16 March 1998

CommunicationsWeek International

The 'Stupid Network' approach to innovation


By David S. Isenberg

Incumbent carriers around the world are at a disadvantage. The cost of infrastructure has been falling at a much faster rate than carriers have been able to depreciate and replace their legacy networks. As a result, new entrants are technologically better placed to succeed in the liberalized telecoms environment. This is especially true in Europe, where for years the incumbent national carriers have built up centralized, proprietary, intelligent networks.

But new operators can exploit a simple, smart idea -- "The Stupid Network." Stupid Networks make no assumptions about voice or other content. Users can put bits in at one end, and the same bits come out at the other. Unlike the "Intelligent Network" model, The Stupid Network features abundant infrastructure, not carefully engineered scarcity.

Addressing, features and class of service are specified in the user's intelligent terminal, at the edge of the network. Furthermore, the Stupid Network's simple interface makes underlying network complexities irrelevant to the user.

This creates an environment that fosters wild-eyed innovation, in which users can try out harebrained ideas without asking permission of a big bureaucracy.

This unimpeded ability to innovate is most crucial. Think of the cost to humanity had Mosaic, the first Internet browser, not been invented. The "Next Big Thing" is more likely to come from a hacker's terminal than from an engineer at a central switching office, or a telephone company marketing department.

In fact, the Web itself emerged from the Stupid Network climate that the Internet provided. Carriers that support innovation - fostering infrastructures will gain ground on operators that discourage it.

Today, incumbents might think: "We own the most backbone, the most local distribution plant and the most customers - surely we are safe from the purveyors of The Stupid Network." This is false security. The cost of new backbone construction is in securing rights-of-way and digging the ditch.

And with one eye on exponential Internet traffic growth, upstarts are burying more than enough fiber for the future along railroads, highways, pipelines, and electric power corridors.

So what can the incumbents do to parlay this Stupid Network insight into the marketplace? One way a carrier can rise above itself is by creating a subsidiary that is financially and organizationally different from the parent. That means building a new network, based on today's economic and technological imperatives.

This is because the needs of today's telecommunications customer are very different from the old customer. Legacy carriers don't want to cannibalize the children they care about most -- the customer base and operating principles nurtured over 100 years. These too are based on hard-nosed economic imperatives, but they are the imperatives of the past, of an age of scarcity.

In addition to fostering innovation, The Stupid Network also opens markets by letting incumbents exploit regulatory discrepancies. In the United States, for example, local mega-carrier Bell Atlantic Corp. is prohibited from offering long-distance services in its own region, but is telling U.S. watchdog, the Federal Communications Commission, that it wants to offer regional long-distance by using the less-regulated technology of Internet telephony. In Japan, domestic carrier KDD is offering hitherto prohibited international services in the same way.

Customers benefit, regardless of whether new players or incumbents seize these opportunities.

I don't know exactly how The Stupid Network will impact telecoms, but I do expect that compelling applications will emerge, and these will reshape existing markets and create new ones. Operators must plan for the unexpected, knowing that the infrastructure with the best ability to accommodate innovation will win.

David Isenberg is the founder of Isen.com based in Westfield, New Jersey, which helps the telecoms industry re-think the value of networks. E-mail: isen@isen.com

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Date last modified: 5 Apr 98