The next bunch of transcripts follow.
A kick-off by George Gilder:
Just got back from Korea. No ponzi scheme, fiber gluts, bubble. Basic thing that happened was US launched BB revolution but didn’t consumate because of regulatory and monetary mistakes. Korea has 40x the bandwidth per capita as US.
Accomplished this in 3 years. 75% penetration of homes with real broadband (8mbit/sec+). Most DSL with rapid VDSL deployment. Dribbleware in the US.
The whole economy changes. $250bn transaction on Internet, 1/3 of their economy.
Imagine this had happened in US. Instead of 2% on Internet. Most of thosebusiness plans that seemed quixotic and absurd eould have been validated.
Many of the services that seemed preposterous like grocery purchases (Webvan) have prevailed in Korea.
Still haven’t grasped what happened. US launched, financed and invented.
If there is such a thing as Interstate commerce it has to be the Internet, but it is regulated by 50 different PUCs. Huge # of federal bodies. 10k members of telecom bar in washingotn. Most regulated and taxed in US short of tobacco and alcohol.
Telecom is not a commodity. A dynamic industry. Chief insight from Christensen’s model of disruptive innovation is integration for undershoort industries, and modularity for overshoot (deliver more than the customer wants).
Need companies like Corvis that does all-optical network. Reproduces AT&T model – everything delivered by them. Broadwing. Can be steadily advanced and outperform other networks.
Reason telecom looks such an appallingly unpromising business is that 100 juridictions, 50 states etc. and assumption by all politicians that they have the right to run IT industry. Industry moving at 3x the pace of Moore’s law. Aborted deregulation transformed into reregulation that inflicted paralysis on US system. Koreans making handsome profits.
Q: An argument in US is that if the market wants it the market gets it. How have they done it in Korea.
GG: Market was stifled by regulation. Also at the period telecom industry had to address 9000x rise in traffic in 7 years and transformation of nature of the traffic system has to carry. As they mobilized to meet challenge, huge debt. Simultaneous huge deflation. Dollar appreciated 50% against gold and commodities. Punishes debtors, pay back with more dollars to get same other goods. Caused 1000 bankruptcies in telecom and supporting industries. Many bakrupticies across the system. Also govt trying to regulate prices and connection in every local loop incompatible with risky technology changing every week. Korea entheusiastic about BB. Corporations too. Industrial policies in favor of BB. Didn’t have an antiindustrial policy in favor of policies hostile to communications. All govt services happen over the net in Korea.
Q: What do you think of the interstate highway system as a way of delivering roads
GG: Does a fine job. Road construction not a dynamically changing industry in the way that telecom is. Kind of structure for deliverying interstate highways fails to deliver diverse last mile services.
Q: But what if interstate fiber system kjust delivered dumb unlit glass.
GG: Backbone fiber is being delivered. No need for govt to fixate on particular technology or topology. Tech advancing very rapidly. All-optical network going to be incomparably more efficient and robust than current hybrid optoelectronic networks currently being deployed. DoD deploying new optical national network by Pentagon. Adopted a retarded set of technologies only this year.
Q: As a forver advocate of ATM etc on glass. We have issues in US not extant in Korea. E.g. east coast traffic. Texas to Chicago commodity markets in business day. We can light a galactic supernova in the glass we have. Q is how did Korea handle the heavy traffic peak loads and hackers.
GG: Their DSL is 4-1 deployment rather than 100-1 DSL in US. Several reduandant fiber networks. They throw bandwidth at the problem. Over-provisioned last mile connections.
Q: Suppose we got rid of all of FCC, how do we get a parallel with NTT in Japan who tore their network wide open. What reason do we have to expect LECs to open networks.
GG: They have this copper cage, which is their problem. Not the best technology. Biggest business failure I’ve seen is RBOCs failure to deploy FTTH. Many competitors now and will lost most of that business. Japan doesn’t divide into 100 jurisdictions, 50 ways of regulating. Don’t litigate every connection. So they could force NTT to unbundled. Have lots of other kinds of competition in japan emerging. Haven’t advanced quite as fast as Korea, making tremendous gains. Three big DSL suppliers. Must simpler and less paralytic regulatory structure. Simpler and better.
Q [Roxane Googin]: This network is a wonderful tool we have given the world. In Korea what did you seem them using it for that was particulary effective? They play a lot of games. What about telemedicine, training, corporate productivity.
GG: All sorts of services. Retailing in general. What we see on Amazon is the normal way of doing retailing in Korea. EV-DO deployed all over the place. See people on buses watching TV on cellphones. Widespread delivery of actual TV on cellular. Afraid in US for fear of broadcasters. Qualcomm afraid of being regulated as a broadcast carrier. Don’t think their B2B internet services are more developed than US. Probably significantly less developed, although changing rapidly. Really in retailing and multiplayer gaming. Within easy walking distance of hotel were 7 internet cafes jammed with big screen PC devoted to multiplayer games. 24 hours a day. People leave homes still to go to these places. They do a lot more video teleconferencing and video messaging. Deployment of bandwidth exceeds use. Examine traffic – does not indicate the sort of vast increase that could be enabled by fast increase in bandwidth. The way they deal with spikes is overprovision. People learning to exploit this in innovative ways.
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"Telecom is not a commodity."
Eh!? Perhaps the services aren't but by now with ethernet and TCP/IP as foundation infrastructure I would have thought at least connectivity was. Was Bob there?
/me grins
As for: "Road construction not a dynamically changing industry in the way that telecom is."
Again George conflates carriage and service. Road building is not a dynamically changing industry, but the services that run over it certainly are.
Posted by: at April 4, 2004 07:07 PMWell, strictly speaking it isn't a commodity because it's not tradeable (Enron notwithstanding). I'll write another day on why there's no such thing as a commodity, full stop.
Posted by: at April 5, 2004 10:32 AM