SMART Letter #46a
TELECOSM CONDUIT & CONTENT
October 11, 2000
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SMART Letter #46a -- October 11, 2000
Copyright 2000 by David S. Isenberg
isen.com -- "proud as a rooster at sunrise"
isen@isen.com -- http://isen.com/ -- 1-888-isen-com
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CONTENTS
> Quote of Note: Ned Washington
> Good News Journal
> My First Fortune Article
> Conferences on my Calendar, Copyright Notice, Administrivia
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GOOD NEWS JOURNAL: Hindery resigns, Armstrong meets with comptrollers.
The Wall Street Journal today made me feel like a rooster who's convinced
that his crowing caused the sun to come up. There were two stories that
reported favorable developments on issues discussed in yesterday's SMART
Letter #46.
The first WSJ story reported that Leo Hindery is resigning as Global
Crossing's CEO. Good. Maybe Leo was learning, but the top slot of a major
corporation is no place for on-the-job training. Today GBLX is trading at
20 and change. I finally bought some. George Gilder is right, in the
longer-term the stock is safe. Lots safer than AT&T. Know any widows and
orphans? Buy them 100 shares of GBLX today. Now if we can only teach
Global visionary Winnick about selecting the right intellectual capital.
The second WSJ story today reported that AT&T CEO C. Michael Armstrong
finally agreed to meet with the comptrollers of New York City and New York
State after they expressed grave concern with the short-term nature of some
of AT&T's strategic options. Apparently the comptrollers' Sept 22 letter to
Armstrong got them an appointment with the head flak at AT&T Investor
Relations, so they wrote a second, stronger letter to Armstrong.
Now Armstrong grudgingly agrees to meet the comptrollers to, "help clarify
any myths or misrepresentations". I hope Mike clarifies the myths of
Sisyphus, the Augean Stables and Medusa. Maybe he'll tell us which frog he
plans to kiss next. Clearly, no clarification of the Icarus myth is
necessary at this time. -------
MY FIRST FORTUNE ARTICLE Now on Newsstands Everywhere by David S. Isenberg
I've always wanted to write for an F-named popular business magazine. But
Alan Webber, Fast Company's co- founder, must still be pissed at me for
complementing him on the great cover story about how failure is good for you
(which was on the Forbes ASAP cover at the time). And Forbes publisher Rich
Kaarlgard, who I schmooze every year at Telecosm, gave me a number to call
last year, which I did -- the result was the skinny letter from Forbes
personnel wishing me success in my writing career. So I was overjoyed when
Fortune smiled on me with an invitation to contribute an opinion piece on
broadband. Furthermore, in the process I was delighted with Andy Kupfer's
mellow manner and light editorial hand.
The resulting article, "Skeptic's Corner -- You Think It's DSL vs. Cable?
Think Again", is now on newsstands everywhere. It has a blue cover that
proclaims THE FUTURE OF THE INTERNET. I signed in blood that I would not
reproduce it. In return, Fortune's legal department graciously allowed as
how I could link to the article from my website -- so far, they've given me
nothing to point at.
However, even Time Warner (Fortune's publisher's parent) has not been able
to repeal Fair Use. Yet. So here are a few select F.U. 'graphs:
[Introductory paragraphs deleted -- SMART People already have clarified the
myth of David (I) vs. Goliath, but go buy the magazine anyhow.]
"DSL and cable modem services are too little, too late.
They're retrofits of almost-obsolete copper networks.
Cable companies developed cable modem technology because
it works with the network they've already built. Telephone
companies adopted DSL for the same reason. Yet both
technologies have serious problems. Long strands of copper
act like antennas, especially when transporting signals at
the frequencies necessary to carry data at high speeds.
Electromagnetic interference from adjacent wires-
crosstalk-is a huge stumbling block to universal
deployment of DSL. Compensating for crosstalk is a signal-
processing burden that makes deployment spotty and costly.
DSL demands that $150-an-hour technicians search like
Diogenes for a circuit that is clean enough to carry the
signal. Technicians must untangle-literally, not
metaphorically-an undocumented legacy of twisted copper
wires dating back to Alexander Graham Bell. That is why
DSL often takes several customer-frustrating weeks to
install. Two DSL users groups are suing their phone
companies over such problems.
"Cable modem service has an advantage over DSL. Cable
networks are simpler and they can carry more information
because cable was designed for broadcasting video signals.
But this advantage comes with a price-500 or more
households share each high-capacity connection. And as a
direct consequence of this shared design, cable companies
must upgrade the network of an entire neighborhood with
two-way amplifiers before the first house can get the
service. Cable modems have reliability problems, too. As I
was writing this article, my cable modem inexplicably
slowed to a crawl for an entire afternoon.
