Telecosm - Ike Elliott

Comcast & BitTorrent Sitting in a Tree...

...you know the rest of the rhyme.  Golly, you take a week off on vacation, and you come back and the wind has been taken out of the sails of the 'net neutrality push.  Who'd-a thunk it.  Reminds me of that Peaches and Herb song from growing up:

Reunited and it feels so good
Reunited 'cause we understood
There's one perfect fit
And, Comcast, BitTorrent's it
We both are so excited
'Cause we're reunited, hey, hey

...okay, so maybe that's just a little over the top.  Must be the vacation still messing with me.

Of course, I'm talking about last week's news that BitTorrent and Comcast are working together to change the way Comcast does "traffic shaping" on its network, so that certain apps like BitTorrent aren't singled out anymore.  Instead, bandwidth hogs will be singled out.  Of course, it will take Comcast most of this year to do some experimenting and change its traffic-shaping policies, but there it is.  BitTorrent is no longer the mortal enemy of Comcast.

Hance Haney, over on the Technology Liberation Front, says the 'net neutrality fight is over, and I tend to agree with him, at least until another major violation is discovered.  However, FCC Chair Kevin Martin continues to fire warning shots at Comcast.  Martin wants to take credit for progress at Comcast, and it does appear that the threat of regulation had some positive effect, so Martin won't relent 'til Comcast follows through on their public statements.

Of course, 'net neutrality proponents are still begging the FCC to regulate, as with this post from Jef Pearlman at Public Knowledge:

Much like Verizon’s announcement that they would open their wireless network to anyone’s devices, this news has the potential to do a lot of good, but the devil will be in the details.

...and later in the post

We know that service providers are discriminating against certain technologies. ISPs have denied everything, they have failed to release the details of their activities, they argue that there’s no problem with their behavior, and they claim that the FCC has no authority to stop them. None of these is acceptable.

There's more than a little truth in that.  Still with Comcast recanting and working with BitTorrent, it will be hard to make as much political progress with the FCC petitions or in Congress, with the Markey bill. 

Meanwhile, I'm glad that Comcast is on a better path, and that it got there before anybody had to get heavy-handed with regulation.  I hope we can continue to self-regulate in the Internet space, even if threatening regulation is what it takes to keep it unregulated.

Spring Break Vacation Photos

Pop quiz:  Where was this photo taken?

I know it looks like Arizona, but if you guessed the Grand Canyon, you would be wrong.  This photo was taken last week in Waimea Canyon, the "Grand Canyon of the Pacific", on Kauai.  My family visited this beautiful and varied little island over spring break, and what a trip!  It was my first time to Hawaii...now I know what all the fuss is about.

We went to Kauai on the advice of friends, and it was great advice.  What an incredible place!  From superb hikes through deep canyons, to great snorkeling, to whale-watching on the north shore, it was a dream. 

Rather than bludgeon you with all the pictures here, I've put them up on Windows Live Spaces, so if you are interested in seeing some cool shots of Kauai, you can view them here.  Enjoy!

PS - Yes, the vacation explains why there were several non-technical posts from my Uncle Fred and my late Grandfather this week. Thanks Uncle Fred, for filling in!  The vacation also explains why I didn't respond to some comments in as timely a manner as I usually try to achieve.  What can I say?  We all need a break now and then!

Little Notes 3 (by Brooks Faber, provided by Fred Faber)

Difference Between Preaching and Meddling (The Front Row Hussy)

A lady once approached the minister of her church to tell him what a fine job he was doing by telling all his parishioners so many things that they needed to be told.  She stated that other preachers she had heard merely meddled around with a lot of things that didn’t mean much, but you, she said, get right down to brass tacks.  The minister thanked her for her very kind remarks and stated that he always tried to do his best by way of spiritual guidance.  Then he remarked, “While we are on the subject, it would be a little less distracting at times if you would wear clothes that were a little less revealing. You are a beautiful woman and I can understand your wanting to show your charms, but don’t you think you could do it well enough if you wore your skirts a little longer and your blouses a little higher in the front?”  The lady replied, “Reverend, you have already quit preaching and gone to meddling”.

Little Notes 2 (by Brooks Faber, provided by Fred Faber)

A Good Sermon Is Worth Repeating

By Brooks H. Faber

A minister was assigned to a church and preached his first sermon to the congregation.  The church was filled because everyone wanted to hear and meet the new preacher.  At the end of the service, many people told the minister that he had preached the finest sermon they had ever heard.

The next Sunday, there was a good crowd, but the church was not quite so full as it was the Sunday before.  The minister preached the same sermon again.  Several people told the minister that although they had heard it before, it was still the finest sermon they had ever heard.

The next Sunday, the church was really overflowing.  Everyone was talking about the new minister who had preached the same sermon twice.  The minister preached the same sermon again.

By that time, the vestrymen began to get together and they decided that one of them should act as a spokesman and question the minister about preaching the same sermon three times.   When approached about the matter, the minister asked, “Have you folks started to live and profit by all the fine things that you say I told you in this sermon?”  The spokesman replied that he could not be sure that they had.  The minister said, “Be sure to come back to church next Sunday, you are going to hear that sermon again.”

