PREVIOUS	December 2007 (16.09)	NEXT

Trapped in the “Regulatorium”
A Call to Arms

Time for Education on all levels - From the PUC to the
Exhaustion of IP v4

October 31, Ewing, NJ -- The December issue focuses on new FTTH technology and business strategy.

Executive Summary

Time for Education

Education is needed to work around the regulatorium, and to understand the operational impact of IPv6 and related matters. We describe the telco business model as a model dependent on the more on the regulatorium than on any rational economic construct of what the technology enables. These will be among the issue focused on at an Infrastructure Cook-in in Loma Linda March 26-28, 2008

An open space discussion will be seeded by very short presentations on five listed topics. The introduction concludes with a summary of an October 23rd interview with John Curran on the huge implications of the exhaustion of IPv4 space and the time needed to implement IPv6.

New Business Model for Fiber Based Utility Districts

Land developers generally have had to invest millions of dollars in developing utilities (water, sewage, electricity, streets and telecom – now fiber – ) for land that they wish to sell to builders for housing construction. James Hettrick describes how he is playing a technology development coordination role in cooperation with companies that are incorporating financing and utility outsourcing and coordination roles for land developers.

These companies deal with money managers to fund the development of utility districts that include water, sewers, electricity, roads AND FIBER everywhere for everything. The company says to the land developer sign with us, we will invest and build the utilities and fund doing that from the cash flow income we have from having done prior utilities. You do not have to lay out the money upfront. We will operate the utilities for you and give you a percentage when the development is done meanwhile you can start selling lots to builders.

Then that company hires James Hettrick’s 20 person consulting company to be the technology selection, planning scheduling coordinator for the build. Hettrick interviews the developer, the builder, the local businesses talks to the people in the nearest city where the new development must interface its utilities, looks at all the environmental variables as well as at the business schools university and potential customers and figures out what vendors have the best set of products to be melded into a package that not only does triple play , but reads all the meters, does SCADA for the water electric and sewers and sensor networks where needed.

His firm then produces a proposed and well-costed integrated package that shows how the project can be built to reap the maximum economic effectiveness from the carefully planned integrated approach. Flavor the whole package with fiber connectors that Hettrick has developed in cooperation with a UK company called MiniFlex that allow buried fiber to be brought in from small cylinders in the street that can feed twelve houses per cylinder avoiding all fusion splices from the street to the houses. Yield is a 40 to 50 per-cent decrease in the cost of bring fiber to each new house.

The result looks to me like an extremely interesting business model where its biggest threat to it would be a total collapse of the housing industry in the US. Even if the bottom would fall out, I would still think that new developments built with this approach would be the most likely to be built.

IP v6 Discussion on NANOG Continues

We will begin devoting more time to a look at this extremely complex and critical problem. Several interlocked programs are unfolding simultaneously. Allocatable address blocks that can be used for routing are running out. This in turn will cause larger than customary increases to the routing table that will in its turn cause backbones to have to be rebuilt with larger and more capable routers.

Networks must convert to v6 in order to be able to continue to grow. But the problem of converting means that they need to be able to talk to the existing v4 parts of the internet. This means running operationally complex dual stack systems.

As John Curran says: ìWhile making the backbone networks dual-stack is going to be serious work, it's at least an understandable goal that operators can make plans to hit. That's not the case with the requirement to provide transparent connectivity to IPv4 destinations via IPv6 transport.î

Later John says: It's going to get real interesting, since (in general):

1) Customers aren't going to ask for IPv6 (it's not their problem) 2) ISP's may plan a few years out, but don't make capital commitments until they're absolutely required. 3) It takes most vendors 3 to 6 months to move requirements through marketing and 1 year plus for engineering and chip design.

Alas, this particular feature set (functional IPv6 and transition tools) is not just one new protocol feature or option; it's an order of magnitude more complex and will take ISP's months (or even years) to deploy. It's amazing that we got the need for the new protocol right more than a decade ago, but seemed to have left all the details to the last minute.

Symposium Discussion

Voice is Passe

How is voice service changing now and how will it change in future? (This section concludes what was reported on briefly at the end of the last issue.) A summary by Lee Dryburgh of the proposed opening session for E-tel in March 2008 (Editor now cancelled - but that’s another story.) gives a good overview of what is discussed.

