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SpectralShifts Blog 
Thursday, April 25 2013

The Law of Wireless Gravity

I've written about the impacts of and interplay between Moore’s, Metcalfe’s and Zipf’s laws on supply and demand of communication services and networks.  Moore’s and Metcalfe’s laws can combine to drive bandwidth costs down 50% annually.  Others have pointed out Butter’s law, coming from a Bell Lab’s wizard, Gerry Butter, which arrives at a more aggressive outcome; a 50% drop every 9 months!  Anyway those are the big laws that are immutable and washing against and over vertically integrated monopolies like giant unseen tsunamis.

Then there are the smaller laws, like my friend Russ McGuire at Sprint who penned, “The value of any product or service increases with its mobility.”  Wow, that’s very metcalfian and almost infinite in value because the devices and associated pathways can move in 3 planes.  I like that and have always believed in McGuire’s Law (even before he invented it!).

Since the early 1990s, when I was one of the few, if only, analyst on the Street to cover wired and wireless telecoms, I’ve been maintaining that wireless is merely access to wireline applications.  While that has been validated finally with “the cloud” and business models and networks have been merging (at least at the corporate level) the majority of people still believe them to be fundamentally distinct.  It shows in simple things like interfaces and lack of interoperability across 4 screens.  Thankfully all that is steadily eroding due to cloud ecosystems and the enormous fight happening in the data world between the edge and the core and open vs closed:  GOOG vs AAPL vs MSFT (and let’s not forget Mozilla, the OS to rule all OS’?).

Anyone who works in or with the carriers knows wireless and wired networks are indelibly linked and always have been in terms of backhaul transport to the cell-tower.  But over the past 6 years the symbiosis has become much greater because of the smartphone.  1G and 2G digital networks were all capable of providing “data” connections from 1998-2006, but it really wasn’t until the iPhone happened on the scene in 2007 along with the advent of 3G networks that things really started taking off.

The key was Steve Jobs’ demand to AT&T that smartphone applications purchased through the App Store have unfettered access to the internet, be it through:

  • 2G, which was relatively pervasive, but slow at 50-300kbps,
  • 3G, which was not pervasive, but faster at 500-1500 kbps, or
  • Wifi (802.11g), which was pervasive in a lot of “fixed” areas like home, work or school.

The latter made a ton of sense sense, in particular, because data apps, unlike voice will more likely be used when one is relatively stationary, for obvious visual and coordination and safety reasons; the exception being music.  In 2007 802.11g Wifi was already 54 mbps, or 30-50x faster than 3G, even though the Wifi radios on smartphones could only handle 30 mbps.  It didn’t matter, since most apps rarely need more than 2 mbps to perform ok.  Unfortunately, below 2 mbps they provided a dismal experience and that’s why 3G had such a short shelf-life and the carriers immediately began to roll out 4G.

Had Jobs not gotten his way, I think the world would be a much different place as the platforms would not have been so generative and scaled so quickly without unconstrained (or nearly ubiquitous) access.  This is an example of what I call Metcalfian “suck” (network effect pull-through) of the application ecosystem for the carriers and nothing exemplified it better than the iPhone and App Store for the first few years as AT&T outpaced its rivals and the Android app ecosystem.  And it also upset the normal order of business first and consumer second through the bring your own device (BYOD) trend, blurring the lines between the two traditionally separate market segments.

Few people to this day realize or appreciate the real impact that Steve Jobs had, namely reviving equal access.  The latter was something the carriers and federal government conspired to and successfully killed in the early 2000s.  Equal access was the horse that brought us competitive voice in the early 1980s, competitive data in the early 1990s and helped scale digital wireless networks nationwide in the late 1990s.  All the things we’re thankful for, yet have forgotten, or never entirely appreciated, or even how they came about.

Simply put, 70% of all mobile data access is over Wifi and we saw 4G networks develop 5 years faster than anyone thought possible.  Importantly, not only is Wifi cheaper and faster access, it is almost always tied to a broadband pipe that either fiber or becomes fiber very quickly.