When Will Cable Bite The Bullet and Upgrade to Fiber?

This week we've been looking at some of the disadvantages of the hybrid fiber coax (HFC) networks deployed by most cable operators, as compared to passive optical networks like the one behind Verizon's FiOS service.

We've made a pretty clear case that fiber optic networks are superior to HFC networks, in terms of capacity, reliability, and operating costs.  So why doesn't cable just make the switch?

The answer, of course, is that the up-front cost for a cable operator to replace their HFC network with a passive fiber optic network is massive, much higher than the cable operator or their shareholders can bear right now.  Also, the cost of upgrading to DOCSIS 3.0 is much more reasonable...Comcast estimates their cost at about $2B for the DOCSIS 3.0 upgrade, versus Verizon's estimated $18B cost for their FiOS deployment.  DOCSIS 3.0 allows the cable operators to buy time before a launching another large network investment.

However, it's not as binary a decision as you might think...vendors are coming out with hybrid technologies that replace the coax part of the cable distribution network, but convert back to coax once the network reaches your home, so that set top boxes and cable modems don't have to be replaced, but the cable company reaps some of the benefits of passive optical networks, such as lower operating costs and greater network capacity, plus the comfort of knowing that a future-proof fiber-optic cable has been deployed.  A lot of the tire-kicking that cable operators are doing with passive optical networks is with these hybrid optical approaches.

I think it makes the most sense for cable operators to test these new technologies in two arenas: 

• new housing developments (where there is no pre-existing investment in HFC plant), and
• business markets (most cable operators are making big new pushes into business services).

These trials will allow cable operators to get some operating experience with the new technologies before making bigger bets later on. 

I'm guessing that DOCSIS 3.0 and the new hybrid fiber optic technologies will buy cable operators at least six years before they are forced to consider more widespread deployments of passive optical networks.  Some analysts are betting that big cable PON deployments happen sooner, many are betting later, and the cable companies themselves are probably targeting later dates in their strategic planning exercises.  I just worry that in six years' time, cable will see some serious competitive pressure from fiber-based networks...pressure that can only be answered by a big fiber deployment by the cable operators.  One consolation for the cable operators in this is that by then, Verizon and AT&T will have driven the prices of optical components down far enough that cable operators should be able to make a smaller investment to reach parity with the first mover telcos.

DOCSIS 3.0 Upstream Still Skinny

This week we've been looking at why cable companies are kicking the tires on fiber-based passive optical networks, even though they have a heavy investment in hybrid fiber coax (HFC) networks. Today, we'll look at the DOCSIS architecture and its skinny upstream data path, and how this decreases the longevity of the DOCSIS architecture. 

I'm going to condense a whole lot of history and summarize a lot of detail in only a couple paragraphs, so if I leave out some details you are looking for, please comment on this post and I'll circle back to try to get answers in future posts.

When looking at the DOCSIS architecture as defined by CableLabs, it is important to remember that DOCSIS was rooted in the history of broadcast television networks.  Cable networks were originally designed for one thing: distributed television signals in one direction - from the headend (imagine it as a bunch of electronic gear sitting beside a big satellite dish picking up a bunch of television signals) downstream to your house.  Originally, the main reason to have a return (upstream) path at all was to allow network elements to report errors and anomolies back to a network management system, so not a lot of bandwidth was necessary for the upstream direction. 

Since the cable networks were designed to distribute TV signals, they were designed just like over-the-air broadcast television signals, using radio frequency spectrum in 6 MHz channel sizes.  A typical HFC plant is designed around 870 MHz of radio frequency spectrum, with 800 MHz of the spectrum allocated for downstream TV channels.  The bottom of the spectrum is used for upstream capacity, but a lot of the bottom part of the spectrum is allocated for the DOCSIS operating system, and some of the rest is poor quality spectrum and unusable for data services.  In the end, only about 20 MHz is used for the upstream data channel in a DOCSIS 2.0 deployment.   That amounts to about 80 Mbps of upstream bandwidth to be shared across 250 customers per node, or about 320 Kbps per customer.  If there are 500 customers on your node, then your upstream bandwidth is about 160 Kbps.

That's not a lot of bandwidth in the upstream direction, so you can understand why cable companies are very concerned about applications like BitTorrent that use tons of upstream capacity.  These kinds of peer-to-peer applications work much better when there is a bunch of upstream capacity available.  On an upstream-constrained cable network, peer-to-peer applications have the potential to suck up all of the already-limited upstream capacity. 

DOCSIS 3.0 was supposed to help with this problem by allowing multiple channels to be "bonded", so that bandwidth can be multiplied.  However, in an effort to accelerate DOCSIS 3.0 certification efforts, the cable industry deferred upstream channel bonding certification til 2009, so that they could provide downstream channel bonded services earlier in 2008.  What that means is that in 2008 the top downstream speed may be able to hit 160 Mbps under ideal conditions, but the upstream speeds are still stuck at DOCSIS 2.0 speeds. 

