A Practical Navigator for the Internet Economy

Presenting Web 21 C at Supernova

Jp Rangaswami and Jeremy Ruston Explain How BT Is Reaching out to the Public with an Open Source Service Development Platform

The new British Telecom in detail. Symposium discussion on Google fiber access and ATT merger committments. How to purchase this issue. $350 or $1400 group.

August 6, 2007 Ewing, NJ -- The October issue contains an edited transcript of the 95 minute Supernova BT presentation on their new developer's busioness startegy.

Executive Summary

BT - Making Partners of Your customers

At Supernova on June 20 JP Rangaswamy and his colleague Jeremy Ruston presented a 95 minute workshop introducing BT’s new 21 CN Developers Website. BT is effectively trying to kick start an open source community that will develop its own tools designed to work with the web services interface to BT’s own network. What is happing here is that, for the first time of which I am aware, a telco actually says we are going to enable our customers to innovate at the edge of our network and sets out seriously to give them the tools with which to do so.

 

In what follows I have distilled the basic chain of reasoning that underlies BT strategy. I have also written some text of my own – found inside parenthesis - to fill in gaps in the arguments that follow.

JP Rangaswami: In a commoditized industry (we realized that) the only distinguishing factor that we would have was the quality of the customer experience.

(Bt has a new and expensive all IP network of which it is proud. But are we going to say “be a customer of BT in order to use our IP network?” No.) No one uses an all IP network; people (on whatever kind of network they happen to be) transact when they get there (regardless of the underlying technology).

People transact because they have conversations about what they want to buy or sell or deal. People transact because they have relationships. We realized that our historical model of having these relationships was completely defunct.

(We concluded that if we are sincere about focusing on the quality of the customer experience) that we have to switch the model from customer relationship management to vendor relationship management, that it is not wrong to ask customers what they want.{We understand that this is now a world where innovation takes place at the edge. Consequently, we asked ourselves) how does innovation move to the edge unless the tools for innovation pass to the people at the edge and what should these tools look like? How should they be used? This was not easy for us to figure out because no one was doing it.

Jeremy Ruston: (The economics are changing. BT) bought a company with no IP. They bought a company with no revenue stream. It is one thing for JP, who we know understands this stuff, to have an appetite to do that, but for BT’s corporate finance department to have an appetite to do that I think is real evidence that BT is a changing organization.

Your goal is to get as many people as possible playing with this stuff. Thus, whether you are BT or Amazon, you really want to lower the barriers to participation.

This HTML file (created in Tiddlywiki) is like a primitive application that I can now give to Doc and he can modify it and give to somebody else without BT being involved in that process at all. Thus, we have totally yielded control of the application to the end user to the point that all that BT cares about is the web services that are being hit by the application.

JP Rangaswami: What we tried to do there was, to keep it very simple, to provide web tools with three characteristics that matter to us.

First, the output was something you could use and reuse anywhere else in the context of what in the open source world. I think Doc referred to originally as nobody owns it, everybody can use it, anyone can improve it

The second element we wanted to stress was that the tools allow the innovation to take place within the consumer’s hands.

The third bit was we were not going to dictate or prescribe what you did with it, for a very good reason: we did not know (what you would want to do.)

Thus, as soon as we constrain what you want to say, by giving you a mask to operate on, we are already filtering out much of the value you may want to have.

Searls: You are using the big back end of the phone company in a way that is more in your control.

This is like one little chink in a wall; it is like one little door that has opened and I wondered what other doors does that open?

Ruston: The better way to look at open source is what it gives you is not free code; it gives you an unparalleled insight into the requirements. Therefore, if you study any open source project, an awful lot of the activities that take place, as in the stuff that goes on in the forums, what bugs people choose to fix, what bugs people choose to vote up, gives you insight into the requirements. Indeed, it gives you insight into the requirements in a much more realistic way than you get by asking people what they want and we all know that if you ask people to say what they want they will give you, for many reasons, completely unhelpful answers.

Convergence Without Being Converged

JP Rangaswami: We figured out we were doing something wrong: we were speaking convergence to the market and to the consumer without being converged ourselves.

