Why Settle for Just 1%?

Monday, August 15, 2005

My adventures with Verizon continue. I realize that I've been wrong in criticizing Verizon for poor customer service. After all, it doesn't make sense for them to put a lot of effort into supporting traditional landline telephony. It isn't part of their future and they know it. It's better to invest in networking technologies. Once they can assume that I have a network connection, they will indeed be able to add or delete services at a remote keyboard. They will, of course, maintain the fiction that the service is the still POTS (plain old telephone service) even when it's simply their closed version of Voice over IP.

The carriers aren't deploying fiber just so that they could give me better telephone service. While they will be offering me a 15mbps Internet connection rather than the 1.5mbps I have with their DSL service, the effort to deploy fiber is not simply about faster DSL. After all, they could have given me 15mbps service on copper if they wanted to.

One problem with copper has been that the carriers had to share it. For example, Earthlink has been able to buy DSL lines from Verizon at a reduced cost and resell it in competition with Verizon. Unlike copper, they don't have to share their fiber infrastructure. That might explain why they are so anxious to remove the copper once they install fiber. Naah – they have strong incentive. Anyway, the FCC has relieved them of the burden of sharing their DSL lines anyway – they consider Internet connectivity just another service. Sort of like a TV channel.

The carriers live within the Regulatorium – the set of rules that define “telecommunications” in the United States (and much of the world). In that world the Internet is just a service. Broadband is treated like a television channel. The Internet really represents a fundamental shift in the dynamics of the marketplace. People used to think you needed phone wire to make phone calls. Today we accept that telephony works just fine over IP (Internet Protocol). Video is no different. Within the carriers' networks, IP is becoming the dominant transport for video.

The telephone companies played an important role in developing this technology. In the 1980's, they developed DSL as a digital transport for Video! Their first attempt at TV (Interactive TV or ITV) went nowhere. Because bits are bits they had no problem repurposing DSL as a transport for IP. With the failure of ITV, there was no incentive to do further development of DSL. So it has remained stuck at 1980's speeds despite the advances in technology over the last 20 years.

They haven't given up on ITV – this time they are using fiber as the transport and calling it IPTV. The fiber they are installing for FIOS is really a cable TV plant disguised as a network. It is a Passive Optical Network (PON) designed as a distribution system from a head end to the terminals at each home though it does have capacity to send data back. A single fiber has the capacity for gigabits of traffic. There's so much capacity that they can simply allocate a portion of the capacity to emulating traditional Cable TV. The 15mbps they reserve for their Internet service is less than 1% of that capacity!

The big lesson of the Internet and personal computer is that it makes more sense to just deploy simple IP connectivity and then use standard digital technology to convert the IP video streams to analog video when necessary. While I might forgive the Telcos for neglecting the old-line telephony business, it's harder to understand why they are deploying technologies that are obsolete before they are deployed.

One reason may be that the tradition of “CO (Central Office) Grade” makes them very conservative and it seems a very safe choice when it is really a brittle choice. Even better for the carriers is that it maintains a distinction between video bits and Internet bits. The effect is to take the 99% of the bits “off the table” so they don't have to compete nor worry about efficiency.

The distinction between video bits and Internet bits maps nicely into the myths that define the FCC. The FCC treats the Internet as an information service rather than a fundamental technology.

This flies in the face of what we've learned since the regulations were put in place. The regulations date back to a time when the technology barely worked and every element of the system had to be precisely specified. It was very expensive and each signal had its own special characteristics – bandwidth, frequency, noise etc. IP technology is fundamentally different and allows us to have a single packet medium. All the packets are the same – video, audio, images, text – it doesn't matter!

To its credit the FCC is attempting to fit this realization into their regulations by classifying the “Internet” as an information service. To many in the orbit of the Regulatorium this is a great accomplishment and a step forward. Given that the Internet has had such an impact with far less capacity, getting 1% of the total available capacity seems like a major victory. But that misses the point.