Also, while DOCSIS 3.0 grabs headlines with numbers like 160 Mbps  or 100 Mbps downstream, it is likely that this capacity will be shared across multiple customers, just like today's cable Internet services, so a cable customer may not really be able to buy a service as fast as 160 Mbps downstream. 

So, in 2008 at least, while a Verizon FiOS customer is enjoying a 5 Mbps upstream connection, a cable customer is likely to be stuck with a 360 Kbps upstream connection, even on DOCSIS 3.0.  It won't be til sometime in 2009 that the cable customer really starts to see upstream speeds on par with Verizon FiOS.

As time goes on, even with DOCSIS 3.0, the upstream direction is likely to remain the bottleneck in cable Internet services, and it will remain a serious disadvantage for cable Internet service providers until they finally break the tie with HFC architecture.   

Most analysts agree that someday, cable operators will need to upgrade to passive optical networks on a broad basis.  But when?  That's the subject of tomorrow's post. 

Fiber vs. Coax

This week, I'm digging into why the cable companies are looking at deploying passive optical networks, even though their public statements profess and undying belief in DOCSIS 3.0.  At it's root, there are two areas of concern about cable's existing hybrid fiber coax (HFC) plant:

• Limitations imposed by coaxial cable versus fiber
• Historical limtations imposed by the DOCSIS architecture

In today's post, I'll dig into the differences between fiber optic cable and coaxial cable, in terms of their data-carrying capabilities, and we'll leave the DOCSIS architecture piece for tomorrow's post.

In a perfect world, where cost was no object, and you would make a decision about what kind of cable to deploy based only on what works better, fiber would be the only choice.  Without the constraints of the particular technology used at either end of the cable, fiber optic cable beats coaxial cable, hands down.  To see why, check out the table below:

	Fiber	Coax
Theoretical Maximum Data Rate	~129 Terabits/sec per wavelength	8 Gbps (assuming 8 bits/Hz, and 1000 MHz RF spectrum)
Distance without regeneration	5-7 miles (BPON)	~1400 ft.
	up to 70 miles for long distance fiber technology
Sensitive to temperature	No	Yes
Sensitive to electro-magnetic fields	No	Yes
Sensitive to wind	No	Yes

The first advantage for fiber is the data-carrying capacity.  A single thread can theoretically carry 129 Tbps on a single wavelength...and depending on the sophistication of the equipment used on either end of the thread, each thread can carry multiple wavelengths, meaning the data carrying capacity of a single fiber optic cable is virtually limitless.  Compare that to a coaxial cable that carries 1000 MHz of RF spectrum (more than the more typical 870 MHz HFC systems carry today), where there is a theoretical maximum of about 8 Gbps in carrying capacity, assuming all of the spectrum is used for data and none of the spectrum is used to carry television signals. Even assuming only one wavelength, a single fiber has over 16,000 times the potential carrying capacity of coaxial cable. 

That's why fiber optic cable is often described as "future-proof".  Sure, a typical Verizon FiOS deployment today only provides about 622 Mbps downstream, and 155 Mbps upstream, per thread, but Verizon can upgrade the service to higher speeds in the future without replacing the fiber optic cable, and instead replacing only the equipment on either end of the cable.

Fiber also has an advantage in the distance it can carry a signal without having to re-generate or amplify the signal.  With today's passive optical networks, a fiber can carry signals five to seven miles without regeneration.  A coaxial cable may need to amplify the signal every 1400 feet or so.  The important thing to remember here is that amplification or regeneration translateds into operating cost, because you need to power the devices that do the amplification or regeneration.  So, fiber has a lower operating cost than coaxial cable over time.

Of course, passive optical networks based on fiber have the advantage that they are passive, meaning that much of the network does not need electrical power in order to keep operating.  Not only does this reduce operating cost for fiber networks versus coax networks, it increases reliability. 

Fiber is also immune to signal corruption from electro-magnetic fields, and is immune to changes in performance from temperature or wind.  Coaxial cable is not.

So, why doesn't everybody just deploy fiber these days?  The main advantage that coax enjoys is that the equipment used to send signals down a coax cable has historically been less expensive than the equipment used to send signals down a fiber optic cable.  However, that is changing with time as well, as volume manufacturing of passive optical network equipment is creating a drop in cost.  Equipment that drives fiber is still more expensive than equipment that drives coax, but the differences are not as large as they once were.

Cable companies are facing a choice:  do they continue to deploy coaxial cable in the last mile of their plant, or do they deploy a future-proof optical cable?  The answer depends on how quickly cable thinks their coax plant will really be at a competitive disadvantage to PON-based service providers like Verizon.  You could argue that this is already the case, and that Comcast is already at a disadvantage versus Verizon, and for the time being, that's true.  However, Comcast believes that their DOCSIS 3.0 rollout this year will bring them back to parity or better, and at much lower up-front cost than a fiber-based PON rollout. 

Someday, though, cable companies will no longer be able to keep pace with fiber deployments while operating an HFC plant.   How soon will that be, and is it soon enough to justify a PON deployment now?  To take an educated guess at that, tomorrow, we'll look at the biggest bottleneck in the DOCSIS architecture, to get a sense for how soon it might motivate a cable switch to fiber.

