At a recent industry event, a number of executives trotted out the latest variation on that old maxim of the telecoms industry: “Customers don’t really care about technical details; they just care about what technology can do.” In this instance, it was applied to broadband speeds: “Customers don’t really care that our network can’t deliver 8Mbps speeds, they just care that it allows them to access YouTube, Facebook, etc.”

Unfortunately, history has shown time and again that customers really do care about the technical details, particularly when they have been mis-sold. Anyone remember the satisfaction of surfing the BT Cellnet? Were you pleasantly surprised by the first generation of 3G phones?

Yet, several years on, few operators can resist overhyping their services. As outrage over “up to 8Mbps” DSL reached its peak in the UK, several mobile operators began marketing mobile broadband services promising speeds of “up to 3.6Mbps”. Vodafone even marketed a service offering “up to 7.2Mbps”, until it was forced by the Advertising Standards Authority to drop the claim after rival operator 3 complained that the actual download speed experienced by customers was 6.6Mbps.

Even so, it seems unlikely that many customers will even be able to experience that speed. I’ve been trialling an “up to 3.6Mbps” mobile broadband service from 3 for some weeks now and have never seen speeds pass 1.4Mbps. Most of the time they linger around 600Kbps, occasionally dropping down to dial-up rates.

On one level, it is understandable that operators have a history of being slightly vague about the technical details. Long before their products reach the market, vendors are busy hyping the capabilities of the technologies the services will rely on. Perhaps after years of disappointment, the operators cannot bear to print what their services can actually deliver on their marketing material.

This is a shame, because focusing on the technical details is one area where operators can truly excel. After years of failed attempts to become content players, fixed and mobile operators should realise that their true calling is to provide quality connectivity.

That is not to say that DSL operators should radically redesign their networks or that mobile operators should build new cell sites on every corner in order to deliver the headline speeds they promised in the first place. Rather, they should be transparent and manage consumers’ expectations, because, frankly, they have set the bar far too high.

Some positive steps have already been made in this direction. I know, for example, what speeds the 3 mobile broadband service I have been trialling has delivered because it features a software client that logs them for you. The client also keeps track of how much data has been transferred over the connection, which helps users to avoid exceeding their monthly download caps.

On the fixed-line side of the market, UK ISP PlusNet enables subscribers to access an even more detailed breakdown of their usage via an online tool. The BT-owned ISP also offers all comers an insight into traffic on its network and how it is managed on its customer-support pages.

What’s more, PlusNet provides a glimpse into how more mainstream ISPs might use the concept of quality connectivity to increase ARPU and reduce churn. The ISP markets a quality-assured service aimed at online gamers, which, at £19.99 (US$39), costs twice as much as its entry-level broadband package. It is not fanciful to imagine consumers may be willing to pay more for services that bring the same level of quality assurance to online video, particularly as the resolution and frame rate of services grow.

Regardless of the future opportunities, UK ISPs have a number of pressing reasons to start thinking about how to offer quality connectivity.

First, most have signed up to a code of conduct to inform customers of the true broadband speeds they are likely to get. Second, a wide variety of groups, from hobbyists to consumer media to Ofcom, are performing their own research on speeds, using a variety of means.

Third, even BT’s own lab tests seem to suggest that services on their next-generation ADSL2+ network will disappoint, with only half of homes covered able to access the 8Mbps speeds promised by the first generation. Given that the unbundled networks of BT’s rivals use the same copper infrastructure, its seems likely we will see similarly disappointing rates from their services.

ISPs should use this period of transition to think carefully about how they can set more realistic expectations about headline speeds, while working out ways to go above and beyond the letter of Ofcom’s code of conduct. From now on, their motto should be: “Customers really do care about the technical details, because it lets them know what they can do.”

 
 
 
 
Hamid Akhavan’s claim at the CeBIT trade show in March, that there will be more subscribers to mobile broadband than to DSL within a few years will no doubt lead to a rash of reports predicting that fixed-to- mobile substitution will spread from voice to broadband.

