Telepocalypse

Whatever happened to the Energizer Bunny?

The idea of an energy crunch seems to be getting some more exposure. This has an interesting long-range repercussion on telecommunications. The obvious stuff is that you have a lot more demand for telecom since moving bits is a substitute activity for moving atoms. The less obvious impact is the type of telecom you get.

Smart networks require energy to run. In the absence of commercialized reversible computation technology, every time you turn a 1 into a 0 inside a silicon chip you need to discharge some energy as heat. The Internet has a pretty hefty energy requirement. The energy bill will start to matter more and more, since it scales linearly with the number of bits transmitted through an electrical or optoelectrical system.

This points us towards the Gilderean future of all-optical networks. Optical switching is the end destination in terms of dumb pipes. (Unless you have some insight into superstring theory and data transmission via parallel universes we haven't seen yet -- but the evidence points away from this at the moment.) The energy needs are much lower -- one photon per bit.

For wireless, it also means mesh networks offer more than convenience and low cost. Whilst directional antennas help, ultimately you're radiating energy over a roughly R^2 area with any wireless transmitter. A sequence of mesh nodes radiate your bits over a smaller area. (Think of a sequence of overlapping lily pads in a bigger pond. The pond is a traditional cell tower. The lily pads are mesh nodes. A path from A to B covers only a few lily pads with energy, not the whole pond.) The question is, though, does the increased energy cost of routing the meshed bits nullify the lowered energy cost of transmitting them?

If energy gets really expensive and the number of bits to be sent increases dramatically, we're all going to get a lot more familiar with the information theory work of Claude Shannon over the next few years.

Interesting aside: quantum computing also appears to be fundamentally limited by the energy budget needs.

Finland, Finland, Finland

I promise to write some original and witty content of my own real soon, honest. But in the meantime, here's a great quote from Russell Beattie:

I think Nokia can [dominate the handset market again]. I think their R&D, the investment in their own chipsets, focus on the enterprise and multimedia and general concentration on the long term is going to pull them through. Motorola and Samsung are kissing carrier asses and producing a million different handsets to see what sticks, but that's not what's going to win in the long run. What's going to win is developing an ecosystem around your brand and platform, and that's what Nokia (to me) is doing. The threat to this, of course, is that the carriers don't like it because it devalues their brand. But these guys are going to be nothing more than "cellular-based ISPs" in a few years anyway.

No, it's the platform, not the pipe, in the long run that's going to rule the day. That's why I'd invest in Nokia now.

All together now! [Gregorian style.] A-m-e-n.

UPDATE: The Economist takes the opposite view (subscription required):

The company with the most to lose [to original design manufacturers like Sendo and BenQ] is Nokia, which has become so powerful that operators and rival handset-makers are keen to take it down a peg or two. "For Nokia to stay on top of the game it will have to adjust," says Brian Modoff, an analyst at Deutsche Bank. Unlike Microsoft and Intel in the PC business, Nokia is not protected by ownership of proprietary standards. To maintain margins and stay ahead of the industry's ever-faster product cycle, says Mr Modoff, it will have to stop doing everything itself. "They will be more of a brand, a design shop, rather than building everything," he says.

Nokia is doing its best to diversify, notably into mobile gaming with its N-Gage handset. At the same time, as handset technology is progressively commoditised, a strong brand will be increasingly important, and nobody has a stronger brand than Nokia. Its recent troubles may turn out to be a blip. But given the seismic shifts now under way in the industry, observes Mr Dean, with Nokia's market share so large "there's only really one way to go."

Turning TV off

At the risk of exposing my ignorance of spectrum regulation, I'd like to propose a way of dealing with the hogging of UHF frequencies by the broadcast TV industry. Two simple regulatory changes with low political impact could make a difference.

TV is undergoing a fundamental shift in economics. As noted today by C|Net News.com, the mass market broadcast 30 second advert is an animal in serious decline. The replacement is Google-style personalized adverts. The Internet is a two-way medium, which makes this possible. All very Cluetrainy.

So change #1 is you insist the current spectrum can only be used for one-way TV broadcast. There is method in the madness of preventing progress. It means nobody has to change. Just keep doing what you're doing now. No squeals of protest. Of course, you're becoming increasingly irrelevant to your true market (advertisers).

Second, insist that you only keep the spectrum as long as you actually use it to broadcast TV at the full power allowed by your license. Sounds very reasonable. But a TV station pumps out hundreds of kilowatts of output 24 hours a day. You need a big stack of coins next to the meter to keep it going. And, as noted earlier, energy is likely to get a lot pricier over the next few years. So this eliminates the danger of squatting on unused frequencies. It simply costs too much.

The alternative to the above is to try to remove sitting spectrum tenants through force. So you can either spend a decade of campaigning and lawsuits, or a decade of waiting for the invisible hand of the market to do its stuff. I'd chose the latter.

Rethinking regulation

I was reading this old article at Tech Central Station, and noodling about what it was saying. In a nutshell, it is arguing that the 1996 Telecom Act is fine as it stands, just that it was badly implemented because incumbent telcos are allowed to charge excessive wholesale rates.

I completely disagree. Most regulation seems to be about trying to directly fix outcomes rather than let the market take its course. A monopoly supplier of telecom that charges high prices should be sending a price signal that encourages new entrants into the connectivity business. Telecom is not a natural monopoly. Cable, municipal fiber, MMDS, satellite, meshes -- they are all viable alternatives, and more are on the way.

What the regulators need to do is prevent discriminatory pricing against newcomers. I would therefore propose that most of the existing regulations be scrapped and replaced with a much simpler framework. The goal would be to prevent predatory behaviour. The ability of incumbents to price differently according to geography would be restricted - a price drop when a new entrant arrives would have to be given to all. Additionally, I would consider restricting the ability of incumbents to drop prices following the arrival of a new entrant, for maybe a period of two years. That would encourage price moderation at the outset, and make a stable business environment for new entrants to form a business case against.

Watt a Lot of Bits

One thing I missed on my post on relying on Vonage is our other single point of failure: Kansas City Power and Light. We're about to enter storm season here in Tornado Alley, which is frequently spectacular if somewhat unnerving. We don't get many outages, but they do happen. Last Christmas, the moment I headed back to Europe we had one. My home server got stuck on rebooting at a screen asking if I wanted to repair filesystems that might have been corrupted due to incorrect shutdown. So I couldn't access a ton of my email and files.

A traditional criticism of VoIP solutions is that the analog PSTN is powered at the edges, and smart VoIP endpoints depend on being powered from the unreliable mains power. (Don't lick your fingers and stick them in those phone sockets kids! Someone might ring you with a ring tone you won't want to feel again...)

But I've had several experiences that have shown me that this isn't a very strong argument. I've been in Scottish winter storms where both power and telephone service has been knocked out to rural areas. And the 2002 ice storm in Kansas City had telephone and power lines down over half the city. (The blue and purple arcing of failing power lines was quite a scene from our balcony.) Clearly there is a significant correlation between failure of the telephony network and the power network. It might be interesting to have some facts on the relationship. Anyone out there know what the correlation coefficient might be?

Happy endings

Via Corante comes news that Comcast cable are creating their own set top box. This is interesting because it continues an ongoing trend. Imagine you're the network operator or some other middleman in danger of disintermediation. You don't care about being cut out of the picture if you also control the end points of the network. Think subsidized Analog Telephone Adapters locked into Vonage service. iPods locked into iTunes. Cellphones locked to their network operator. Even PCs locked into trusted computing architectures.

Inlaws and outlaws

My wife's parents are over in the US from Europe. They finished their two-week stay with us this morning. We've equipped them with a car, a credit card and a cell phone, and pointed them westwards. They're driving down towards Dodge City today and on to a rendezvous in Vegas in two weeks' time. (Maybe the credit card wasn't such a good idea after all...)

Anyway, by the principle of conservation of cell phones, my wife is now cellphoneless. Decellularized. Unmobilated. (In case any of you think that's lacking in chivalry not relinquishing my own phone, let me tell you I'm now carless. In sprawling suburban Overland Park, that is like being blind and limbless in most of the rest of the world. Serious personal impairment.) So no cell phone means she's sat at home, baby on lap, with just a Vonage phone and a Yahoo instant messenger client to get hold of me. Both of which have a single point of failure, our Roadrunner cable modem. And her parents are 100% relying on Vonage to get hold of her in an emergency.

Now, I'm damned pleased with Roadrunner. Reliable, fast and good value. But their DNS server can be pretty wobbly at times -- they've been struggling to return the address of one of their own web sites recently. (I have a home web server that places my current IP address on my ISP's FTP server once an hour, in case the dynamic DNS service update fails when I'm away. I can then SSH back home to fix any problems. When it fails, I get an email.) The service has been known to go down from time to time, too. We've had a few difficulties with Vonage too, but nothing that a quick hard reset couldn't cure. And before now all it did was delay an intercontinental social call back home.

It's only when you really rely on VoIP and VoIP alone do you feel that feeling of being a bit exposed. You know, like when you've decided to pass another car and get alongside and wish you'd put your foot down a few seconds earlier as the next corner looms. I'm at risk, and either this damned machine works perfectly, or I'm in a lot of doo doo. Not as bad as when I did a bungy jump, but a definite moderate nervous edge.

There's a nice comment by Steve Saenz on this old article of mine on Vonage. He documents his difficulties in getting it to work reliably. He can't be alone.

I just wonder if we're set up for a backlash. Some day, someone will have a serious mishap because a VoIP call failed when a POTS one clearly wouldn't. They might even die. Even if as a society we'd be safer on average with an IP communications solution, this will make the TV news and the press. And they'll make a BIG thing of it, because nobody tunes in to hear that there were no sensational events today.

How long will it be before the speeding truck comes round the corner? I don't know, but it will give the incumbents potent political ammunition when it happens.

Free at last

The IP-MoU initiative seeks to propose a set of "freedoms" for IP communications, thus:

Ensure that consumers worldwide are assured basic rights as users of IP communications.
* Freedom to Access Content: Consumers should have access to their choice of legal content;

* Freedom to Use Applications: Consumers should be able to run applications of their choice;

* Freedom to Attach Personal Devices: Consumers should be permitted to attach any devices they choose to the connection in their homes;

* Freedom to Obtain Service Plan Information: Consumers should receive meaningful information regarding their service plans; and

* Protection of Consumer Privacy: Consumers should know that their personal information is safeguarded, except to the extent necessary to abide by law enforcement obligations.

This is, of course, extremely similar to the software libre freedoms propounded by the GNU Foundation:

* The freedom to run the program, for any purpose (freedom 0).
* The freedom to study how the program works, and adapt it to your needs (freedom 1). Access to the source code is a precondition for this.

* The freedom to redistribute copies so you can help your neighbor (freedom 2).

* The freedom to improve the program, and release your improvements to the public, so that the whole community benefits (freedom 3). Access to the source code is a precondition for this.

I suspect the coincidence is intentional.

Pin dropped

Users traded availability and reliability for mobility and ubiquity when they fell in love with cellular. Looks like they might not have to trade in quality and audibility when moving to VoIP according to Stuart Henshall:

What's more this user has learned that Wi-FI Skyping from HotSpots is better than a Mobile phone when available. Thus the paradigm that threatens the landline system may have more impact on mobility than current projections suggest. Some of you may have seen the recent releases of mobile phones like the Nokia Communicator 9500 that provides the traditional cellphone features along with Wi-FI. So now consider the user experience. When they are in a hotspot sound quality goes way up. When they get home their cellphone automatically becomes the home phone and the cellphone and the quality is way up. It's just possible that the mobile providers are entering a sound spiral as well.

Om Malik recently found that VoIP on today's cellular data was quite good enough thank you.

Hmm, better and cheaper. Not a hard sell, methinks.

To whom may I direct this call?

Don't usually write about work, but I don't think I'll be giving any deep corporate secrets away with this one. It's just a little parable of the cell phone and the smart network.

People who have both cellular and local telephone service need to be put through to a different call center from people with just cellular service. This is because normal cellular care agents can't deal with local telephone service issues.

But the project for combined service means upgrading the intelligent routing software in customer care to send the calls to the right place. Every inbound call needs intelligent routing. This will take time and money.

The easy way round this would be to re-provision selected customers' cellphones so that the short code for calling cellular customer care pointed at the combined care center. Except you can't do that because the end points are dumb and the routing of short codes is done in the network, which in turn has no idea whether you have local service as well as cellular.

So the smart network and smart call center routing system conspire to prevent what would be a trivial one-off routing change if done at the edge of the network.

(There is also currently no way of remotely re-provisioning handsets this way, although there are standards in the offing to do it. But the existence of legacy dumb devices that need a smart network leaves you stuck in the high-cost smart network world forever and a day.)

The moral: start with smart edges and a dumb center and you're better off. And if you start the other wrong way round, you'll never make the transition because the embedded base of dumb edge devices imposes an impossible switching cost (if you'll excuse the pun).

Can you keep a secret?

In case you had forgotten, smart networks are incompatible with personal privacy.

Found you!

Cellular carriers are struggling to see how to integrate WiFi into their mobile data product offering. Is it a complementary or substitute product?

The thing about cellular is that it has asymmetric value. Incoming calls are more valuable than outbound ones. Why? Because there are plenty of substitute ways of making outbound calls most of the time -- desk phone at work, home phone, e-mail, call box in the street, borrow someone else's cell phone. But there is no substitute product for "send this voice message to Martin wherever he may be right now". (For an illustration of this, see the failure of Hutchinson's Rabbit network in the UK in pre-cellular days: it only allowed outbound calling.)

And that "find the user" capability is wired into the lower layers of the network architecture through a home agent switching service.

Now WiFi isn't a very mobile technology. In end-to-end fashion, any "find this user" capability is built into the end points via things like instant messaging presence servers, dynamic DNS lookups or mobile IP. There's nothing smart in the network itself to support mobility. So it's philosophically very different in how the value is dished up. The core "find the user" function is freely available independent of the connectivity, so there's less to charge for.

Even worse from the cellular operator's point of view, the WiFi connections are not under carrier control. So you can't filter and meter, unless you lock down the device. But consumers may be unwilling to accept locked-down devices that run on their own connectivity. (Although DVD players and iPods suggest that rejection of lock-down isn't always the case.) And if you can't filter and meter, you can't charge for the true value the customer receives. Cue usual dirge on business model collapse for telcos.

Copper vs. copper

No surprises that the cablecos are trying to gang up on the telcos, as documented by the ITU Strategy and Policy Unit. NeuStar are going to be the ENUM directory provider. The idea is that the calls between cablecos are kept 100% VoIP and don't go anywhere near the PSTN.

Eventually the public are going to discover that the sole "voice" function they've bought is the mapping of a phone number to an IP address. This isn't any harder than DNS, which comes for free with any Internet connection. The Internet is perfectly capable of doing the haulage.

Repetez apres moi: The correct price for point-to-point voice service is zero. There is no such thing as the "market for VoIP calls". It's a mirage. The cost structure is lower than (zero marginal cost) email. There isn't even anything to store. This is a race to nowhere.

No trespassing on my network

So, The Euro carriers are ganging up to try to stop open operating systems controlled by Microsoft and Symbian running on their nice closed networks. To do this they are agreeing to their own common specification, and sucking in a puppet vendor to build it for them.

From dictionary.com

car·tel n.

1. A combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members.

Hmmm... production. Debating the meaning of that word will keep some competition lawyers well supplied in Mercedes convertibles and pate au fois gras for a few years.

