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SMART Letter #12 - October 10, 1998
For Friends and Enemies of the Stupid Network
Copyright 1998 by David S. Isenberg
isen@isen.com -- http://www.isen.com/ -- 1-888-isen-com
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ANNOUNCEMENT: Lots of NEW! stuff at http://www.isen.com/
My epitaph: "Finished updating his website." :-)
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CONTENTS:
+ Lead essay: A Tale of . . . Municipally Owned Infrastructure
+ Steve G. Steinberg's "Stupid is Smart" from Wired 6.08
+ U. S. Senator Bob Bennett on Year 2000 (Comments by David I)
+ Conferences on My Calendar, Copyright Notice, Administrivia
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A TALE OF TWO CITIES:
Municipal nets show new models for local competition.
By David S. Isenberg.
[This piece originally appeared in America's Network,
October 1, 1998 as the second column in my new series:
"Intelligence at the Edge."
http://www.americasnetwork.com/issues/98issues/981001/ ]
Even the most ardent get-the-government-off-our-back-sters
have to admit that municipal government does a pretty good
job with roads and sewers. As I grope in the legal debris
of the Telecom Act of 1996, I ask myself what, if anything,
makes telecommunications infrastructure different?
The best example that I know of telecom infrastructure-as-
public-good comes not from America's network, but from
Sweden's. In 1994, the city of Stockholm chartered a
company named Stokab to provide dark fiber to all comers at
cost-based rates. In an amazing two years, Stokab built a
96-fiber pedestal on virtually every city block in
Stockholm.
Stockholm chartered Stokab because it recognized that rate-
lowering competition and a proliferation of new telecom
services attracts clean, high wage, information-based
businesses. The city envisioned a virtuous circle where
advanced infrastructure led to an educated workforce, a
prosperous economy, and an attractive lifestyle. In
addition, Stockholm did not want multiple competitors
digging up its historic streets time and time again.
Focus On Fiber
To date, Stokab's business plan is on-track, and 1998 will
be its first profitable year. Its customers include
wireline and wireless telecommunications companies, cable
television (CATV) providers, Internet service providers,
and companies that need private, high-speed metropolitan
area networks, like banks and insurance companies.
MFS (now Worldcom) was one of Stokab's first customers. In
1994 MFS found a European foothold with Stokab, which
provided entree to the exclusive international carrier
club. Tele2, Sweden's second carrier, was another early
customer; Stokab lowered Tele2's barriers to competing
against Telia, Sweden's former PTT.
The secret of Stokab's success is direct access to city-
owned ducts and tunnels. Stokab hung fiber optic cable in
the subways, and pulled it alongside steam pipes, water
pipes, electric cables and sewer lines. The city-owned
company found remarkably little red tape from municipal
agencies. And in the odd case of "dig we must," Stokab had
little difficulty in obtaining the necessary city permits.
Stokab's second secret is its focus on dark fiber.
According to Anders Comstedt, Stokab's managing director,
initially Stokab was to become a full-service
telecommunications company. But while Stokab's directors
knew infrastructure, they quickly realized that fielding
telecom services was a totally different game. So Stokab
made the crucial decision to zero in on infrastructure.
Stokab's focus on dark fiber creates a clean interface
between what it does and doesn't do. Also, the decision
promotes trust, in that it keeps Stokab from competing
against its customers. Stokab provides a physically
separate fiber for each customer, designing each customer's
network to individual specifications. Customers light their
own fiber, and provide all service layers above that. (The
only exception is that Stokab operates city's own data
network.)
Other Cities, Other Models
Comstedt has seen other municipal telecom ventures stumble
as they climb the value chain. When it comes to marketing
telecom services, he says, "That's when they screw up. They
get outsmarted by other people. They don't develop the way
they initially had in mind." He has seen municipal electric
companies rush to bundle telecom services into their
offerings but, he says, "sooner or later you're in a
situation where commodity products need to be cost-
effectively produced."
Billy Ray, manager of the Glasgow, Ky. municipal Electric
Power Board, debates this observation. For eight years
Glasgow, population 14,000, has operated one of the most
visible U.S. municipal information services. Its citizens
can buy 53 channels of CATV for $15 a month, and 4-megabit
symmetrical Internet service for $22 a month (including
cable modem rental). Like Stokab, Glasgow has driven rates
down and brought information intensive business and white-
collar jobs to town. It also shows that a municipal company
can operate infrastructure plus offer retail telecom
services.
Nonetheless, next to Stokab, Glasgow makes me uneasy. Does
Glasgow's success depend on the smallness of the town and
the inspired leadership of one individual? Will it scale to
a big city, where greed can grow unchecked by public
awareness, where incompetence is easier to hide behind
anonymity? Will it transfer to other towns, where
leadership is less visionary? To me, the Stokab model seems
more robust, because it gains strength from the magic hand
of open competition at every level above dark fiber.
Tragically, both efforts would be against the law in four
U.S. states. Furthermore, thanks to lobbying by the
regional Bell operating companies, several other states are
mulling anti-city ownership laws.
Cities benefit from having cutting-edge infrastructure, and
they benefit from competition. If a city wants its own
telecom infrastructure, why make it illegal in this land of
the free, the home of America's network?
