29 December 2005

One billion Internet users

This article is interesting. Aggregate statistics, such as those in the article, point to trends and can help us understand the motivation behind current events. For example, user growth is highest in countries such as China and India, while most of the commerce comes from the US. This helps us understand the motivation and the outcome of WSIS.

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28 December 2005

Arrival of Ubiquitous Video

There is an interesting article from BBC to introduce the initial development of mobile TV and DVB-H in Europe.

Although keeping a skeptical attitude about the future of watching video program at a tiny screen, I observe that a lot of big players in different industries have invested a great deal to promote “ubiquitous video” as the next killer application. (e.g., mobile TV, DVB-H and podbroadcast)

The development of ubiquitous video fades the border between telecommunications and broadcasting gradually. It also implies that the amendment of Telecom Act becomes necessary.

27 December 2005

The year that was in Telecommunications

In keeping with the season, I decided to summarize some of the major events of the past year in telecommunications. As a review of this blog, which is only four months old, shows, there were many noteworthy events in the past year. To recap:

  • The World Summit on the Information Society (WSIS) happened. After much ado, the result was to keep studying Internet governance. The divide between those arguing that nothing needs to be done and those who feel inadequately represented has not effectively been bridged.
  • Mergers and acquisitions were prominent features of the news. SBC kicked off the sweepstakes by entering into an agreement to purchase AT&T. This eventually triggered a bidding war between Qwest and Verizon for MCI. Verizon eventually prevailed, though not without discontents among MCI shareholders because Qwest's purchase price was higher, though it was clearly the weaker merger partner. SBC ended up taking AT&T's name, leveraging a well known brand.
  • Amidst all of this consolidation, the large ILECs invested in infrastructure -- fiber to the home to be specific. Over this high speed infrastructure, they hope (and are) offering video as well as high speed Internet. This raises the specter of a "triple" or "quadruple" play ... voice, data, video, mobile. This is what AT&T attempted in the late 1990s by acquiring TCI (cable) and using the FCC unbundling rules for local access. They did not pull off a bundled service offering and ended up having to sell off the pieces. Comcast entered into an agreement with Sprint/Nextel to compete. Are bundled service offerings going to be the best business strategy going forward?
  • Not everyone thinks so ... Alltel announced the sale of its wireline (ILEC) business, and Telecom Austria also moved in that direction. So which will it be?
  • This might be remembered as the year in which VoIP became mainstream. VoIP traffic was blocked in some places (Israel, Qatar, to name a few). Ebay purchased Skype. Tiny Western Kentucky decided to go VoIP ... I had forecasted this eventuality some five years ago ...
  • Content and carriage began coming together in new ways, to the delight of some and the consternation of others. Google began building municipal, in addition to acquiring the rights to some dark fiber. Similarly, Edward Whitacre of SBC (now AT&T) made the news in which he suggested differential pricing for high profile users. This raised the profile of an ongoing discussion about "network neutrality", including an article in Technology Review about a potential redesign of the Internet.
  • Speaking of carriage, there was a tussle between Level 3 and Cogent over peering. This added fuel to the fire of network neutrality, WSIS, and the power wielded by the large internet backbone providers. This was eventually resolved, even though it did result in some temporary outages for some Cogent customers.
  • Mobile continues to be an important feature in the telecommunications landscape. Many operators are rolling out 3G services; CDMA 2000-based technologies still have a substantial lead, though most of us expect WCDMA to come on strong in the coming years, as the GSM-based carriers roll out the necessary infrastructure. Will we ever see a single worldwide air interface standard? Maybe with 4G?
  • Mobile continues to provide a viable alternative to wireline network access for voice. Access lines continue to decline, which is one of the reasons why Alltel (and Telecom Austria) decided to take the actions they did.
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26 December 2005

Presentations from Istanbul workshop on VoIP

This website has some presentations from a recent workshop on economic and political aspects of VoIP. A few of these presentations contain useful information, while others are more general.

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22 December 2005

The Internet Is Broken

Technology Review just released The Internet is Broken (note that this article is in three parts ... follow links within the article for subsequent sections). The article argues for a fundamental redesign of the Internet to support its uses today in an efficient and secure manner. The National Science Foundation is interested in addressing this question in its FIND project. There are two kinds of questions here, technical and economic/political.

The technical questions include: Why is a redesign needed? Wasn't IPv6 supposed to solve the problems addressed in this article? Why can't we continue to evolve the current approach?

To me, the more interesting questions are not technical. They include: How would you get existing users to switch to a new design (note the rather unimpressive adoption IPv6, some ten years after the standard was approved). Given the earlier items on network neutrality, do you believe that a new architecture would address Isenberg's wish list? Do you believe that the current infrastructure providers (AT&T/SBC, Verizon, et.al.) would go along with such an approach? How would a new architecture fare under some of the legislative initiatives underway in Congress?

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15 December 2005

Mobile phone standards

This topic has come up before on this blog (see this and this). Now Siemens is predicting the demise of CDMA-based standards in favor of GSM. Would US carriers (Verizon and Sprint/Nextel) swap out their 2G infrastructure? What about 3G (in which they have a significant market lead)? I doubt it ...