Of course the whole thing is ultimately doomed. Competition will occur from open rivals. Smaller local rivals and municipal networks will pop up regardless. (Particularly if we have an oil crunch.) And just like people pay a big premium to live near physical communication links, the economic pressure to be near good and cheap data communication links will be equally pressing. Mesh networking isn't the technological equivalent of hot nuclear fusion. We have it today in a rudimentary commercial form. The only question is whether the traditional carriers have the collective will and power to hold things back for a few years.

UPDATE: More here.

UPDATE: Similar thoughts over at El Reg.

Say what?

I've just been doing some reading on the usual telecom business model debacles, and something popped into my mind. We're using the wrong words to talk about the participants.

The limits of my language are the limits of my mind. All I know is what I have words for.— Ludwig Wittgenstein, Philosophical Investigations, 1953

Today I've read articles about "cablecos", "cellcos", and of course "telcos". This is all horribly misleading. Each of these businesses has varying degrees of forced bundling of connectivity and service. But we really should make the distinction between connectivity providers and service providers truly stark.

For instance, over at Forbes they say:

In a world of Net phones, local monopolies and duopolies will no longer exist; Internet consumers will have every telco in the country competing to win their business.

The word "telco" has clearly lost all of its traditional meaning in the above sentence. And if we can't consistently use the word to say something, it has no meaning. In the wise words of our philosopher friend:

For a large class of cases—though not for all—in which we employ the word "meaning" it can be defined thus: the meaning of a word is its use in the language. — Philosophical Investigations

(Incidentally, there are some great quotes in the Forbes article: The rest of the telecom industry, however, seems to be in denial of the coming cataclysm. Fears that phone traffic will migrate to cheap networks are grossly overblown, according to the Telecommunications Industry Association, a leading trade group. It forecasts that revenue has hit bottom in the U.S. in every single category of the phone business, from local to toll calls to wireless. Hey, didn't Christensen say you had your best years just before you fall off the cliff of disruptive innovation?)

Anyway, back to linguistics. First, connectivity. For these, "netcos". We recognize that Internet connectivity is the key for most public networks. For the rare occasions when you need a truly private pipe, you go to a "pipeco".

At the other end of the spectrum are pure service providers like Vonage or Amazon. Their applications let you buy connectivity service from anyone. These are "servicecos".

In the middle you have the legacy business model. Hmm. Something mildly derogatory needed that highlights the limited lifespan of service and connectivity bundling. Must encompass telcos, cablecos and cellcoes. How about "Nogocos"? Too obscure. "Controlcos"? Still not right. Aargh! We don't have a word to describe the business model we argue is going away!

Any better ideas out there?

Retail therapy

There's a nice quote at the end of this America's Network article on bland branding of US celular compared to lifestyle branding of Orange, Vodafone and Nokia in Europe.

Ultimately all will benefit from a broader set of higher quality products inherent in the shift by the carriers from voice corner store owner to multi-service, multi-segment department store purveyor.

Of course, the hollowed-out downtowns of many US cities bear the sun-beaten shadows of the names of almost-forgotten department stores from the past. The department store made sense because transport was the constraint to shopping. It wa just too darned hard to run a multi-point distribution network. And it was too hard to shop at multiple locations when you had to hop on a trolleybus (or horse and cart) to do it.

Once users had total and flexible control over their own transport with the arrival of the affordable motor car, everything changed. Of course at first there was a boom in department stores. More customers could make it into town more often from a greater area. Wal-Mart and out-of-town malls didn't happen overnight. Indeed, history often turns full cycle with the Wal-Mart Supercenter or mall becoming a single shopping destination. But in the meantime most of the old institutions disappear or become shadows of their former glory.

Spot the similarity? Packet networks give flexible control over data transport to users. All the same principles apply. The same future applies to these all-things-to-all-men carriers. Things will look really great as pervasive broadband hots up. Boom times will return. But the business model of control will become an albatross that can't be shaken off.

Duck!

How often do you see this same drivel appearing in general business articles on VoIP:

Because VOIP services use public networks and software rather than a fixed circuit, the service is far less expensive to build and maintain than traditional phone systems.

Wrong, wrong, wrong and incorrect. It just ain't so. It's nothing to do with transmission cost or efficiency. Indeed, the software inside a traditional telephony switch is not much different in complexity than that inside a modern large router. Most of the effort goes into security and management, not packet or circuit routing. And on wireless, IP is hideously inefficient unless your network goes to great pains to strip down all the IP and MAC headers.

Nope, it's about bypassing the levies and tolls. It's about people and their control of economic resources. Packetization technology is a side show that happens to drive the change by naturally moving control to the edges. Ignore the efficiency canard. It's wrong and irrelevant.

Update on Nextel

So, Nextel has gone commercial with its Flarion deployment, as previously described here. Here's the pricing. Similar to normal wired broadband.

This is going to cause an oh f*ck moment at some point in the next two years at the traditional cellular carriers. (I'm assuming the wireline carriers are oh so f*cked already.) The question is will Nextel have the balls to carry the open IP network stance all the way through, and chuck in VoIP PSTN calling for a nominal cost? Will they try to lock down the devices? Can they manage peak usage and contention the right way?

My approach if I ran Nextel would be do an exclusive deal with Flarion, and slowly kill all my regional competitors, one market at a time. No big bang nationwide launch. Buy up their bankrupt spectrum. Repeat until false. Then eat the big guys.

I can see the marketing campaign now. TV ad with woman in shower, lathering hair. Partially draw back curtain, pokes head around. Says "DSL and cellular bills? No way! I just surf and phone with Nextel Wireless Broadband". (With apologies to Procter and Gamble and those who never saw the infamous original 1980s TV advert.)

A deaf ear

Two very interesting stories over at Slashdot on how scammers are using relay services for the deaf to anonymize their telephone transactions.

The Arizona Daily Star is reporting on how 419 scammers and credit card thieves are abusing the US' TTY service which enables hearing-impaired citizens to make phone calls with the help of an intermediary operator. 'The callers try to use stolen credit-card numbers to make big purchases of merchandise from American companies. The operators often suspect fraud, but they can't just hang up. Federal rules require them to make the calls and keep the contents strictly confidential.'

This will only be solved by some for of digital identity. Identity is going to be the hot story of the decade. Just like in 1994 few people could see how cellular would explode into the general population, a decade later the need for better digital ID is equally pressing and under-recognized.

My only hope is that we find a happy medium on privacy. You don't need to be personally identified in order to use this sort of service. That makes deaf people second class citizens in the privacy stakes. But you do need to have membership of the "verified deaf American people" set to get through. Deaf people should be able to launch scams through this service if we're to preserve the right to privacy and anonymous communications. Then we're all equals. It's a funny world.

UPDATE: More here.

Piggy in the middle

Someone's got some good ganja cooking over at Always On:

The core technologies to make personal broadband a reality are already in place—Wi-Fi, for example, is a personal broadband technology. However, Wi-Fi does not represent a sustainable service model because it uses public spectrum, because it does not support end-to-end class of service, and because it represents an addition to the existing cost of broadband access. The upshot is that we're still missing a clear global market vision and understanding of the personal broadband opportunity and its scope.

Since when did a technology need money-making middlemen with a "sustainable service model" to become blessed as a valid concern? Just because nobody can engage in rent-seeking behaviour and make globs of profit doesn't lessen the concept one iota.

"I'm sorry sir, you can't marry this woman as you do not appear to have been introduced by a licensed introduction agency to whom you have paid the appropriate fee."

OPINION://Over the edge

Having been reading about Session Border Control systems, I've been pondering over what is really meant by "the edge of the network".

The classic end-to-end argument is that a dumber pipe is the better pipe because it is can be repurposed to applications never conceived when it was created. The consequence is that all the application smarts should be "at the edge". This usually implies a single terminating device.

But we're moving to a world where functionality is increasingly spread among multiple devices that co-operate to complete tasks. Is your "TV application" inside your TiVo-style home media server or the smart screen that decodes the video stream? Or in the neighborhood content cache?

We live in a very end-to-end impure environment chez Geddes. We have a NAT router and a caching web proxy server at home. So I don't have an unmediated path from my PC to the Internet. But I don't care, because it is all under my control. The fact that a bit of my network is "smart" doesn't trouble me one bit.

So perhaps the classic end-to-end argument is too techno-centric. The real issue isn't one of dumb pipe vs. smart pipe, and pushing functionality out, but one of control. It's the politics, not the technology, that matters. If I control what's going on, then I don't care how dumb or smart the network is. If the smarts aren't what I need, then I can replace them.

So if the PSTN were to ever evolve (picture: Hades, snowdrifts, river Styx, ice flows), here's what it would have to do to survive. All those switches would need to become open and flexible. They would enable me to run my own agent software. I could use the circuit reservation capabilties to create new functionality that a non-QoS IP network might find harder. I could write better presence management software to deal with wireless devices that go out of range (a classic failure scenario of end-to-end: a disconnected smart device can't do jack). I could create triggers that would operate even when my power is out at home disconnecting my smart home voicemail server.

We already have the technology to do this. Virtual servers, virtual machines, process protection. Stuff IBM and Sun have worked on in the labs for decades. We have the identity technology to know who is running what and where is came from and who to whack if it misbehaves. It's just a question of making it happen. Which will never occur, because telcos believe loss of control is their nemesis, not their savior.

Lock-down screw-up

From Russel Beattie comes this gem

Okay, about the Motorola i730: It's a really cool phone, but... you can't put your own apps on the phone even with a cable unless you get a special application approved by NEXTEL Moto has this program called the Java Application Loader (JAL) but only "JAL Lite" is readily downloadable and it won't load any application that uses the network classes. So even though I bought the cable and ran that app, I still couldn't test our map-based J2ME client here at work on the phone (which was the whole reason to get the phone in the first place!). I've submitted an application to NEXTEL to get the full-featured JAL and I've been Googling for workarounds. Stay tuned on this subject.

The PC is an open architecture, and Windows is open in the sense that Microsoft doesn't control what apps can run on it. (Although if you make too much money doing it, watch your back!) These PCs are all wired up via an open network, the Internet. The result was a stunning success.

Cell phones have been locked up from the get go. The architecture is closed. The carriers control which applications go in their portal, and how applications are signed and what APIs they can access as a result. The result has been mediocrity.

The one big mobile applications success has been iMode and its imitators, which created a pool of "official" branded content whilst also positively encouraging a primordial soup of innovative new applications. The technology was made as un-proprietary as possible within the constraints of the device.

Prediction: open systems will continue to crush closed ones. Why? The obvious reason is that open ones are fitter in an evolutionary sense. An application that almost hits the mark is easily superceded by one that scores a bullseye. In many ways, that's the core concept of end-to-end or the stupid network.

There's a less obvious reason, too. It's what I would call the openness ratchet effect. The easy, zero cost way of differentiating yourself from your competitors without incurring product development costs is to be a bit more open. Someone will always make the jump.

Funnily enough, in the music business they're busy trying to lock down the entire system. But the harder they fight to lock it down, the more boring and corporate the music has become, and the lower the sales. People have been substituting their entertainment dollar for other less restrictive and more interactive products.

The music industry relies on legally granted power over its customers to perform price discrimination. For the music industry, they want to charge a vastly increased amount to play a 30-second clip in a TV advert compared to you playing it on you iPod. Copyright is the mechanism to do that.

For telecom, the price discrimination control may be:

• technical (e.g. firewalls, signed applications),
• contractual (e.g. Comcast don't allow VPNs on their home broadband service, and Time Warner don't allow servers), or
• regulatory, e.g. by the extra charges that get tacked onto a phone bill as "FCC Subscriber Line Charge". Nobody goes to prison for fraudulent advertising because they're allowed to not disclose the true price of the voice product. No other communications service is allowed to be misrepresented this way.

In many ways the primary purpose of an old-fashioned telco isn't pipe provision but price discrimination. Smart networks to classify, filter and meter traffic. Complex pricing plans and megamillion dollar billing systems for contractual confusion. And an army of lawyers. Price discrimination of service use is the core competence.

The trick to survival in the long term is to forget about piracy or disintermediation, and think only about profit. Get a smaller slice of a much bigger pie, rather than try to grab the whole pie for yourself. Unfortunately, the music business and communications corps keep backing themselves into a corner. New value creation will ultimately route around your toll gate, like it or not.

Irregular service

A quick extract on a recent Pulver email on VoIP:

* If IP voice services are to be regulated, will it be at
the European or national level? Does it matter?

* When should IP voice services be classified as PATS [publicly available telephone services], and why?

* Can public services -- such as access to emergency services on
VoIP -- be assured in the absence of regulation?

Oh my. We're stuck in a situation where the circuit-switched mentality still controls our vocabulary and thoughts. Every part of the application value chain is separable. There's more than just application service and bit haulage. You have to look at all the individual parts and decide whether to regulate.

In this case, the concept of regulating VoIP is meaningless. Are you going to regulate voice chat embedded in multiplayer games? I don't think so. Are you even going to be able to define VoIP? Detect VoIP traffic? Nope. So the bit that's left to regulate is the namespace. The digital identity made from telephone number digits.

You can control the issuance of telephone numbers. By definition, you need a central authority to state whether a particular number is already issued and to whom. Centralized things are amenable to definition, detection and regulation. If IP-based voice services want to hook into telephone numbers, then regulate that interface. But don't regulate a service you can't even define.

Even better, moving the regulatory focus to the identity sphere, you aren't inhibiting competition and innovation. Anyone can invent a new namespace and stick up a directory. Namespaces are not a scarce resource being artificially rationed.

You can regulate PSTN-alike VoIP services where there is an identifiable service provider. But regulating VoIP as a class is like regulating anger or success. It's an ether you'll never put back into a bottle.

UPDATE: For those interested on how language regulates thought, read the works of Wittgenstein. Then please report back here, as I'm too lazy to read it all myself...

Your horseless carriage awaits, Sir

This rather nice summary of the impact of VoIP on call centers reminds me of something I've been meaning to get off my chest.

I'd just like to say some rude things about the concept of an "IP PBX". (For the acronymically challenged, this is a packet-based teeny weeny local phone exchange you stick in your enterprise and lets you dial Sharon in accounts by just entering her extension number.)

What an utterly cretinous concept. Does anyone believe this market has any future whatsoever? At worst it will be crushed as SIP call routing becomes a minor feature of Microsoft's Real-Time Communications Server (at a tenth of the cost). At best, you're left with a routing directory with the profit potential of a domain name server (i.e. none).

There must be some good money to be made shorting the stock of suppliers of dead-end technologies like this.

Give us this day our daily gallon

The International Monetary Fund (IMF) has had a rather controversial history. The IMF is sort of an economic policeman. And, as the song goes, a policeman's lot is not a happy one. Picture an indebted and impoverished country that has been pillaged by its leaders enough to collapse into insolvency. That's when the IMF's bankers and economists get to fill a few extra pages of their passports.

Any medicine for such sick patients is unlikely to be pleasant. And potentially unwelcome, too, when not every previous patient has gotten better. Even if they did a splendid job and made everyone a relative rags-to-riches success like South Korea or Costa Rica (not IMF rescue subjets), the IMF probably wouldn't have crowds on cheering admirers throwing garlands of flowers in their path as they emerge from passport control.