Because of this “smart” or market driven form of equal access and in appreciation of Steve Jobs’ brilliance, I am going to introduce a new law.  The Law of Wireless Gravity which holds, "a wireless bit will seek out fiber as quickly and cheaply as possible.”  I looked it up on google and it doesn’t exist.  So now I am introducing it into the public domain under creative commons.  Of course there will be plenty of metaphors about clouds and attraction and lightning to go along with the law.  As well, there will be numerous corollaries.

I hope people abide by this law in all their thinking about and planning for broadband, fiber, gigabit networks, application ecosystems, devices, control layers, residential and commercial demand, etc…because it holds across all of those instances.  Oh, yeah, it might actually counter the confusion over and disinformation about spectrum scarcity at the same time.  And it might solve the digital divide problem, and the USF problem, and the bandwidth deficit….and even the budget deficit.  Ok, one step at a time.

Related Reading:

Not exactly reading, but comic Bill Burr's ode to Steve Jobs

Looking back at the number of laws Kurzweil got right and wrong (sometimes a matter of timing) looking back to 2001.

Posted by: Michael Elling AT 09:49 am   |  Permalink   |  0 Comments  |  Email
Sunday, June 03 2012

Since I began covering the sector in 1990, I’ve been waiting for Big Bang II.  An adult flick?  No, the sequel to Big Bang (aka the breakup of MaBell and the introduction of equal access) was supposed to be the breakup of the local monopoly.  Well thanks to the Telecom Act of 1996 and the well-intentioned farce that it was, that didn’t happen and equal access officially died (equal access RIP) in 2005 with the Supreme Court's Brand-X decision vs the FCC.  If it died, then we saw a resurrection that few noticed.  

I am announcing that Equal Access is alive and well, albeit in a totally unexpected way.  Thanks to Steve Jobs’ epochal demands put on AT&T to counter its terrible 2/3G network coverage and throughput, every smartphone has an 802.11 (WiFi) backdoor built-in.  Together with the Apple and Google operating systems being firmly out of carriers’ hands and scaling across other devices (tablets, etc…) a large ecosystem of over-the-top (OTT), unified communications and traffic offloading applications is developing to attack the wireless hegemony. 

First, a little history.  Around the time of AT&T's breakup the government implemented 2 forms of equal access.  Dial-1 in long-distance made marketing and application driven voice resellers out of the long-distance competitors.  The FCC also mandated A/B cellular interconnect to ensure nationwide buildout of both cellular networks.  This was extended to nascent PCS providers in the early to mid 1990s leading to dramatic price declines and enormous demand elasticities.  Earlier, the competitive WAN/IXC markets of the 1980s led to rapid price reductions and to monopoly (Baby Bell or ILEC) pricing responses that created the economic foundations of the internet in layers 1 and 2; aka flat-rate or "unlimited" local dial-up.  The FCC protected the nascent ISP's by preventing the Bells from interfering at layer 2 or above.  Of course this distinction of MAN/LAN "net-neutrality" went away with the advent of broadband, and today it is really just about WAN/MAN fights between the new (converged) ISPs or broadband service providers like Comcast, Verizon, etc... and the OTT or content providers like Google, Facebook, Netflix, etc...

(Incidentally, the FCC ironically refers to edge access providers, who have subsumed the term ISPs or "internet service providers", as "core" providers, while the over-the-top (OTT) messaging, communications, e-commerce and video streaming providers, who reside at the real core or WAN, are referred to as "edge" providers.  There are way, way too many inconsistencies for truly intelligent people to a) come up with and b) continue to promulgate!)

