IP: Welcome to the Telecom Dark Ages

[Dave Farber <dave () farber net>]

He has it right. I have preached this as have many . Djf


------ Forwarded Message
From: "David Prior" <david () priorintelligence com>
Reply-To: <david () priorintelligence com>
Date: Sat, 29 Jun 2002 11:46:34 +0100
To: <dave () farber net>
Subject: FW: Welcome to the Telecom Dark Ages

Dave,

Further to Dana Blankenhorn's piece:

A copy of a letter I sent to the UK Times in response to an article
(http://www.timesonline.co.uk/newspaper/0,,173-339450,00.html -
subscription, sadly, required!) on the telecoms circumstance. Please feel
free to distribute via IP.

Have fun,

David.

-----Original Message-----
From: David Prior [mailto:david () priorintelligence com]
Sent: 28 June 2002 11:51
To: letters () thetimes co uk
Subject: Welcome to the Telecom Dark Ages
Importance: High


Sir,

Your article of June 27th (Spending spree that crippled the giants of
telecoms, Nic Hopkins) only perpetuates the misconception that the current
climate for the telecommunications sector is a result of massive
overspending resulting in huge overcapacity. Your correspondent writes that
"with a limited number of people there was always going to be a confined
marketplace. Many of those thousands of miles of cable lie unused."

Those of us who have worked with the telecommunications sector recognise
that much of the fibre-optic cable installed remains unlit, awaiting demand
before being brought into service. Rather than being an expensive asset
which remains unused, such cable actually represents an economy of scale in
deployment in respect of the costs of installing such cable. As previous
commentators have remarked, to say that there is a glut of
telecommunications/network capacity because there is a lot of cable is like
saying there is a glut of microchips because there is a lot sand!

The problem lies in demand. Rather than a limited number of people to make
use of network capacity, by far the biggest problem is that this is
compounded by the limitations inherent in the access network environment. As
long as network access is restricted to traditional telephony
infrastructures - the famous 'last mile' or 'local loop' - aggregated demand
in the network core will remain low. Michael O'Dell, previously of UUNET,
has empirical evidence of this point. From UUNET's experience, a 100% per
annum increase in network demand from the access environment requires a 100%
increase in capacity at the network core every 3-4 months.

Indeed, my own research has indicated that current access network technology
penetration rates (for dial-up, ISDN, xDSL, fixed-wireless, cable modem and
fibre-optics) will limit around 85% of latent demand for network capacity at
the end of this year. It is unfortunate that this circumstance, in the UK
and elsewhere, is itself perpetuated by an industry focus on the roll-out of
xDSL technology. xDSL makes no sense in the medium term and,. according to a
contact at one major equipment manufacturer, is loved only because it 'turns
copper into gold'.

xDSL is a short-term technology solution that delivers unexpected revenues
to local exchange carriers. xDSL is not, by any stretch of the imagination,
'broadband'; nor is it capable of liberating latent demand for converged
network services. In early 2001, a discussion forum was launched under the
title 'The Telecom Dark Ages'. This forum, participated in by peers with
extensive telecommunications expertise, recognised the limitations of
existing access technology and the knock-on effects of such limitations on
core network providers and equipment suppliers. It seems that it is only now
that the rest of the industry, and those who supported its rise, are
catching on to the problem.

The fact of the matter is that existing approaches to 'broadband' are
short-term only. Without a move towards real broadband, and by real I mean a
network infrastructure providing at least 10Mbps of converged (voice,
Internet, TV, audio, video, etc.) services, demand will remain fettered;
deployed cable will remain unlit, and the telecommunications sector will
continue to decline.

I would suggest that, rather than focus on short-term revenues from an
unsustainable technology, telecommunications providers and their investors
need to wake up to the idea that now is the time to invest in a real
solution based on optical fibre to the building. Although initial costs are
relatively high, the potential returns for customers and suppliers alike are
immense. Furthermore, should existing communications players fail to grasp
this opportunity, Government and private enterprise should begin to address
the situation at community level with a view to providing a municipal fibre
solution, operated under a wholesale access model.

With such models underway in Canada, Sweden, and the United States, as well
as some localities in the United Kingdom, telecommunications as we have
known it is no longer a viable proposition.

Yours Faithfully,

David Prior
p r i o r i n t e l l i g e n c e

Glen Lodge
Buckland Brewer
Bideford
Devon
EX39 5LY
United Kingdom


Telephone: +44 (0)1805 622239
Facsimile: +44 (0)870 139 1215
Cellular: +44 (0)7811 359792

Email: david () priorintelligence com
http://www.priorintelligence.com

Collaborative Member - VAWSS:
http://www.vawss.org/panel.aspx

Member - Broadband Content Coalition:
http://www.broadbandcc.org


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