How Far Does Cable Fiber Go?

Following up on last week's question about why cable companies are buying fiber-to-the-home gear when they already have a DOCSIS 3.0 architecture that they claim is good enough to compete with Verizon, here is the first of a few background posts on the existing cable architecture.

Today, most cable deployments in the U.S. use a "Hybrid Fiber Coaxial" (HFC) architecture, meaning that they use a combination of fiber optic cable and coaxial cable to deliver video, Internet, and voice services to customers.  Coaxial cable is that shielded, cylindrical cable you plug in to the back of your set-top box, while fiber optic cable is a really really skinny glass thread that most folks have never seen (see picture of dozens of fiber optic threads).  The fiber optic cable is used to extend a the cable HFC network to a neighborhood with anywhere from a couple hundred to up to 2,000 homes, where the fiber is connected to an optical node and the signal is converted from optical to electrical (see diagram below). 

Once the signal is in electrical form it is transmitted downstream on coaxial cable, using radio frequencies (RF).  That coaxial cable goes through splitters so that individual coaxial cables can serve individual homes. The coaxial cable also goes through trunk amplifiers and line amplifiers to make sure the signal is still strong enough by the time it reaches your home.  Without the amplifiers, in many cases the signal strength would drop to levels too low to be detected by your set-top box or cable modem. 

That's part of the reason for the HFC architecture...if the cable operators tried to deliver signals from the headend all the way to your house on coaxial cable, they would be spending a lot of money on amplification, because of the distance limitations inherent in sending a signal down a coaxial cable.  Instead, cable operators use fiber optic cable to get the signal close to a neighborhood, because fiber optic networks use light rather than electricity, and light has better long-distance propagation characteristics. 

Okay, so cable operators are already using fiber optic cable to get the outskirts of your neighborhood, and then they use coaxial cable to go the rest of the way to your house.  In my next post on this topic, we'll look closer at the differences between fiber optic cable and coaxial cable.

Little Notes (by Brooks Faber, provided by Fred Faber)

My Dad left a fair sized roll of hand-written notes in his dresser.  Many were from his musings and preparation for his Sunday school lessons.  My wife found them after his death and planned to set about transcribing a few.  My Dad really appreciated to-the-point, plain talking – don’t mess around.

The Preacher Who Had but Little Book Learning, but He Was Filled With the Holy Spirit

By Brooks H. Faber

He knew nothing about Roman numerals, so he might start off his sermons with such things as: “We take our text from One-eyed John, two-eyed Chapter, three-eyed verse.”  One day one of his politician friends approached him and asked, ”What sort of position do you think that I might be elected to in Heaven?”  The preacher replied, ”I saw you run for councilman and you got elected, I saw you run for mayor and you got elected, I saw you run for congress and you got elected, I saw you run for governor and you got elected.  To be elected to a place in heaven, how do you expect to be elected to something that you aren’t even running for?”

(We'll be publishing additional notes from Brooks Faber, who was Ike Elliott's grandfather, later this week).

Three Good Ideas From Gates

As Microsoft Chairman Bill Gates nears retirement, he is riding a winning streak with his public pronouncements.  It's looking like the tech legend wants to go out on top:

• Last Thursday, Gates urged the FCC to allocate "white space" spectrum between analog broadcast television signals for unlicensed wifi Internet access use.  Microsoft has joined Dell, Hewlett Packard, Google, and others in the White Spaces Coalition, a group that advocates the use of white space spectrum for wifi.  Early tests by the FCC of prototype gear didn't work very well, but the FCC discovered later that the device they were testing was damaged.  Undamaged devices did fine in tests.  The FCC should move this forward...more wifi spectrum is needed!
• A couple of weeks ago, Gates told congress that they should lift the limit on H-1B visas given out each year to foreign engineers, scientists, and computer programmers.  Currently, only 65,000 H1-B visas are issued every year, and the annual allotment is used up on the first day of the their availability.  There are a lot of opinions on both sides of this issue, with opponents saying that H1-B visas depress wages for and steal jobs from American technology workers, and many high tech companies saying they can't find enough qualified American applicants and they pay H1-B visa holders just as much as American workers with similar qaulifications.  Having been a hiring manager in some of these companies, I think Gates is right.  I was also interested to read a Wall Street Journal editorial on Wednesday, citing a a couple of studies showing real shortages in skilled positions at U.S. companies, and showing that issuing more H-1B visas actually creates more jobs for citizens.  We should raise the H-1B visa limit, and get the world's most talented technologists working here, and paying taxes here.  It's good for the economy and good for our standing in the world.
• Gates made a speech a couple months ago in Switzerland, urging a "kinder capitalism" that includes corporations growing a conscience, and waking up to the reality that most of the world lives in poverty and without clean water and medicine.  Right again, Mr. Gates.  Corporations should show some imagination about using their talents and resources to intervene on behalf of the developing world.  Google is doing it!

It's good to see Mr. Gates using the platform of his success at Microsoft to try to do good.  I wish him well on all three of these issues.