Whether the T-Mobile CEO’s forecast is right is arguable, but fixed-to-mobile broadband substitution? It’s not going to happen, and smart mobile operators shouldn’t want it to.

There’s no doubt that mobile operators have had, and continue to have, a devastating effect on the fixed-line telecoms business. Fixed-line operators have seen their voice revenues decline as using their mobiles instead of their home phones, or have dropped their landlines altogether.

Akhavan’s claim would seem to suggest that the same fate is in store for broadband, as the first generation of mobile services that appear to match DSL and cable on speed and price emerge.

However, there are many reasons mobile broadband will prove no substitute for fixed-line broadband in any meaningful sense. For a start, the two are not comparable in even the most basic respects.

Take Akhavan’s forecast. How many of the 1.8 billion will be using services that customers would accept as an alternative to fixed-line broadband?

The size of his estimate suggests that he has set generous criteria. Informa Telecoms & Media forecasts only 1.6 billion mobile broadband subscriptions by 2012, and only then when you include 665 million subscriptions to conventional WCDMA-based 3G services. WCDMA offers only 384Kbps per user, a speed few would consider to be “broadband”.

Still, a more modest estimate is likely to be impressive when you consider that Informa forecasts only 517 million fixed-line broadband subscriptions by 2012. But it would be misleading to say that mobile broadband will have “overtaken” fixed-line broadband, except in the crudest measure of raw subscription numbers.

Today, each mobile broadband subscription probably has just one user, while a fixed-line subscription is shared among several members of a household. Thus, mobile broadband penetration (of the population) in 2012 will be only 25 per cent, even if you accept Akhavan’s optimistic forecast, compared with fixed-line broadband penetration (of households) of 26 per cent.

True, there are home routers that can turn 3G into a household technology by redistributing the signal via Wi-Fi, but low demand means they are expensive.

A 3G Wi-Fi router typically costs an operator $300 wholesale, according to some analyst estimates, while fixed-line Wi-Fi routers start in shops at about $60. Tellingly, one of the first operators to offer 3G Wi-Fi routers, Vodafone Germany, does not market them anymore, following its move into the DSL market.

Mobile operators’ networks are also poorly equipped to deal with the volumes of traffic seen on fixed-line broadband connections today.

Typically, mobile traffic is backhauled from base stations using several E1 or T1 lines - known in the fixed-line business as “legacy” leased lines. To cope with even modest increases in data traffic, mobile operators will have to make substantial investments.

Informa’s Mobile Backhaul report predicts that North America’s mobile operators will spend a total of $3.3 billion on backhaul between now and the end of 2012 as mobile broadband boosts annual traffic to more than 800,000TB from about 150,000TB last year.

Even so, mobile data traffic will remain tiny in comparison with total Internet traffic. Cisco estimates that US Internet traffic in 2007 totalled 30 exabytes (EB) - that’s 30,000,000TB - and will rise to 72EB in 2011.

The mobile operators tacitly acknowledge that diverting any more than a fraction of “real” Internet usage onto their networks would be disastrous. Dig deep within the terms and conditions of any affordable “unlimited” mobile broadband offer and you will find monthly download limits of as low as 1GB.

Nevertheless, fixed-to-mobile broadband substitution appears to be happening in at least one market; Telekom Austria partly blamed rival low-priced mobile broadband offers for a recent acceleration in its fixed-line losses. 3 UK has also claimed that some customers have taken its mobile broadband services instead of DSL or cable.

This is likely to be a blip; subscribers will soon realise that mobile broadband can’t do what fixed-line broadband can. Regardless of any improvements in value for money, speed, home networking or backhaul, mobile broadband will always be a few steps behind.

But more important, it fails one simple test. Ask yourself: would you advise any of your friends or family to go mobile-only for all their broadband needs?