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Network Neutrality, again

This article on the BusinessWeek website is a re-statement of the concerns around network neutrality (see this earlier post on this, and this one as well). Link Hoewing's remarks in this article cause me to wonder whether the incumbents' differential pricing strategy is a way to compensate for the regulatory asymmetry that is currently benefitting VoIP providers.

Update: Please check out Ray Gifford's analysis of network neutrality. I found it interesting and useful in that it was based on economic analysis than on historical, moral, or other imperatives.

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Telecom Austria restructuring

In this post, I commented on Alltel's restructuring. Please note this article, in which Austria appears to be undertaking a similar restructuring. So, will the "telecom triple/quadruple play" amount to alliances among independent service providers? There are clearly advantages and disadvantages to this ...

On the plus side, it allows operational autonomy and valuation (from an investment perspective). This seems to be behind the Alltel and Telcom Austria actions. This is also what AT&T (prior to the SBC merger) did in the 1990s. On the minus side ... constructing bundled services is more difficult when the members are autonomous. Incentives to defect from the "cartel" can be strong enough to cause it to collapse. We see this with OPEC. There is, by the way, an historical precedent ... AT&T in the 1990s. After assembling all of the elements of a "triple play", they dismantled the project, arguably because they couldn't make bundling work (I have some papers somewhere ...). How easy will it be for fully independent companies to make it work, when AT&T couldn't as a holding company for these units?

There are other questions ... are bundles in the "public interest"? Are consumers better off or worse off? By what measures?

I guess I'll have to visit Tirol this winter to check it out ... ;-)

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14 December 2005

Telegraph in New Zealand

Being a fan of the early history of telecommunications ... I came across this site that talked about the history of the telegraph in New Zealand. The article mentions a link with Australia ... I wonder how this was negotiated and how the accounting was done. It would be interesting to consider that in light of Internet interconnection agreements!

I will post similar links as I come across them ...

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Can Broadband Predict Economic Shifts?

In this article on his blog, Om Malik asked the question in the title. As I commented there, this reminds me of the discussion/debate that took place in the 1980s around the causality of telephone penetration and economic activity. The net result of this debate was fairly inconclusive.

Is this debate at all germane to Om Malik's questions? Does it matter that we discussed telephone technology in the 1980s and broadband technology today? Does it matter that the previous debate was on national development, while Om Malik is interested in transational effects?

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Telecom and taxation

The USA Today ran this article in which they reported that nine federal courts have ruled a 3 percent federal tax doesn't apply to phone calls that are priced only by how long a person talks -- not by how far the call travels. That means that many cellular phones, Internet phone service, and long distance calls would be exempt from the tax. Taxpayers would be due three years of refunds, or about $9 billion. It seems easier to institute taxes than to repeal them (see this, for another example ...) This follows this a different but related article on tax protesters with regard to the same tax. Politics makes curious bedfellows.

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13 December 2005

Google, Yahoo, Alexa and search

A couple of articles (see this and this, for example) came out yesterday. In this article industry observer and reporter Om Malik considers their implications. Here is Nicholas Carr's take on this development.

Does this foreshadow a restructuring of the search industry? Does this explain (in part) Google's (and, for that matter, Yahoo's) recent activities (i.e., announcements and acquisitions)? If so, how and why do you think so?

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Importance of pricing in telecommunications

We tend to get distracted by technologies in trying to explain market events that we sometimes might forget that pricing can play a significant role. This article highlights this, as did the 1989 Telecommunications Policy article by Jill Hills, in which she used the different pricing structures in the US and the UK as a partial explanation as to the differences in telephone penetration between the two countries in the 1980s (and before).

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12 December 2005

Is Qatar blocking VoIP calls?

This story, which reports that Vonage users in Qatar are being blocked, has been making the rounds on the telecom blogs. Unlike the Israeli policy, which was quite overt, I have not come across an official government statement.

Do you think that governments should be blocking VoIP traffic? If they do, do you think they should do it explicitly or quietly?

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Network Neutrality

David Isenberg posted this article, which amounts to a wish list (or manifesto?) on "network neutrality". In this article, he calls for regulation to ensure that the network remains neutral. I wonder how regulation would be implemented ... specifically:

What would the measurables be? What are appropriate interventions? How would you know if you were successful? Given the recent talk about Google's ambitions (see, for example this post earlier on this blog), would Google be a candidate for this kind of regulation?

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09 December 2005

Alltel spins off wireline unit

This article reported today is an indication of the changes happening in the telecommunications industry. It is old news that the number of ILEC access lines has been decreasing in past years, while the number of mobile subscribers has been increasing. This is due in part to competition from mobile carriers and penetration of broadband service (both ILEC and CATV based). This topic has shown up in earlier posts on this blog.

In focussing on rural and suburban areas with its wireline business, Alltel had built a company that was largely immune from (wireline) competition by CLECs that characterized the late 1990s. With competition from wireless carriers and CATV providers, Alltel faced greater competition. Clearly, they felt that maintaining an integrated company was not consistent with shareholder value.

