The Critical Lowdown Podcast Episode 11
Broadband Connectivity Reimagined - Turning Service ProviDers into Experience Providers
Gunter Reiss, Chief Marketing Officer, DZS
Internet Service Providers face significant challenges in supporting their subscribers with the demand for bandwidth and the number of IoT devices in households surging.
As users enjoy richer services such as 4K or even 8K video, gaming, augmented or virtual reality, and buffer free conference calls, more strain is being placed on the existing wireless infrastructure found in your average household.
In Europe alone, the number of smart light bulbs in households grew by 233% in 2021, while in the US the number of smart devices per household rose to 21 in the same year, yet as the hyper-connected world begins to take shape, accelerated by the global pandemic and changes in how we work and consume entertainment, one thing is for certain - the need for speedy reliable broadband is here to stay.
Research shows 49% of households have changed providers over concerns about their Quality of Experience. So what now for Service Providers who want fewer truck rolls, loyal subscribers, and reduced churn? How can they transform into experience providers, deliver new revenue generating services, and gain unprecedented end-to-end visibility into their networks?
Today we have the pleasure of speaking to Gunter Reiss who is the Chief Marketing Officer of DZS, to discuss how Service Providers can provide a richer experience to their end customers, while in turn reducing truck rolls, customer churn and create new revenue streams.
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How can Internet Service Providers create an immersive in-home WiFi experience?
Ciara McCarthy: My name is Ciara McCarthy I’m the Chief Marketing Officer at EPS Global, and today I have the pleasure of speaking to Gunter Reiss, who is the Chief Marketing Officer at DZS, our end-to-end networking solutions partner. DZS ships millions of access units every year to Tier-1 Service Providers and innovative AltNets around the world which makes them highly qualified to comment on broadband connectivity trends and how Service Providers can enable subscribers to take more control of their in-home networks. Gunter you're very welcome to The Critical Lowdown, could you start by introducing yourself to our listeners, a bit about you, your background, and DZS?
Gunter Reiss: Thanks for having me today, my name is Gunter Reiss, I’m originally from Austria. I started my career there - 21 years in various places such as Ericsson, the mobile supplier and leader in the industry in Austria and Sweden, and then Silicon Valley and Plano Texas, plus a few years in in the UK. Then I joined a company called A10 Networks in Cyber Security and 5G, and then spent a year with a number of startups and I joined DZS this year. I got really excited about joining DZS because the CEO is iconic in our industry, Charlie Vogt, the management team is fantastic, and I was intrigued by the opportunity to really make a difference in fiber broadband, OpenRAN, optical infrastructure and software solutions. Today DZS is one of the leaders in access networking; optical infrastructure; and cloud software solutions. The company has more than 700 Service Provider customers around the world; we are connecting more than tens of millions of households; we are a public company on the stock market and we are capitalizing on the super cycle of investments in fiber broadband and 5G.
What's your perspective on the future of fiber broadband connectivity and the current state of deployments in the major global markets like: North America, and EMEA, and Asia?
The future of fiber broadband connectivity really has never been more exciting and brighter. What are the reasons?
- Broadband connectivity today is essentially the fourth utility, after water, gas, and electricity, and some would possibly rank it more valuable or important, we can't live without broadband connectivity anymore.
- The emergence of the Metaverse, Augmented Reality (AR) or Virtual Reality (VR) applications, low latency multiplayer gaming consoles and HD video conferencing applications which are all really bandwidth hungry. They demand higher bandwidth and better broadband internet.
- Governments are now spending more than $120bn around the world to connect everybody.
In the US the government initiatives such as the $42bn BEAD program (Broadband Equity, Access, and Deployment), we have the $1bn Middle Mile program, and the Capital Projects Fund which is another $10bn. Just to give you some perspective, in the US there are roughly 60 million homes connected today with fiber, and that accounts for only 43% of all residences. From a European perspective, the UK has less than 10% of households connected with fiber today, and that's why the Government announced the Project Gigabit project, to connect 100% of homes with high speed broadband connectivity by 2030.