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STUPID IS SMART by Steve G. Steinberg
[This article originally appeared in Wired 6.08,
August 1998, in the Crucial Technology section:
http://www.wired.com/wired/6.08/crucialtech.html
I'm flattered to be subject of even a small Steve G. Steinberg
article: he's the author of "Netheads vs. Bellheads"
http://www.wired.com/wired/4.10/features/atm.html -- David I]
David Isenberg has emerged from the belly of the beast. Last year,
as a member of AT&T's technical staff, this self-described telco
nerd sparked an influential debate with his essay "Rise of the
Stupid Network." In that essay, Isenberg argued that the
"intelligent" architecture of the telephone networks has retarded
innovation, while the Internet, by offering "stupid bandwidth,"
has become a breeding ground for smart apps. Not surprisingly,
the relationship between Isenberg and AT&T turned cool. Today, he
runs his own shop, calling himself a "prosultant" ("con is
negative," he sniffs) on next-generation networking. Here's
the iconoclast on what's next for networks.
Meet the New Net, Same as the Old Net:
"We're already seeing intelligence start to rear its head in the
Internet. New protocols, like RSVP (which tries to guarantee users
a specified amount of bandwidth), require a smart network. We need
to find stupid solutions to these problems to avoid the same kind
of big monopolies we have in the telephone industry."
Voice Isn't the Killer App:
"The real win for voice-over-IP will be allowing people to mix
real-time voice with data, images, and video. In the meantime, the
circuit-switch guys will have to reduce prices to stay competitive -
and still offer better quality."
The Customer Doesn't Know Best:
"If you're listening to your customer it's almost preordained that
you'll miss the new market. And when the new market expands
to encompass the old market . . . that's when companies can become
obsolete."
Why AT&T is doomed:
"Today, Internet telephony has crummy voice quality. The average
telephone customer couldn't stand it. But suppose that Net people
start using voice to, say, supplement online gaming. Because it
starts off looking more like a Nethead game than a phone call,
AT&T might not realize how cross-elastic it is with telephony
until it is too late."
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A YEAR 2000 STORY
"I read a story recently about a major oil company that tested one of its
oil refineries. They found that the refinery had 90 separate systems that
somehow used a microprocessor. Many of these were key systems. Of the 90
systems, they were able to come up with detailed documentation on 70. Of
these 70, they determined that twelve had date dependent embedded chips.
Of the twelve, four failed a Y2K test and will have to be replaced. Had
any of the four failed on January 1, 2000, they would either have
completely shut down the plant or would have caused a high level safety
hazard which would have caused other systems to shut it down. What is
really worrying the company's experts now is the other 20 systems. They
don't know what functions the chips in these systems have and are leaning
towards replacing them all. This happens to be a relatively modern plant."
Senator Robert Bennett, Chair,
U.S. Senate Special Committee on The Year 2000 Problem
http://www.senate.gov/~y2k/statements/61298bennett.html
[Note how this *quote* about a *story* about an *un-named* oil refinery
serves as hard news about Y2K! This absence of hard information
itself is one of the BIGGEST part of the Y2K Problem. When propaganda
is the "hard" information available, stories like these become truth, even
to a United States Senator. Our leadership needs to get its nose out
of the presidential crotch and challenge this "Major Oil Company"
(and other major infrastructure companies, like *ahem* telecoms) to come
forward and discuss test results openly. More importantly, they (we!)
need to challenge the major infrastructure companies that are not testing
to begin facing their Y2K liabilities now. -- David I]
[Note: For info and insight on The Year 2000 Problem, you can subscribe
(free) to Doug Carmichael's Y2K Week. Details at http://tmn.com/y2k ]
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CONFERENCES ON MY CALENDAR
+ October 14-15, 1998, Toronto ON: IP Telephony and
Voice/Data Convergence. A distinctly Canadian view. In
many respects Canada is showing the way to the rest of us
(e.g., CANARIE, the Canadian national optical network
initiative). http://www.mondaq.com/ or 416-927-7936.
+ October 17-18, 1998, Hakone, Japan: Stupid Networks
and the 21st Century Society, hosted by GLOCOM, The
Center for Global Communications of the International
University of Japan. Many SMART People know the
perpetually peripatetic Izumi Aizu, and Shumpei Kumon,
Executive Director of GLOCOM. http://www.glocom.ac.jp/
+ CANCELLED??: My appearance at ISP Forum, October 26-29,
Cannes, France: To make a sordid story palatable, seems
that my agreement with IIR regarding my appearance is no
longer in effect . . . there is some behind-the-scenes
work to correct this as SMART Letter #12 "goes to press."
+ November 2-6, 1998, Washington DC: Next Generation
Networks (NGN98). Produced by John McQuillan for the
Business Communications Review crowd. This is a
conference that takes itself very seriously so I will
leave my fool's hat at home and wear my business suit.
http://www.bcr.com/confer/ngn98/Default.htm
+ POSTPONED: Solutions 98! -- Denton TX: Sponsored
by University of North Texas. New date is Feb 9, 1999.
New name: Solutions 99! Contact Mitch Land mland@unt.edu.
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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 1998 by David S. Isenberg
isen@isen.com -- http://www.isen.com/ -- 1-888-isen-com
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Date last modified: 11 Oct 98