Most telcos had a powerbase which was a network powerbase and over the last 30 years they have grown a second design authority besides the network, which was the people who manage processes, because every telco became a very large bureaucracy.

Then there was a third group that came along because people realized you could make money out of this rather than just be a monopoly or state owned utility and so there were a bunch of guys called ‘product.’

Then, about 15 years ago, as computing and communication started converging, the so called IT departments came up. What you ended up with was four design authorities within a firm and four groups of people operating the infrastructure. The net outcome was stuff did not work, because if you want it not to work there are far fewer good ways of making it not work than to ask four people to design it in isolation (from each other).

How to Monetize the New Ways

We are a listed company with shareholders and accountable to them, so we have to find a way of making money out of this, but we do not start with saying ‘How are we going to lock you guys in to make that money?’

We are going to expose these things and then figure out where the best value proposition comes. It could be in classic support and service for it; it could be in hosting services for some of these things; it could be picking up some of the more downstream, between data centre and desktop services we could provide; it could be in consulting.

We have seen an inversion from the enterprise being the early adopter of technology to the consumer becoming that early adopter.

Today, TiddlyWiki is unique in that sense and it was the first time we have decided to get an application up and see what happens. How easy is it to integrate with the toolkit? (We shall find out.) These are early days and when we started off we said we do not know what we are doing.

We have been used to building software platforms, but we have not necessarily figured out how to make software platforms into marketplaces where monetization of the right things happens and we are not going to learn that by acting in isolation in an ivory tower. We are only going to learn that by exposing ourselves without, seeing what you guys do with them and then seeing what you want to pay for.

We can either make applications up that we offer the customer saying ‘We are going to have you in triple play, quadruple play, end-to-end locks’ or we can say, ‘We do not know what you want to do, but we do know that if we give you right software tools, raised up in the value that they generate, because they allow you to manipulate things, to connect things, not to have to program to do it’ then we will end up with applications we could not imagine.

That is why our metrics for customer service are saying, one, whatever it is you want, can we get it to you quickly. Can we reduce the cycle time? because we do not know what you want but we know you want it fast. That we know. The second element is when you do get what you want do we get it right, are we listening? How often do you order something and you get not what you wanted? How can we improve the accuracy of getting you what you want?

The only two metrics we have for defining the customer experience are the quality of right first time, so we do not have to keep iterating to do it; and the second is the cycle time required to deliver what it is to you.

What we are trying to do is to say nobody loves the machine that is a telco or if they do then there are some numbers I will give you to talk you out of that. However, what we do know is that the connectivity that a telco can provide does make life easier. If we can expose that connectivity in forms and shapes that do not have monopoly rents associated with them, that does not have the paths to using that connectivity polluted, then we are likely to be providing more of the service than if we did (otherwise).

We have set out officially from the Board downwards, through the entire company, to say we want to be the best at something.

However, we do not know what that means. What we do know is our monopoly rents are disappearing, that if we do not change we are going to die. We have taken the brave steps or what we think are brave steps to change and now we are on that vulnerable path to figuring out how the hell we are going to make money as a result.

DataFoundry Net Neutrality and ATT terms of Service Destroy Privacy

FCC filing on behalf of Ron Yokubaitis’ Data Foundry. The filing takes a new and very creative tack on the Network Neutrality debate.

It points out especially how ATT’s use of deep packet inspection would give ATT access to the contents of proprietary legal and business conversations. Since ATT’s terms of service makes clear that ATT owns the traffic that pass over its network, it reserves the right to use customers’ information as a “business record.” They point out that with such TOS customers who never the less use ATTs network give up all reasonable expectations of privacy.

The implications are profound in that any normal use of business confidentiality is not protected but rather exposed by ATT’s arrogant policy. It would seem that it would clearly behoove anyone who had need of confidential communication to make sure that their communication did not touch ATT’s network.

Symposium Discussion

ATT Merger Commitments Breached?

Consensus is that ATT doesn’t follow its commitments in general. Ten dollar DSL very hard to find. New CEO tells Atlanta newspaper it is because no one wants it. David Weinberger essay calls for structural separation.

Usefulness of Copper Plant

Mention of a claim of the feasibility of a 100 gigabit copper by Stanford Professor Joe Cioffi and colleagues leads to question about why anyone would want to remove copper from the telco networks.