The same happened in Germany. Think about it... Germany is the 4th largest economy in the world, yet only 5-6% of households are connected with fiber, which caused the Minister of Digital to call it the ‘digital awakening’, which I thought was really interesting. They are now committed that by 2030, 100% of households in Germany will be connected to fiber optic. You have the same issue in Italy, France, and Austria, all those governments are basically investing heavily in addition to the private equity companies. In Germany, private equity companies spend $30bn on top of government initiatives, for example Deutsche Telekom and Deutsche Glasfaser invest heavily in fiber optic infrastructure.
On the other hand, there are countries today like Korea, Sweden, and Spain which have 80% fiber optic coverage to households today and that is a massive advantage for them as they can really drive digital service in a digital economy which is an economic advantage. They keep upgrading to provide new services and more broadband connectivity to the households. It's a very exciting time and I think you will see the super cycle go on for the next decade.
Certainly, we can see the government targets pull through our customers, in fact we've participated in some of the Project Gigabit business summits in the UK.
What do you see as a driving force behind more and more Service Providers transforming into Experience Providers?
Ultimately think about what we want in the home. We have all these new applications, connecting maybe up to 10 or 20 smart devices, even beyond the Metaverse, we have 8K televisions and so on. It is about us, the home user, and we want the Service Provider to deliver us the ultimate subscriber experience. Over the last few years we’ve seen that the big hyperscalers, the Amazons, the Googles, and so on, have stolen the thunder by providing their own services and the Service Provider has acted only as the big pipe, just the broadband connectivity provider.
However as an Experience Provider, the Service Provider has an opportunity to be of more value to the home users. The power is literally shifting. I’ll give you an example from some of our recent studies. 70% of broadband connectivity issues are attributed to Wi-Fi, and that goes down to the broadband provider. Wouldn't it be nice as subscribers that we have an application on our phone whereby we could actually automatically discover all our connected devices from Ring bells, to 8K televisions, to gaming consoles and we could identify right away where the issues lie? For example we could identify where we need lower latency and where we don't, and this would help the subscriber and in turn the Service Provider by reducing truck rolls, as getting employees sent out to a premises or residence to try to figure out what's going on is expensive, and ultimately this could also help reduce churn.
On the other hand as a Service Provider what you really want is a multivendor, vendor-agnostic kind of end-to-end service assurance, and Wi-Fi experience management. You want visibility into your network from your OLT, ONT, Wi-Fi Access Point all the way to your device. On top of that, as a Service Provider you don’t just want a remedy for issues, what you want is a single pane of glass to see everything. You want to be able to take the data that is made available through AI, user behavior analytics and intelligence in the network (which is gold!), analyze it and understand where you can provide new services to your subscribers. Suddenly there is a real benefit for the Service Provider to being an Experience Provider, and the subscriber also benefits because they get the ultimate subscriber experience.
You're placing the power in the hands of the Service Provider who is now the Experience Provider, who is then enabling their subscribers to remedy their own network issues through a simplified app, for example adding more bandwidth where it’s needed which is a better user experience. I would also imagine that creating these in-home experiences provides lots of opportunities where are going to generate incremental revenues for the Service Provider, and obviously more revenues are good from a from a business point of view.
What does it take for a Service Provider to deliver this type of experience, an immersive experience that is actually working well. What are the technical requirements?
Research suggests that to provide the ultimate Metaverse immersive experience or Decentraland, it will take 3 - 5 Gigabit of bandwidth (or throughput), and it will require a latency of 5 - 20 milliseconds to provide that. I think one of the aspects which I want to highlight here too is that it is not only about throughput and latency, it is also about picture quality.
