Competition as a driver of innovation

Nowadays, increasing numbers of high-speed network providers claim to have an ‘open network’. What that actually means varies from one provider to another, making it very difficult to determine whether the offer meets specific requirements.

With this in mind, Lex Wils, Business Development Manager with Eurofiber Netherlands, answers the core questions about the use of open networks.

What is an open network exactly?

An open network is one whereby the physical infrastructure is separate from the services delivered on it. That means that other service providers can also use the network and that the operator of this network makes it available to external service providers.

Why is that important?

The installation of a network represents a substantial investment that has to be recouped over a long period of time. In contrast, the service sector is a rapidly evolving one. Thus service providers do not need to invest in their own networks because they can use an existing one. The savings generated as a result can be invested, instead, in research, development and innovation. The other advantage of an open network is that some areas that are difficult to access for a single supplier can be served more quickly. That’s because it’s possible to combine various network demands within the same area. An open network can link businesses as well as GSM masts, bridges and even locks. Conversely, in a closed system, a single supplier connects a new client’s site to its network. And when the client changes supplier, a new network connection has to be installed. It’s not very efficient.

What are the advantages of an open network?

Free choice of services, price, guaranteed quality and innovation thanks to the presence of competition. With a closed network and a single provider delivering both the infrastructure and the services, there is no choice. In the event of a change of provider, it is necessary to shut everything down with the first one, unless the client is willing to pay two network providers during the transition period while the second provider is establishing a new connection for the client.

A closed network makes the client dependent on the provider’s service offer, with no option to go elsewhere. That’s a shame bearing in mind that when it comes to connectivity and services, the world is a very big place. An open network means you do not have to wait for a provider to decide to invest in research and development: all available services can be accessed directly. The simultaneous presence of several service providers triggers the supply and demand mechanism, which always has a positive impact on customer service. A service provider is well aware that a client can easily move to a competitor, thereby encouraging it to optimize its own service. And the provider can focus all its efforts on its service, because, among other things, it does not have to worry about maintenance and management. This stimulates innovation too.

Does the client have the same freedom of choice when it comes to infrastructure?

Absolutely. A good network operator will allow clients to decide on the level of services they wish to access. They can opt for dark fiber services alone, or also DWDM, Ethernet or Internet solutions. In practice, clients chose on the basis of their expectations and specific needs.

Why choose an open network?

Innovation is evolving rapidly. This is reason enough not to restrict innovation opportunities to the confines of a closed network. The choice of a broadband network is not made on the basis of the here and now. It is the future that is important, with the technological developments and innovations it entails. The pace of innovation in the service sector is such that we already know that the choices available today will be outdated two years from now. We have to be able to change and renew quickly and when necessary. That’s when the flexibility of a smart and open network comes into its own.

Does an open network have its disadvantages?

An open network isn’t a one stop shop. Sometimes, a client receives several invoices, for the physical infrastructure and for services. That’s not necessarily practical for all organisations. Also, freedom of choice and independence mean that clients don’t always deal with a single contact. In some organisations it may be unclear who should be contacted in the event of technical problems. It should be clarified however that many network providers work closely with partners in order to meet clients’ ‘one stop shop’ requirements. We can make a comparison here with what happens in the energy market: you sign a contract with a provider, who sends a bill that includes an amount (fixed basic fee) covering the use of the physical infrastructure used to carry the energy to the place of consumption (house or business).

Does an open network mean I am responsible for its management?

No, the management and maintenance of a fiber-optic network are the responsibility of specialists working for the network owner. The client signs an SLA with the operator to this effect. The degree of management also depends on what the client uses. If the client opts for dark fiber that it then runs itself, only the physical network will be maintained. If clients order a service such as Ethernet, maintenance will also cover that of the appropriate Ethernet equipment.