I believe it was in Tunisia that an interesting phenomenon was observed. The IMF's aim was to gradually increase the price of bread to reflect the world price for wheat. Being sensible chappies, they staggered the price rises. The first went into effect, the market price rose, people still bought bread. The second went into effect, up went prices. The third happened, and there were riots on the street.

What this illustrates is the breakdown of free market economics. Lawlessness undermines the foundations of freedom of contract, price discovery and open trading.

Which brings us to the most excellent talk from Professor Deffeyes at WTF last weekend. In a nutshell, the Professor demonstrated that world oil production is almost certain to peak next year, and then begin a steady decline over decades to come. Which is a bit of a disappointment if you're a newly minted member of the Indian or Chinese middle class hoping to buy and run your first car. Because richer Americans, Japanese and Europeans are going to be sucking up what's left at ever increasing prices.

The invitation that David Isenberg extended to Prof. Deffeyes was particularly cunning. At first sight, you have to ask youself why we're looking at oil production at a telecom conference. Then the talk starts to get interesting and you think, "OK, this is interesting enough I'm glad he came, it was still worth the money." But what we were really getting was a lesson in supply and demand. And what happens when supply goes keeerunch. The obvious answer is that prices rise. But here's the non-obvious bit from my notes:

One possibility that economists love is that we will ration by price. Nixon govt fixed the price of oil. Ration by inconvenience – lines for gasoline. End of WW2, Roosevelt had ration coupons. Will be some form of rationing. What happens when gap between supply and demand opens.

Aha! So last time this happened the price mechanism was only allowed to go so far. Before long, the clamour to "do something" by those disadvantaged by high energy prices became too much. And rationing was de facto introduced. (The same thing happens with the National Health Servce in the UK. Extended waiting times are an alternative means of rationing without the political pain.)

So what we see is a transition from a market economy to a political economy. In the former, production and prices depend on what you offer in return. In the latter, it's down to who knows whom and has influence. So oil, even in the richest countries, can behave like Tunisian bread. At some point the assumptions of a well-behaved market go wobbly and you're left with a mess.

And there's more. The oil industry clearly has lessons to teach telecom. The current strategy of most incumbent telcos is to restrict supply, much as any good monopolist will do. But oil and telecom don't exist in different worlds. They are, to some degree, substitute goods. Instead of shipping goods around the world at each stage of production, you can ship the knowledge of how to process them. People can telecommute and teleconference. An oil crunch means we're going to need a lot more telecom.

Which in turn means we may see an intensification of the political economy of telecom. In many ways, the core competence of most large telcos and cablecos is lobbying. In the US there is the Telecom Act, sundry FCC rules, the allocation of broadcast spectrum, franchising rules, and so on. Each acts to make entrance of new competition harder. Even if the label on the tin says the opposite. I'll say that again. Many telcos only make money from their copper landline operations, and that only happens because the political system makes it that way.

This doesn't paint a happy picture. On one hand you've got a potential explosion in demand. And on the other you have incumbents dearly set on restricting supply (Where's The Fiber!), and the political leverage to make it happen. And if Tunisian bread is a guideline, the result is going to be a riot.

UPDATE: More comment here from the Angry Economist.

UPDATE: New York Times article here

UPDATE: The "peak oil" hypothesis is just that -- a disprovable theory, not a fact, as this article (pdf) describes.

Suburban spread

The talk at WTF by George Gilder on Korea has set me thinking about structural causes of broadband uptake. The south of Kansas City when I am sat now is one vast suburban sprawl. Fifteen years ago, 95th Street was the edge of town. Now when we take our daughter swimming we head down to 159th Street. The few fields left down there have "For Sale" signs on them awaiting development.

I'm just wondering if the US appetite for consuming land is a leading cause of the relatively low uptake of broadband. The US is clearly no broadband backwater, but given its riches and economic dynamisn, you would expect it to be doing better. All that sprawl just increases the mileage the cables and fibers need to be laid over. And there's an R^2 effect. Make those houses 50% bigger in each direction, and you're only getting 45% of the density of properties per square mile. That makes broadband wireless more expensive to deploy.

Even worse, VDSL can't deliver high speeds over long distances of copper wire without lots of local repeaters. And the uplinks of wireless connections are pretty sensitive to distance from the central tower.

So perhaps the future of American suburbia will remain two kids, an SUV and an expensive trickle of data for the forseeable future.

At least they won't have the problems seen in the UK where cable TV laying got into trouble because so many urban pavements [=sidewalks] have trees embedded in them, and the cable TV folks where cutting their roots. Here there aren't many sidewalks. Only freaks and deadbeats walk.

At there's no danger of a hill blocking the line-of-sight view of a cell tower in Kansas...

Economics class 001

The usual suspects have been bleating to the FCC that wicked Internet access providers are trying to turn a profit.

Tech heavyweights explain how to destroy the Internet

... The best speech came from University of Virginia Law School Associate Professor Tim Wu, who cited actual examples of industry abuse worth regulating against. ... He mentioned as well that broadband providers, Comcast in particular, have restricted or banned the use of virtual private networks (VPNs). The idea here is to charge the customer as a business user, rather than a home user, and extort extra money. Servers and VoIP have also been banned in places, to protect other services that the provider offers.

I'm afraid that whilst such activities may raise the ire of customers and create a lifelong loathing of their connectivity provider, they aren't worthy of regulation. Price discrimination is a GOOD THING because on average it tends to reduce prices, even if some people suffer.

In the days of PTTs and Ma Bell, it was reasonable to restrain the mandated monopoly from exclusionary or discriminatory tactics. But if you're looking for an explosion of wired and wireless connectivity possibilities, then those new entrants need a carrot of juicy profit to attract them to take a risk.

The role of government is firstly to ensure the customer has a clear understanding of what they are buying into. Only contracts freely entered into with clear terms and should be enforceable. Words like "broadband" and "Internet" in the advert should imply certain minimum functionality. Secondly, new entrants should be protected from predatory pricing of incumbents. And that's it. Consumer protection and anti-trust.

If we'd had that rigorously enforced thirty years ago, there would have been no need to break up AT&T. The market would have done it for you. Of course, as we've seen with Microsoft, that isn't easy to implement in practice. (Plus the astute observation at WTF that the first imperative of regulators is to perpetuate the need for regulation.)

If the "tech heavyweights" don't like capitalism, I'd rather they said it directly than try to regulate around it. Also, focusing energy on resolving symptoms rather than causes just diffuses the forces of communications freedom. And holds you up to ridicule for economic illiteracy, too.

When evil is good

One comment someone made at WTF was whether people who work for monopoly telcos know they are doing evil [in holding back the tide of human progress]. There were many references (including my own) to the big, bad telcos. I'd just like to put my amateur economist hat on for a moment, and pass comment.

I'm in essence in agreement with Professor Milton Friedman of the University of Chicago, who believes that business’s sole duty is to make profit. I think we all acknowledge that there are ethical bounds that surround that mission. You can't bump off your competitors too literally. But declining to extract the maximum from your customers isn't an ethical issue. You MUST do it. And it's a good thing.

Why? Because that's how the price mechanism works. It sends a signal that attracts competitors with better, faster, cheaper products. You can argue that the price mechanism is ineffective because the telcos work to avoid competition by rigging the rules. But that doesn't mean eliminating the monopoly price signal is wrong. Regulated prices just entrench the status quo forever.

So, no, telcos aren't evil. They have no moral scale you can pin them on. They just are. If you don't like it, go set up some competition, or agitate to change the political rules that keep them artificially in business.

Boing Boing Dosh Dosh

The masters of serendipitous eclectica over at Boing Boing are pondering how to deal with the bandwidth bills resulting from their inorexible success. Indeed, I occasionally live in fear of a sudden overage bill if this site suddenly got a spike of visitors (I should be so lucky) or suffered a denial of service attack.

The answer is simple in theory if somewhat hard to implement in reality. Don't centralize what doesn't need to be centralized. Boing Boing is a "bag of bits" website, where the only interative feature is the search function. We need to start thinking of how to re-wire the web into a peer-to-peer architecture. Don't store static data centrally. Just store the pointers who who might have a list of where it is (a-la Napster mk1 or BitTorrent).

Of course, Boing Boing can't alone be expected to change the world this much. But you can't escape the cold clutch of economics. If the only way of getting your message out is to reinvent the web, so be it. I can imagine a day in the not too distant future where your visit to a website returns a lightweight page like this:

We're sorry, but we have reached our monthly bandwidth charge cap and your user agent "Microsoft Internet Explorer 7.0" does not support distributed web page delivery. May we suggest you upgrade to one of the following products...

The interesting thing about BitTorrent is the algorithm by which download speed is coupled to the uploads you've made available. No free riding, folks. Applied more broadly, this would greatly discourage the use of dynamic IP addresses (which make acting as a server awkward), NAT devices (hard), and firewalls (impossible). Worried about the balkanization of the Internet? Then just set up the technology so the economics are in your favor.

I bet someone is already working on peer-to-peer locally cached web delivery. (If not, I want credit on your patent application.) Anyone want to enlighten me?

WTF Index

Due to overwhelming demand, here's an index to the transcripts.

WTF Sunday Afternoon Sessions - Talks [on Wireless]

WTF Sunday Afternoon Sessions - Developing World Telecom

WTF Sunday Morning Sessions - Sifry [Politics and Internet]

WTF Sunday Morning Sessions - Operations Culture [Peopleware]

WTF Sunday Morning Sessions - Corporate Culture

WTF Sunday Morning Sessions - Short Talks

WTF Saturday Evening Sessions - Deffeyes [Oil, Supply and Demand Thereof]

WTF Saturday Afternoon Sessions - Wireless Wonderland

WTF Saturday Afternoon Sessions - McGarty [Municipal Fiber]

WTF Saturday Sessions - Short Talks

WTF Saturday Morning Session - Noam [Infopocalyse Mispredictions]

WTF Saturday Morning Session - Netches [Putting Change in Perspective]

WTF Saturday Morning Session - Gilder [Korea]

WTF Friday Sessions - Googin [Why RBOCs are F*ck*d]

WTF Thanks

Before I collapse into bed, just a few words on WTF while it's all fresh. Wow. An orgasm for the intellect. I must thank David Isenberg for pulling together an amazing crowd, excellent presenters, diverse agenda, and top-notch organization.

My biggest take-away is the historical significance to the species of getting things connected. It's a mission, not a business. Trashy telcos aren't the central issue. We're too close to it to see the implications. I want my grandchildren to know what it was like when it happened.

WTF Sunday Afternoon Sessions - Talks

OK, the last session. What a panel! Tim Shepherd, who modestly disclaims inventing mesh networking. Gordon Cook, the sharpest quill in telecom. And Col. David Hughes, and extraordinary gentleman and soldier who has been wirelessly connecting the ends of the Earth.

Tim Shepherd

PhD thesis [Theoretical basis for mesh networking] misused. Used to whack FCC commissioners on the head. Things we think are settled in wireless are not. Want to teach a few technical things.

Imagine 100,000 people go to a football stadium. Acoustic spectrum for speech only a few KhZ wide. If everyone talked at once nobody can talk. Wrong! But you can talk to neighbour if everyone else talking at once. PA system still works. Can use intuition of football stadium acoustics as metaphor, with limits.

Where do we need more regulation? Acoustic or electromagnetic. Need more acoustic regulation and less electromagnetic.

Electromagnetic waves do not interfere. Slit experiement is inferference. Economists and lawyers use it in a different sense. Analog of two cars going to a single spot.

Interference occurs happens in the receiving apparatus.

On open spectrum list someone said there are times everyone in football stadium needs to shut up, for example during anthem. Life isn’t like a football stadium. 3am music – call police. In theater, kicked out if I annoy my neighbours. Response – football stadium analogy not perfect. Need less refulation than acoustics.

Hearing different from electromagnetic. Can’t redesign ears or brains. If neighbour transmits 100W of RF only a problem if you have a receiver. No receiver, no problem.

Second way it is different that there are 5-7 orders of magnitude more bandwidth. Like being able to listen to 50,000 at once. Also small wavelengths mean you can have directional signal.

So yes there are times when we expect people to be quiet in the real world. What does it mean to be quiet on the Internet? Maybe on a mailing list, but can’t expect people to keep it down and stop writing so much on their blog.

Military should be able to do what they want. Robust civilian systems like GPS need to be robust against people with malevolent intentions. Then we should have a free-for-all.

Gordon Cook

Three things. If I’ve learned anything in the last 6 months and the last 2 days. Former: wireless everywhere, ubiquitous, gigabits to kilobits. WISPs to RFID to tiny remote sensor networks. All interlinked in intriguing ways. To the extent that there is room for innovation left in ICT field it is in building this global, ubiquitous wireless network.

In last 48 hours have seen things get clear. It’s boundary crossing. Dinosaurs getting weak at the knees and keeling over. The only opportunities for creative existence not shackled by constraints of corporate business model. Need to understand how all the pieces build on relationships. Interesting business propositions.

Chaos, but can see enough of the big picture. Three years ago was losing subs. Asked Dave [next speaker] for advice.

Went from supercomputer center to office of technology assessment. Didn’t understand what it was all about. Start a newsletter. How to do that? Just start and keep on going. One foot after another. 3 years later meeting Steve Goldstein in Moscow and talking on NSF and international connections system. My devil’s tail not so long, so introduces to person running BBNS presentation. Head out to Colorado in 1994, meet Dave who is hooking up school in mountains at 56kbps.

Mitchell – passion is getting K12s onto the Internet. Hate the RBOCs. Whoa! Do I have the person for you [Dave]. Dave been doing amazing wireless stuff ever since.

Went to Tibet and Nepal in 98/99, Kashmir in 01, Nepal in 02. Had a revelation. Guy who runs largest ISP in Kathmandu. 10 years earlier was a student in Montana, student of a student of Dave’s. Said there’s an interesting Sherpa putting a telecom on the side of a mountain. Met about 4 Nov 02, talked to him for 45 mins. In 3rd world, Maoists had blown up the repeater tower. Get a satellite dish, PBX. Needed to explain whole copper and PBX stuff. How much is a box and can I stick it into a plane and fly it into Namche? Sure. Explaining how he did all this. Suddenly, sentence that changed everything with my relationship with Nepal and Colonel.

But that’s not the only reason I’m doing this. I want to preserve Sherpa culture. Want to put Tibetan characters on computer. Nobody under 35 can write Tibetan. Have Tibetan culture, not Nepali. Now using telecom to enable local indigenous cultures to survive. Another human being has come to same conclusion independently. From straight back to Toyko, New York, imedially call Colonel [Dave]. Back from Mount Everest – news for you. You’ve been reincarnated on Mt Everest. Met this crazy Sherpa. Spent 02-03 getting cybercafe to Everest base camp. Dream to go there. Did it.

Colonel David Hughes

Don’t go to many conferences. Isenberg dragged me here. Don’t like to do anything for people. Just go there, do it while they watch, let them learn, I have no intention to stay behind.

Hedy Lamarr, Inventor of Spread Spectrum. 1941. Never got recognition. I nominated her for award that got her world fame. Never occurred to these people who used her image in marketing she might still be alive (84 years old). She sued and for $5m.

Picture of her actual patent, released for public access in 1985.
Classified for 40 years by FCC. Too secure for intercept.

1995 and Israelis were playing with the technology. They then loosened up. Three NSF years at the edge. Rain forests of Puerto Rico, permafrost in Alaska, lakes in WI, outer islands of Chesapeake.