Evslin: In a more lucrative territory (lucrative even for a telco with bloated costs) the copper gets replaced with something which the telco is committed to maintaining. And there is a pervasive cable presence with telephony services. Yes, there needs to be more competition but, even in the worst case of continued duopoly, service is maintained (although at pathetic levels on a global scale).

But given a sparsely populated copper net already suffering from deferred maintenance and deferred upgrades and given continued landline loss to wireless, cable, and Tim's Burlington Telecom fiber and the like, the cost of maintenance per copper revenue line goes up quickly. The cost of maintaining a few live pair per trunk mile is almost the same as if all the circuits were live. The revenue obviously not.

Bill St Arnaud: Maintaining unused copper plant is expensive. For example to minimize corrosion at terminal points, carriers always transmit small amount of leakage current over their copper plant. Carriers also do periodic sequential over voltage ring tests of all fiber pairs to insure their integrity and that there is no break down in the insulation. In many countries (like Canada) carriers have argued that this is why they cannot offer unbundled traditional telephone from DSL i.e. if you only want naked DSL you must still must buy copper telephone services.

Google Open Spectrum Balloon Shot Down

The announcement of Google’s Open Spectrum proposal on July 20 prompted some long and astute conversation. Google “encouraged the FCC to require the adoption of four types of "open" platforms as part of the auction: 1. Open applications: consumers should be able to download and utilize any software applications, content, or services they desire; 2. Open devices: consumers should be able to utilize their handheld communications device with whatever wireless network they prefer; 3. Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms; and 4. Open networks: third parties (like Internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network.” [Some discussion highlights.]

Frank Coluccio asked: How will investing $4Billion plus in the auction model affect Google's future outlook towards more radical approaches to sharing spectrum that will be based on software-defined radios and other cognitive-enabling technologies? Thoughts?

Vint Cerf: Google believes that it is in everyone's interest to have alternatives to the present incumbents offering broadband connectivity. Google's proposal and commitment is an effort to create a much more open broadband environment which we believe is beneficial to everyone. Consider that the four openness criteria include open device access to the spectrum. [snip]

Coluccio: Given that COTS wares do not yet exist for the new rules, even dispelling for the moment the need to retire existing infrastructure already in use, how long would it take to implement the new rules in footprints across the nation to the point where they are accessible to 10 % of the population? 25%? And so on.

I don't know how long it would take for alternative, shared-spectrum technologies to become viable and then commercially available to the point were they'd make a difference. Perhaps other members of the list who are expert in SDR-ATT and other cognitive technologies might chime in here. Using some lousy-case numbers for both scenarios, however, if it were to take the Google model 2-to-4 years to fully ramp across the nation, compared to 4-to-6 years for SDR to become a reality, the penalty may only be one or two years. I am comfortable in stating, however, that the comparison I just described above is more likely to happen sooner, rather than later, with Google's backing the pioneering of shared-spectrum approaches. [snip]

Clay Shirky: Google, by my read, has done something even better, which is taking a position against the auction and treating the $4.6B as ransom money.

They are saying, essentially, "If Congress is committed to taking in revenues for this spectrum, we're willing to offer that money *without demanding that the spectrum be treated as property.* [snip]

Crawford: I'm reluctant to rain on the "it's not property" parade in support of Google, but:

The idea is that the winner under Google's conditions *would* still draw revenue for transport, but the revenue would come from wholesale, commodity transport rather than vertically-integrated operations.

So to that extent (and only to that extent) the Google-style winner would still be treating spectrum like property - they'd be the ones making money from their retail transport partners. And they'd have the exclusive right to be the wholesale operator for that spectrum. Yes, they'd be open to retail operators, open to devices, open to applications, open to interconnection. [snip]

Farooq Butt: The questions I'd have is to what extent does GOOG want to be in the wholesale enabler business versus being a virtual "operator" ? After all GOOG have the provisioning, billing and security engines that make the operator magic behind the curtain work. Judging by all the net gossip, they appear to be working on an access platform (one instance of which could be a "phone"). Most importantly, GOOG also have some level of identity collateral from all the toolbar, search and user-account profile stuff. This is heady stuff, especially if combined with a couple of hardware suppliers.

