29 December 2006

AT&T BellSouth merger

In case you haven't been following the saga of this merger, you might want read this short item to bring you up to speed. Now, in an effort to break the deadlock, AT&T submitted this letter to the FCC in which they outline further commitments. The mainstream media (MSM) is reporting this as a win for "net neut*" advocates. Om Malik has a different view, though ...

I find it interesting to speculate on the cost-benefit computations that underly these further commitments. It is not possible to estimate these without more extensive research, as the letter reports targets and not the current state of affairs. If these costs can be estimated, then we will presumably be able to estimate the benefits that AT&T expects to obtain from the merger. This article provides a start at this analysis.

Update: The merger was approved on 29 December. Here is the FCC statement; you might also want to read the statements of the commissioners as well (here, here, here and here). This article provides a summary, as does this one. As these articles indicated, "net neut*" "purists" were not particularly happy. For examples of their concerns, see this, this, this, and this, among many others. On the other hand, this presents a more pragmatic analysis.

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Vodafone in India

This story in BusinessWeek isn't hot off the press at this point. In fact, you might enjoy Om Malik's analysis as well. However, I find a couple of things that are particularly interesting at a meta level:

The article reports that Vodafone is pursuing this acquisition to find growth. Growth, ultimately, is growth in revenues, but it is also closely related to growth in subscribers because of weak network effects and scale/scope economies at work. Vodafone is by no means alone here. Having finally digested the expensive spectrum auctions of the late 1990s, they are finding growth relatively weak in their "home" markets (Europe) despite the rollout of 3G technologies such as HSDPA.

Update (2007/1/5): This article in BusinessWeek indicates that interest in India's carriers is very hot. Note that Verizon and Vodafone operate Verizon Wireless as a joint venture ...

Update (2007/1/10): After meeting with the Commerce and Industry Minister Kamal Nath, this bid appears to be moving forward.

Update (2007/1/17): This analysis is insightful, building a case for the importance of this acquisition to Vodafone

Are expectations of 3G-related revenue growth modest enough to warrant an investment of this kind?

Is this a useful model for a developing country? I.e., to invest organically in its infrastructure to the point of "viral" growth and then to consider a partnership with a carrier based in and industrialized country to complete the rollout?

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28 December 2006

WiMAX as a backhaul technology

There have been questions raised about the suitability of WiMAX as a competitor to WiFi or 3G because of the return path challenges (see this, for example). As I have noted earlier, Sprint Nextel plans to roll out a national WiMAX network as its 4G mobile technology. This article in BusinessWeek indicates that Sprint Nextel's real motivation is different ... to reduce the cost of backhaul in its wireless network. The article goes on to suggest that the main business target of a WiMAX network is not mobile customers, but fixed small businesses who need DS-1 level speeds.

Do you find this argument compelling? Do you think that WiMAX has a future as a mobile wireless technology?

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The beginning of the end for VoIP?

This item in BusinessWeek is very interesting ...

Traditional telcos' services can, in fact, prove to be cheaper when calling countries like Israel, he says. My personal experience shows that using prepaid calling cards is still cheaper when dialing Russia, meanwhile.

If VoIP is truly the cheapest switching technology (as I argued in my 1999 TPRC paper), why does this observation obtain? Is this more an issue about business models than cost of technology?

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Taiwan quake and telecommunications

This article is a nice case study of how natural events can affect telecommunications. Despite our best efforts to engineer robust networks, it seems that these systems remain relatively fragile in the face of natural events of this magnitude. This article in Forbes indicated that the initial impact of the quake was quite severe.

Update (2006/12/28): This article indicates that service is being restored, though it appears to be far from "normal".

Update (2006/12/29): There are a couple of additional articles that contain a bit more technical detail that came out today (12/29). See this and this. This article reports on restoration plans and hints at the business impact.

Update (2007/1/3): The restoration work is just beginning, even though the interest of the media has largely moved on. The article reports estimates of late January to early February for complete restoration. Meanwhile, you might find this thread interesting with respect to an unanticipated consequence of the break.

Update (2007/1/5) This article in BusinessWeek goes a bit further in discussing restoration efforts, the costs, and cable design strategies than the previous articles did.

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21 December 2006

Repurposing VHF spectrum

This item points to an upcoming opportunity. As you may already know, the transition from analog to digital television will take place in the coming years. This will entail the release of the current television spectrum in the VHF and UHF bands.

Given the desirable propagation characteristics of the spectrum in this band, what would be the best application for this? Would this be a good "third pipe" wireless technology (perhaps using WiMAX)? How much bandwidth would be required to compete effectively with Comcast, Verizon and AT&T? Should this spectrum be allocated in this way, or should the allocation be "open" so that an auction winner could use it for any application they please?