But a third form of equal access, this one totally unintentioned, happened with 802.11 (WiFi) in the mid 1990s.  The latter became "nano-cellular" in that power output was regulated limiting hot-spot or cell-size to ~300 feet.  This had the impact of making the frequency band nearly infinitely divisible.  The combination was electric and the market, unencumbered by monopoly standards and scaling along with related horizontal layer 2 data technologies (ethernet), quickly seeded itself.  It really took off when Intel built WiFi capability directly into it's Centrino chips in the early 2000s.  Before then computers could only access WiFi with usb dongles or cables tethered to 2G phones

Cisco just forecast that 50% of all internet traffic will be generated from 802.11 (WiFi) connected devices.  Given that 802.11’s costs are 1/10th those of 4G something HAS to give for the communications carrier.  We’ve talked about them needing to address the pricing paradox of voice and data better, as well as the potential for real obviation at the hands of the application and control layer worlds.  While they might think they have a near monopoly on the lower layers, Steve Job’s ghost may well come back to haunt them if alternative access networks/topologies get developed that take advantage of this equal access.  For these networks to happen they will need to think digital, understand, project and foster vertically complete systems and be able to turn the "lightswitch on" for their addressable markets.

Posted by: Michael Elling AT 10:21 am   |  Permalink   |  2 Comments  |  Email
Sunday, November 13 2011

A humble networking protocol 10 years ago, packet based Ethernet (invented at Xerox in 1973) has now ascended to the top of the carrier networking pyramid over traditional voice circuit (time) protocols due to the growth in data networks (storage and application connectivity) and 3G wireless.  According to AboveNet the top 3 CIO priorities are cloud computing, virtualization and mobile, up from spots 16, 3 and 12, respectively, just 2 years ago!   Ethernet now accounts for 36% of all access, larger than any other single legacy technology, up from nothing 10 years ago when the Metro Ethernet Forum was established.  With Gigabit and Terabit speeds, Ethernet is the only protocol for the future.

The recent Ethernet Expo 2011 in NYC underscored the trends and importance of what is going on in the market.  Just like fiber and high-capacity wireless (MIMO) in the physical layer (aka layer 1), Ethernet has significant price/performance advantages in transport networks (aka layer 2).  This graphic illustrates why it has spread through the landscape so rapidly from LAN to MAN to WAN.   With 75% of US business buildings lacking access to fiber, EoC will be the preferred access solution.  As bandwidth demand increases, Ethernet has a 5-10x price/performance advantage over legacy equipment.

Ethernet is getting smarter via a pejoratively coined term, SPIT (Service Provider Information Technology).  The graphic below shows how the growing horizontalization is supported by vertical integration of information (ie exchanges) that will make Ethernet truly “on-demand”.  This model is critical because of both the variability and dispersion of traffic brought on by both mobility and cloud computing.  Already, the underlying layers are being “re”-developed by companies like AlliedFiber who are building new WAN fiber with interconnection points every 60 miles.  It will all be ethernet.  Ultimately, app providers may centralize intelligence at these points, just like Akamai pushed content storage towards the edge of the network for Web 1.0.  At the core and key boundary points Ethernet Exchanges will begin to develop.  Right now network connections are mostly private and there is significant debate as to whether there will be carrier exchanges.  The reality is that there will be exchanges in the future; and not just horizontal but vertical as well to facilitate new service creation and a far larger range of on-demand bandwidth solutions.

By the way, I found this “old” (circa 2005) chart from the MEF illustrating what and where Ethernet is in the network stack.  It is consistent with my own definition of web 1.0 as a 4 layer stack.  Replace layer 4 with clouds and mobile and you get the sense for how much greater complexity there is today.  When you compare it to the above charts you see how far Ethernet has evolved in a very rapid time and why companies like Telx, Equinix (8.6x cash flow), Neutral Tandem (3.5x cash flow) will be interesting to watch, as well as larger carriers like Megapath and AboveNet (8.2x cash flow).   Certainly the next 3-5 years will see significant growth in ethernet and obsolescence of the PSTN and legacy voice (time-based) technologies.

Related Reading:
CoreSite and other data centers connect directly to Amazon AWS

Equinix and Neutral Tandem provide seamless service

 

Posted by: Michael Elling AT 12:46 pm   |  Permalink   |  0 Comments  |  Email
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