Ofcom consultation on BT's NGN

This report is very interesting. In it, the UK regulator OFCOM responds to changes in BT's investment plans in its network upgrade. In the process, the consultation does a good job in laying out the technology and regulatory implications not just for consumers but also for competitors. It is a bit technical but well worth the read if you're interested in NGNs.

Apple, AT&T and network capacity

I have written about this before (see this) so this article in BusinessWeek is an interesting follow up. This article highlights several things that I find interesting to note:

• The relationship between product development and service development. In the wireless market, handsets are provided by companies that do not provide services. Especially in the case of the iPhone, Apple made a considerable investment in developing a user experience and singular branding that required investment from AT&T to implement.
  
• The differing investment life cycles of products, software and infrastructure services. Apple has gone through at least three generations of its hardware, more than three generations of its software (if nothing else than to break jailbroken phones). In the same time period, AT&T has still been implementing its original network technology (HSDPA/HSPA) throughout its network. The cost and complexity of delivering infrastructure support is far higher than the product that users directly see and interact with.
  

Google voice and the iPhone

The dust-up around the Google Voice iPhone application has been fun to watch (see this for an update). There are many things going on here, including (possibly) AT&T's involvement (which both it and Apple deny). I found this item over at TechCrunch an interesting analysis of Apple's response to the FCC's inquiry.

I have to agree that it seems largely about Apple's control over users. AT&T would get either the data traffic or the voice traffic and, unless there is a serious difference in the profitability of one service over another, they should be largely indifferent.

Welcome to life in Apple's walled garden.

Update: The plot thickens ... according to this item, AT&T and Apple did have an agreement regarding VoIP, but it did not cover third party apps.

Termination charges in mobile systems

This post discusses a paper by economist Sandy Levin comparing Wireless Party Pays and Calling Party Pays. The paper rightly concludes that CPP systems require ongoing regulation because there is no competition for termination charges, so they can get quite high. The subject of high termination charges has been the subject of EU regulation as well as complaints by the US Trade Representative.

Future of WiMAX

I am not quite as pessimistic about WiMAX as this item is. Instead, I think it will serve a role as a wireline replacement technology rather than as a competitor for LTE.

USDA report on rural broadband

This report form the US Dept of Ag. seems as though it will be worth reading. I suspect that the timing of the report is no accident, coming as it does as the FCC is in the midst of developing a broadband policy for the US. From the report summary:

Analysis suggests that rural economies benefi t generally from broadband availability. In comparing counties that had broadband access relatively early (by 2000) with similarly situated counties that had little or no broadband access as of 2000, employment growth was higher and nonfarm private earnings greater in counties with a longer history of broadband availability.

By 2007, most households (82 percent) with in-home Internet access had a broadband connection. A marked difference exists, however, between urban and rural broadband use—only 70 percent of rural households with in-home Internet access had a broadband connection in 2007, compared with 84 percent of urban households. The rural-urban difference in in-home broadband adoption among households with similar income levels reflects the more limited availability of broadband in rural settings.

Areas with low population size, locations that have experienced persistent population loss and an aging population, or places where population is widely dispersed over demanding terrain generally have diffi culty attracting broadband service providers. These characteristics can make the fixed cost of providing broadband access too high, or limit potential demand, thus depressing the profitability of providing service. Clusters of lower service exist in sparsely populated areas, such as the Dakotas, eastern Montana, northern Minnesota, and eastern Oregon. Other low-service areas, such as the Missouri-Iowa border and Appalachia, have aging and declining numbers of residents. Nonetheless, rural areas in some States (such as Nebraska, Kansas, and Vermont) have higher-than expected broadband service, given their population characteristics, suggesting that policy, economic, and social factors can overcome common barriers to broadband expansion.

Availability in current cloud computing services

This article reports research performed in Australia looking at the availability of cloud services provided by Amazon, Google and Microsoft. Here is how the experiment was set up:

The team of researchers, led by the University of New South Wales (UNSW) and in collaboration with researchers at NICTA (National ICT Australia) and the Smart Services Cooperative Research Centre (CRC), have spent seven months stress testing Amazon's EC2, Google's AppLogic and Microsoft's Azure cloud computing services.

The analysis simulated 2000 concurrent users connecting to services from each of the three providers, with researchers measuring response times and other performance metrics.

Here are some things they found:

Response times on the service also varied by a factor of twenty depending on the time of day the services were accessed, she said.

The response times collated in Sydney were tested against measurement instruments loaded onto the cloud platform to isolate whether delays were attributable to the service itself or the latency involved with accessing US-based data centres from Australia.

and

None of the platforms have the kind of monitoring required to have a reasonable conversation about performance," she said. "They provide some level of monitoring, but what little there is caters for developers, not business users. And while Amazon provides a dashboard of how much it is costing you so far, for example, there is nothing in terms of forecasts about what it will cost you in the future.

