Communications

Wikablog - A Wiki of Blogs

BubbleGeneration points out the Wikablog.

Is this useful?  I don't know.
Will it attract postings?  Definitely yes, if only for the vanity factor.

It's just another example of the ease and low cost of creating new services in an era when processor costs, storage costs and bandwidth costs are dirt cheap and shrinking.

Strong positive impact of telecom on economic growth in developing countries

Back in August I wrote about an article by David Canning that shows there is a large productivity benefit from telecoms investment over and above the normal productivity of capital.  That study focused on OECD countries, i.e. the developed world, and a time (1960-1990) before mobile phones were significant.  I concluded that post, "My sense is that the advent of mobile phone competition and soaring adoption has only accelerated the trends identified by Canning but, as yet, I haven't found an analysis based on more recent data." 

Shortly thereafter, Bob Schechter and Andrew Odlyzko each gave me pointers to more recent work, but other priorities intervened.  However, this post from Mobile Pundit VeerChand Bothra pointed me to the recent Annenberg workshop on wireless communication and development, which in turn caused me to pick up the loose threads from ten weeks ago.

Indeed more recent research suggests, telephony's impact on economic growth may be twice as large in developing countries compared to developed countries.

In response to last August's post, Bob pointed me to two articles in the March 10th 2005 issue of The Economist (subscription required) Calling across the divide and The real digital divide.  These articles present the high level summary for non-economists.

Plenty of evidence suggests that the mobile phone is the technology with the greatest impact on development. A new paper finds that mobile phones raise long-term growth rates, that their impact is twice as big in developing nations as in developed ones, and that an extra ten phones per 100 people in a typical developing country increases GDP growth by 0.6 percentage points.

And when it comes to mobile phones, there is no need for intervention or funding from the UN: even the world's poorest people are already rushing to embrace mobile phones, because their economic benefits are so apparent. Mobile phones do not rely on a permanent electricity supply and can be used by people who cannot read or write.

Andrew gave me pointers to several works by Wallsten of the World Bank, the direct citation for the paper the Economist was citing which is The impact of telecoms on economic growth in developing countries by Leonard Waverman, Meloria Meschi, Melvyn Fuss, and indirectly lead me to an excellent set of policy papers on the Vodafone website.

As with the earlier work, Waverman, Meschi & Fuss seek models and data analysis techniques which disentangle two effects:  better communications support higher income and higher income allows more people to use communications networks.  Is there any causality?  From my personal experience, it seems clear that improved telecom dramatically improves individuals' lives and incomes by improving information flow, broadening markets, substituting for physical travel and transport and reducing transaction costs.  But does the data show this?

Yes! 

Waverman et al. examine 38 developing countries for which full data was available for the period 1996-2003.  Among other things, they conclude:

Differences in the penetration and diffusion of mobile telephony certainly appear to explain some of the differences in growth rates between developing countries...
... There are increasing returns to the endowment of telecoms capital (as measured by the telecoms penetration rate).

and  a variety of specific comments such as:
... the results suggest that long-run growth in the Philippines could be as much as 1 percent higher <per year> than in Indonesia, were the gap in mobile penetration evident in 2003 to be maintained.

None of this is to downplay the developing world's need for clean water, public health initiatives and access to medical care, but if there is one area where capital investment provides out-sized returns for individuals and nations, it's mobile telecom.  And this is one area where developing nations can easily attract outside capital investment with regulatory policies that favor open access and competition.

Layer Zero competition

My Industry Perspectives presentation at VON and the article I subsequently wrote have prompted a few questions.  To quote from one articulate email received this morning:

The problem I see is that we have (as in many other areas) regressed to where we were about a century ago.  Fiber to the building or home is a natural monopoly:  it costs a lot to deliver one, but once you have it you have everything.  If people are willing to lay single-mode fiber they have (looking forward) delivered around a terabit/s to each customer.

I'm questioning the idea that fiber is a natural monopoly.