Nobody is doing modeling of wireless properly, just need to apply known biological science model techniques.

Towers, trees, rain, rats problems in Puerto Rico. Need to cut through canopt. 902-928 Mhz radios.

Lake Wisconsin, problems with ice, wireless in middle of lakes. Tower height, $7000 to get 125ft up, above trees. LOS problems? Use helium balloons. Small radios in slings. Hooked into wells [against wind and snow].

Chesapeake, offshore. Univ of Virginia studying out there, 14 miles of water. You can get range out of wireless, just need to know how. Maybe a little bit of civil disobedience in public interest. Only thing that stayed up during hurricane was this one link.

Alaska. Fairbanks. Central AK. 16 miles down the river to collect data from sensor, swap memory modules.

Real-time demo of webcam up in AK, -7C , date and time is now.

Caribou, vertical solar panels, not enough power still.

Power is biggest issue of mobile.

Everest. 18000 ft up. Can’t put solar panel and satellite up on iceflow next to base camp, as glacier moves 4ft a day. Called up friend in Cisco. Asked to give radios in return for PR. Got it all hooked up. VSAT on hard ground, local link to basecamp. Picture of Sherpa with directional antenna. Can then charge $1/min to climbers who can communicate with rest of the world.

Then off to Namche, but 76 years old. Had to train in CO. 2000 feet in 2 hours without collapsing. Namche surrounded by cliffs. Start with Lukla, don’t bring US radios, just being cheap ones from Singapore with low power needs.
Cybercafe. Success. Any climber could get to top of Everest and send email home to mum.

In Thame [nearby village], very poor, trying to raise money for books (much poorer than Namche). 5 relay radios. Picture of Moats [HELP! I know nothing about these micro smart-dust radios, even how to spell their name] Future of radios, tiny.

Economic development next topic. Examples of Bhuddist art they are selling.
Demo of SJPhone, ready to call – contact Mingma, sherpa in Pittsburgh, learned English in kathmandu. Couldn’t afford to go to CMU. Distance learning VoIP to classroom. 1500ms latency.

[Wifi problems in auditorium.]

Moats demo. TinyOS Linux derivative. Looks small. But two big dry cells. Haven’t paid any attention to alternate power. Sensors – sound, accelerometer. Smart dust 2mm x 2mm. Stansby power 1 uW. Transmit 1.5mW. Receive 1mW. Mesh range @915Mhz, not spread spectrum.

Duck Island in ME off Bar harbor, had Stormy Petrel birds. Why survive there and not next island. Put 150 old style sensors in, no room for bids in nest!
Fuel cell technology. Fuel cell with printer techniques, H2 hydride fuel cell. Three 1V cells. Smallest ones will fit on a bee’s back.

Want 20 years unattended of a fuel cell harvesting power. Tiny power, tiny storage. Want to know how to tap evergy in changes in atmos pressure. Why not? Trickle charge. Can last for years that way. I don’t want to be the guy who goes out there to change the batteries [Audience: what’s that PhD students are for!]

DI: Tell them about the award you won! We just think he’s great, given him the only standing ovation of the show.

Flattered, humbled, astonished. Association of graduates of west point. Schwarzkoph. President of Phillipines. Am Distinguished West Point Graduate for 2004. Going in May. Only 7th colonel to get it. Aldridge and Borman who went to moon before me.

GC: Crossed political correctness boundary.

Women at West Point – any nation that permits and encourages its women to join an institution aimed at killing people and destroying people is morally bankrupt.

Q: First time I’ve heard spread spectrum being locked up by military. Wanted to confirm this had been around for a while. Defence department has affected direction of [economy].

[Story of Hety Lamarr - you go Google for it yourself]

GC: I visited David in 1989 in CO. Will have Global bulletin board. Working stiffs will see this. Thatcher will talk to Brezhnev. Only 7 years later was putting Mongolians onh the Interet.

Third world can’t go wired except in main cities. Must be wireless. PDA sized thing.

WTF Sunday Afternoon Sessions - Developing World Telecom

Two interesting speakers on the real opportunity in telecom, emerging markets, a.k.a. places you want to visit on vacation but not live in.

Intro: Lane has been wiring Africa. Rahul is public policy researcher at CMU.

Lane Smith

Mickey Leland, congressman from Houston when it was very racist. Fought against hunder. Plane crashed in Sudan and died. Asked for $25m from Whitehouse, so USAid stepped in.

Connectivity map of Africa in 1995. Very little. By 2000, all capitals and many major cities connected.

Two great privileges in life. Started with Peace Corps, now with USAid. Funded by tax dollars. A privilege to be a steward of those dollars.

I didn’t do any of the roll-out. All done by Africans. I just sat in Washington. ISP from Morocco installed gateways into 10 countries.

Knew old telecom model of monopoly wouldn’t work. 40 countries at a kick-off conference. All countries wanted internet. Only 10 wanted retail competition at Internet. How many willing to offer cost-based tariffs to make it work. Same 10. Worked with those countries. Last country to sign up is Eritrea.

To give idea of bandwidth scarcity, USAid bought “gigantic” circuit of 128kbps for 1st year. Soon had ISPs wanting more bandwidth. Go to telcos. Either couldn’t work out how to do it, or refused (competition with own ISPs).

Issues: Policy reform, infrastructure access, network of users.

All countries had regulatory countries, not independent, staffed by current or former telcos people. Needed 4-5000 people trained in regulation. Have formed industry regulation associations.

Nigeria: 450k phone lines, 20k cell phones at start, deregulated, 18 months later, 2m cell phones. Still growing that fast. Catalytic infrastructure. Incremental.

Rahul Tongia

Carnegie Mellon University. Engineering and public policy. Faculty of school of CompSci.

Background academic, lots of real-world experience. CMU involved with India number of years ago. Presentation to prime minister officer. Don’t treat voice and data the same. Build all-optical network, leapfrog. 1998. Spent three years building Internet++ for India. Walked out because of politics. Need to be ready to play dirty. Can’t just win on merit. For example, CMU project funded by DARPA, think it’s a back-door to take over India.

Lessons: International is very important. UN meeting recently. 90% of brazil tax returns done online. Internet important. UN important. Therefore UN = Internet. Hmmm… Scares engineers.

Compare voice versus Internet. Developing countries have call completion charges. Raises forex. In Internet would they have to pay to send and receive data.

2.8bn live in poverty (<$2 day). Internet far from the minds of people with lack of food and electricity. Developing countries don’t know how to react to change. US has incumbents. Developing countries the incumbent is the government. Restrict VoIP, unlicensed wireless spectrum.

World telecom development indicators. Didn’t ask govts for stats. Went direct to source. Asked for costs of basic Internet dial-up connectivity. As of GNP, Hong Kong cheapest at 0.2 of personal income, 968% of income in Congo.
No technology bottleneck. Can provide services to 10x people a fifth cost with regulatory changes.

Push to privatization for PTTs, competition believed to solve all problems. Doesn’t necessarily deliver what you want. Bad outcomes from the market. Role of govt needs to be understood.

Foreign Policy article on “Broadband Marxism”. Like Utah OTOPIA model.
Developing countries where the action is.

China has more DSL than USA. $5/month. In terms of absolue numbers US voice is saturated. All about re-arranging the pie. Elsewhere it’s about growing the pie.

Q: Outsourcing of US jobs. Why should we help?

L: Have seen bad things coming out of developing world (AIDS, SARS, Al Qaeda). Down the road see this being a healthier, saner world.

R: No longer $10 Nikes made in US. In grand scheme, jobs to India is small. India imports more than it exports, and imports growing faster. Just will be different winners and losers. Bottom line is all benefits have not gone to consumers, just CEOs and shareholders.

Q [Gordon Cook]: Fiber economic model utterly broken, can’t survive without government subsidy.

L: In India for $2.75/day can get Internet to a location. Doesn’t include labor to run retail outlet. Just capital. Plenty of purchase capacity. Can get BB internet out there. Africa has your equals in entrepreneurial skills.

WTF Sunday Morning Sessions - Sifry

A talk by Micah Sifry on the impact of the Internet on politics.

Intro [DI]: Author of iraqwarreader.com. Brother of David Sifry. Writes for The Nation.

Was editor at The Nation. Freeland write. “Public campaign” group – change the nature of money inpolitics. “Spoiling for a fight” book. “Is that a politician in your pocket” book coming out.

Is this the end of politics are we know it? Are 2m moveon members, 1m meetups just dazzle that’s irrelevant? Presidential campaign that relies on small donors? Or just seeing intensification of patterns of power and voice?

Mark Hannah – Two things important in politics. Money. And can’t remember the second.

Money shapes what can be discussed. Can view politics as a contest between organized money and organized people. Decline of organic mass-membership orgs with local ties (1950s). End of fellowship pursuing large civic purposes and community support. Since then 800,000 people with money dominate. 0.25% of population give contribution of $200 or more.

Don’t get elected unless you are already rich, or know someone rich. A universe of professional interest groups. Give voice to people with money or high levels of education or both. A few exceptions like NRA or Christian Coalition lower down socioeconomic scale.

Gatorade demo. Politics is a duopoly. Two sellers, have driven out all other competition. On the beach. Situate themselves next to each other. Can jointly act to raise prices, take a vacation at the same time. Can give vendors money to sell one type of ice cream.

Most politics conducted under duopoly conditions. Paralysis, lack of accountability. Dominated by one party, and person with most money. Ability to write govt regulations to protect themselves from competition. Gerrymandering. District boundaries. Choose the voters before they choose you. No competition eliminates accountability. Bipartisan = buy one party, get one free.

Many costly blunders. Degregulatory excess caused Enron etc. Before 9/11 couldn’t secure airports. Wolves investigate how the chicken coop was broken into.

Social s/w, many-to-many – do they tip the balance? Answer – I don’t know. History suggests we should be skeptical. Cable TV came out, people assumed community TV would revolutionize politics. Didn’t happen. Direct mail, new communications tool, bring little people bacik into politics. George McGovern started, new right perfected it. Hasn’t changed politics. Lots of organizations with letterheads and mailing lists.

Still want authenticity and honesty. Used to have double the voter turnout in 1800s as a true multiparty democracy (80%+). Some things that route around duopoly do well. Talk radio a quasi public forum. Victory to stop Congress giving itself a pay raise in 1980. Raised 8m dollars through 800 numbers for campaign. Ross Perot similar, shame he was a madman. Howard Dean could have succeeded if Dean had been a better candidate. Changed the discourse, injected a different message. Told people their $50 or hour in a precinct not wasted.

Optimist tells be broadcast politics not ending, but mass self-organization arising in parallel. Anything organized like a cathedral will be routed around. The swarm can be smarter than the queen bee. Institiutions that don’t open to dialog will be routed around.

Dean campaign successful because people asked for input. Cluetrain manifesto. The range of things people themselves can do is enlarging. Meetup doesn’t meen the people who turn up know how to run a meeting. Get echo chambers, not propogation.

Does this extend to people who aren’t college educated? The upper ranks already express themselves through professional organization when they are constrained personally. Maybe will move from representing top quarter of population to top third. These people already looking to get involved.
American Legion was prime mover behind passing GI bill in 1944. Very progressive piece of social legislation. Had chapters everywhere.

Most of us never experienced how to have a meeting, how to have a leader.

May intensify existing affiliations.

Q [DI]: Ralph Nader?

I supported Nader in 2000, don’t support him this time. He should have done it in 1992 when conditions ripe. Terrible campaign in 2000. Should have run like Jesse Ventura. Have to go right up the middle and crowd out the parties. Need name recognition. “Debates” are controlled by the parties. A quirk that Perot got in in 1992. So many similarities between Bush and Gore. Wish Nader had focused on Perot voters. This time it is insane. He’s stuck in an old paradigm. Looks at this analysis. Was one of the leaders in 60s and 70s that said don’t need a mass movement org. GM tailed him, sued, and money from settlement was used to build grassroots base. Nobody has elected him to anything. He’s just another lobbyist. Out of touch with new technologies. Someone asked if he was bothered about lack of meetups, said he didn’t have time for virtual reality. Will route around him too.

WTF Sunday Morning Sessions - Operations Culture

This session sparked some heated commenty. Focus was on simple people issues rather than disruptive innovation and kill the telcos. A clear clash of value systems.

Jack Baron

Terrible acquisition by AT&T. 35 managers around world, all gone in 120 days. Some of those left started Paetec communications. Funded by friends and family. Aim to be most customer-centric telco. “Nordstrom service at Walmart prices”. A sexless vision. But fine with it.

Focus on medium-large business, $5000-$250k a month bills. 50% local and 20% long distance. 15 internet, 15 managed services. Only profitable CLEC of size.

People are the key. Fairness, balance, ownership. Best friends together. Makes huge difference in success and trust. Everyone has options.
Paetec is not the most important part of life. CEO insisted I not come in to work when I was sick. Senior execs took radical pay cuts to start company. Common bonus program. No exec perks. No company cars. No CEO huge salaries. Promote from within unless significant skill set differences.

Big on community services. Big on family. Big screen in NOC and have kids in to use playstation on it on holidays. Lots of family events. Charitable events. Want to host a chartiable event, company will host. Pays dividend in how people view company.


[DI - sounding frustrated] But how does this deliver us cheaper better networks.

Listen to customer. They want cheap, promises delivered. Hire smart people. Recognize and reward. Process innovation. Technology agnostic. Just deliver what customer wants. Drive down costs with technology and process.
No IVR front end on customer service center.

$400,000 revenue per employee. Significant profit.

“We suck less”. – initial motto
“We no longer suck” – more like jetBlue.

Jim Sturtevant

Customer first is the secret.

Wedge Greene

Have seen corporations like MCI doing well and tank. Have never been part of the core group of any company. Never realized until I lost $600,000 at Worldcom. Was a “corporate resource”. My voice was always being heard, listened too, funded, spouted. Ebbers talking about things we proposed. Thought we were directing the same way we did during MCI growth. Media suggested I was great influence on the company. When push turned to shove that wasn’t the case. The critical number is revenue per employee.

Grew MCI from zero to $5bn in 5 years. With BT focus changed to new technology. MCI was about ways of influencing customers (friends and family). But BT interest increased personal visibility. Value of corporation dropped.
Worldcom came around. Company messed up. Value going up, nobody cared. Cost structure getting worse. Had to cut costs out of “fat” organization. Ended up cutting away the efficiency of the organization. Reward structure didn’t reward employees to perform in interests of customer and company at large.

Cost-cutting lost track of that.

Q: Big evil telcos. Do people do evil knowing it?

Investment bankers are evil! Telcos are fine. Once the decisions start getting being made in Wall Street, you’re in trouble.

The people who make decisions must be doing in the interests of customers. Can’t add value by just cutting people out of operations.

Q: Christensen said listening to customer leads you away from bottom 20%. Miss disruption. What to do?

The customer is always wrong. Org needs to lead ahead. That’s why advertising exists. Lead and then convince customer what they wanted all along. Just don’t make customer mad. Not the same as listening to them and doing what they ask for.

People get used to such a poor level of service from telcos. Don’t have to lose those bottom 20%.

Q: Don’t ignore people who do existing stuff well rather than new stuff. My objectives of starting company was (yes) make money, but also have a place people want to work.

We follow customer downmarket, because that’s what they want.

Q: This is about people, not technology. We came here to meet people. It’s about people, caring. That’s how the world changes. Wrong to challenge Jack who was focused on people.