 
 
 
 
Door-to-door salesmen touting 100Mbps connections. Field engineers fighting over permission to wire up apartment blocks. Coffee mornings about ultra-high-speed broadband for the over-60s. House-proud homeowners digging telecoms trenches in a bid to boost property prices.

This is how Europe is being wired up with fibre-to-the-home (FTTH), according to some of the more outlandish claims coming out of last month’s FTTH Council Europe conference.

Certainly, operators believe the stakes are high enough to justify unprecedented sales tactics. Laying fibre-to-the-home networks takes time and money. According to various estimates put forward at the conference, passing each home will cost about Eur1,000 (US$1,540) in many of Europe’s cities and towns, and many thousands of euros elsewhere.

The operators are understandably keen to make sure that customers sign up to those connections, especially given that monthly tariffs in the tens of euros mean that it will be many years before they make a complete return on their investments.

There is also evidence that operators that are first with fibre find it easy to attract and retain customers. John Quist of the Dutch incumbent KPN described how 85 per cent of households covered by one municipal FTTH network in the Netherlands converted to paying customers.

“The cable companies and KPN and the other telcos were just wiped out,” he said. Another Dutch municipal network, Neunen, claims 90 per cent take-up, while Sweden’s ViaEuropa claims 78 per cent. One municipal operator said that its FTTH services were so appealing that it did not need to market them to the younger population, hence the coffee mornings for the older generation.

Others are even confident that customers will pay the thousands of euros it costs them to lay fibre to their homes. Malarnetcity in Sweden charges ?2,800 to potential subscribers in houses and Eur300 to those in flats. Denmark’s DONG Energy charges up to Eur1,600, reduced to Eur400 for customers who dig the trenches the fibre will be laid in.

Malarnetcity claims that removing the need to fold the capital expenditure of laying fibre into its wholesale tariffs will ultimately result in lower retail tariffs.

The difference compared with tariffs on an incumbent’s network can be so great that Malarnetcity estimates that even subscribers paying the full ?2,800 can make back their investment through cost savings within four years. The operator also says an FTTH connection increases a property’s market value.

As unlikely as it sounds, there might be something in the municipal operator’s pitch. Malarnetcity claims that 60 per cent of house owners in eligible areas have made such investments, with more queuing to stump up the cash.

The problem for conventional telecoms operators is that there is more at stake than just subscriber numbers. If one operator beats others to wiring a house or apartment block, it will have a monopoly on that infrastructure that will likely last decades. In order to serve these customers, other operators will have to rent capacity at least on their competitor’s in-building wiring, even if they take the risk of laying their own fibre to those properties.

Municipal networks in particular pose a challenge to conventional operators. Driven largely by social rather than commercial motives, these publicly funded projects are spreading from Europe’s northern states to its larger markets, having been sanctioned in France and Spain.

Reggefiber, the owner of the network Quist referred to, already has FTTH infrastructure covering 200,000, or nearly 3 per cent, of the Netherlands’ 7.2 million homes and is expanding. One of its projects, Citynet, plans to eventually cover 450,000 homes in the capital, Amsterdam. Municipal networks in Sweden, meanwhile, pass more than 6 per cent of homes and counting.

The progress of the Swedish networks has already caused the incumbent, Telia, to rent capacity on them, while KPN has agreed to operate a network covering 40,000 homes that Reggefiber will build and own.

Another advantage the municipal networks have over incumbents are their close links with communities. Organising town meetings, door-to-door sales and recruiting well-known local figures as ambassadors for their wares is not much of a stretch for them.

The same cannot be said for incumbents and alternative operators. Although they share the municipal networks’ optimism about the appeal of fibre, they admit that their glossy nationwide campaigns will only serve to annoy customers who can’t access services.

Already, such “legacy” operators in France, Sweden, Norway and Finland have taken to the streets to recruit housing authorities, apartment-block owners and even individual householders to their cause, knocking on every single door if necessary.