If you only consider service providers competing to deliver a specific service like Internet access, then you are correct -- the first service provider to get a fiber to your building has an incomparable advantage over anyone else -- it's a natural monopoly.

However, in the real world there are at least two other considerations:

1.   Service bundles. 

So far, few providers are peddling straight Internet access by itself.  In the consumer space, we have various dual-, triple- and quadruple-play offers and they are further differentiated by content bundles.  In the commercial space, we have Cogent pushing pure low-cost IP transit, but all the other service providers push their other services capabilities which might include private line, frame relay, managed services, international footprint, and so on.  There's also the issue of "brand" - who do you trust with your data service needs? 

In my neighborhood (Newton, MA), I have three fixed access service providers.  Verizon is pushing Fios (a dual-play over a fiber PON) while Comcast and RCN are pushing triple-play over HFC.  At the moment, Comcast and RCN have similar offers and have pushed fiber to about the same depth into Newton neighborhoods. Comcast has the benefit of being first and RCN is struggling, but I don't think this means triple play is a natural monopoly!

In the commercial world, there are many competing rights-of-way between major cities so we see many, many parallel fibers between those cities.  The first fiber from New York to San Francisco has no "natural monopoly."  Again, when you buy services between New York and San Francisco, there are typically other factors at work besides just the New York to San Francisco connection.

2.   User-owned fiber. 

If you add in the opportunity for user-owned fiber (most likely via condominium fiber), then there will be plenty of individuals or organizations who will chose to own their own fiber -- making their investment decision for a wide variety of reasons, most of which are very different from those of the service provider.

I can't point to a lot of consumer's who own their own fiber, although there are some, like these folks in northern Sweden.  But, if you could own a pair of fibers from your house to some aggregation point where there were competing suppliers of upstream access and your recurring cost for 100 Mbps Internet access was $10/month, would you be willing to spend $5K one time?  (OBTW:  you could fund by this by adding to your mortgage).  The folks in Sweden are spending about $8/month per household after a one time capital expense of less than $2K per household, but they made use of a community center that holds some active electronics.

On the commercial side, we already see universities and large corporations buying their own fiber on specific routes, i.e. they are buying 20 year IRUs on a few fibers in a larger cable.  Bill St. Arnaud at the CANARIE project in Canada has described several ways this model plays out.

So no, I don't think fiber by itself is a natural monopoly.  The right-of-way in front of my house is the limited resource (that's already government owned). That's the natural monopoly.

I take it as a given that if something can be open up to (or regulated into supporting) real competition, the consumer benefit will exceed anything that government owenership or government regulation of a monopoly or duopoly would achieve. There are plenty of grounds for this assertion in telecom -- just look at the comparative rates of subscriber growth in the over 200 countries that now have mobile phone service compared with the number of effective competitors in a country.  The results are striking -- competition really works to benefit consumers.

So regarding broadband access, I'd love to see regulatory efforts focused on facilitating competitive access to the limited space on the poles and under the streets.  Obviously Verizon, Comcast and RCN would freak out at a community fiber or municipal fiber effort in Newton, but I see this as a political issue, not something that is impossible due to economics.

Good white paper on Indian telecom market

The Shosteck Group has a very good study, The Indian Telecommunications Experience:  Its Relevance for the World, available for free (45 pages - registration required).  It's from a year ago (September 2004), but still very relevant.

In a very short period (mostly since 2001), India has substantially deregulated its telecom market and dramatically reduced (formerly onerous) tariffs and taxes. This has produced more competition (5+ significant players) than China and a dramatically faster rate of subscriber growth. India is still way behind China in total mobile phone subscribers (63M in India  vs. 373M in China as of August 2005). But India's rate of subscriber growth now exceeds China's at a comparable time (2000) in China's development.

Competition works!

The report documents the various steps taken in opening up the Indian telecom market and the more or less immediate impact of these steps.  It also gives a good summary of the state of play in telecom in India as of 9/2004.

