strategy is alarmingly simple: before you go anywhere, make sure there is a market. They make sure by creating it.
They could not realize differentiation over cable or copper. It had to be fiber. To justify the investment, the company set up meetings in the neighborhood. They provided a supervised play area for children, coffee, mineral water, and a presentation.
The basic pitch is also simple. The company will lay fiber to your home, and you get 100 Mbps IP access (minimum), IPTV and triple play services, and because the bandwidth is symmetric, you can also participate in a community of interest groups. But all of this can happen only after enough households sign up. Participants can sign up at the meeting or later, and they are encouraged to spread the message if they want the service.
It works. To keep costs down, subscribers can lay the last part of the network themselves. There’s a do-it-yourself kit, and they save €500 (US$630). Around 80% do the physical, self-provisioning part themselves.
Apart from saving money, subscribers who lay the fiber themselves feel that they own that part of the infrastructure. VoIP calls made within the broadband network are free. This part of the strategy minimizes churn, as does the decision to deploy symmetric access to facilitate the development of community services. It works. Upstream traffic exceeds downstream.