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20 December 2006

Network neutrality and private decisions

In an earlier post, I had addressed Akamai and how their business might relate to network neutrality. Apparently, at least one company (Sony) has found it worthwhile to pay for better performance, according to this item from IPCentral.

Would this business arrangement be permissible if network neutrality regulations are enacted? Does this provide sufficient evidence of a demand for higher quality of service?

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Investment in fiber returns

There have been a number of stories in the past days about big undersea fiber projects (see this, for example). Om Malik takes a thoughtful view of this new trend in this post on GigaOM:
The first sign of a new dawn: a new network by Verizon Business1 (which in reality is the old MCI) and a gaggle of Asian telecom operators including China Telecom, China Netcom, China Unicom, Korea Telecom, and Chunghwa Telecom of Taiwan.

The new cable consortium is going to build a $500 million network called, Trans-Pacific Express, and the 18,000 kilometer cable system will have capacity of up to 1.28 terabits/second, but will eventually upgrade to over 5 terabits per second. The network will land on Nedonna Beach, OR, on the US side and will hit China at Qingdao and Chongming. It will also have landings in Tanshui, Taiwan, and Keoje, South Korea.

The new network should not come as a surprise to anyone who has been following the telecom and broadband markets. The traffic between Asia Pacific (and China in specific) and the U.S. has been increasing at a steady rate, and current infrastructure is feeling a bit stretched.

By the way, there is a cool visualization of undersea fiber capacity on the original post.

Do you think that this is being driven by offshore outsourcing? Or, are there other factors at work?

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WiMAX and scale economies

Om Malik posted this item over at GigaOM. He argues that adherence to global standards and common frequency ranges is essential to gaining the necessary economies of scale. But there is a fly in the ointment:
... standards could also bring scale economics to gear makers. In ideal conditions, that is. However, we have started to observe some disturbing trends that run counter to the scale-is-the-salvation argument, at least anytime soon. Concerns both about multiple frequency ranges as well as the question of fixed vs. mobile flavors may keep WiMAX from scaling up quickly, making it more vulnerable to Wi-Fi and 3G/4G cellular alternatives.

India and China are often showcased as the big WiMAX opportunities, and with a reason. Booming economies and a lack of legacy wired infrastructure makes WiMAX perfect for the local needs. However, as we noted last week, India is opting1 for WiMAX in the 3.3-to-3.4 GHz band, a spectrum slice not available in say, the U.S. market. So there are spectrum conflicts that need to be thrashed out.

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08 December 2006

UWB in Europe

I came across this item today that was interesting. Quoting the article:
Ultrawideband is to be legalised across Europe within the next six months, following its approval by a key European Commission group.

The short-range, high-bandwidth technology - which promises speeds of up to 1Gbps - has until now been illegal outside the US. Its status has now been reversed at a meeting on the 4th and 5th December of the Radio Spectrum Committee (RSC), a European Commission body which can mandate spectrum usage across the continent.

Ofcom's chief technologist, Professor William Webb, said on Friday that the UK regulator was "delighted" at the approval of ultrawideband (UWB). He pointed out that if the RSC approves a document "it automatically becomes EC law" and said the decision to mandate acceptance of UWB across all European states within the next six months was taken at an RSC meeting earlier this week.

Note that the chairman's report has yet to be posted on the RSC website. The cited article basically implies that this document has been accepted by RSC (perhaps with modifications). Note that pages 9-13 contain a draft Decision for the EC.

How does this compare to efforts at the FCC to allow UWB? How about elsewhere in the world?

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04 December 2006

ITU: Policy and Regulatory Challenges of NGNs

I came across this ITU site that you might find interesting. It looks to be, in part, a collection of work on this subject. This could be a good resource, especially if NGNs come into being someday.

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01 December 2006

GAO Report on Access Competition

The US General Accountabiltiy Office (GAO) released this report on the state of dedicated access competition that is worth a read. This report surveys sixteen metropolitan areas (including Pittsburgh) and assesses the extent of facilities based competition. The findings include:

Available data suggest that incumbents’ list prices and average revenues for dedicated access services have decreased since 2001, resulting from price decreases due to regulation and contract discounts. However, in areas where FCC granted full pricing flexibility due to the presumed presence of competitive alternatives, list prices and average revenues tend to be higher than or the same as list prices and average revenues in areas still under some FCC price regulation. According to the large incumbent firms, many large customers needing service in areas with pricing flexibility purchase dedicated access services under contracts that provide additional discounts. However, GAO found that contracts do not generally affect the differential cited previously, and that contracts also contain various conditions or termination penalties competitors argue inhibit customer choice.

What kind of response do you think is necessary or appropriate? What does this say to you about a pro-competition telecommunications policy? How do these results match with related studies elsewhere in the world (eg. the European Union)?

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