Given the pronounced productivity benefits of telecom infrastructure investment (also see here), it would sure be nice if we could get this report in front of government officials in the rest of the developing world.

Tracking new posts in this blog

This is for people who aren't familiar with news aggregators, a.k.a. feed readers, news readers or RSS readers. If you already use a reader/aggregator, or have some other way to get notified of my postings, just skip this.

I keep having conversations with people who say they read my blog, but in further discussion it becomes apparent they do so by checking my URL on some regular or not so regular basis. It's always flattering to find someone, besides my mother, who cares what I write, so if you really are interested, here are some specific alternatives for tracking new posts in this blog.

"Communications", i.e. this blog, is a website where I post occasional articles and comments.  There are two principal ways to get notified when I've made a new posting, by email or via a web feed and a feed reader.

For email subscriptions, I use a service called Feedblitz. Once a day, Feedblitz will check my blog and, if I've posted new material, send you an email containing the new posting(s). To get started, look to the right. On the fourth line below my picture, you'll see a box for your email address and a button "Subscribe me!"  If you enter an email address and click the button, you'll see a Feedblitz acknowledgment page, then a few minutes later you'll get a confirming email. You must click on the link in that email to verify you really want email notifications.

If you want to track several people's blogs and/or other web-based news services, there is special software that makes this easy, helping you organize sites and track new postings. Alternate names for this software include news aggregator, feed reader, news reader or RSS reader. Versions are available that run on your PC and that run on a website you access with your browser. About.com reviews the top feed readers here.

My personal choice is a web-based feed reader, Bloglines, because I use several different computers in a typical day.  With Bloglines, I have a single view of my subscriptions regardless of which computer I'm using.

SMS Denial of Service Attack?

Bruce Schneier picked up on some work by a group at Penn State entitled Exploiting Open Functionality in SMS-Capable Cellular Networks.  And Martin Geddes comments that this provides further proof that building intelligence into networks is harmful.

While I agree with Martin's views on intelligence in networks, this article is not a good reference.  The authors studied the GSM specifications and provide a nice description of how SMS (and GSM call set-up) works. From this they thought of a possible method of attack. But to verify it, they did only some extremely limited gray-box testing and a news story search. They end up suggesting there's a major security issue where none exists.

While I have never worked at a mobile operator, I have been involved in SS7 and mobile network signaling for more than a decade.  We have a message switch (not a standard product but available OEM) which interfaces with SMSCs and, through the detailed traffic logs of our AccessGate product produces, I've seen minute by minute signaling traffic (SMS & call setup) at cell sites during normal operation and periods of traffic overload in real GSM networks in diverse countries.

It is certainly true that you can overload a cellular network with more calls than it was designed for, and it's true a cellular operator can misconfigure their network so parts of it saturate before all resources are in use. I can even envision a way you might misconfigure a network so what the Penn State group proposes could happen, but it's not a venerability in networks I'm familiar with.

Evidently the Penn State group didn't want to get their university in trouble so they were careful to abide by all service agreements. Their gray-box testing was limited to sending SMS messages to three specific handsets. What they established were the limits in the cellular operator's Internet messaging interface and the per-user message limits configured in the operator's Short Message Service Centers (SMSCs).  They determined nothing about the rate at which the SMSC pushes messages into the mobile network's SS7 signaling system.

Their full paper also cites six news articles which they assert represent occasions when SMS traffic impacted voice traffic. The articles they cite are about cellular traffic overloads -- either SMS or voice -- and efforts to prevent traffic overloads, however none of the stories actually shows a case where SMS traffic impacted voice traffic.

If they weren't prepared to actually try their proposed attack, they might at least of discussed their ideas with signaling experts within a real mobile operator.

Internet policy debate missing the most important issue

While I failed to blog it at the time, I've finally written up my VON presentation as an article...

In my Industry Perspective at the VON conference two weeks ago, I claimed current US public policy discussions about VoIP and especially about Broadband Access were totally missing the most important issue -- competitive access to Layer Zero.