Level 3 Amassing CDN Patents

Dan Rayburn, who writes the Business of Online Video blog, has done some masterful sleuthing in a guest post on GigaOm about Level 3 acquiring 20 IBM Content Delivery Network patents.  We knew that Level 3 had done a cross-licensing deal with IBM last month, but the company did not announce that they were also acquiring these 20 CDN patents. 

Now we know why Grant Van Rooyen, Group Vice President of Content Markets for Level 3, said what he said in a recent Contentinople article:

"First and foremost, we feel we have all the intellectual property rights and protections we need to conduct our business," van Rooyen says. With regards to Akamai's intellectual property portfolio: "For a range of reasons, [we] believe we have no exposure to the 703 patent."

Grant was holding his cards close to his vest.  Thanks to Dan Rayburn, we got to sneak a peek.

Rayburn says he's doing an analysis of Level 3's CDN patent portfolio versus Akamai's.  It should be interesting reading!

Google Shut Out in 700 MHz Auction

The FCC announced the winners of the 700 MHz auction this afternoon, and alas, Google was not among the winning bidders.  Verizon and AT&T, the two biggest incumbents, accounted for over 81% of the $19.6B bid in the auction.  Verizon Wireless was the big C block winner, and Google did keep its word and bid on the block in order to ensure that the block would be subject to open access requirements, but Google stopped bidding after the block reached the open access requirement threshold. 

I had predicted a couple of months ago that Google would bid to win in the auction, but apparently, that was just wishful thinking on my part. 

The FCC is going to launch an investigation into suspicious activities prior to the auction that caused a prominent D-block bidder to shut down.  Those activities could have caused the D-block bidding to fail to reach the minimum bid threshold. 

Does Cable Need Fiber to the Home?

I had an interesting comment on Tuesday's post about increasing Internet capacity demands.  Here's an excerpt:

"Cable companies may have to accelerate their deployment of DOCSIS 3.0 to help meet increasing demand, and may begin to deploy passive optical networks to keep pace with telco deployments." This seems a bit contradictory. DOCSIS 3.0 is supposed to yield 100 mb/s and theoretically make fttp unnecessary. While I believe DOCSIS will present its own set of challenges in the medium term, Cable Co's seem comfortable with testing results.

Good question...why would Cable consider deploying fiber optic networks to the home, especially when their public statements indicate that DOCSIS 3.0 should be plenty good enough to meet competition from the likes of Verizon's FiOS fiber-to-the home service?  According to Comcast, their initial DOCSIS 3.0 rollout will provide top speeds of 100 Mbps, certainly much higher than the 5, 15, and 30 Mbps packages advertized on Verizon's web site. 

But the cable companies are actually signing deals with passive optical network vendors such as Alloptic, who says they have signed 21 deals with cable operators, including two tier 1 cable companies. We haven't heard announcements from the big cable companies themselves, though, presumably because they are afraid of spooking the stock market into thinking they have a major new wave of capex coming. 

So, the cable companies are buying fiber-to-the-home gear, but aren't admitting it to the public. Next week, I'll be doing a little series of posts on why the cable companies would deploy this technology, with the first few posts focusing on laying a foundation for understanding the current cable distribution architecture and its limitations.  Once we get that in place, we'll start to address the question of why cable companies might want to deploy fiber to the home.

700 MHz Auction is Over

At long last, The FCC ended the 700 MHz auction yesterday, after 38 days and 261 rounds, and after raising $19.592B.  It took 38 days to get here, but will take up to ten more days for the FCC to make its announcement about the spectrum winners. 

The auction exceeded the FCC's expectations in terms of dollars raised, but the D-block did not reach the minimum bid and in the end had to be "de-linked" from the auction in order to close the bidding out.  The FCC needs to consider whether to re-auction the D-block under different rules.

Harold Feld has a good summary of the auction over on WetMachine, calling the auction a success despite the D-block failure.

Of course, my main interest is in learning if Google won C-block!

T-Mobile wins a BUNGL for Talk Forever Mobile Service

The envelope has finally arrived from the Academy, and T-Mobile has one its first BUNGL award!  This on is for the expansively named  "Hotspot @Home Talk Forever Mobile" service.  The service is a fine way to get you to overpay for your VoIP service simply because T-Mobile forces you to use their handset.

Here's how it works:

• If you don't already have a wifi router on your broadband internet access service, you can pay $50 for a wifi router from T-Mobile. 
• Pay $39.99 per month (or more) on a postpaid T-Mobile wireless phone account
• Get a dual-mode GSM/wifi handset.  The Samsung models are subsidized and free, but the subsidy on the Blackberry Curve still leaves you paying $249 out of pocket.
• Pay $10 per month for the privilege of using your T-Mobile handset you bought, with the internet connection you are also buying, to place VoIP calls through the Internet to the T-Mobile network.
• When you are at home, in range of your wifi router, your mobile phone makes calls through your wifi hub and your broadband Internet access service and the minutes don't get charged against your plan's minutes limit.

So, your one-time costs could range from $0 to $300, and your monthly recurring costs will be at least $50 a month. 