Let's take an example - a holographic 3D call at home. What's the picture quality? If you if you take an example of 10,000 points with 30 frames per second; 100,000 points again same frames per second; or a million points frames per second, just to get good picture granularity. The difference in bandwidth from the smaller size is 5Mbps, all the way to 100-150Mbps, this can also impact the latency, which can vary from 12ms to 35ms, so it’s really critical that we have the infrastructure in place to support the bandwidth, latency, and also the quality of the pixels. The second aspect is you need a symmetric capacity. You need low latency, but almost guaranteed low latency. If latency varies too much, it can impact on your experience. The third one is called concurrency. You need a broadband access infrastructure which is non-blocking and allows every single device to have access to the resources. This is a big order and as I mentioned before that a lot of the governments and so on are investing right now in this infrastructure, we will have to continue to upgrade this infrastructure.
That's for sure. There was this visionary BBC series in the 80s and 90s called Tomorrow's World, and when you talk about holographic phone calls in your sitting room, I am reminded of episodes of that program! You mentioned the government funded programs that are happening across EMEA - Project Gigabit in the UK, the Grey Spots initiative in Germany, the Rip-and-Replace or BEAD programs that are going on in the US.
Are the government-funded programs providing the needed guidance and legislation to adequately support providing these immersive in-home experiences?
The US Capital Projects Fund from the treasury department mandates a minimum of 100Mbps downlink and 100Mbps uplink, totally symmetrical speed. But as I mentioned before if you really want to consume some of the latest AR/VR applications as well as the Metaverse type of applications where you need multiple gigabits, that's not sufficient. What I didn’t highlight earlier is that in a household where work from home, potentially multiple video conferences going on, you have kids playing on their consoles at the same time, and you have multiple other connected devices, that's where you suddenly run into trouble and that creates a problem.
Another example is the BEAD program, $42bn to connect the underserved and unserved across the United States, but the requirements are just 100Mbps downlink and 20Mbps uplink, from my perspective that is helpful because a lot of these rural areas today don't have any connectivity, so it is obviously a step in the right direction, but it unfortunately provides a continued inequality. If you look Europe today, the European Union committed that they want to provide connectivity for all households in Europe by 2025 (which I think is aggressive), with at least 100Mbps and that could be still copper or fiber, and at least 1Gbps to airports, hospitals, schools and to various others. Just to give you another perspective, today Africa just has an average of 8Mbps of connectivity. There is a lot of work to do to bring them to levels of even 100Mbps, considering the average speed in European municipalities today is 64Mbps. There is a lot of work, but a lot of opportunities.
Yes a lot of opportunity too, we're working in Africa on several Greenfield deployments, where we’re providing connectivity across wide expanses of rural areas, we’re currently providing a customer with 200G links. The opportunity is there, and the need is there. I’m to change direction just ever so slightly.
Why is end-to-end multi-vendor network orchestration, and maintaining service uptime so important for a Service Provider’s network operations?
There are a lot of providers out there who advocate proprietary end-to-end network orchestration and service assurance and automation capabilities, for example companies like Nokia and Ericsson. It works for their infrastructure but I think what the network operations teams are excited about now is a vendor agnostic, end-to-end network orchestration and automation software tool that really offers them a single pane of glass for easy provisioning and overall service assurance. They have to integrate new network elements all the time and from different vendors. As an engineer you want to be able to do that in a low code, or almost no code environment, and it needs to be simple. You want to do things which previously took you weeks, in not just days but even hours or minutes. You want to leverage AI and analytics tools to really automate a fully programmable network infrastructure.
Why do you want that? The result ultimately is that you reduce your OpEX costs and you simplify some of the processes which are still tedious and complex. That's why we at DZS are excited about these developments of our network orchestration software tool. You can go a step further with the network orchestration, for example network slicing in the 5G world, why do you apply network slicing? Because you have different use cases - for an autonomous vehicle you need low latency; for a smart parking meter, you need more reliability and security; so you can provide different common channels with these guaranteed ingredients or elements. Think about that. We have now been able to develop that same capability, not just for the mobile infrastructure, but for the broadband access infrastructure and for optical.
