A Practical Navigator for the Internet Economy

Where is New Wealth Created? Center or Edge?

If in the Center, then the Duopoly Makes Sense - If at the Edge, We Better Understand How to Build Edge Based and Owned Infrastructure

Why is the US Betting on the Center and the Rest of the World Choosing the Edge?

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The September - October 2005 issue looks at technology's impact on wealth creation. It shows why, if one accepts the premise of The Only Sustainable Edge by John Seely Brown & John Hagel, the development of muni networks and edge owned infrastructure is the only responsible alternative to the oligopoly.

August 3, 2005 Ewing, NJ --Business strategists need to understand how changes in technology are impacting the creation of wealth. Or, as John Seely Brown and John Hagel put it in their new book The Only Sustainable Edge, they need to understand how business can build new capabilities. The authors assert that in a time of quickened technology development and a more tightly networked world, capability is built in loosely coupled, autonomous process networks that enable intelligent businesses at the center that understand and cooperate with this phenomenon to out perform businesses that don't.

Read more: September October 2005

The New Battleground: MegaLec and IMS vs Google

Is the Duopoly Preparing to Launch IMS in Order to Force the Internet Genie Back into the Bottle?

Do the ASPs Led By Google Have Tools and Environments that Can Successfully Push Back?

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The November - December 2005 issue looks at different forms of Broadband. It describes the regulatory-political victory of the Duopoly in the United States. It examines IMS and a carrier control mechanism and then outlines Duopoly’s coming and likely IMS oriented struggle with the Application Service Providers (Google, eBay, Yahoo, Amazon) for control of digital networks.

October 1, 2005 Ewing, NJ --Developments in telecom appear to be coalescing around two very different approaches. Call them polar opposites. On the one hand the cabl cos and tel cos are fighting a rear guard action bolstered by huge lobbying budgets to get Congress and the FCC to support their vertical, and control-oriented models. Make no mistake about control. The latest atrocious piece of test legislation to surface is the 77 pages of Barton-Dingell. According to Brett Glass’s reading, to become a broadband ISP, you must register with the FCC - an FCC that is also to be given power to denymay indeed have been ddesigned as a control planeany registration application that it does not like.

If it blossoms fully, the Duopoly control will box users “in” in every way at the very time that they seek ways to ensure that they can engage in real time global collaboration. The Duopoly controllers will seek to ensure that access speeds will be as asymmetric as the providers can manage. The customer’s ability to send data to the network will be tightly constricted. The centralized content owners will have a fire hose with which to spray their content at users. The Duopoly hopes to have working IMS that will permit it to sell and bill for all manner of micro-services. The Duopoly will also seek to build its levee walls higher with software that will allow it to block its customer’s attempts to use Skype and other P2P services.

Carriers and Cablecos Versus the Application Service Providers

The polar opposite of the telco cable company “control-the-user-and-make-him-pay” world view is led by Google (but would include Amazon, Yahoo eBay and Skype) exits to empower the user by offering him a broad environment of tools intended to support business, learning or entertainment interests. This emerging counterweight to the duopoly is becoming known as the ASPs (application service providers). However, we had also better recognize that the environments of the ASPs include walled garden characteristic of their own and may not be immune from the influence iof IMS.

Seeing what is at stake in communications revolutions has never been easy for those caught in their midst. COOK Report subscribers and mail list members understand the swirling complex of issues in a way that average members of the public do not. As Andrew Odlyzko wrote on September 20: “The bulk of the population most likely does not know or understand the issues. That was certainly the case in the past. The “cheap postage” fight in the first half of the 19th century was not a great popular movement. And even after the fight was over, people had to be taught how to use the mails for social communication (with a brisk trade in how-to books). Similarly, in the early 20th century, the marketing of telephone for social communication did not come out of popular clamor, but was a result of the telcos finally waking up to the opportunity they had.

Odlyzko’s insight about the opportunity to promote being missed by the telcos and Google’s on going efforts to turn itself into an environment that becomes the first choice of everyone’s interaction with their network environment is compelling. Google is turning itself into a combination of telephone directory, library and mapping service to become a one-stop reference for everyone who plans business, education or research activity. In the future fewer and fewer people will be engaging in their own business development or research without access to a computer and the network. At one point MicroSoft wanted to become the Operating System for the Internet. It failed. Google it seems has similar goals. It will likely to get further along this path than did Microsoft.

Read more: November December 2005

Optical Revolution Increases Obsolescence of Legacy Carrier Networks

Highly Efficient Layer One and Two Optical Networks Will Spell End of the Road for ATT, Sprint & MCI in Their Current Form

Intelligent Acquisition Could Lead to Quick Write Offs of Obsolete Equipment
& Result in Modernization of “Telco” Infrastructure

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The March-April 2005 issue examines the new optical technologies being employed today in service-provider, enterprise and research and education networks around the globe.

Optical Networks Becoming Much More Affordable

Thinking about the meaning of the COOK Report’s last two months of research, I ask readers to consider whether we are headed towards optical networks owned, built and operated by enterprises and other large entities that are sources of, and/or, sinks for data, with the public Internet and carrier backbone networks merely acting as inter-connecting vehicles for private bit carriage?