"Today's network owners may be able to preserve their old
business models for a time with cable modems and DSL. But
eventually, these technologies will be superceded by the
convergence of two radically faster, simpler, cheaper
technologies-Ethernet and fiber optics. Ethernet is a
simple, well-established computer networking technology
invented in the mid-1970s at Xerox PARC, birthplace of the
graphical computer interface and the mouse. Ethernet is
widely used to connect computers in offices. The first
installations couldn't span distances longer than a few
hundred feet, but these limitations loosened as the
technology improved. Today, Ethernet networks can have
links of 50 kilometers or longer. Ethernet got faster,
too. It began at DSL-like speeds, but soon jumped to 10
million bits per second, then to 100 million bits, and
now, to a billion bits per second. A 10-billion bit
version of Ethernet is in trial, and stories of 100-
billion bit per second Ethernet are beginning to filter
out of Silicon Valley labs.
"Fiber optic communications technology is advancing as
explosively as Ethernet. The peak-hour telephone traffic
of the United States can be squeezed onto a single glass
fiber using off-the-shelf equipment. Technology in the lab
today could provide ten times that capacity. Furthermore,
fiber optic cables hold as many as 1000 fibers. Such
cables are about as thick as the cables of copper
telephone wires that hang from every pole. With a 1000-
fiber cable coming down the street, there could be one
fiber for every house. The mythical last-mile bottleneck,
the last bastion of the old business model, would be
shattered.
"The faster versions of Ethernet work hand-in-glove with
fiber optics. Ethernet over fiber can connect homes to the
Internet at speeds hundreds of times faster than DSL or
cable modems and tens of thousands of times faster than
dial-up modems. Lest you think that building a new network
would be too expensive, the gear needed for 100 megabit
Ethernet service costs about the same as the equipment
needed for broadband service over telephone or cable
networks-several hundred dollars a connection, according
to the Dell'Oro Group, a Silicon Valley market research
firm. Companies in places with fiber-friendly policies are
already installing fiber-optic Ethernet service at (or
even below) the cost of retrofitting old networks for DSL
or cable modem service. In Canada, for example, the phone
company must allow competitors (and even some customers)
to install fiber on its right of way. Such places have
determined that plentiful bandwidth is as critical to
their economy as running water, sewers, roads, and
electricity.
[very important paragraph deleted here -- whadaya waiting
for, go buy the magazine! It's all about the future of the
Internet -- SMART People *love* this stuff!]
"The fiber-optic future will arrive first in Montreal,
Stockholm, and several fiber-friendly United States
cities, such as Palo Alto, Calif. In Stockholm,
residential customers can buy a 10-million bit per second
Internet connection for about US $25 a month. In Palo
Alto, the service (still in trial) costs $70 a month. When
the rest of the network matures, customers with this new
Internet service will be able to switch from website to
website as fast as changing TV channels. They'll be able
to make high-quality phone calls and get TV-quality video
over the Internet -- and even broadcast their own video.
"Don't expect old-style phone companies to bring us this
kind of Internet service. They will not allow their cash
cow to be slaughtered. And don't expect cable-TV companies
(like AT&T and Time Warner, the parent of Fortune's
publisher) to bring this kind of Internet service either.
The owners of the old video entertainment business will
not willingly provide the infrastructure to destroy it.
"But new network service providers that are not tied to
past technologies and obsolete business models-like Cogent
and Telseon and Yipes in the U.S. (disclaimer: I'm on the
advisory board of Yipes), like VDN in Canada and
Bredbandsbolaget in Sweden-will see the opportunity in the
new "deliver-the-bits" technology. In the US, the
economies of fiber-friendly cities will leap ahead,
creating another dimension to the digital divide. Old
industries that we love to hate-cable companies, telephone
companies, even the movie and record industries-could fade
to insignificance or be changed forever. The
communications revolution is just beginning."
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QUOTE OF NOTE -- Ned Washington
"When your heart is in your dream no request is too extreme."
from "When you wish upon a star" lyrics by Ned Washington, music by
Leigh Harline
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CONFERENCES ON MY CALENDAR
October 31, 2000. New York City. Merrill Lynch TechBrains,
featuring some of my all-time heros like Gordon Bell, Clayton
Christensen, Phil Neches and Don Norman. I'll beat the drum for
IP-Ethernet-Optics from 1:35 to 2:15. To get in, contact
Vanessa Brown, 212-236-7072, vbrown@exchange.ml.com and tell her
the name of your Merrill Lynch representative.
November 5-9, 2000. Rose Hall, Jamaica. Porter Stansberry's
Pirate Investor's Ball, featuring Eric Raymond, Tom Petzinger,
Porter's impressive research director David Lashmet, and yours
truly. Porter is a big-picture guy, a cross between George
Gilder and Tony Robbins, with a nose for leading edge values
in infotech and biotech. Contact Andrea Shaw,
andrea@pirateinvestor.com, 410-223-2648.
November 13-15, 2000. Hong Kong. Jeff Pulver's VON Asia.
VON stands for Voice on the 'Net. It's the premiere Internet
Telephony show in the U.S. and Europe; this is the first Asian
VON. I'll be doing a panel, subject TBD. (I've suggested to
Jeff that it be called XON with X unknown.) For more, see
http://pulver.com/asia2000.
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COPYRIGHT NOTICE: Redistribution of this document, or any
part of it, is permitted for non-commercial purposes,
provided that the two lines below are reproduced with it:
Copyright 2000 by David S. Isenberg
isen@isen.com -- http://www.isen.com/ -- 1-888-isen-com
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