I find this move by Alltel a bit peculiar in that Sprint/Nextel has recently made some noise by allying themselves with CATV providers in support of a "telecom triple play" (also discussed earlier in this blog), and the moves by Verizon and AT&T (aka SBC) in this direction. Further, Alltel does not have the wireless footprint or subscriber base to compete with the big three.

Alltel is clearly marching to the beat of a different drummer ... are they right? What are good rationales for this move?

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New book on US Telecommunications

Please note this new book on US telecommunications, co-authored by yours truely. Please excuse this shameless self-promotion! I haven't found it on Amazon.com yet. Happy reading ...

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08 December 2005

Yahoo phone service

This article highlights how competition might be arising from unexpected sources for communications companies. The purchase of Skype by Ebay foreshadowed this, as do some of Cringley's speculations (on which I blogged earliers). Many people (besides me) have observed that the distinction between voice messaging (using an instant messenger interface) is indistinguishable in many respects from a basic voice call. This article shows how traditional lines of business are blurring ... here's a quote:

"Historically communications have been stuck in a bunch of different silos," said Brad Garlinghouse, Yahoo vice president of communications products, and a former executive at Dialpad.

"The home phone is one silo, the work phone is a silo, the mobile phone is a silo, instant messaging is another silo and mobile phone text-messaging is another silo," he said of how Yahoo plans eventually to tie together communication services.

Business 2.0 notes that the cost to Yahoo for this new service is probably well below the billions that Ebay paid to purchase Skype. In his blog, Om Malik comments on this as well, posting price estimates -- around $30 per year. Forbes has a an article that is very bullish on Yahoo's prospects in this market.

Do you think network externalities are relevant here? How is this new business model (for Yahoo) different from its previous one (in regard to voice communications)? How successful do you think Yahoo will be in executing the strategy suggested by the Forbes article?

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07 December 2005

Microsoft vs. Korea

Earlier, I had blogged about the dispute between Microsoft and South Korea. In that post, I noted that Microsoft was threatening to withdraw. In today's news, it is reported that the South Korean Fair Trade Commission found Microsoft's practices an "abuse of market dominant position and unfair trade practices." A fine of (only) $32 million was levied against Microsoft, along with an order to change its practices by offering two versions of Windows.

So, will Microsoft make good on its threat to withdraw from S. Korea in response? Personally, I doubt it ... the risks are high in a technology-savvy country like Korea.

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Is a Domain Name Property?

The manner in which the ".eu" TLD has been opened was done to honor the rights of pre-existing trademark holders ... or perhaps to avoid disputes. The question remains as to whether such rights actually exist. Milton Mueller, among others, have written about this. This blog post addresses this question, in case you are interested in delving deeper into this question.

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05 December 2005

The Internet of Things

The ITU just released the latest in its series of reports on the Internet, The Internet of Things. I have only read the executive summary (available on line at no cost) ... as with many reports like this with catchy titles, they don't explain the title (a pet peeve of mine). What is the relevance of a report like this to you? How does this compare to other academic or government reports? Do you expect this report to have an impact? If so, where and why?

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02 December 2005

Infrastructure theft and telecommunications

This article is interesting, in that it highlights an aspect of infrastructure that seldom gets attention -- theft. As the article points out, it is hardly a problem isolated to developing countries. The impact of infrastructure theft is perhaps greater in developing countries because the resources are scarcer.

On the CAnet News mailing list, Bill St. Arnaud speculates about whether this phenomenon might turn out to be a driver for technology change. Would fiber or wireless equipment face the same problems? What if the lampposts being stolen contain access points ... how would this affect municipal networks?

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".eu" opens next week

A new top level domain ".eu" opens on 7 December. This press release indicates the protocol ... trade mark holders and public bodies will have first dibs on names for two months, followed by a two month period reserved to holders of "prior rights", before it is open to the public in April. What is the rationale for this approach? What problems is EURid trying to avoid?

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01 December 2005

Price's Law and the Downside of Network Effects

We have discussed network effects from time to time. Here is an interesting article that gives a little more definition to the phenomenon. Price's law appears to be more focussed on content, with more applicability to the "web 2.0" phenomena. Do you think that Price's Law also applys to the network effects experienced in the telecommunications industry? To think this through, take a look at your own consumption behavior where network effects exist (IM, mobile phones, etc.). You might also revisit the historical access competition era in the US (1892-1912). If Price's Law holds in this domain, what implications would that have on policy, especially for developing countries?

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More on Google (less off-topic)

Recently, I posted a piece speculating on Google's future plans. This post featured a reference to an article by Robert Cringley. Cringley has now posted this article in which he further speculates on Google's plans (in addition to correcting some errors in his previous piece). Om Malik adds weight to Cringley's speculations in this posting on his blog.

So how does this frame Google's competition (and competitive position)? Does Microsoft's investment in the Xbox make more sense in this context? Who else might have an interest in competing here? What about Whitacre and his recent comments? What kind of future do you think is emerging, based on these (and other) speculations and analyses?

And then there is this ....

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