Lee Dryburgh: Telephony was the predominant mode of person-to-person communications during the 20th Century. As we enter further into the 21st Century it has become clear that telephony will cease to be that predominant mode. In fact, voice pundits tout that it will simply become an application feature rather than a service in itself. The question is what does the new communications landscape look like and who will define it?

Those two questions are far from easy as they also entail the future of the main stream media, the Internet and radio spectrum allocation policies (to name but a few). In trying to break free from the entanglement of this koan we can state what we do know. Dumb terminals (fixed line phones) will cease to exist; all communication clients will be multi-modal; time and distance based charging will cease to exist; devices will become increasingly aware of other devices in their proximity as well as objects; devices will become increasingly socially aware and will progress to being socially opportunistic (on the users behalf).

In seeking social opportunities communication devices/clients will be constantly seeking to answer two questions – who has what I want and who wants what I have? These two questions form the basis of a main thrust of the new communications landscape – prompting relevant people to interact with each other. The PageRank™ algorithm was behind the multi-hundred billion dollar market capitalization of Google and primarily finds documents of relevance. Would a "PeopleRank" be worth ten times as much?.

Networks Are
Conversations

A ”conversation” between Erik Cecil and Fred Goldstein.

Erik posits that “in some senses networks are built for the purpose of conversing in one form or another. Thus, they themselves are sort of a mechanized conversation.” Later he says ”It seems that old rules pull backward on incentives to innovate, and to create more value out of the same limited resource set. What we really need, therefore, are fair rules that promote all conversations equally.

If that is true, then which nation's regulatory model would . . . best enable all conversations such that all parties to the conversation - consumers, providers, and governments - walk away happy? If there is not one model that works, what are the best elements of the best models? (Let's leave "worst" out of the conversation for now; I think that ground is well covered; I'm not looking to complain, I'm looking to create.) I ask because anything less results in regulatory, legal, legislative friction and therefore, societal loss.”

Fred: “The best model recognizes monopoly power where it exists, recognizes and rewards innovation where it exists, and allows enough "lubrication" to gloss over regulatory friction. . . . . If there were no rules, then the incumbents would just disconnect their competitors.”

Erik: “It seems there is agreement around minimizing regulatory interference because regulators don't always have the same vision of what it means to serve the public interest; just look at how direction of the FCC, for example, changes with each administration.”

Fred:”That's why the separation should be structural, and locked in with covenants that permanently ban the utility from competing against its customers. That was a problem with the MFJ; once the ink was dry, the RBOCs started whittling away at it, and ended up undoing it. Create a legal mechanism to prevent that, a charter in which many covenants and contracts, for instance, would be violated if they tried.” Later Fred says: “I suggest that there needs to be one regulated "just and reasonable" (fair rate of return) price wholesale provider of loop facilities.” Your editor agrees.

IP v6 Conversion
issues

Curran: We simply do not know whether we'll have viable routing (especially on the calculation side) in a highly fragmented world where IPv4 address space becomes increasingly scarce. ISP's must have new IP address space to add new customers, and this will come from anywhere they can find it. This means hundreds of new routes per day for the each of the ISP's in USA, where we might have had a dozen new routes per quarter in the past. ISP's will be under *enormous* pressure to route these, and therefore to accept such routes. Industry self-policing ("route filters") died under similar pressures and no ISP is going to filter smaller announcements if they themselves need to announce similar slices of address space.

The real question is: What coping mechanism(s) will emerge? - back pressure on customer allocation sizes? Note - this just encourages customers to (find/beg/buy/borrow) their own block and makes things potentially worse.

"Routing fees" to downstream ISP's for route insertion?

Fixed allocation among top players of each month's additional DFZ routing table growth? “ later – “We simply do not have an answer for how IPv4 keeps running, and anyone who thinks this is stable (or even predictable) state of affairs hasn't thought it through yet. Add the fact that any significant network upgrade takes more than a year for the larger backbones, and we readily could find ourselves in some situations which are impossible to correct in sufficient time.

Given that there are quite a few economic impacts to screwing up "The Internet", it's no wonder that governments are now quietly asking whether we've got this situation under control.”