We all know that the lines between residential and commercial subscribers have kind of blurred since the pandemic, as the home is now the office. However what matters to subscribers of any kind is that the internet works when they need it to. We've all experienced the frustration of not being able to see or hear the other participants on a zoom call, or awkward delays on the line which are which are not helpful in business meetings! When issues like this consistently occur subscribers are going to naturally look for alternative broadband providers.
How can ISPs deliver the highest Quality of Experience to residential subscribers to avoid these issues, avoid the flood of complaints and avoid losing their customers, and can they utilize the user behavior analytics that you mentioned earlier to allow them to offer a better Quality of Experience?
Subscriber Quality of Experience is fundamental because if you can't provide that, then set yourself up for churn - there is more competition now than ever to provide these services, so subscriber Quality of Experience is really everything. It significantly differs at the time of the day, and what some of the user preferences are. This is an opportunity for the Service Providers to timely provide services with the relevant Quality of Experience by using some of the AI and analytics capabilities to monitor the user behavior and then manage the Quality of Experience based on their usage patterns.
Take Google Nest for example. It's very clever because it understands the user’s behavior or what kind of temperature they like in their home, and then it continuously learns and then it adjusts and adopts the temperature to what the user wants and at more or less any moment in time independently. That is something that Service Providers can now do with the latest technology, they can go through the user behavior analytics and learn what's going on in those households. For instance if there is somebody in the household gaming at a certain time, let's say in the afternoon, that specific user will need much lower latency to provide the ultimate Quality of Experience and so Service Providers can actually adjust that. We can envision that you just have an application on your phone and you can manipulate what latency or service you need. We are really quite advanced now and I’m just excited about what's in front of us over the next two to three years.
I would love to have access to that at my fingertips today! I’m about to go on an important Zoom work call, my husband is on Microsoft Teams and my kids are trying to stream ‘Lightyear’ on Disney+ because it's just been released! If I could guarantee that I was insured the highest quality of service for this scenario that would certainly be beneficial!
To finish up I have a crystal ball-type question to ask you.
What do you see is the biggest opportunity for Service Providers over the next 2 - 5 years?
Currently there is a ‘once in a generation’ opportunity for Service Providers. The fixed Service Providers that don't jump on the bandwagon of implementing these next generation broadband technologies from GPON; XGS-PON 25G; 50G to 100G complemented with what I mentioned earlier: vendor-agnostic end-to-end network orchestration, automation, service assurance, Wi-Fi experience management, and ultimately delivering an immersive subscriber experience… they will be left behind. It's very simple. That's why we are so adamant to help these Service Providers in their transformation to Experience Providers.
DZS is really at the forefront of deploying these services, partnering up with the top Service Providers in the world, 15 of the top 30 Service Providers in the world are our customers today and we have customers in rural America in the Tier-2s, Tier-3s, Korea, Japan, across the globe. We are very fortunate but also we are very dedicated to support our Service Providers in their transformation. Today we are connecting and providing these experiences to tens of millions of households and their subscribers, we're helping them with reducing the truck rolls, $350-400 a pop, customer support calls are reduced by 35%, we're helping them increase their net promoter scores.
What is really important for Service Providers is not just to try to drive cost reductions and drive more efficiency, but to give them an opportunity to upsell and provide more services to us as home subscribers, it goes all the way from cyber security to parental control, to provide new low latency capabilities to gamers (and gamers are ready to invest, they are at the forefront of this broadband infrastructure because they need such low latency to gain a competitive advantage and so they pay for it). From that perspective I am just excited and thrilled about this once in a generation opportunity, and I’m also excited that we work together with EPS Global to literally transform Service Providers into Experience Providers.
You've summed it up really nicely there! We can help enable Service Providers to become Experience Providers which will in turn bring about happy, loyal customers which at the end of the day is the most important thing. Thank you for joining us today Gunter it was really a pleasure speaking to you and we'll speak to you again soon.
Thank you Ciara, it was my pleasure.
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