Customer service is the product. A difficult product to sell. Reputation in the community, takes time.

Q: Yes, good corporate culture is important. But for many of us the issue is how to get disruptive technology to work, particularly when you’re not in the core group. An easy thing to say you’ll make customers and employees happy. Unsolved question is how to put disruptive tech into org that may be successful or sick.

Q: Discussion on whether panel has any value – isn’t treat customer well motherhood and apple pie.

Many just don’t execute this. Hard to build process.

MCI can only do so many gimmicks on existing technology. Run by salesmen, objective is to turn over the company into a sale. Need people who can give negative employee feedback that doesn’t make people leave company.

Q: Expert in the field in having people come to you and pay you to tell them they are wrong. Assume most people here are iconoclasts. Would like to direct people to earlier speaker on information flow. How is information flow linked to success? To cash velocity? Does it exist in service industries rather than manufacturers/assemblers like Dell?

David Isenberg

Transmission Capability (Gilder’s law) (up very fast), Transistor density (Moore’s Law) (up fast), Accounting Law - depreciation (down). Core issue.

WTF Sunday Morning Sessions - Corporate Culture

Two speakers, one an author, the other an advisor to CEOs of megacorps.

Art Kleiner

Isenberg intro: Book Recommendation - The Age of Heretics

Corporations know what to do but don’t do it. Liveraldi [Help me spell this right, someone!] – saved Ford Motor. Created Taurus team. Denied promotion. Offered exile position. Left company. Heart attack. Wife bought a Mercedes. Why?

Examples at AT&T, Shell, General Foods. Looking for universal explanation, a theory with predictive power. Can come into an organization ahead of time, and actually move a corporation in the way you want.

Traditionally believe: capitalism sucks, entrenched interests, short-term ROI.
All are wrong. Counter-examples exist.

Book of his: “Who Really Matters?”. Organizations matter, they amplify human activity. Number of organizations doubles about every 25 years. Since 1840! A world of proliferating organization. In an organization, every decision matters.
Metaphor of everyone having a joystick trying to control a game. Often going in a different direction.

Most people mix a bit of where they want to go with where they think the org is going as a whole.

We base decisions partly on what we think helps us, partly on the org needs.
We carry around with us a mental map and frame of mind about where org wants to go. We anthropromophize the problem onto the people. Core group who largely control. We think about how consequences of decisions will affect our personal relationships with those people.

Core does not align with org structure. Core group, subgroup and enablers.
Whose priorities have to be considered. Annotated org charts of four example orgs. We collude with power. Susceptible to exploitation.

Enron put forward the case that EVERYONE was in the core group. But there was a secret core group based on the knowledge of existence of secret partnerships.

Employees give the core group legitimacy.

In 1970s many corporations left NYC. Common theme: all ended up withing 8 miles of CEO’s house.

How do we foster great core groups to achieve great things.

Core group feedback – Market feedback – Noble Purpose Feedback. Declines in org respectively 5-25, 50+ and 150+ years. Introduce a new product – core group will give feedback in 5 minutes. Everyone carries perceived view of what the core group needs and wants. 3 months to 2 years to know if it is successful in marketplace. 10+ years to know if it makes a better world.

Francis McInerney

Intro [DI]: Has been in many telco corporations.

Notion in 1967 that the survivability of all orgs based on the velocity of their information. Those that can process information better than other will survive, and others will not.

Prague Spring and Soviet invasion example. Televised. Slow velocity organization trying to suppress an increasingly fast one. Great idea, not very helpful.

How do you measure information velocity inside organizations. How to create something predictive?

Have worked with C level execs at telcos all over. Also work with large number of consumer electronics. Only caucasion advisor to head of Matushita. CEO of Siemens, Phillips. Global perspective.

The thing that has stunned me is that the closer I’ve gotten to measuring info velocity and the risks in persuing high-velocity orgs, the bigger the resistance to the orgs in making the changes they need to make that should be obvious.
Time and again huge mistakes get made. Example of DEC before Compaq bought them out.

First is the efficiency of sale to cash cycle. Faster in slick orgs. Second the efficiency of operating earnings.

By these measures, DEC only had 24 months to live, yet Compaq bought it.
Must be, given Art’s observations, that the core group made a decision that any fool doing due diligence is terminal.

You could predict almost to the month the unfolding of Compaq. Amazing you have these large organizations making decisions that will kill them. Same again with HP and Compaq. Latter only had 36 months to go. Why did it happen? Some sort of profound malaise, an existential crisis.

How is it that otherwise perfectly selfish human beings should make decisions that are suicidal? It is clear that there is a gene that turns companies off!

What is most interesting isn’t the failures – can read about every day in WSJ. But how do the great truly survive.

Excellent example of Dell. Sale into cash in -42 days. Gets paid 42 days ahread of incurring expense. A phenomenal cash engine. It’s the only decision they make. The entire structure of customer structure and order entry all geared to this.

By having touchpoints on all of supply chain you have unique proprietary data.
Look at HP, Compaq, DEC. These companies at all times have never had less than 70-80 days disadvantage over Dell. No matter how much improved (gone from 120 days to 35), still stuck way behind.

Concept of “more time”. A different time dimension. Look at HP learning curve on cash velocity. Drop their cash velocity along the Dell curve, project 5 years ahead. Look at HP, Matsushita, Phillips. In 2007 they will be where Dell was in 1996.

WalMart has fabulous numbers. IBM has sale to cash in 4 days. A winner. Extraordinary for large company.

Consequences of lag a 10 year competitive disadvantage. Consequence of failure to decide [partly due to slow info velocity] is to perpetuate that cash lag.

If you’re investing in those stocks it is over for those companies. Companies where high market values but slow velocity of cash. Will go bust. Market has it wrong. Dell, IBM, Southwest Airlines. Undervalued, despite high P/E.

Japan has fallen off the graph. Japan thrived as long as simple “ship a VCR”, but died as soon as complex supply chain was the issue. Could be terminal decline or a renaissance.

Q: Mechanism that has some people providing direction and other executions seems in humans tied to something that goes against grain. Can do big things if we direct/follow, but at the same time it kills itself.

F: Can’t divide accountability and authority.

Q: This reminds me of the six sigma fallacy. Japan worked perfectly until went over cliff. Is it better to have corporations die than try to get them to change direction.

A: Believe in Schumpter, but also that many corporations die before their time.

F: My favorite institution in that respect. Bank of England in 1696. Without it would be no USA, financed Spanish war. Also second bank of US, killed by Jackson. The inability to clear a cheque in a second a legacy. Still don’t have a proper clearing system in US. Remember practices in early 70s from London that you still can’t do in the US.

Q [RG]: 7 simultaneous equations. Some corporations working on lower layers. May eventually outsource stuff to IBM. Real-time biz intelligence etc all trying to replicate Dell. Good news is everyone wants to be like Dell.

A: What does HP keep? What does it do that even Dell doesn’t do?

F: Existential crisis at HP. Logic says HP should unload everything except printers. But have put it off. But Dell now entering printers. A few percent and their printer business implodes. What are these guys doing. This is madness

Q: I’ve always believed velocity of info affects wealth creation. In CA with some GM folks. JD Power said lowest ranking quality level in automobile is 20% above where highest was 10 years ago. How do you see orgs in general

A: I believe quality in consumer electronics has peaked and going downhill. Dynamics in HP improving, getting better now feuds dying down.

F: Companies that win control the sales process. Thinking of taking on one axis cash conversion ratios, and churn rates on other axis. 0.98 R^2.

WTF Sunday Morning Sessions - Short Talks

Not the optimal moment for daylight savings to kick in and rob everyone of an hour's brain rest. Praise be for caffeine.

Bob Frankston - Professional iconoclast and heckler

Greasing the path, retaking the edge. Make it Simply Stupid (MISS)
Commoditize transport. Crypto essential (stops value added in the middle).

Internet is too smart. Induces thoughts about owning value. Fuck ‘em Strategy.

Water is water, bottled water is an option for the too rich. Static IP address bad, need GUID. You should control routing, not have someone else. IP mobility brings back circuits. Discovery mechanism from other nodes much simpler. Just works. No way to sell differentiated services. Marketplace is inorexible.

Don’t ask don’t tell is the principle. [Beyond end-to-end]

Lindsey Annison - British broadband campaigner

US can help [UK] BB campaigns. BB not about technology. ADSL strategy in the UK. ADSL isn’t broadband. Live in rural area. Suffering badly. Communities are taking control. Can do mentality.

Putting in antennas base stations, mesh boxes. Set up as co-ops. Social and economic benefits stay in communities, not behemoth telcos.

Having to do everyting – maintenance, installation, billing, bandwidth management. Have to manage scarce bandwidth. One user might ask everyone else to stay off network. Sometimes have to knock on people’s door. Like having a shared line in the old days.

Organic building networks is the only way, don’t have access to capital

Malcolm Matson - British entrepreneur

Scarcity and value. Very powerful investment in the center. Generation of revenue by allocation of scarce resource. Scarcity gone away. Artificially put computers in the middle to keep it scarce.

All the talent at the edge. Fighting against broadcasters and publishers.
Inevitible as the wheel we will win out, just WHEN? Will be big political battle, lots of bruises.

Gerry Gleason - Ethical global commons

Issues are larger than us. Commons doesn’t always commons. Traffic is an example of tragedy of the commons. But harder to add more road than to build more telecom. Not cheap, but as a chared resource, not expensive per person.
Horizontal org, modularity, standards.

Too few people on internet, not enough connected.

New economic models, commons-based peer production

Russ Nelson - Economist

Many hats. Wearing hacker hat today. No policy in the middle of the network.
[Lucent and their policy manager.] Holds smart IP phone. Earlier demo.

Smart by itself, but doesn’t need any other devices.

But problem is that it doesn’t have any concept of other devices than itself and other SIP phones. Have electronic rolodex at work. Can’t cut’n’paste to phone. Phone has web browser. Can’t fix it, not an open source phone.

Have position paper on the need to open software.

Example #2 is cell phone. Thinks it’s a smart device, but really depend on network. Has pseudo-GPS, talks to towers, and dependent. No API to get at location.

Newer phones have an API. Layered model. h/w. Device drivers. Session management. UI. [I didn't really understand what he was getting at here. Any other WTFers want to clarify?]

Newer phones programmable in Java. Can’t replace UI etc in Java. Making the devices too smart is a problem.

Q: Thoughts on Eli Noam’s market failure thesis

A: No such thing as market failure. They just operate the way they do. You can choose to not like it. Bad luck.

WTF Saturday Evening Sessions - Deffeyes

Emeritus Professor of Geology, Kenneth Deffeyes. Oh my I've got a lot to say about this one. Maybe later. You read it, hope you figure it out. Sorry the notes aren't very good. There was a massive amount covered, and my fingers can't summarize graphs quickly enough.

"Recent" in Geology is 3m years ago, attoseconds of telecom disconnected from my discipline by 30 orders of magnitude.

In early 1950s electric nuclear engineers said would be too cheap to meter. Wrong, but true for telecom. Princeton university now moving to print on demand. Dartmouth college stopped charging for long distance calls. Spending more money charging for calls than revenue collected. Online but not peer reviewed journals. Don’t like peer review. Whole of publishing is changing.

In the wider world, Bob Ballard at University of Texas, just send the sense organs, not the organs and kidneys. Mars probe next generation should have the sound of the wind. Enhance the feeling of presence.

Picture of swiss army knife with 128Mb USB drive.

1926 in Houston predicted that US oil production would peak in early 1970s, and never come up again. Heavily criticized, but in 1970 it happened. 1970 was peak year. Didn’t know it at the time. In 1972 the Texas Railroad Comission said allow 100% production. No surplus production capacity. US dependent on imported oil. Note that production drop not correlated to demand drop.

WSJ story. Saudia Arabia said that production maxed out. (Story has disappeared from their records!) About two months ago, Mathew Simmonds, biggest merchant bank in oil industry, said Saudis not being upfront, there’s more. Some Saudis turn up in DC and say that given time can build more fields, but existing wells have no more capacity. So OPEC no longer in charge of the price of oil. But nobody else is.

Book -- Hubbert’s Peak - Impending World Oil Shortage.

Simmonds doesn’t use Hubberts methodology. Completely different approach. Same conclusion. Oil fields old.

“What would Jesus drive” – religious right. The answer - “Satan Sucks truck”.
Next book in Dec/Jan, new method.

US production history graph. P/Q on left scale (annual production), Q billion on bottom (billions of barrels) cumulative production, graph goes 45 degree down slope (scattered early on). US most drilled-out area in the world.
Rather cryptic. Method from population biologists.

Have discovered with Hubbert’s math overcomplex. Equation of straight line, y=mx+a. P/Q = a-(a/Qt)/Q. a = y axis intercept. Qt is where oil production is zero. Time is only here as production per year. Running battle per year. Can vary unit, same overall story. P=a(1-Q/Qt)Q

Stuff in parenthesis is oil that hasn’t been produced yet. Going down. Fish analogy. Fishing out pond. # of fish goes down. Go to tackle store for better equipment. Doesn’t help.

Price of oil not there. Economists say there will be new equilibrium price to level supply and demand. Wrong!

Another graph with inverse scale. Bell curve. Fit to data is good.

Now show world production data. P/Q is annual percent growth. From 1983 on is a straight line. If your ability to produce oil depends on the fraction not produced yet, you have to apply Occam’s razor to find explanation. Thing is symmetrical, so RHS of curve like LHS. We’re almost there at 1 trillion barells. Thanksgiving 2005 is where smoothed symmetrical peak rolls over. Uncertainty is a few weeks.

2003 production only 3% more than 1998. Growth clearly has stopped.

Reserves very difficult to report. 2+2 joke. Geologist – between 3 and 5 needs more study. Geophysicist – 3.999999. Petroleum engineer – closes door, unplugs phone, what do you want it to be?

OPEC reserve estimates based on political decisions. Outlier dot where downgrade of reserves exceeded production. Makes for negative value of D/C.
Last big discovery in 1975 off Yucatan. None since.

Lower 48 states – 1930-40 when most oil found. Price down to 10c a barrel, worst economic times, so not standard economic story. Exxon was the winner.
Last billion barrel discovery in US in 1948. All good stuff already gone. Don’t want to live in Libya!

Since 1950, have gone for half a century without finding another in lower 48. Fancy technology doesn’t help.

We’ve found 95% of all the oil. Big dollar value, yes, but discovery game is over. Hubbard did make a mistake. This was to say discovery curve that looks exactly like the production curve, displaced in time. Doesn’t work that way – Pennsylvania. Time constant for hits shorter than discovery than production. Area under the curve the same. Hits almost over. Discoveries peaked. Production about to peak.

Uncertainty? Any two points on graph define a straight line. 1983-1983 for left hand point, 2001-03 for right hand point. Even at the extremes, all go down my 2010.

USGS has some larger estimates. 3tn barrels, not 2tn. More people applied, big analysis, computers. Not a laptop model. Trouble is (and journos get this wrong) if experts disagree there’s no knowledge on subject. But Hubbard is either right or wrong. Doing nothing is a bet (by default) that he is wrong.
If this happens we’ll have to change society in several ways. Will have to prioritize some things.

One possibility that economists love is that we will ration by price.
Nixon govt fixed the price of oil. Ration by inconvenience – lines for gasoline.

End of WW2, Roosevelt had ration coupons. Will be some form of rationing.

What happens when gap between supply and demand opens.

