The future ain’t what it used to be

Perspectives on investing in the option value of fibre

James EnckmCAPITAL

Your future here

If the past has any lesson for us, it’s that predicting the future is very, very hard

Especially when predicting the sorts of things we won’t need

Not that this fact ever stopped anyone…

What, sir, would you make a ship sail against the wind and currents by

lighting a bonfire under her deck? I pray you, excuse me, I have not the

time to listen to such nonsense.

Napoleon Bonaparte, 1800

Rail travel at high speeds is not possible because passengers, unable

to breathe, would die of asphyxia.

Dionysius Lardner, Professor of Natural Philosophy and Astronomy at University College, London, and

author of “The Steam Engine Explained and Illustrated”, 1830

Well-informed people know it is impossible to transmit the voice over wires and that were it possible to do so, the thing would be of no practical

value.

Boston Post, 1865

This "telephone" has too many shortcomings to be seriously

considered as a means of communication. The device is inherently of no value to us.

Western Union Co. internal memo, 1876

The Americans have need of the telephone, but we do not. We have

plenty of messenger boys.

Sir William Preece, Chief Engineer, British Post Office, 1878

Everything that can be invented has been invented.

Charles H. Duell, Commissioner, U.S. Office of Patents, 1899

Who the hell wants to hear actors talk?

H.M. Warner, Warner Brothers, 1927

There is no reason for any individual to have a computer in his home.

Ken Olsen, founder and CEO, Digital Equipment Corporation, at the World Future Society, 1977

Of course a Ferrari is faster than a Ford, but most people are

happy with a Ford.

Ian Livingstone, CEO, BT Group, Digital Britain Forum, April, 2009

Expedient choices, dire consequences

“I told Mike he'd have to decide between them. It was up to him - The Beatles or Brian Poole and the Tremeloes. He said, 'They're both good, but one's a local group, the other comes from Liverpool.' We decided it was better to take the local group. We could work with them more easily and stay closer in touch as they came from Dagenham.”

Dick Rowe, head of A&R, Decca Records

“We don’t like their sound. We don’t think they will do anything in their market. Guitar groups are on the way out.”

Beatles’ rejection letter from Decca Records

Innovations have an annoying habit of mutating in unpredictable ways

Warfarin

nitroglycerine

SMS

email

Some innovation happens way too soon, only to be abandoned and revived later

Fiber is not just about video!

• e-learning

• e-medicine

• e-government

• smart grid

• distributed computing

• telecommuting

• sensor networks

• green dividend

Any lessons here?

“When our leaders were contemplating the rollout of electricity in the 19th century, few would have foreseen the profound impact it has had on our economy over the past 150 years. When, in 1894, most of Melbourne's streets were brightened by electricity from Australia's first power station, few could have known the full extent of innovation that would follow. Since then we have seen the advent of refrigeration, automated production lines and electronic media. New industries have flourished and services have improved standards of living across the country. We live in a society where every function and process has been shaped in some way by electricity. It has driven new market efficiencies, productivity and jobs. This technology has fundamentally changed Australia. For this we can thank the vision of previous Governments - Governments that ensured that Australia kept pace with the world and we reaped the rewards. Our past leaders ensured we have had access to enabling technology, offering opportunity beyond their original intentions.”

Stephen Conroy

Australian Minister for Broadband,

Communications and the Digital Economy, April 2009

Decisions, decisions…

• How to incentivise stakeholders to invest?• Can this even be achieved in the current

market context?• Where will the liquidity come from?• How can we quantify the impacts of

innovations which haven’t occurred yet?• Is it enough just to believe?

• We can’t know the answers to some of these questions – the option value of symmetrical fiber is hard to calculate prospectively, but much easier in retrospect.

• Conversely, it’s easy to demonstrate a lack of utility for something which is not available.

• Many world-changing innovations would not have occurred if sceptics’ views had prevailed.

• Connectivity policy is not enough – it must be part of joined-up thinking around economic and social policy.

Awaiting paint, brushes, and, most of

all, vision

Thanks!