[FoRK] [IP] more on INTERESTING ARGUMENTS DJF The Myth of Scarcity,
or Verizon-MCI is Doomed (fwd from firstname.lastname@example.org)
eugen at leitl.org
Wed May 4 08:23:29 PDT 2005
----- Forwarded message from David Farber <dave at farber.net> -----
From: David Farber <dave at farber.net>
Date: Tue, 3 May 2005 14:22:57 -0400
To: Ip <ip at v2.listbox.com>
Subject: [IP] more on INTERESTING ARGUMENTS DJF The Myth of Scarcity, or Verizon-MCI is Doomed
X-Mailer: Apple Mail (2.728)
Reply-To: dave at farber.net
Begin forwarded message:
From: vijay gill <vgill at vijaygill.com>
Date: May 3, 2005 12:11:45 AM EDT
To: dave at farber.net
Cc: Ip <ip at v2.listbox.com>
Subject: Re: [IP] The Myth of Scarcity, or Verizon-MCI is Doomed
David Farber wrote:
>May 02, 2005
>The Myth of Scarcity
>Posted by Dana Blankenhorn
>The bidding war between Verizon and Qwest for MCI is based on a
>myth of scarcity. That is, both think they can make the deal pay
>by squeezing customers for the scarce resources represented by the
>Moores Law of Fiber rendered that inoperative many years ago.
>There is no shortage of fiber backbone capacity. And there are
>ample replacements for Plain Old Telephone Service -- not just
>cable but wireless.
This is starting to read like Gilders Telecosm. Yes, there is no
shortage of fiber backbone capacity. The problem is looking at the
fiber in the ground the major component, when in reality, in building
a backbone, this is only one of many major components. Lets go into
some excruciating detail here (to backup my statements, I present the
amount of traffic on a backbone I am responsible for: http://
1) There is no shortage of fiber backbone capacity.
True. There is plenty of fiber in the ground. There are even empty
conduits you can blow more fiber through. However, lighting the fiber
is non-trivial in terms of capital spend. Then you have huts you have
to maintain, and cards in chassis that sometimes go bad, and it costs
you to have 4 hour turnaround in a hut in the middle of Ohio.
Then there are pathing issues. You build a backbone and since there
is infinite capacity of fiber in the ground, you turn up multiple
thousands of gigabits. Then a backhoe or a tunnel fire cuts your
network capacity in half and, well, you're in trouble. There is
plenty of fiber, there are not plenty of PATHS, so to avoid that,
you're doubling up capacity on the same routes and instead of n:1
redundancy, you are now effectively operating a 1:1 redundancy or
3:1, and your cost basis just doubled.
2) Any idiot can build a global backbone and at NANOG 34 (http://
www.nanog.org), yours truly will speak to that, using himself as an
example. Building a backbone is _easy_. Getting people onto the
backbone is _hard_. The issue is not even the last mile or the first
mile. The issue is the last 100-200 feet. Laterals cost you money.
They cost you time. Getting a permit to trench into a building from
your fiber path in the street is non-trivial. Wireless local loop or
lasers are NOT the answer, as many billions in failed ventures will
tell you (Telegent, Monet, winstar et al).
3) Operating a backbone costs money. Everyone buys the same
equipment, and their COGS tends to be about the same for the layer 3
side of the house. Things like OSS/NMS will become the competitive
advantage. Today, we're used to living in high margin situations.
This is untenable and the companies will have to learn how to survive
on 10%-15% margins. The SG&A will have to be cut down to the bone,
and the way to do this is automation. And building automation is
beyond hard, ask Mike O'Dell, who I believe is a reader, about his
time at UUNET. It takes an amazing amount of force of will, time and
talent to automate the network and that costs money. Unless you have
deep pockets already, you cannot afford to fund this, and you will
get crushed trying to make a business out of that "abundant" capacity.
4) Wireless. POTs is being supplanted by wireless, and the dominant
players in wireless also just happen to be verizon/sbcs of the world.
This is because building a wireless network is also hard. And did I
mention it is expensive? Building a RAN is spendy enough that the
cost of IP equipment to backhaul the packets/voice is trivial in
comparison. Waving the magical wireless wand is easy. Circumventing
laws of physics is hard. Circumventing community resistance to
putting up towers, care and feeding of towers, backhaul capacity from
towers and the maintenance of the equipment is harder still.
>The myth on which this deal is based is, simply, untrue.
I do not think so. Maybe I am too focused on the operational
realities of networking that I am not seeing the forest for the
trees, but I deal with spreadsheets and they almost never lie. At the
end of the day, is the return on the spend on the network greater
than my cost of capital? Yes/No.
>The same scarcity myth has long underlain the FCC's regulation of
>broadcast content. The FCC regulates what is broadcast only
>because there is a limited frequency spectrum, thus limited choice
>in each market. Without that myth all content regulation is a
>direct violation of the First Amendment.
>And it is a myth. Moore's Law of Radios proves it. Cellular
>telephony proves it. Frequencies can be re-used, and transmit far
>more than we once thought. The resource is, in fact, practically
Frequencies can be re-used. However, re-use looks great from the 100k
foot view. On the ground, reality is a bit different. High re-use.
Ok, that means smaller "cells" of coverage. Smaller cells means more
cell-sites. More equipment. More backhaul. More maintenance, more
capital spend. At this point we hear the mantra about moores law
making the electronics cheaper every n months. That is true for the
processing elements, but things like antennas, housings, power, and
maintenance are fixed and don't come down as quickly.
>All efforts at controlling the mind are subject to this myth of
>scarcity. Try to control education and smart kids learn to reject
>you. Try to control the Internet and Chinese people learn just how
>precious a sip of freedom is, while the rest of us get bored by
>Freedom is the answer to tyranny because freedom creates
>abundance, or discovers the abundance that is in fact all around us.
>To all those who feel oppressed, no matter their cause, I hope
>this brings some comfort. In the end, freedom will win out. Maybe
>not today, maybe not tomorrow, maybe not even in your lifetime,
>but it will. Freedom, knowledge, and truth are all plastic, all
>powerful, and all unlimited.
>The universe, whether we're talking about your mind, this planet,
>or the stars themselves, is far more infinite than you or I can
>And the only way to get a taste of it is to open your mind, as
>scientists do, and prepare always to have it changed.
This is definitely very pretty wording.
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