The real impact has come more from the 24x7 connectivity than the speed. It is this persistent connectivity that has made VoIP both important and not very interesting. Kids playing Xbox-live with friends around the world are not making phone calls – they going beyond the conceptual model of telephony. By treating the Internet as a service rather than fundamental and vital connectivity, we cannot use it as the basis for new services such as medical monitoring and emergency communications. The tragedy is that the resilient Internet is far better for emergency services than E911 could possibly be even if it weren't locked into legacy rules.

I take every opportunity I get to speak to those within or proximate to the Regulatorium. The biggest problem is that many lawyers, even those with the best intentions, are tragically ignorant when it comes to technology. It reflects a larger culture that views technology and science as undignified. The other problem is that lawyers seem to be steeped in a tradition of precedence and incrementalism. The precedence system is based on the pre-scientific notion that wisdom is handed down rather than tested. We now understand that the defining principles of the Regulatorium are no longer true. Yet Somehow, the system is not beholden to reality. The best we can do is tweak a few rules when we have to force the system into being less obviously at odds with external realities.

Those who understand that IP represents a fundamental shift in the concept of telecommunications or, to put it more correctly, “tele/communications”, find themselves unwelcome. The regulatory system lacks the essential vocabulary to challenge its premises – you can comment on whether DSL is an information service or not but you can't say that it's a meaningless question. The term “broadband” is a good example. When carriers talk about broadband, they are referring to the fiber technology of which they share only 1%. When the FCC justifies a broadband policy, it classifies anything slightly better than dial up a broadband so it can claim that we are not behind countries offering consumers 100mbps services and above.

As long as the FCC fails to understand the concept of connectivity as fundamental infrastructure, it will act little more than a shield for the carriers.

There is a glimmer of hope with an increased interest in providing a level playing field for IP connectivity. We can't waste this enthusiasm arguing over just 1% of the playing field when the rest of the capacity is reserved for the benefit of the carriers themselves. We will only have a truly level playing field when 100% of the capacity is available.

The FCC says it wants to reduce the amount of regulation. A truly level playing field would obviate the need for heavy regulation because there would be a real marketplace for services. We need a 100% solution rather than a 1% solution.

When Ivan Seidenberg, President of Verizon spoke to the Massachusetts Software Council on September 30, 2002 he said that he was prepared to play fair and offer Internet connectivity without taking special advantage of Verizon's control of the transport. And he seems to be following through as long as you ignore the elephant in the room – the 99% of the capacity of his new infrastructure that's devoted to the Verizon video service! A neat trick, he's taken 99% of his capacity off of the books and pretends it doesn't count.

It's a neat trick and the FCC fell for it. But I know that bits are bits and I know that Verizon is taking 99% of its assets off the books. I see no difference between that action and any other accounting scam. It's a multibillion dollar fraud! It may be technically legal in the same way one might exploit an accounting loophole by funneling funds through another entity.

As far as I am concerned, Seidenberg is cheating even if he doesn't think of it that way. He is abusing the right of way that Verizon holds in trust by using 99% of it for his company's advantage and then tossing us the remaining 1% and asking us to be thankful. I'll admit that I still want FIOS – it's faster than what I can currently get from Comcast or RCN, but it's still only 1% of the capacity.

I'm picking on Verizon because I am dealing with them and Verizon made this promise to me and others at the meeting so I take it personally. Verizon is not necessarily worse than other carriers and in some ways it's better. SBC's Lightwave uses a QoS (Quality of Service) story to justify limiting their customers' choice and for Cable Companies, it's business as usual.

We've been distracted by side issues such as whether carriers have to share DSL access and whether they will play fair and let all packets through. But we're arguing over less than 1% of the available capacity! We've been connected.

The marketplace is still working its magic – RCN and Comcast will meet Verizon's speed and the process will continue but at a very slow pace. With 99% of the capacity of these networks off the books, it will take decades to catch up with countries that already provide 100 mbps and even gigabit access to homes.

Ivan, you made me a promise. Will you set an example for the carriers and honor your promise to play fair?

Bob Frankston Site