Will the enterprise-owned and -operated network be one that is composed of hybrid networks that set up lightpaths when needed, and then tear them down, for certain Quality of Service and security-mandated applications? Will best-effort Layer 3 IP services for email and web browsing utilize a separate allocation of bandwidth elsewhere within the optical spectrum of physical glass? Is this new enterprise-owned optical network one that could switch lightpaths back and forth on an as-needed basis sending payloads over dedicated lightpaths where appropriate and needed, while best-effort routing continues to function on its own over intranet or Internet routes, thus filling in the gaps between highly mission-critical and business-as-usual applications?

Are enterprise nets going to get very dynamic? Will they do switched lightpaths internally, route stat-muxed traffic of routine importance and direct lambdas, when need be, to branch offices, or to suppliers, or to customers?

Large carrier networks still have a role to play. However, in their present state we argue that their role will be sharply constrained. Here is why: Ken Belson writes in the January 29, 2005 New York Times: “Despite its less impressive performance, MCI still remains a [take-over] target because other than AT&T, only MCI and Sprint have the heft to sell a full complement of phone and data services to America’s biggest corporations, particularly those that operate globally.”

While our largest carriers have what enterprises want, if these global phone companies are failing is it because, they offer the kind of service that makes sense for their own infrastructure, cash flow, debt commitment and are not organized to meet the needs of their enterprise customers? They are serving their own interests at a time when alternative sources for equal-and often more- effective services are undercutting them in price, and outperforming them in many ways by wide margins (as might be exemplified through the comparison of Ethernet over SONET versus approaches to delivering native Ethernet over WDM). What makes sense for the IXCs increasingly is not the most cost-effective course for large enterprises. Giving the enterprise the best deal possible would be detrimental to the IXCs own interests. At the same time, those who provide the aforementioned alternative sources (for example dark fiber from AboveNet) find that satisfying enterprise needs enables them to flourish, rather than merely subsist, or worse.

Read more: March April 2005

Telephones Become Software and the Phone a Computer

Skype Examined as Virally Spreading Second Generation of VoIP While SIP and World of Enterprise VoIP Live in Very Different Universe

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The May - June 2005 issue examines Skype, SIP and VoIP in 2005.

Convergence Arrives at Level of the End User Device

April 3, 2005 Ewing, NJ -- The telephone has become software. In 2003, VoIP was a bucket of bits adapted to a special SIP-endowed handset or “Ethernet phone” that cost between $200 and $600 and had to be connected via a complicated interface to an early island of connectivity like Free World Dial Up. In 2005 VoIP is viral and software. It is a program called Skype downloadable from the Internet. Other such programs will follow.

Skype is a free software phone that “just works.” And, as our experts point out, Skype is not necessarily the be-all and end-all of a softphone. Better products will likely appear, and, whatever happens, the business model appears to be profoundly disruptive.

At the very end of March Skype CEO Niklas Zennstrom published by Mathaba on March 29, 2005, said,

“The telephone is becoming a computer. See my telephone, I have Skype on a mobile phone with a 200 MHz processor and an operating system, and it’s connected to the Internet with different types of radio access, whether its GPRS, WiFi, 3G or WiMax, it uses different radio technologies. Then telephony becomes a software application that just lives on the network. Skype is that software application, there will certainly be others...” [Source is Skype Journal, Skype on my Linksys Router, April 2, 2005.]

Lingo and Vonage are based on hardware devices that must be shipped to customers and added to their networks. Both have the old advertising, network maintenance, billing and customer acquisition costs of the phone company business model. Customer acquisition costs are likely well over $100 per customer for services that bill at about 20 to 25 dollars a month. Skype customer acquisition costs are more like a penny a customer for a service where over a million people have purchased the minimum 10 Euro Skype-Out service and many many more merely use the service without ever leaving the Internet.

Read more: May June 2005

MegaLEC Consolidation Creates Local Infrastructure Opportunity

While LEC Acquisition of MCI & ATT Promise Economies of Scale, Since Local Needs Go Unanswered, Municipalities Must Take Control of Their Own Future

The July-August 2005 issue examines LEC IXC consolidation and shows how to begin to think about building local infrastructure.

What is the Future “Phone Company”?

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June 3, 2005 Ewing, NJ --This July August issue of the COOK Report examines the changing industry perspectives that derive from falling voice revenues for the telcos and increased interest in local infrastructure building on the part of those who feel they are not being well served. It also looks at the industry consolidation that will give us mega LECs made up of SBC and AT&T and of Verizon and MCI. Trailing in their price setting wake of the mega companies will be Qwest and Bell South.

We ask how the acquisitions will benefit the acquiring local companies? Our interviewees, with the exception of Farooq Hussain, see little benefit. Since consolidation seems unlikely to solve problems, we search for solutions in what seems to be the only alternative – that of defining, and sometimes building, one’s own infrastructure.

Understanding the Changing Value Equation

Telecom is a necessary part of the economy. No one doubts that. It has great value. The question becomes where do you find it and how do you put it to work? For more than a century the public telephone networks of the world have been designed with special hardware that has one major purpose: carriage of analogue voice. The maturation of the Internet has changed all that. Voice has become data and the revenues it generates have shrunk to the point where they can no longer support independent Inter-eXchange Carriers like Sprint, MCI and AT&T. However, since the very largest local phone companies have a large embedded base of customers, SBC and Verizon have enough stable and recurring revenue to acquire the IXCs. But when voice is no longer profitable, one has to ask why these LECS would pay additional billions to acquire companies whose major line of business was long distance voice. Farooq offers the hypothesis that the Verizon and SBC believe that there are economies of scale to be found in cutting expenses by combining networks and scaling back equipment and staff.

Read more: July August 2005