To get inbound and outbound VoIP minutes a la carte through Skype, you would pay about $6 per month, versus the $10 per month incremental charge from T-Mobile for the Talk Forever service.

So, T-Mobile charges a 67% premium over Skype, and T-Mobile gets to off-load your traffic from their precious wireless spectrum, onto the "free" Internet, and charge you for the privilege.  Plus, with T-Mobile you have to buy either the Samsung or the Blackberry phone...you don't get to choose a different wireless phone if you want to.  And any data usage or text messaging on the dual-mode phone that happens to use the Internet instead of the T-Mobile network?  It counts against your plan's limits on data usage and text messaging.

Sounds like a good deal for T-Mobile, but not for you!

Internet Capacity Demands Increasing

It looks like the "middle mile" is fast becoming a bottleneck in the Internet video revolution.  Internet networks are often described as being constructed out of three parts:

1. The tier 1 backbone (the superhighways that only connect the major cities together),
2. The "last mile" that connects end users to their Internet service providers' points of presence (PoPs), and
3. The "middle mile" that connects the ISP's PoPs to the tier 1 backbone (or to an intermediate traffic aggregation point).

It's this middle mile that is apparently feeling the most strain as online video traffic is ramping.  Here are some anecdotal examples:

McNealy Warns Telcos that Content is King

Sun Chairman Scott McNealy warned telcos in a Network World interview that they are missing the boat:

"I have explained to every telco that either you become a destination site, or the destination site will become a telco."

Ahhh, yes, another voice joins the chorus of those who would claim that content is indeed king.  McNealy thinks that telcos are falling behind in the Internet race, and offers as evidence that

• eBay bought Skype.
• Google is trying to buy wireless spectrum and is buying a share of a trans-oceanic fiber optic cable, and
• Microsoft is attempting to buy Yahoo

Last month, I posted about execs who have been crying wolf for years about the impending telecom disaster as telcos are reduced to mere commodity bit-pipes.  Why is it that tech execs believe that just because they know how to design and manufacture electronic gear, that they understand the telecommunications business? 

Slaughtering and Tomatoes (by Fred Faber)

This set of memories from my childhood was my first attempt at such things. Trying to remember significant, related events did not come easy, at first.  While not a world shaking item, I have always loved tomatoes eaten warm from the summer sun and just picked from the vine – that was easy.  The smoke house with its unique smell, the livestock around the place, a huge sycamore tree and slaughtering our own meat seemed important, so I had a go of it.  My interest in telling the story was that no one I know of still does it any more.  Even the few people I hear of that have gone hunting and killed a dear don’t do anything more then field dress the animal.  Their next stop is at a commercial butcher to have a pro finish the hard work and prepare the various cuts and ground meat ready for the freezer.  They don’t even can sausage in Mason jars.

Slaughtering and Tomatoes

Several of you have expressed some interest in my recollections of Elk Two Mile Creek. In trying a Google search of the name, I discovered it is spelled, “Elk Twomile Creek; three words, not four.

I could not have been older then five or six when I first remember Dad and some helpers from up the holler, Mr. Belcher and his two strapping sons, butchering a cow and then a pig from our livestock on the farm.  Today it would probably be called a hobby farm by the IRS, but to Dad it was a way of life and a way to feed the family.  Dad worked for Union Carbide, DuPont and several mining companies over the years while we lived there, but I do not remember the sequence.  His evenings after work and weekends were consumed by taking care of that farm.  The day of the slaughtering was cold and the carcasses steamed when opened as they hung from the block and tackle attached to a huge limb on the sweet gum tree beside the old garage.  The cows tongue and pig’s feet were gross, but valued by someone and set aside during the day’s process; I have never eaten any of that stuff.

FCC Extends Deadline for Qwest Forbearance Petition

The FCC was due to make a decision this month on a Qwest forbearance petition that would have granted "dominant carrier" tariff relief and would have lifted some price caps on local loops in four markets: Denver, Phoenix, Seattle, and Minneapolis.  The FCC extended the deadline to July 26th, according to a Phone+ report.

The FCC denied a similar request from Verizon last fall, and should deny this Qwest request as well. I'm not sure why the FCC needs another 90 days to say "no."

FCC Chair Kevin Martin Under Fire

Ars Technica reports that FCC Chairman Kevin Martin is the subject of a congressional investigation over his alleged manipulation of study data to support his policy viewpoints.  Representatives Dingell and Barton sent a letter to Martin requesting tons of records, and they seem to be focusing on:

• Martin's support of a la carte video programming and how Martin ignored the findings of a 2004 study that questioned the benefits of a la carte video programming.
• Martin's contention that the cable industry had reached the 70% market penetration number despite evidence to the contrary, and therefore should now be regulated.
• The FCC's recent controversial position on media ownership rules.

Some chickens might be coming home to roost for Chairman Martin.

Level 3: Why the Big Change?