Spectrum and some sort of market are all that is missing ;-) The issue is: do GOOG want to (a) become a [potentially more enlightened] operator that respects some version of a new "don't be wirelessly evil" pledge or (b) do they want to be a fair broker for spectrum or (c) do they want to change the rules for everyone going forward by enshrining some/all of the above 4 principles into FCC requirements? snip

What a Google Built Infrastructure Might Look Like

Thompson: So the US is 3.5 million square miles, but large swaths of it are unpolluted. 100 million APs has each AP with a range mere 915 feet, assuming a) you were talking about a US-only network (because 700MHz is US-only), and b) that they are evenly distributed (they won't be).

Better would be 1-2 million access points, and some method to tie them together (routed back to Google's local POP), with "Internet" on the back of that. Here you've spend $20 - $40 million on APs. You still have 4 *billion* dollars to acquire the fiber rights and install to reach some semi-central "cell", and have the other APs "mesh" to it. (Using something other than the 802.11 MAC, please.) Run the mesh in 5.250 - 5.350 GHz, because the Wireless ISPs are abandoning it, claiming they can't use it now that DFS and TPC are required. (You could use the 5.470 -5.725 band as well, because the idiots aren't bright enough to build networks that don't have to "shout".) Run the "access" side as ordinary 2.4GHz 802.11g, likely without the 48Mbps and 54Mbps modulations. (These are typically EVM limited, not SNR limited as the other 802.11g modulations are.)

Make sure the bandwidth is symmetric.

Essentially, 1) get rid of the asymmetry inherent in the telco / cable model. 2) drive the price of IP networking to $0. 3) enable VoIP (likely with a short ad insertion) at a cost of $0, subject to "connection fees" endured by Google if you call "off-net" This drives the cost of telephony, even 'mobile' telephony, to near $0 It doesn't, however, work while you're driving down the road.

Let VZ and T own the TeeVee. I honestly don't care about broadcast TeeVee over IP.

Google's services get a lot more traction, because it is faster to get to them even before, and they're absolutely free to use.

Editor’s note: On July 31 The FCC denied Google’s petition but said instead that winners of the auction could not restrict the brand of phones used in the 700 MHz space. My prediction: The carriers will buy the bandwidth and mothball it.

Bitstream Access – a Critique

Tom Vest: Bitstream access and other technical/contractual forms/mechanisms for exchanging fractional beneficial control of network infrastructure are less secure and thus inferior to PLCs ("network infrastructure") or even more physically embedded (e.g., unbundled "network facilities") mechanism in several ways:

1. They leave the service customer more vulnerable to a broader range of technical problems in the service provider's network. 2. They generally provide the service customer with fewer means to isolate and diagnose those problems, and more limited (i.e., no) recourse to fix them independently. 3. Being more opaque, such services are more vulnerable to manipulation, deception, and price predation. 4. As service abstractions built on top of physical/facilities or PLC "infrastructure", they provide service customers with no direct means to enjoy the benefits of increasing returns to Capex created by ever- improving multiplexing technologies, etc. Thus, where new technology may increase the potential capacity of existing facilities platforms by orders of magnitude (granted, at the cost of modest additional Capex), a bitstream access-only market will assure that these savings never really percolate through the rest of the network economy; they are captures and internalized by the network facilities owner.

Fiber in the Ground all Bottled Up

Thompson: There is a ton of 'dark' (unlit) fiber in the ground.

Goldstein: Most of it worth precisely zero. If somebody buried 50,000 strands between two farms in Alma and Kinmundy, IL, there's be a lot of fiber in the ground, but not usable. Sadly, that's the fiber situation now. A ton was pulled along a handful of routes in the same cities. Some of the owners tanked, their assets rolled up by incumbents and thus taken off the market. Prices for what's left are high, well above levels of a year or two ago. Owners would rather sell lit services.

FCC policy is to pretend that wireless is a valid substitute for wire, part of the "intermodal competition" farce. snip

Tom Hertz: Fred is mostly right. There is a lot of fiber in rural areas of the Midwest, much of it owned by rural telco's and almost all of unusable by anyone EXCEPT THE TELCOS THAT OWN IT because of the way the USF and access charge environment works. It would cost them money to sell off fiber in any route where they carry LD traffic.