WTC was Osama bin Laden trying to prove he was one to replace govt of Saudi Arabia.

Economists saying this recession unlike others we’ve seen before. Someone else did analysis based on queueing theory. Across a wide range of such systems, when demand for queue meets supply, length gets volatile. Sometimes on freeway traffic is bumper to bumber, but no cause – just chaotic.

Graph of US natural gas prices. Big peaks and spikes. Getting bigger. And most recent prices (not on graph) even bigger – doubled record.

Managers hate uncertainty. There’s going to be a lot more of it.

OPEC saying they’ll set price in $22-$28, but no surplus capacity. $35 now, and they’re cutting back. OPEC price damping going away.

Who gets hurt? Agriculture, automotive, aviation.

Automotive – 75% of oil goes into transport. Natural gas vehicle no longer looks good. Have used it all for electric. During Nixon made it illegal to use NG to generate electric, because it was the premium clean fuel. Used to be NG filling stations. Now high efficiency diesel in Europe.

Very severe aviation impact. Food being flown around out of other hemisphere. Out of season stuff. All those fashion pages will be for vegetables than can be stored.

Aviation engine manufacturers benefit. 2-30 improvement in compression ratio. More to come.

Iowa corn farmer’s costs are 80% fossil fuel. Haulage. Fertilizer very energy intensive. Not very water soluble. Lots of energy to convert. N2, not free, need H2 from NG to process it.

There are plans to make H2 from coal. Coal+steam+O2+higher temp, get rid of CO, process getting better. Texaco have such plants. Sold 10 plants to China. H2 from coal could be good. H2 from H2O 3-5x more expensive.

Colin Campbell in Ireland – monthly newsletter. Analysis on Saudi situation. 249bn official Saudi reserves, says it is really closer to 88.

Europeans much better organized about phasing out of this problem. 100% of Europeans believed Iraq war about oil. Devious thing as a motive, but possible. All mideast oil fields about the size of Montana. Possible plan to seize the lot for all mankind.

This gap between processing and transmitting bits and molecules about to get wider. These worlds will diverge. Processing seismic data used to need six pack of mainframes. Invention of IC, Texas Instruments and Intel.

Big squeeze on hauling molecules. Process, manipulate, transmit, store bits getting cheaper. My grandfather drove cattle to Abilene, wild west, and worried grandson the same.

Q: What about wind, wave, solar?

Not worried about 15 year timescale. 5 year timescale, have to use stuff we have engineered right now. That’s high efficiency diesel car, wind and nuclear.
Each has political problems. Solar still expensive. 60W demo for the book. $1000, even from suplus house.

Case of corn, dead loser without govt subsidies. Biodiesel from canola or rapeseed oil. Not price competitive, since made for $7/gal, retail for $5.
Hydrogen oversold.

Q: Methane in the oceans.

Continental shelves have has hydrates. Total amount of gas is bigger than all the oil and gas put together. Only one intermittent production from hydrates in Siberia. Get it to break down by dropping pressure. But depending on pressure to drive the stuff. Even if you pull a vacuum, only 1 atmosphere. Could try to heat it up (geothermal). Inject methanol in. No success. Nobody knows how to produce it. Opportunity to get rich. Just find places where gas seeps up naturally. Then improve on it. 15 years or more timescale.

Q: I’m an economist. The way world changes is people go along doing stuff. Then something changes to make that thing stop working. Can’t do that anymore. They start to suffer. Then they decide to change. Not suffering now. We will have suffer.

If you wait to apply the brakes until you drive off the cliff….

Q: What about fuel cells?

Supply of hydrogen in petroleum and fertilizer. Electrochemical. Norsk hydro. Norwegian WW2 raids to stop Nazis getting heavy water. New process use 1.65-1.7x voltage to deliver H2. In fuel cell, get 0.7 if idling. More load, less voltage (0.5). So worse than carnot cycle. Jeremy Rifkind book on H2. “Moore’s law for H2 about to kick in”. Sorry, wrong metaphor.
New book about the other fuels that come out of the earth. Uranium, coal etc.

Q: Of 100 units of energy for automotive, 80 wasted as heat, 19 move vehicle, 1 moves us. Toyota – think of smarter cars that make them lighter by not colliding, less tank like. But unmarketable.

Took 0.5 a barrel of oil to get me here. MUST get to teleconferencing mode.

Q: How does India and China affect us?

Very scary. Economies acquiring automobiles. Will run out of gas just as they get there.

Need to get word out that there is a serious problem. I am quite upset.

WTF Saturday Afternoon Sessions - Wireless Wonderland

Patrick Leary and Steve Stroh gave an update on the state of wireless broadband (w-bb in my shorthand notes).

Patrick Leary

Talk about unlicensed wireless other than WiFi. Alvarion - Founded in 1992 as BreezeCOM. W-BB is great equalizer of BB tech. The one type of methodology than can be deployed by any entity, new and incumbent. Stats hard to find.

Last year $85m on unlicenses w-bb in US (not wifi). 1:15 ratio of base stations to CPE [consumer premises equipment]. About $6m on base stations, $79m on CPE. 30% growth pa.

Mix of 900Mhz, 2.4Ghz, 5Ghz. Lots of unlicensed spectrum. 2.4 declining fast, .9 and 5 faster, 5 biggest. Many adopters, not just WISPs [Wireless ISPs]. Often share rural component. Diverse, different motivations. WISPs early adopters. Hate the telcos. Foresaw WiFi commoditization.

About 200 US WISPs but most have <50 CPE (400-500 people). High expectation of dialtone, century of subsidized rural ops.

Utilities doing w-bb. Some states say cities can provide internet services (e.g. MO). Rural don’t have access to DSL, don’t want revenue sharing.

Rural cellular carriers. Whole existence on licensed bands. Beginning to adopt unlicensed. Lots of good customer and billing assets. Real estate.

Cablecos. Small segment.

Munis. Can’t wait for VZ or SBC. Losing businesses to adjacent towns.
Some examples: WLAN to connect nearby users, never ddesigned for outside of enterprise. W-BB designed from ground up for commercial service like SLA, QoS, etc.

Leaders in North America? AMA Techtel – grain storage. 53 years in small towns. Wireless on private network, and extend to local communities. About 6000 subs. Prices – similar to cable and DSL. Big network – near contiguous, 2 hour drive across. WTF [Where's the Fiber]? Not here. Get re-deployable capacity, some NLOS connectivity.

Diode – Diller Telephone. Nebraska. 1888 founded! 500 access lines.
WTF? Joking! 9 households/sq mile – fiber untinkable.

Owensboro Muni Utilities. Community services. $25/month. Tight cell coverage. Utility wants ubiquitous access, so overbuild. Higher grade equipment. WTF? Yep. Lots. Connects power facilities. Not economic to home today.

Midwest wireless. Tier 2 cellular, about 350k subs. Needed separate brand. Clearwave, very successful. Fastest growing, eliminating churn. About 10% of state of MN covered. WTF? No way. Over 200 towers. Just stick radios on existing towers.

Wheatland Broadband. Electric membership coop. 40000 people in western KS. Very rural. Take rates as high as 35%. 56% of households with computers.
Back-haul wireless. WTF? 3 households/sq mile, no way.

Allegany County, MD. Have replaced every single Verizon leased line. Not a single entity left. Allconet phase 2 on the way. They are becoming carrier.
WTF? No way. Poster children for all W-BB.

San Diego County Sheriff’s Dept. Ultimate lasting virtue is mobility. Want to manage It productivity, getting more than 2 hours/officer/day improvement.
WTF? Not relevant, mobile.

WiMax – [presentation from WiMax forum] – today mostly hype. Non-certified product for 3.5Ghz (non-US; 3.5Ghz in military in US). Nothing certified now. First interop testing in Dec 04 at best. Chipsets mid ‘05. Unlicensed WiMax in 2006.

Case study. Community on coast of Newfoundland. Some communities don’t even have voice. Shared payphones. Populations declining with fisheries. No BB, communities die. Problems with access to health services, education, challenges from mountainous remote terrain, climate, ecology.
Solution was u/l w-bb. Some federal money. Health, education, biz. About 120km from end-to-end. WTF? Nope. Towers by helicopter. Solar panels to power. Expanding.

BB not about free, but about being an economic engine.

Steve Stroh

Excited about w-, grew up in small town. Internet would have been great when growing up. Only came with w-bb. Only later did DSL arrive. W- lets you route around the stupidity of a telco.

Verizon quote in Telephony – “rival BB means we won’t deploy BB” – [circular argument]

Virtual fiber starting to take hold. A chunk at 57-64Ghz. Radio equiv of flashlight in fog bank. Unlicensed. No modulation specified. Can run gigabit into a radio. As dirty and polluting as you like, as limited spillover.
Where they (smaller ISPs) have fiber in an urban core, they are running freespace optical out from the fiber core to buildings where they have customers but not fiber. Like a sprinkler head on a fiber hose. Suddenly all the buildings have access to competitive bandwidth.

Asterisk author did keynote talk at WISPCon in Chicago. Was telling WISPs how to build Asterisk systems. Capable of building and deploying infrastructure. Will not even build network just for voice. Quietly doing it, don’t want to be on radio. Pulver FWD decision means you can build your own intercom system. (Just don’t obviously interconnect with PSTN.)

VoD [Video on Demand] over fiber? Have been waiting for TiVo cum streamer. Akimbo now exists. Box sits on TV, order up movies.

"WiFi is generally not a great infrastructure unless you build it that way." Disagree with that. Example in Thursday’s USA Today. Talks about city in CA. Tired of waiting for cable and DSL companies. Came up with provider called AirMesh. Cost of about $30k. Can have it ready in a couple of months. Box the size of a toaster oven, attach to power poles and street lights.

Patrick: We’ll see how they perform have customers. Will be like a pump well instead of getting water from stream. Not the end point.

WiFi is the standard every other w-bb solution must be measured against. Companies like Vivato getting there.

Q [Bob Frankston]: I go to Radio Shack and want to buy gear, what does it cost?

P: Currently market is expensive, average about $500 for true w-bb CPE. Can support 300 customers with $15k

Q: Backhaul: how to do it.

Some doing out of band point-to-point links. 8-10ms from point to point

Q: How do you get the best industry data?

It’s all mixed in with WiFi, so hard to separate the rest. Hard to extrapolate market. Struggle to get accurate market data.

Q: Political issues in one community. Ops in Russia, France, Africa. What differences do you see at customer end?

Huge differences in regulatory regimes. E.g. US regulators don’t just regulate size of channel bus also modulation. Political stability issues elsewhere, big country. 2.4Ghz licensed in Nigeria. Customer in Russia can use network as much for 3G cellular backhaul.

Q: Who pays for all this?

IPOs during bubble, which is why we have so much cash. Customer, ultimately.

Q: Who are your customers?

See socialtext page. Siemans, Alcatel OEM product. Major ILEC in Europe. Titan/Reliance in India. Lots in China.

Steve: Fiber is great BUT has to be there, competitive and reasonably priced. With wireless you have the choice whether to take the copper of fiber deal, or just bypass the whole lot. Example is WISP in suburbs outside Chicago. Tired of being raped on T1 deals from Ameritech. Found rooftop on outer edge in Chicago with fiber. Set up point to point link. 20km. Very competitive. When the time came cut over and said we don’t need T1, telco in shock.

WTF Saturday Afternoon Sessions - McGarty

Next was Terrence McGarty, very suave and impressive. Has a company deploying municipal fiber in New England. His topic: "Where The Last Mile Is." Type his name into Google and you get a week's worth of interesting reading right away.

Ex Warner president. Builds networks. Someone came to him [at Warner cable] saying we hate our cableco and we want to build fiber. You’re crazy. Said would think about it, and found maybe she wasn’t crazy.

Looked at New England. Unique because there are towns and localism is a factor. Went to over 150 town meetings.

Three categoties. Ones where fiber to home economically viable. Towns where not viable. Amhert NH was prototypical one of these. Large houses in large plots of land set half mile back. Excludes upper 2% of income bracket.

Third category is politically unacceptable muni financed. They remember fiasco of 1903 where they build trolley line. Comcast threatened to sue. Won’t build in Comcast towns.

Muni bond financing is hard, so looked at USDA rural bond financing. Desperate to distribute money. Started in town near Dartmouth, NH.

How to make this work? Need to build public/private partnership. Gave each of the towns a shareholder interest in the venture. Equity participants, have a seat at the board. Integrated with public safety etc.

What are we really selling? Are we selling video bb internet and telephony, better faster cheaper? No, it was more. A virtual LAN, interconnecting towns and cities. A portal to a wide area network. Got an open video franchise. Terrifies cable folks.

Local people as sales and marketing. About 250 munis. Supreme court rules towns are not “entities” under 1996 act, and act says any entity can become carrier. Afraid it would open pandora’s box and anyone could become entity. Duh! Says it is a states right ruling. Says states have right to control any entities in their states and declare them non-entities.

Local power companies, about 120 building fiber to the user. New housing development with FTTH [Fiber to the home]. In excess of 750,000 households, 700+ suppliers. About 80% of households economically viable for fiber only. Rest wireless. 98% coverage. Use EPON (Ethernet on passive optical network). 80% of people live on 20% of roads. Find this out by … driving all the roads. With 70 miles of roads in a town, 80% live on 14 of those miles.
$25k/mile to deploy fiber. Electronics $200-500 NID [Box on wall of house]. $200 for drop from street. $150-250 shared network. OAM 4-5% a year of CAPEX.

Killer is pole attachments, more poles than in Warsaw. 95%+ of fiber on poles.
Verizon etc have 6 month cycle. Will wait until last minute, and then delay. Won’t deny access explicitly.

Sample costs curves. Always have significant positive cash flow.

Need local ISPs. Localism. AOL deal didn’t work.

Will ILECs do it? No money, not in their interest, can’t maintain monopoly rents.
Verizon will try to pre-announce fiber to chill competition. FTTH is inherently open, cornerstone. New applications and innovation and economic development created by openness.

Question is what happens if you suddenly deploy open BB network. A new distribution channel. Distorts market relationships.

Q: Cablecos are incumbents too. Cablecos dropped price in fiber zones to keep customers. Who is the real incumbent?

Most towns Adelphia, dead corpse trying to rejuvenate itself. Localism hits cable guys, re-franchising. LEC has more power than cablecos, state-wide franchise. Once they put in video they are prohibited by law from constructing until they have a franchise. $25/month outside of region for DSL, $5 in fiber zones. Need to invoke anti-trust.

Very dependent on USDA RUS pool. Doesn’t work without loans. Can’t do 100% equity funding. $1.8bn pool, 210 million allocated. Created a constituency, affected the politico thinking.

WTF Saturday Sessions - Short Talks

There were a number of breakout session readouts, short talks (4-8 minutes each). These are not in the same order as the conference agenda, just grouped for my editing convenience.

Overthrowing the incumbents – Ted Stout

Need to campaign FOR something, not AGAINST. More people in the conversation. It’s all about the phone bill and those strange charges. The real cost to the customer. Local economics. Don’t want to make it partisan (party political) battle.

Need a GAO study, FCC and states can’t do it. Need congress involved. Grassroots ways of doing this. Need innovaton around broadband. Target the key investors around incumbents,

It must be about the customer. Must be ease to transition customer to this new world. All about local and regional votes. Impact on telecom costs, education, regional economics.