These things do happen.  In some ways, it is remarkable that Kevin O'Hara survived for over ten years as the number two exec at Level 3, before stepping down on Monday.   The industry environment has been pretty treacherous during his tenure, especially for the last seven of these years.  I had already had enough by 2003 and elected to leave, but Mr. O'Hara stubbornly stuck with it 'til 2008.  It's a tribute to his perseverance, and to his political skills, that he continued for so long.

Level 3 didn't give us much information about why Mr. O'Hara stepped down, so we are left to speculate.  I've heard some theories that don't sound right to me, such as "O'Hara was fired because the provisioning fix is way behind schedule."  I posted earlier this week as to why I don't think that is the case, yet there has to be a reason why Mr. O'Hara stepped down.  So, in today's post I offer an example scenario to point out that there are other plausible explanations.

First some background:

Back when the provisioning miss was announced in October, an analyst asked CEO Jim Crowe why nobody had been fired.  I wrote a post praising Mr. Crowe for his response to that question, and if you are interested, you can check it out here, but here is what Mr. Crowe said:

"I'll say again, the responsibility for the provisioning issues, which I've tried to be clear about, and the consequences, which I've tried to be clear about, flows up through the operating organization to Kevin and I.  If I thought there was a lack of recognition of the problem, if I thought there was a lack of appreciation of the causes or the seriousness of the problem, I think it would be completely appropriate to have answers to your questions.  I see none of those, and I can assure you, by the way, if I didn't feel that way, our board would. I'm not of the school that says a mistake, in and of itself, is cause to start terminating people.  We're moving quickly, we're an organization that has covered a lot of ground in a short period of time.  We've made mistakes in the past.  We'll make mistakes in the future.  Analyzing those mistakes, understanding them, and correcting them quickly is what I believe is important, and if I see any evidence that that is not occurring, then I do think it is appropriate to look for other individuals that will fix those problems.  But I don't see any evidence of that.  Next question."

It was an interesting statement, in that Crowe backed up his team but basically left the door open to making changes after looking into it further.  Crowe resisted the knee-jerk impulse to find a scapegoat based on the inadequate information he had at the time, choosing instead to wait until he knew more.

Given the way events have unfolded, with O'Hara's departure four months later, here's one potential explanation.  Please note that this is a tale of my own making, and is meant to be an example of how things could have happened.  Certainly things could have happened differently, but the following version sounds credible enough to me.

Heading into the third-quarter conference call when the bad news was about to be announced,  Mr. Crowe started to roll up his sleeves and dig into the business, turning over rocks to see what was really going on.  He assigned key execs to make sure the provisioning fix was progressing.  He attended weekly meetings with those execs and with O'Hara.  In effect, he was looking over Mr. O'Hara's shoulder a lot.

I'm guessing that Mr. Crowe didn't find a single smoking gun that pinned the blame for the provisioning problems on Mr. O'Hara, but instead found more subtle issues that gave him concern and encouraged him to keep turning over rocks.  I'm guessing this detective work wasn't aimed only at the question of "Where are the provisioning problems and are we doing the right things to fix them?", but also focused on "How could we have missed this provisioning issue, and why was it such a surprise?"  The results in this latter area, while less black and white, were probably more worrisome to Mr. Crowe.

Meanwhile, Mr. O'Hara was getting signals that he may have lost the trust of his boss, and naturally wondered if he was still a shoo-in to replace Mr. Crowe as CEO when Mr. Crowe retired.  He probably had an honest conversation with Mr. Crowe about it, and I'm guessing Mr. Crowe probably gave an answer that was less than what Mr. O'Hara was seeking.  No longer assured that he would become CEO, Mr. O'Hara elected to step down rather than continue with that uncertainty, in effect accelerating what may have been the inevitable. 

The problem with the this tale is that it is only speculation.  It is not even based on rumors I have heard coming from current or former employees...it is based solely on my familiarity with the company, the individuals involved, and my own imagination.  There are countless other plausible versions of this tale, where it is not Mr. Crowe who loses confidence in Mr. O'Hara, but it is the board, or the large institutional investors.  The point is not whether this particular version is right.  Take this version with a grain of salt...I offer this tale only in an effort to show that there can be rational explanations to the executive change that do not indicate that the company's condition has worsened, as some seem to wish to believe.   

So, I'll go out on a limb and say that even with the exeuctive change, I believe the condition of the company is still consistent with the report from the February conference call, and that the company is steadily improving its operations.  Looking forward, the only negative I see from the executive change is that the company no longer has a clear succession plan.   Time will tell if I am right.

Level 3: Does Exec Shakeup Mean More Layoffs Ahead?

Since Monday's big announcement of leadership changes at Level 3, I've been looking into what the announcement does and does not mean.  So far, I've posted that

• The announcement doesn't mean that provisioning is still broken, and
• The announcement doesn't mean that the company is about to do more acquisitions.

Today, we'll look at the speculation on GigaOm earlier this week that the announcement means more layoffs are ahead for the company.  The specific quote from GigaOm:

"The disagreement might have been over possibility of layoffs. I have heard for quite some time that Level 3 is contemplating a big reduction in its head count. These have been postponed for a while now."