Coluccio: So that's just great! We have the USF inhibitors working against the telcos selling dark fiber and the FCC-sanctioned prohibitions against the telcos sharing both dark and lit fiber capacity! That's one helluva marvelous combination of government inspired drivers for competition, eh?

_

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Contents

Presenting Web 21C at Supernova

Jp Rangaswami and Jeremy Ruston Explain How BT Is Reaching out to the Public with an Open Source Service Development Platform

Three Points of Future Strategy p. 1

Global, Open and Realtime p. 2

Vendor Relationship Management p. 2

TiddlyWiki p. 3

What TiddlyWiki Does p. 3

GuerillaWiki, Plugins, p. 7

BT’s Web Services Demonstration p. 7

Questions & Answers p. 8

Significance for the Customer of Changes in BT’s Internal Organization p. 13

How to Monetize What BT is Doing? p. 15

eBay and Amazon “Meet” Facebook p. 18

Design What You Like Self-service p. 20

Not Machines but Machine Tools for You to Use p. 22

Summing Up p. 24

 

Symposium Discussion: July 6 August 5 2007

Is AT&T Honoring its Merger Commitments? p. 32

Usefulness of the Current Copper Plant p. 36

Spectrum Issues Toleration of Interference and Unlicensed Spectrum p.20

ATT Threatens 700 MHz Suit p. 39

Google Commits to Open Spectrum - July 20 A Brief Visit to Camelot p. 40

A Business Model for the Google Proposal p. 44

Converging Two Threads... p. 49

The Impact of 700 MHz Had Google Won p. 50

What a Google Built Infrastructure Might Look Like p. 53

Diversiture II and Bitstream Access p. 54

Should Vision Be Grounded in Reality? p. 56

Wireless Bypass Not Viable - Surplus Fiber
Not Available p. 57

Symposium & Interview Contributors to this Issue

Affiliation given for purposes of identification - views expressed are those of the contributors alone

 

Robert Berger, startups in wireless, currently Ruby and Rails consultant
Marshall Brown, CEO of WiFi Salon free WiFi for New York City's parks
Farooq Butt, former Chief Strategist, Motorola’s Mobile Devices Group, now consultant
Vint Cerf, Chief Internet Evanglist, Google
Franl Coluccio President DTI Consulting Inc., New York City
Mark Cooper, Director of Research Consumer Federation of America
Susan Crawford, asis prof cardozo Law school, Board Member ICANN
Tom Evslin, Novelist, Blogger and Retired Former CEO of ITXC
Bob Frankston developed Visicalc and Lotus and later home networking at Microsoft
Fred Goldstein Principal of Ionary Consulting, author of The Great Telecom Meltdown
Tom Hertz, CTO Fiber Utilities
David Isenberg, author of the Stupid Network and proprietor of ISEN.com
Bruce Kushnik Founder Teletruth and author 200 Billion Broadband Scandal
Kevin Marks, now with Google, Coauthor Micro Formats, Quick Time Developer
Tim Nulty runs Burlington Telecom, in Burlington Vermont
Scott McCollough, Texas Regulatory Attorney
JP Rangaswami, CIO BT Global Services
Jeremy Ruston, Head of Open Source Innovation, BT
Doc Searls Editor Linux Journal and Doc’s IT Garage blog, ClueTrain Co-author
Clay Shirky, consultant, teacher, writer on the social & economic effects of Internet tech.
Jim Thompson, wireless expert, Vivarto, Waytport etc currently in Hawaii
Joost van der Vleuten, Head of Strategy, DG for Energy and Telecom, Ministry of Economic Affairs, The Netherlands
Tom Vest, Senior Analyst, Internet Economics & Policy, CAIDA
Dirk van der Woude, Civil Servant Amsterdam and fiber expert
Ron Yokubaitis, CEO Data Foundry Austin Texas
David Young, Vice President Public Policy, Verizon
Sara Wedeman, CEO Behavioral Economics
john Waclawsky, Chief Software Architect, Motorola
David Weinberger, technologist, professional speaker, commentator, Cluetraincoauthor