Bart Stuck - Why Don’t Venture Capital Funds Invest in Innovation

Looked at 1300 IPOs, 200 acquisitions. Came up with 5 that were truly innovative in technology – Verisign, superconducting, Akamai, Ciena .
Puzzled that so companies got venture funding. Innovative ones had higher valuations per dollar of investment before and after crash. Those that didn’t have a tech advantage

Michael Olson – open source telephony

Most interesting open-source company is doomed. Sleepycat Berekelydb customers – building telecom systems a lot. Reasons: 1 . s/w is cheap and cheap is good. 2. Asterisk PBX is Open Source Software (OSS).

Mostly written by one guy, Mark Spencer. Makes living from digiom (hardware sales). Doesn’t own his own IPR in his s/w because of community development.
Can’t do dual licensing to levy different terms and price discriminate.

Stan Hanks – Columbia Ventures

Going from super glut of fiber. Qwest did well. Caused a gold rush. 1998 Salt Lake City to Dallas $110,000/mile, wholesale price $1500/mile, COGS $763, and it sold out. Same route today is $100 an untouched. It’s the salvage business.

Big CAPEX savings (chapter 7, 11, 18, 22 joke). OPEX is killer, people, real estate, services like power. And more – h/w recertification for 2nd hand h/w, obsolescence, “fitness of purpose”.

Morals – some smokin deals, purchase price of fiber isn’t whole story. Some assets that are impossible to operate profitably. “Buy and hold” until the market perceives a scarcity (demand rises). If Wall St loves something, run the other way.

Tom Mandel, Ken Tyler – stupid software

The hardest thing to grasp is that we in this room are the ones who wish to build railroad tracks along the canal to haul barges. 4 part matrix – lhs demand/supply (top/bottom); bottom anxiety/comfort (l to r). 4 part stupid/intelligent; center/edge. Only people are intelligent, can’t be smart if you can unplug it without it defending itself.

Example of grammar correction in word competing with human intelligence (‘cos it gets it wrong a lot).

Opposite to Noam – can’t run an entire economy EXCEPT on niches. A society is based on niches. It is local, completely. Economy is only a function of creating society (sociability).

A state can declare a town is not an entity [ref FCC ruling], eliminates a niche.
Things that cross from the existing to the new have value; can’t build the new from scratch. Example of eBay.

Steve Crandall – Music at Bell Labs

Music - listen (all of us), play (some), compose (a few). 10000 societies in the world, all but two sing, all use percussion. How to fill the pipes? Music…

Very incremental business solutions so far, but not yet made social. Observations of kids, anthropological. About 7 years of college data, network monitoring, 10k students. Usage of MP3s, approx 71% are listened to less than once, 14% once, 4% four or more times. They are using it for sampling.

Everyone has iTunes player on. Using rendezvous to see each other’s stuff. 7-9pm can see between 80 and 120 libraries of students. Social class is where you rank in the library list. Faculty involved .

Amount of data is approaching its limits. Korea reaching limits of BB capacity, campus trying to limit usage. Can get people past the stage of the hardness of making music. $12bn of music sales. Music from making own music about $10bn and rising rapidly (instruments, classes, etc.). Make your own really bad music a better experience that listening to someone else’s really good music.

NYC – 10m, NJ – 1km to nearest music expert.

Bruce Kushnick - Teletruth

History of Bell companies – AT&T, 1984 divesture. Immediately went from 9% to 14% rate of return (1985). "Need more money", offer more services like call waiting – pennies to offer, dollars of charge. ISDN on offer.

1995 – “information superhighway” – promises of 6m lines at Pacbell, Amerietch, in 2000 and so on. We can’t build this unless we have money, so used price caps. Froze rates that customers paid. Cut staff, kept differential, wrote networks off faster. Started in NJ – “Opportunity NJ” - $1.5bn paid by customer by 2000 for nothing.

Same in MD, PA, said 50% of state supposed to be wired with 45mbps symmetric in 2004. $21bn write down on copper because being “replaced”. Can’t roll out fiber unless … more money. Convinced FCC to start triennial review. You get to keep any part of the network you upgrade to fiber. Bells get exclusive right, assumes they will build. Have to get rid of line sharing and small ISPs because fiber coming.

Entire telecom crash caused by lack of fiber roll-out. Lucent, JDS had contracts.
Would now need faster computers, better s/w, better last mile by now.

40% of the orders from ISPs didn’t go through because bell companies “lost the order”. Went from 7000 ISPs to 2000. CLECs suffered the same.

Incest of Bells. Siblings marrying. Have to take the networks back. We have paid $121bn since 1991 for networks never received. Currently paying $17bn a year. Answer – go after the phone bills. All those little charges. They are mostly unmarked revenue back to LECs. FCC line charge about to go to nine dollars.

If Bells get control of networks and cablecos. Will try to block VoIP. We in rebel alliance need to work out how to presenve common carrier, and get FTTH not at 100 megabit but gigabit speeds.

Wendy Seltzer of EFF

I had a biobreak so I missed the start of this one - sorry. MG

Upstream providers getting hammered through tertiary copyright infringement
Diebold and threats to get docs off the web. Wanted to carry it all the way through and that their should be punishment for misuse of DMCA takedowns.

Because Internet makes copies of all sorts of activities, all sorts of activities get trawled up in dragnet of copyright law. DMCA says that even distributing tools for circumvention. What becomes fair use becomes circumvention of access controls.

Q: DMCA passed in 1998 shows incredible foresight by companies looking to pass the barn door. What’s the positive thing we can pass that neutralizes that sort of thing? Now we have super-DMCA in 50 states.

One of the steps is to change the whole basis of the debate. Can’t re-introduce fairness into the DMCA. Creative commons project to give middle gorund, some rights reserved. Problem of re-invigorating the commons. Create value where there may be no price mechanism.

Q: The concept of ownership. Spectrum. IP. Ownership going to an extreme. Conversations about of commons fall on dear ears because of different concept of ownership.

We’re always looking for counter-examples, eg Cory Doctorow’s books.

Q: Distribution systems rip-off the artists.

Agree, say they’re trying to stifle independent distribution that lets artists get away from them.

Q: When will be ever see MS use creative commons?

Never!

Q: Economist – Richard Caves – “Creative Industries” – retrospective

Q [DI]: Wendy alluded to Cory’s activities. [Summary of CC and some rights reserved]. Difference between creating profit and wealth.

Q: 2 projetcs; artform, a project for artists. Definition of an API for service providers – fanclub, tickets, t-shirts, etc. Don’t have to be a s/w developer to run an artist biz.

Q: Grassroots mcarthur grants– rethink patronage. No way to tip Cory. $2 tip is the same as the royalty. Big margin. Equivalent of spending $20 on the book. The create the social norms. Unless you’re very famous, tips haven’t worked. Lack of mechanism.

Q: Hardest thing for an act is to get famous. Even if you give away all your product online and then sell out a 2000 seat concert, you’re ahead. Has never been a direct connection between artist and audience once you no longer need physical distribution system. By-product of BitTorrent is popularity. Record companies will offer much bigger royalty once they know you’re a sure bet for physical distribution system.

Need a chance to experiment.

Q: Brewster Kales archive.org – stuff out of copyright, old movies etc. Worth a visit. Talked at library of congress – on web.

Q: Could you say about Eldred suit (Tail vs Ashcroft)

Suing to challenge specifics of most recent copyright extension. Congress can’t add retroactivity portion.

Q: 3 things: many of us connected; would like to donate to artist, EFF, software Two. I’d have an emptional reaction to that. Why don’t we have default habit of spending money on these things. I don’t feel that hump at starbucks. Energy hump. Three. This is much larger than copyright. Cost of producing copyrightable material falling through the floor. A $199 box gives us all sorts of music [Casio keyboard on stage for intros]. We are generating content where ownership is not clear. WiKi/blog/chat in conference. There are legitimate shared interests (doctor/patient example). Don’t have regimed to deal with shared interest.

Cost of figuring out owners of content is more than the value of the revenue stream.

Q: We aren’t prepared to value or price these things.

Q: It’s because the economy has become our society. In asia etc there’s the tradition of the begging bowl and given to the poor. We are very commercial. In 1976 everything came under copyright.

Q: Ask how much a program you just created is worth? Well, it took me 3 weeks, and 30 years.

WTF Saturday Morning Session - Noam

Eli Noam is professor of telecom, finance and economics at Columbia. Wrote some controversial nonsense recently in the FT. There was a lot of backchannel disagreement with what Noam was saying.

Am supported by Alfred Sloan foundation and institute for telecom industry. Not aligned with any company. Had a conference two days ago on convergence. About to have on Internet consolidaton trends conference. Write for FT online.
“Let them eat megabits”. Context on WSIS in Geneva. Big push on BB development. “Why the Internet is bad for democracy”. Almost excommunicated. Big belief in democracy and Internet. But may not come together. Not so worried about short term of the journey, but also what it will be like when you get there.

Economists make distinction between microeconomics and macroeconomics
Example, in parade, stand on tips of toes get a better view. But if everyone does it we’re all worse off.

Article on why information sector may be in structural fundamental crisis. Information products have become smaller, faster, cheaper. But now bad news. We know about .com bubble, music burst, advertising dump, semiconductor slump, etc. Why do these predicaments hit the information sector?

Getting converging digital headache. Telecoms not only information industry with problems. Tend to be unstable. Two explanations.

First. Perfect storm scenario. Rare confluence of factors. Incompetent managers, regulation, bad stockbrokers, naïve investors, etc. Such confluence not likely to be repeated.

This is a view of denial. Of course things will be coming back again.

Alternative scenario is fundamental instability. Not random but systemic. Due to basic characteristics. Seeing gigantic market failure in slow motion.

When market prices do not sustain a competitive structure have market failure. We are causing it, but success has its price. Basic reason for it is information products have high fixed costs, low distribution costs. Information products becoming commoditized, open, competitive. Prices for content, network distribution and equipment are collapsing.

Becoming difficult to charge anything for content and services. e.g. music, publishing, phone calls, national news, software, academic articles, TV, radio, cable TV, etc.

Symptoms of chronic price deflation. We are both consumers and providers. Marginal cost is close to zero and doesn’t cover full cost.

The more efficient the information technology becomes the faster this happens.
KaZaA and Napster are symptoms not causes. Gets worse. There were cycles in individual industries. Overall economy aggregate smoothing. But digital convergence links everything. Tend to go in sync. Information industries go through boom/bust cycles.Information becomes commoditized and like pork bellies. Move to outsource, diversification.

Micropayments to break up value chain. Lock-in from personalization. Bundling. Anything to get out of commodity trap. Result is to postpone the inevitable.
Not everyone can be a winner from innovation. Limit to absorb rapid change over a prolonged period. People aren’t improving along Moore’s law. Believe’s you can’t run an economy based on millions of niches. “Embarassment of niches”.

As a result prices will rise following consolidation. Expansion, new entrants, new price collapse, general downward trend. Price fluctuations exacerbated by credit cycles. Outsourcing increased by collapse in telecom prices. Oversupply of transoceanic infrastructure. Outsourcing collateral damage of telcos that have bombed. As societies become information economies they become more volatile.

People touting volunteerist activity and communal as an alternative. OSS, public hotspots. Don’t solve problem long term. These subject to instability of “tragedy of the commons”. Overloading destroys the commons over time.
OSS will ensure diversification of economy. Economy is a diverse portfolio.

If wireless business in Korea turns weak, whole country is at risk.

Will come to appreciate industries uncorrelated with information industries. Low-tech industries.

The notion an information-based economy is inherenctly prosperous is falswe. Yes, information wants to be free.

Q: Should there be government policies to counteract this?

EN: I don’t think they work. [Q] We should tell people that the government is not likely to solve this problem

Q: What are your views on commons vs aution approach on spectrum. The idea of spectrum as a social good an innovation commons.

EN: I’ve been arguing for over 10 years that auction approach is bad. Auction is not a market approach. It’s a way of giving away exclusive rights to slices of spectrum. Exclusivity is the problem. I would advocate open (not free) access. User-charge based. Price based on congestion and dynamic. No exclusive licenses.

Q [Roxane Googin]: live used to be brutish and short. Couldn’t agree more that the economics of technology are very scary. Hasn’t been meant as an end in itself. Just lowers the effort to get the goods we want. We are focused on the economics of high tech which we don’t control.

EN: Yes, people will come to new forms of production and consumption

Q [Gilder]: this crash got to you! [Noam: I got tenure!] I see tons of new activity around the world. We’re about to enter boom period of amazing creativity and properity.

EN: George has boundless optimism, but some network industries seem less stable than rest of economy, and maybe we just to live with that.

DI gives EN rose-colored glasses as a gift.

WTF Saturday Morning Session - Netches

Phil made it big in databases, interesting talk on social and economic history of telecom.

Phil Netches intro – AT&T mgt through acquisition [Teradata, I assume].

Was going to give another pessimistic gloom and doom that the telcos are falling. Pricing power eroding. Mergers and acquisions. Capital markets confused. Sounds like turn of century – C19 to C20th.

Transportation in 1904. Steel industry like semiconductors. Steel and railroads in consolidation. # of miles of railroad peaked 100 years ago. Steel and rail started to lose employment. Automobile was an expensive toy. Only about 8000 cars. Less than 150 miles of road. Regulation! Speed limit of 10mph, had to walk in front of car at intersection, red flag, honk horn.

Some of these things have changes. But steel is still with us. Interesting thing has been the things we can make with it.

Telecom existed 100 years ago in about 8% of US homes. Long distance a great business. $11/3 minute call. Most innovative idea in 1904 was regulated monopoly best way to deliver this service.

Life expectancy in 1904 was 47 years. Next 100 years not unlikely same improvement will happen again. Healthcare and education are both trillion dollars in US. Both 2-5x bigger than telecom. Ripe for fundamental transformation.

Only 230 murders in US in 1904. Average wage was $0.22/hour.

Coal mining strikes. Concern over energy crisis.

IT and telecom has made notion of core cities and even suburbs obsolescent.
100 years ago cocaine and marijuana legal. 14% of households had bathtubs. Most women washed hair once a month.

Predictions then would would have missed rise of suburbs, women’s rights, multinationals, brands, etc.

We are at the end of the 3rd information era. About to enter 4th.

1st mechanical to electrical (jacquard loom, cash register, tabulation system). Many of these companies still exist, maybe not dominant. Fax machine was first telecoms service! Things can take off 100 years before their time.

2nd electromechanical. Brought about by two innovations. How to put a motor on cash register to give mechanical computing system enough torque to enable multistage computations. Second was vacuum tube with triode. Mechanical gain. Electrical gain. “Moore’s law” for electromechanical was at least 35% compound annual rate.

3rd electronic processing, move data photonically. Transistors, ICs, stored programs etc. Lasers and fiber. Factor of 10,000 improvement in 40 years. Steam engine 10-100x power of draft animal. 10x from that to human. Display industry 7% compound improvement rate. Batteries 3%. Grew up in area was processing was so expensive where it was most expensive part of system. Now the most expensive part is display.

GG: Aren’t displays getting better faster? PN: Displayes limited by human vision system – can’t get smaller. What keeps them on lower trajectory learning curve. 50% annual improvement rate in photonics.

4th electrophonic. Ability to make photonic devices on same chip as electronic ones. In lab today. In marketplace soon. Some of fundamental innovations not yet made. Others not recognized for their importance. Many new information platform technologies. Quantum computing. Nanotubes. Fluidics. Photonic switching. Teaching us to make sensors and actuators. Living systems had chemical sensors (smell), touch, pressure. Will be able to both sense the world as well as manipulate it.

