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He has it right. I have preached this as have many . Djf
------ Forwarded Message From: "David Prior" <david at priorintelligence.com> Reply-To: <david at priorintelligence.com> Date: Sat, 29 Jun 2002 11:46:34 +0100 To: <dave at 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 at priorintelligence.com] Sent: 28 June 2002 11:51 To: letters at 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 at 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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