isen.blog

Industry debates are fun when they get down and dirty, and consultants David Isenberg and Tom Nolle didn't disappoint when they squared off in the NGN 2004 Great Debate, which posed the question, "Are Smart Networks A Dumb Idea?" Both men deployed their utmost rhetorical tones and stagy gestures as they argued their cases.

Isenberg, of course, coined the term "Stupid Network." He and Nolle stood at separate podiums on either side of the same stage, but they addressed each other from different planets. This was best demonstrated when Isenberg asked audience members for a show of hands: How many are employed at large companies? When about a third of the audience raised 'em high, Isenberg asked them to keep their hands up if they felt that, in these large companies, they were "working up to their creative potential." His point being that the Internet's "stupid" core is what allows for innovation and creativity at the edges, which Isenberg suggested is the domain of the small, entrepreneurial technologist--while the big carriers, with their stifling legacy of top-down-ordered "smart networks," allow people to stagnate.

Nolle's response: Raise your hands again if you work for a large organization. Now keep your hands up if you value the ability to "pay your bills and feed your families."

That was the heart of Nolle's argument: "Economics really do matter," he said. "We thought that technology triumphed over dollars. And it doesn't."

Nolle echoed the argument that venture capitalist Rod Randall made yesterday: Stupid networks don't make money and thus can't be sustained. Nolle clearly doesn't believe, as Dave Passmore suggested yesterday, that the incumbent local exchange carriers (ILECs) are in danger of entering a "death spiral" as they face declining revenues in their traditional lines of business. Instead, Nolle sees the ILECs as the only carriers with a hope of survival, as their scale, assets and incumbency give them better margins, even with declining revenues, than any competitor could dream of.

From my vantage point, Isenberg scored his most effective points when he focused on the original "Stupid Network" arguments that time has borne out, namely that applications we now take for granted, like email, likely would never have emerged from a telco "smart network," because of the painfully large amounts of time and money that those organizations typically spent before introducing any new application. I have a tough time imagining AT&T or the RBOCs fostering the Internet, left to their own devices (which tended to have 20-year amortization periods).

On the other hand, Nolle is right when he points out the lack of a real business case for a lot of these innovations. Isenberg had tried to make the argument that customers demand the new applications that the Internet is enabling; Nolle's response was to stride over to moderator Dave Passmore and offer him $20 for his car. His point: Just because you want something and you want to pay a certain price for it, doesn't mean you can or should get it at that price. Or, as Nolle more bluntly put it: "Screw what the customer wants, unless you can have a meeting of the minds with the guy who has to produce it."

Isenberg's retort: "When you say, Screw the customer, I think that pretty much sums up the Smart Networks point of view."

Sorry, I didn't mean to wimp out with an "On the one hand...On the other hand…" writeup of this debate. But I also don't think it's my job to decide who was right and who was wrong.

You're smart; you'll figure it out.

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