This question of layoffs at Level 3 is something of a mystery, especially since TheStreet.com published a report early last month that up to 1,100 would be laid off. The company gave no details of layoffs in their quarterly earnings report, so we are left to speculate at what happened and what will happen. 

In terms of how many were laid off already, I've heard reports from ex-Level 3-ers ranging from up to 200 in Broomfield, to up to 675 company-wide, have already been laid off in December and January.  It's hard to pin the number down because I've heard a lot of different data points, but I tend to believe the 675 number is in the right range. 

The company has said all along that as they realized operating efficiencies from acquisition integration work, they would gradually reduce headcount throughout the year.  By the end of the year, they may well reach the 1,100 total that TheStreet.com reported. 

As for GigaOm's speculation that the ongoing layoffs may have been a source of disagreement, and that the changing of the guard may portend higher layoffs, I have my doubts.  Jim Crowe, Kevin O'Hara, and Sunit Patel are industry veterans and would not be squeamish about a layoff plan, and my guess is they would be united in the view that some additional layoffs would be needed as the integration work proceeds.  Also, I doubt that O'Hara's departure has changed the planned course of layoffs for this year.

Bottom line: Level 3 has to manage SG&A downward this year, and some layoffs have been a part of that plan all along.  The executive shakeup hasn't changed the layoff plan, nor did the layoff plan motivate the executive shakeup.

Telecosm Interview: David Bryan on Peer to Peer Technology

I am pleased that David Bryan agreed to be interviewed for the first of what I hope will be a regular feature on the Telecosm blog: interviews!  I am very interested in peer to peer technology and its many applications, and was thrilled when David agreed to help me launch this part of the blog.  David Bryan wears two very big hats:

• He is Chief Executive Officer of Sipeerior Technologies, a leading provider of standards-based, OEM software solutions designed to enable serverless implementations of real-time communications applications.
• He is co-chair of the Peer-to-Peer Session Initiation Protocol (P2PSIP) working group at the Internet Engineering Task Force (IETF), the standards-making group for the Internet. 

I am particularly pleased the David was able to take some time for the interview from his busy schedule, as there is an IETF meeting underway in Philadelphia this week. 

IKE:  Peer-to-peer file-sharing applications such as BitTorrent get a lot of press, so when people hear peer-to-peer they could be excused for thinking only about file-sharing.  What other applications could be enabled by peer-to-peer technology?

DAVID: I think that is a great question. Peer-to-Peer is one of those things where people not only immediately think file-sharing, but immediately think music piracy too, which is really unfortunate. Peer-to-Peer is a technology, in the same way that client-server – the mechanism used for everything from email to web servers – is a technology. I think as people get their heads around peer-to-peer you will see it used in more and more places. It really is just a way to take advantage of the tremendously fat pipes we have in place to our homes, and the powerful devices we have connected to those. It's a great way to leverage that power, for companies to offer services without the need for large data centers, and to be "green" while doing it, since the end device is being fully utilized.

People also think about only large, Internet-scale communities connected by P2P. I think that you will see many of these, but will also see P2P being used within an enterprise or even a home. Communications, in the form of VoIP or IM is obviously one area where this is very attractive. Small office systems can be server-less, and incorporate all the wonderful features that large office systems have today, such as IM and presence. These systems are running today. Consumer electronics is another area where you will see P2P being used. Some of this looks like file sharing – video on demand content shared between set-top boxes for example, but it can also be used to enable features such as communications between users of consumer devices or for gaming. Imagine being part of a community of users with digital home hubs, where I can post content, look at others’ content, and then communicate and notate their content. Today that would require a big back-end commitment from the vendor. With P2P, much of that can be pushed to the edge.

IKE: Why is SIPeerior’s technology important?

DAVID: I think there are number of reasons what we are doing is really unique and important. We have focused on working on a standards-based approach to P2P. One of the problems P2P has today is that many of the applications that employ the technology are either "black" or at least "grey" in the eyes of ISPs and system administrators. They may not want to allow BitTorrent or Skype traffic on their networks. A big part of this is that it the technology isn't transparent. They don't know what they are dealing with. Similarly, it won't interface with existing devices, and it won't usually operate in a stand-alone, enterprise way.

What we have done is worked since day one to promote and open standard for peer-to-peer (P2P), and in particular P2PSIP. We are working to promote a documented, open standard for the P2P part, and using established, well known mechanisms for call signaling (SIP), NAT traversal (ICE), encryption (DTLS), etc. We offer software for building generic P2P applications, as well as very specialized software for P2PSIP. Both are based on open specifications, and "play nice" with other Internet applications. Our VoIP side products are SIP compliant in the sense that you can take a cluster of P2PSIP phones and connect in a few off the shelf SIP phones, gateways, or even servers if you want a hybrid architecture. You can do that with devices based on SIPeerior's technology today. I think the approach of being standards-based for both the P2P and the call portion is really unique.

We’ve also really focused on reliability and redundancy. Our customers aren’t building a file-sharing network where downtime is acceptable. They need things to work in real-time, and P2P can be a very good way to handle reliability, when done correctly, and I think that is what we bring to the table – a robust, embeddable software library that is open and allows vendors to eliminate their servers.