The ILEC Business Model

Erik Cecil: The ILEC business model is not really a business model at all; ultimately it is a regulatory model. Take away the regulations and the business model collapses. This, I think this the frustrating choice most state regulators face. They don't necessarily like the way things are, but they are convinced that if they don't prop up the ILEC, the state goes dark.

What they can't see past, IMHO, is the end of their title II nose. They cannot seem to see out of the self-fulfilling cycle they've created. Viewed in the aggregate, they continue to define policy, economics, markets, and market results in terms that predetermine the outcome. For the most part, therefore, ILECs continue to win because the game is defined in terms that only an ILEC can win. This is because of the unavoidable truth that regulations keep these business going.

The sad irony is that by continuing to enable the ILECs not to change, they ensure that nothing changes. Thus, they do an enormous disservice to themselves, the ILECs and their constituents because all of the market incentives are tilted against change. Competitive markets, by definition are fraught with change and risk.

Regge Fiber Builds in Allmere: KPN Becomes Customer

From Vincent Dekker of Trouw: KPN has decided to join forces with Reggefiber to speed up the roll out of FTTH in Almere, the fifth largest city in The Netherlands. Reggefiber already owns some networks in smaller towns and in parts of cities, like the project in Amsterdam. This time they will build a network for the whole of Almere. KPN will deliver services on that network. It will be an open network though, so KPN will have no monopoly on it.

KPN has decided its POTs-network in Almere has only marginal residual value. That's one message we got today. How long will it take before cable companies will admit that this is true for their network too?

What Did Bush Administration Promise?

COOK Report: I have a hypothesis: The Bush administration came to power in December 2000. American telcos were on the precipice about to go into Free fall. We have seen how Bush politicized the Justice Department and are much more aware thanks to John Dean’s Broken Government and Charlie Savage’s Take Over of the intense desire to aggregate executive power to feed the Addingtons belief in the Unitary Executive. [snip]

My hypothesis:

It is easy to imagine the bargain: let us snoop on your customer communications and we have huge new contracts for you. But we can do even more. Worried about that pesky internet? No problem. Let us snoop—cooperate and keep your mouth shut and we will take over the FCC on your behalf. We will see that the FCC dismantles the 25 years of regulation that made an independent internet possible. We will bail you out.
Qwest says No and is Punished? Circle ID article at http://www.circleid.com/posts/710261_ipv6_deployment_complex_time_bomb/

Heartland Institute Snake Oil

_

For the complete issue you must subscribe.

Contents

Trapped in the “Regulatorium”
A Call to Arms

Time for Education on all levels - From the PUC to the
Exhaustion of IP v4

Tools for Building Our Own Future p. 1
An Infrastructure “Cook-In” in March in Loma Linda p. 2
IPv6 Deployment – a Very Complex Time Bomb with an
Uncertain Trigger Date p. 3
If it Doesn’t Get Fixed p. 3
What it Means p. 4

Fiber Is Now Basic infrastructure for New
Utility Districts

A Presentation of James Hettrick’s New Technology
Planning and Coordination Business Model p.5

Needed – a Comprehensive Plan for New Communication
Utilities p. 6
Infrastructure Technology Coordination Tailored to Each Client p. 8
MiniFlex p. 11
Cutting Labor Costs p. 15

Internet Backbone Engineers and Other
Operations People Getting Increasingly
Serious about IPv6 Conversion

Conversations from the North American Network
Operators Group Mail List p. 17

Editor’s Introduction p. 17

Voice is Passé

In an Internet World Voice Becomes a Part of Many Applications and Is Much Less Used in Stand Alone Form p. 28

Access to the Tools p. 29
Understanding the “Ultimate Communications
Experience” p. 31

Networks Are Conversations

Why Structural Separation Is Needed p. 35

What Matters Are the Networkís Operational Rules Not Its Owners p. 38

IPv6 Conversion issues p. 40
Is the FCC in Charge of E-mail? or Why Not an Information Utility? p. 45
The ILEC Business Model is a Regulatory Model not a Business Model p. 46

Solution: Divestiture II p. 50

KPN to Move All its Almere POTs Customers to the Open Access Regge Fiber Almere Network p. 51
What Did the Bush Administration Promise the Telcoís in Early 2001? p. 54

Time to Gut the FCC p. 55

Symposium & Interview Contributors to this Issue