The Next Big Thing (2050-2100)

GG: All IT is bottlenecks by the pins on chips. Need optical so that on-chip and off-chip same speed.

Another measure is the # of patents from top 3 universities with tech transfer.


Way cheaper to process a bit than to move it today. True at every scale, in chip, between chips, boxes, racks, towns and cities. Opposite could be true soon. May be cheaper to move it than process it.

Horseless carriage. People look at how new tech substitutes existing ones. Can’t deliver whole infrastructure in one big bang unless forced in face of ordinary economics by overarching force.

We all feel the discontinuities. Old paradigms lose power to extrapolate. Human ability to imagine is the only recourse.

Q: We have public policy trying to force continuity. Had canals. George Stephenson invented steam engine. Don’t have regulators insisting srteam engines to pull barges. What do we have public policy formulation by consultation. Ask “experts” how to deploy new tech. They always place themselves as part of it. Symbiotic co-dependency between government and telecom. Is this threatening to the state? Do we need to do something even more disruptive than we care to dream.

PN: The successful disruptions have begun small and grown. Don’t try to overthrow the established regime. 100 years ago had a lot of utopian and distopian literature. Worries that only alternative to capitalism was communism. Massive social tension, people literally dying in the streets. Didn’t decide to build interstate highways in 1904. Just paved Main Street.

WTF Saturday Morning Session - Gilder

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.

WTF Friday Sessions

Well, we've covered a lot of ground, so here's what I'm going to do. I'll post up some initial commentary and then just dump my raw notes from the talks. Hope you find this of value. My comments are in italics. There are about a dozen big articles I need to wite now in the next few weeks, so we'll be right back after these messages.

First off was as short talk by Scott McCollough on regulation:

Layers and the Law – attachment on conference wiki page

Regulation (in US) was based on service definition, not the networks – IP operates independently – crosses all services – can provide services that look like title 2 or title 3 – can move services up and down the protocol stack.

Regulation not necessary until someone has market power

Principles for regulation – respect the integrity of the layers – only regulate what’s causing a problem and only do as much in that layer as we have to.

Assess market power in each layer separately. Can’t allow leverage between layers of protocol stack. Keep interfaces between the layers open

Then David Cohn [DC] of IBM and David Isenberg [DI] introducing Roxane Googin [RG] (an investment analyst):

Telecom is like airplanes. Don’t get faster or bigger any more. Telecom used to be driven by Moore’s law. How IBM makes money? Delivering biz services bigger than delivering machines or code.

And then Roxane Googin's keynote:

Tracks changes in technology for people with up to $100bn/client at stake. Looks at implications of each transition.

Best network to use is worst one to make money running. Need to collectively decide how important it is but how to allocate capital to benefit ofrisk takers (capitalists) as well as users.

Why don’t I have what I want yet? Because you’ll get it when it pays itself.

Going through 100 year transition. Economics of centralization falling apart. Instead of valuable monopoly you have a valueless commodity. Problems are fundamental to old network. New network is infinitely extensible as a perfect commodity.

Disk drive industry – black hole for money – no pricing power. Airlines – “pricing set by stupidest competitor”.

First biz to disappear is traditional voice – monopolistic and overprices. All RBOCs will go bankrupt. Until they are dead and out of our way the capital won’t be available.

They own the regulators, like most regulatory industries. They’ll get a lot of tax dollars before this happens. Need to be aware when they’re talking about universal service, e911, CALEA [US wiretap law] if just propping up dead unproductive industry.

This is an uneconomic model, but pricing dynamics not cash-flow positive – government ends up funding the operation.

Provider needs to find monopolistic stance to hide behind – e.g. a geography. Other industries with similar economics lose money over time.

Airlines are a pretty good example of what we’re talking about. Similarly layered industry – manufacture, finance, operate. Essential service.

Determine how our future will be as a society. All of our lives are dependent on this working well, but nobody benefits from how it works. Forces at work with a lot of cash behind them want to stop this.

Moving from mainframe to client/server to web – radically new paradigm. Productivity it offers is astounding.

Seven transitions:
#1. Semiconductor: 200mmAl – 300mmCu

#2 big RISC system – blades

#3a Windows to Linux

#3b 3G apps to web services

#4 direct attached to network attached storage

#5 circuit to IP

#6 PC to handhelds

#7 US to global workforce

More profound a change to global economics than could have been predicted at the start. Will change global balance of power. Not only tough economics of the business but also high stakes for you and your children.

DI: How changing global balance of power?

RG: UN trying to get governing body for Internet. Promotes wold peace – unifiying equalizing power. Move to an intellectual meritocracy. In US consume 25% of world’s resources with 5% of people. Used to it, like it, doesn’t make sense. How will that future look, what can we do?

Time to reclaim our heritage: this is scary, need to come up with ideas for us to have this large share: we [US] are the fastest, most innovative? India/Pakistan nuclear war – one reason for standown, outsourcers say to govts that this must stop if you want our business.

Still not clear how to make critical infrastructure sustainable in the new paradigm. Are people familiar with Jeremy Rifkind? “The End of Work” book.
How do you allocate resources [to people].

Roxanne – says capital is pooling up and not being allocated well. Happens in times when allocators are confused or afraid. They are greedy. If one company makes it (eg Vonage?) then the capital rushes that way. Markets are not good at dealing with discontinuities. Some venture capitalists using telemarketers to allocate capital!

Most people may be scared for their jobs and facing diminishing returns. Probably facing period of sustained high unemployment where people find where they fit in the new plan. Says outsourcing will be cramp on domestic employment for about 5 years. Could be “end of empire” for US and historic share of [global] GDP.

When do Bells go bankrupt? When they run out of cash. Impossible to predict because human behavior. Shocked that SBC and BellSouth bought AWE for $41bn. Wrong air interface, wrong spectrum.

Location independence of work is real but painful.

DC: Who is this going to benefit and hurt?

It will impact efficiency of org operations. Will dramatically improve ability to serve them and provide value. Hurts commodity laborers in a high-wage geography, no matter how trained. US – 20m people who work in manufacturiung, in China 20m move to city every year.

Q: Windows to Linux as a trend, lots of open content. Cheap and dirty tools to do things they used to need expensive ones for. Nature abhors a vacuum. Artificial barriers before. Any company doesn’t have an unfair barrier to competition is a capital repellant. Is there a fundamental mismatch between the way me measure success today and the future vehicles to get success (IPOs, stock market, venture)? See VCs throwing money at things mom-n-pop shops are doing. CEOs punished by long-term view.

RG: Don’t underestimate what this will do to economics. Have opened a Pandora’s box. Frictionless economy and high productivity. Freedom to innovate in the ends [of the network]. Bad capital imbalance, few people making a lot a money from making god-knows-what . That is unstable. Indian outsourcing just adds pain. But will get productivity gains. Easy to throw stones at them.

Q: These businesses need to out-compete other business for capital.

RG: People at the top skimming off an ever larger base

DC: Dell has icredible competitive advantage. No secrets. Just doing it better than anyone else, including IBM. Just have to be better. Walmart. Amazon.

Bob Frankston: Sees diagram [7 changes], thinks of linear. Garbage collection may be a better example than airlines. Need bits hauled, but network itself doesn’t need to be a business. During a transition you don’t know where to place the bets. A lot of the market is outside the US, US maybe not be so important. Innovation MUST be badly behaved. VC want to lock in innovators into straightjackets. Real impact is "telco in your basement" – very disruptive. Sewing machine forced us to rethink welface. Age of spiritual machines. Biz is knowing something others don’t know. Always some edge like convenience. Dotcom where only pets website is bad, but could be OL with pizza parlours [lots trying to be the best].

RG: Yes, Pay for garbage locally.

Q: CEO getting over-paid. Does new capital mobility destroy opportunity? NO! But need people to find new ways to build and innovate on now cheap infrastructure. Oh shit! All ideas had. (1900 and physics example.) Wrong! Hard to figure out where change is.

Q: Everyone has heard term utopianism. Parallel is distopianism. Prediction of the end of things. As common as utopianism. Can’t see numbers attached to [RG's] trends. E.g. offshoring same as immigration. No longer have to bring them here to do the job. Does it affect people. Sure. Did people complain during 20th centuy about immigramts? Yes. Normal process of economics. Why is network we have not capable of being run at a profit. 60% of all email is spam. Nobody getting rid of it. Doesn’t fill pipe. Doesn’t stress network. When there is a scarce resource (more demand) there will be money.

RG Web services bandwidth hog.

DC: 1900 PhDs in comp sci /year in US, 1600 in China. Offshoring ramps up faster than immigration. 900,000 construction workers in Beijing. 14% of world’s cranes in use in Shanghai.

Q: What is the real failure? Is this a failure of the market system? Failing of pricing as a signal to work? Bankler paper. New model of production. Commons based peer production. No market. Linux happened on its own. Paradigm shift. Creates confusion. Don’t have language and tools to discuss it. Isn’t just about price on everything going down. Can make money if companies are competing to provide infrastructure. Roads as an example.

RG: Yes, this is radical, this is real. How will powers than don’t benefit from its existence be able to stymie it.

Q: Lots of bankrupt networks with old operational costs. How will this play out?

RG: Nobody believed prices would go below operational costs, but it did. Chinese restaurant. 1st guy buys stuff, bankrupt, 2nd too much marketing, bankrupt, 3rd makes a good biz out of it. 2nd guy may make it but very random, no causality. Undersea link with taxpayer funding for 2nd link, destroys economics of 1st link.

Q: Undersea cables, very old under Atlantic, new ones often not completed. How will this play out?

Q [Stroh]: “I’m a wireless bigot” – people assume you can’t get around the costs of a fiber network, but you can get around those economics with wireless. Just slap up $20-30k of equip and done. Local infrastructure benefits enormously from Moore’s law applied to wireless. That infrasturtcure IS economical to operate. [“It’s being done”]

Q: System has to re-stablize. Without being distopian, Emannual Walresein [?] – stuff is perfectly clear if you see system has reached a point that can’t be returned to stability. A “good economy” always involved some artificial means to get “extra money” out. Technology is dissolving ways of doing that through increased transparency. An economy not like a natural ecosystem. It’s an artificial social construct. People at the top skimmed off the resources.

RG: Not clear that we do rebound.

Q: have talked about inevitable collapse of incumbents. BT not going away, Verizon moved to Dow 100. Plus ca change – meme ce same old thing.

RG: RBOC will die. Need to look at balance sheets. Have $15-25bn in debt, prices plummeting, huge pension liabilities, high OpEx, and this only goes away if they deepsix their networks. Going to WiFi , cellular. People who lent them money was not based on current biz plan. Big liabilities coming up. Need to be careful with regulators. Look at steel, Chrysler. Money down a rathole. They are friends, political contributions, deep affection there with politicos. Will be a lot of debt they can’t pay.

DC: Did MCI go away? Bankruptcy cleans balance sheets.

Q: When mortgage payments stop, house doesn’t go away, just title. Fiber always useful in absence of global wireless mesh. Are discovering further troubles of big fiber operators. Level 3 and Global Crossing. Peering not working well. Europeans entrenched so GC and L3 pushed out. Optical circuit switching about to go commercial. Optical gateway protocol. People buying cheap firesale fiber. But a couple of strands between major cities. Can use layer 1+2 swicthes. Stats on research and education networks with customer-owned networks. No longer need carriers [APPLAUSE]. They attach gigabit Ethernet to it. When Verizon thinks it will get its market back, it is stuff like this that keeps it from happening. Boeing, Ford, GM global corporate-owned fiber networks. Think there are about 500 corp networks no longer on local exchange, but not even customers of GC and L3. Just as L3 thought it had a stabilized biz, rug is pulled out.

RG: Can be world of haves and have nots. You are outside of that, what do you do? How do we agree to fund that?

DC: Disagree: Corporations and outsourcing everything not essential to making a profit. IBM global network sold to AT&T. Not provide HR service to P&G. Sell on to everyone else as a new business. All these things, including network, will become outsourced. Firesale prices will only last so long. [Stroh – Boeing can’t find anyone to provide them the business.]

Q: Traditional carriers go out of biz, govt. support. Outside of US very different. UK & BT, regulator and public don’t want it to go away. Don’t want to invest in it, but want it to exist. In US, federal govt looking to build own infrastructure, wait 15 years for something already 5 years out of date. There is a big row that the government is building own giant infrastructure without commercial value for carriers. Unlikely that traditional carriers can restructure themselves to be competitive. Won’t be federal govt. Only people with interest in [keeping carriers alive] are regulators! Because regulators controlled by and and exist for traditional carriers. Skype is how stuff propogates, bunch of carriers don’t know what to do about Skype.

Q: Whole question of what a carrier is is up for grabs. Fed govt in business [of telco nets] scary because always inefficient. Raises lots of issues in developing world where govt willing to support. Carriers diminishing in importance. Govt will maybe use too big to fail metaphor. Too large, too many people dependent on them. Dinosaur technologies. In White Plains [near conference center]. What’s that building? Verizon switch center 10% occupied, built for mechanical switches, 5% of floor, 15% of heat.

Q: Backlash on globalization. Traditional American hostility in immigration. Walmart into disintermediation. VoIP is disintermediation.

RG: It hurts, economics beyond our imagination. What’s the “price of world peace”. Technolgoies are more powerful than we can imagine. It’s happening. We benefit in part, but it is painful while we restructure. In 1980s Japanese bought half of Hawaii and Rockerfeller center. I have a Prius, wouldn’t get that from Detroit, happy with it.

Q: Backlash will be huge. Civil war came from black labor vs white labor.

RG: World shrinking fast, can’t stop it.

Q: What are the equivalents to Engelbart and other visionaries?

RG: None come to mind. Unfortunately not my business. I see what is [not what could be]. David said it as good as anyone. Take power to the ends, let people connect. Want people to understand how inevitable this is and the magnitude. Irritates me when that say this is just a cyclical issue.

DC: We routinely overestimate short-term change, underestimate long term. E.g. VoIP 8 years ago. Telcos will go away. Will still be communications companies. Call them carriers or whatever. But we will be in a very different situation.

WTF Blogathon

OK, I'm at WTF. Not your average telco conference. No vendor gimmicks. No schmoozing. No interminable marketing VP set-piece keynotes. No fuzzy roadmaps. Heck, it isn't even being held in Las Vegas!

Just a critical mass of IQ about to detonate around a dumb network core and decimate the vicinity. I'm pumped (for a quiet English boy...)! I just wish I'd gone to bed earlier last night, and hadn't had to get up so early that I'm got half a beard by lunchtime...

I've always been sceptical of my ability to listen and blog at the same time, so please cut-n-paste the next few days overexcited ravings through a spellcheck and meme corrector of your choice.

Giddy up!

A telecom ruminant is digesting the possibility that a 3Kb/sec duplex voice stream is not exactly a demanding broadband application.

That's because bandwidth is not throughput. Throughput is what users value (by definition!). Throughput is "end user valued stuff". Throughput of a "chatty" application depends as much on latency as peak transmission capacity. Which is why geostationary satellite is permanently shafted as a means of delivering top-tier connectivity, unless Einstein is planning a second coming. Useless for gaming, hopeless for voice. It's why FLASH OFDM will constrict the market for CDMA technologies: time to obtain and release transmission channels is small.