Communications Week International

May 10, 1999


Facing up to the full impact of the Stupid Network

By David S. Isenberg

AT&T's move to cap investment in its circuit-switched network only partially "vindicates" the Stupid
Network idea (CWI, 5 April, p.4). Despite this important step, AT&T does not yet seem to grasp the
impact of the Stupid Network on its business model.

AT&T network czar Frank Ianna says that the post-circuit world will be "either ATM or Internet
Protocol or some combination of those," and he sees a "huge debate" on this issue. He does not seem
to realize that Internet protocol has won hands down, or that IP is now reducing the need for ATM, and
even SONET, making the network ever more simple and stupid.

Furthermore, Ianna's new emphasis on "Endpoints, endpoints, endpoints," does not seem to appreciate
that IP terminates in a device at the customer's fingertips. Such "endpoints" are no longer owned or
controlled by AT&T.

This simple fact has profound consequences for how AT&T does business.

Because IP is an internetworking protocol, it makes differences between networks irrelevant. So no
matter how much intelligence AT&T's network has, or how many cool features AT&T adds, in an all-IP
network, the only properties that matter are transport and connectivity.

In an all-IP world, the network becomes the transport device for the customer's application; much like a
disk drive is the customer's storage device. This means that new applications, new value, can be created
at the edge of the network, without the permission, control, or involvement of the network owner.

And when network ownership is de-coupled from value creation, AT&T derives no benefit from this
new value beyond the new traffic it spawns.

In other words, when AT&T thinks of its network as some kind of "crown jewel," it is misguided. Under
IP, AT&T's network is just like any other network.

AT&T chairman and chief executive C. Michael Armstrong does not seem to grasp this either. He
speaks of a facilities-based strategy whereby which AT&T would control the interfaces, protocols,
standards and platforms of the network and weave them into a set of seamless services.

In other words, he still sees AT&T's network as somehow involved in value creation. He does not see
that in an all-IP world, the IP interface de-couples the platforms, standards and protocols from network

Facilities are commodities, and the value is created at the edge.

If AT&T saw this, it would have a different business model. It would stop trying to make its network
special. Instead, it would ride open industry trajectories and emphasize its compatibility with other
networks. It would build fat, dumb pipes. It would concentrate on delivering the most bits to the most
people at the lowest cost. And it would leave "value added" to the people who build applications for the
smart IP-enabled devices at the new edge of the network - the customer premises.


David S. Isenberg, Ph.D., is principal prosultant (sm) at inc., a telecoms analysis firm in
Westfield, New Jersey. From 1985 to 1999 he served as a Distinguished Member of Technical Staff at
AT&T (Bell) Labs.

(Prosultant is a service mark of inc.).


Date last modified: 20 May1999