I recognize the importance of "Net Freedoms" and other regulatory guarantees, in a monopoly or duopoly market. But I claimed we don't have to, and we shouldn't, settle for a regulated duopoly -- we could have vibrant competition, multiple facility-based service providers and the option for user-owned fiber.  But to get there, we need to change the discussion.

There were a few hundred people present and the response during Q&A, and one-on-one meetings afterward, was very positive, however I don't have a video to offer and the slide deck by itself is just an outline.

So here is an article, of less than 900 words, that attempts to get my point across.

Fuel cell powered phone displayed

In the cutting edge Japanese mobile market, both DoCoMo and KDDI have been sponsoring development of fuel cell technology to provide longer battery life for mobile phones. DoCoMo and Fujitsu laboratories displayed a somewhat over sized prototype back in July.

Now KDDI is displaying a much more realistic prototype at CEATEC Japan 2005 this week. As KDDI announced last week, they have partnered with Toshiba and Hitachi for two different fuel-cell-powered mobile phone prototypes which are now on display in the KDDI booth at CEATEC. The Toshiba prototype is based on the A5509T handset.  Hitachi's is based on their W32H handset.

Wireless Watch Japan has covered the story and taken this picture of the back of the modified Hitachi W32H handset. One fill up (with methanol) provides 2.5 times longer operation.  Then it can be refilled, assuming you're carrying some spare methanol.

Yes, some issues come to mind !!

1. What are the chances I can take this phone on an airplane???
2. How and where can I carry spare fuel, i.e. a bottle or tank of methanol??
3. Look at the vent holes. How warm is this thing?

None-the-less, it appears fuel cells for mobile devices will be real in Japan in the next year or two.  If so, we can expect them in EU & US a year or two later. I certainly have a number of mobile devices that would benefit from 2.5x battery life and the possibility of a refill while on the go.

Walled Gardens - more and more cracks

Earlier today I was reading Susan Crawford's gloomy post on impending problems for the Internet. Yes, everything she lists is an issue, but none are certain and some are certainly not long term problems.

Case in point -- her third subject, walled gardens. Just a moment ago, I saw this on Reuters.  T-Mobile is launching their "web'n'walk" open Internet service in the UK.  They launched in Germany and Austria earlier this summer and there, web'n'walk users are already generating more ARPU than T-Zones (walled garden) users.

As I commented a month ago, all it takes to break down the walled garden is a competitive market. Yes, more 3G capacity and more applications, useful on a mobile, are needed to take us from early adopters to mass market, but open Internet access (no walled garden) will be the norm in the competitive US and EU markets within a few years.

Mobile phones more important than Web or VoIP

For those of us in highly developed countries, the Internet is the biggest thing that's happened in our lifetime. But we're the privileged few.

In developing economies (more than 3/4 of the world's population), the big story is mobile phones. Over the past ten years, phone service has reached more people (for the first time) than the Internet. And the economic and social impact of getting a phone, or just access to a phone, is substantial -- both for individuals and for national economies. As I've pointed out in the past, it's now well established that investment in telecom infrastructure is more productive than other investment, by a substantial margin. (More supporting research here).

Part of the advantage comes from low costs. A complete green-field GSM deployment can be profitable with as little as US$5 average monthly revenue per user (ARPU). And costs are falling, of course. In 2004, new mobile phones were available for as little as $50 on the black market, i.e. that's the selling price w/o taxes, and used phones for $20. Now a recent GSM Association initiative promises to drive new handset costs below $30.

To cover these costs, phone calls are frequently resold to friends and neighbors, so one phone serves  multiple people. And because economic advantages of phone service are so large, people are willing to spend a greater proportion of their income on phone service.

Another advantage phones over the Web is voice -- many people are illiterate but still quickly learn to use a mobile phone.

Yes, the Internet is really important and it will be the biggest story of the 21st century. But for the vast majority of mankind, for at least the next decade, mobile phone service is the communications revolution that counts.