Network economics and universal service

I found this item over at CircleID interesting. In it, the author discusses the penalty of non-inclusion (see the graph below) and uses it to make an argument in favor of universal service.



This brought to mind some of Eli Noam's seminal work (this article, for example), in which Noam outlines the incentives people have to leave a universal network (see the graph below, from the paper). We are thus left with conflicting incentives, which serve to underscore the difficulties in achieving universal service.

Linux development report

I came across this report by way of this article in Ars Technica. It brought to mind the paper I wrote with a student a decade ago or so where we looked at who was developing 10BaseT standards and who was profiting from them (i.e., free ridership) which was published in the now-defunct ACM StandardView.

There are lots of interesting data in this report if you're interested in studying FLOSS (eg. Linux). Apropos the free ridership article was this graph that I extracted from Table 10 of the report.
It is interesting that the largest single class of contributors are those claiming no commercial affiliation, hence people who don't directly profit from their effort. The graph does seem to exhibit a "long tail" character ...

LTE testing in the US

If you're interested in technology migration in the wireless industry, you might find this item over at Ars Technica interesting. The article reports on this news release:

Verizon Wireless today completed its first successful Long Term Evolution (LTE) fourth generation (4G) data call in Boston based on the 3GPP Release 8 standard; the company also announced today that it had earlier completed the first LTE 4G data call based on the 3GPP Release 8 standard in Seattle. The successful data calls involved streaming video, file uploads and downloads, and Web browsing. Significantly, Verizon Wireless has successfully made data calls using Voice over Internet Protocol (VoIP) to enable voice transmissions over the LTE 4G network.

----------SNIP-------------

Boston and Seattle each now have 10 LTE 4G cell sites up and running on the 700 MHz spectrum. These LTE 4G markets were selected by network planners due to their geographic configuration of suburban and urban areas as well as the areas’ high-technology population. The trials will help Verizon Wireless and its LTE 4G network partners understand issues that include how to best prepare cell sites and how to add the new technology to the network.

Surely Verizon is interested in LTE because it provides a bridge to the GSM world, which it now lacks.

In regards to the competition with WiMAX in the race to 4G, Ars observed:

The announcement also made one of LTE's advantages over WiMax clear: a number of traditional wireless telecom powers were backing it. The tests' description read a bit like a who's who of the cellular world. Network equipment came from Starent Networks and Nokia Siemens Networks, Alcatel-Lucent and Ericsson provided the base station hardware, and devices were provided by LG and Samsung.

But a key factor may ultimately wind up being bank balances. Verizon has continued to grow its earnings throughout the financial crisis, and wireless services account for nearly 90 percent of its income; it can't afford to appear as an also-ran, and has the money to make sure that it doesn't. Clearwire benefits from the deep pockets of its backers, most notably Intel, and has nearly $2.5 billion in the bank, according to its recent earnings release. But, at its current rate of operating losses, that cash will last it less than three years.

In other words, it may have little or nothing to do with the technical benefits of one versus the other, but rather with the ability to sustain the technological conversion. This reveals one of the essential features of telecom: that large capital investments are required before revenue can be earned, giving incumbents a powerful advantage.

Here is a related article from GigaOM.

Economics of content on the web

I only follow this topic in a casual way, but I found this article to be interesting, especially given the challenges being faced by the traditional news organization. Quoting the article:

The vast majority of the value gets captured by aggregators linking and scraping rather than by the news organizations that get linked and scraped. We did a study of traffic on several sites that aggregate purely a menu of news stories. In all cases, there was at least twice as much traffic on the home page as there were clicks going to the stories that were on it. In other words, a very large share of the people who were visiting the site were merely browsing to read headlines rather than using the aggregation page to decide what they wanted to read in detail. Obviously, this has major ramifications for content creators’ ability to grow ad revenue, as the main benefit of added traffic is the potential for higher CPMs.

So, as always, the big question is how you get the incentives right so that people can be compensated for creating valuable content?

Broadband carriers and government funding

This article is interesting. According to the atricle

As the Aug. 20 deadline nears to apply for $4.7 billion in broadband grants, AT&T, Verizon and Comcast are unlikely to go for the stimulus money, sources close to the companies said.

Their reasons are varied. All three say they are flush with cash, enough to upgrade and expand their broadband networks on their own. Some say taking money could draw unwanted scrutiny of business practices and compensation, as seen with automakers and banks that have taken government bailouts. And privately, some companies are griping about conditions attached to the money, including a net-neutrality rule that they say would prevent them from managing traffic on their networks in the way they want.

While it is quite possible that some of the rules, such as "network neutrality" may affect them anyway, it is clear that the carriers felt that the cost of participating in this program outweighed the benefits. A significant part of their concern is related to uncertainty about the consequences of an irreversible commitment. Thus, it seems an apt subject for a real options analysis.

Doing such an analysis rigorously would be challenging since the uncertainty is not easily quantifiable. But clearly carriers have concluded that the high probability of a modest upside does not outweigh the uncertain probability of a potentially large downside.