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« Forbes.com - Thankfully, That's Not The Way It Was | Main | Forbes: Lehman and Meritocracy »

August 18, 2009

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att

Clearwire anyone?

Mike Rogers

Google Voice is the implementation of a technology I anticipated 3 years ago. With the growing digitization of cellular and other wide-area connections, and the trend toward packetised voice, I posited to my friends that the future of telephony would be a "Phone Feature Provider" who managed your number, features, messaging and billing, with their packets running over a variety of "Bit Transporters" who would simply deliver the packets. In this model, the "PFP" would execute roaming agreements with the transport providers, and present an integrated bill.
This would be the exact inverse of the old Telco model, where they charged you for your phone number and features, and "as a favor" integrated billing from the long distance providers which they permitted to connect to your line.
Of course, small upstarts could never hope to set up as "Phone Feature Providers", since the carriers would have no incentive to partner with them, but a BIG UPSTART like Google - disruptive technology - no wonder they're scared.

David Boettger

Regarding the suggestions, the situation can be improved dramatically using techniques along the lines of items 2 and 3 without the need for the government meddling implied by 1 and 4.

Spectrum ownership is one of the two or three primary means by which the wireless behemoths keep new competitors out of the market: They buy spectrum they don't need just so others can't have it, and comply with the letter of the FCC's "use it or lose it" requirement by lighting up a single channel in otherwise vacant spectrum. And the carriers years ago lobbied successfully to repeal the spectrum ownership caps that had enabled new market entrants and, thereby, fostered competition.

Similarly, the wireline carriers and cable companies fought tooth-and-nail against "equal access" legislation -- which would have permitted any carrier to provide service using the wires or cables that go into a home. The phone companies were forced to implement some amount of equal access at least for ADSL (broadband over phone lines), but, in practice, have made it insanely painful for competitors to get access to the wires. The cable companies, however, were completely successful in fending off equal access, which is why we have to pay for 60 channels of garbage just to see The Daily Show.

Fixing the problems identified here starts with fixing "last mile" (radio spectrum and wires/cables to the home) policy.

Mark Katerberg

This post was incredible. I am subscribing. Thank you for being sane.

Dan

I think some of your suggestions are incredibly unrealistic.

• End phone exclusivity. Any device should work on any network. Data flows freely.

There are clear technical reasons why this is unrealistic. The CDMA technology used in my Sprint phone is very different from the GSM used in phones used in this country and overseas. The cost of a high-end phone today is already very very high, to have to integrate a bunch of additional circuitry to handle multiple, completely different formats on different frequencies would add even more cost and size, and weight, and potentially power consumption. My phone will roam onto Verizon's network which uses the same CDMA as Sprint when Sprint is not available.

• Transition away from "owning" airwaves. As we've seen with license-free bandwidth via Wi-Fi networking, we can share the airwaves without interfering with each other. Let new carriers emerge based on quality of service rather than spectrum owned. Cellphone coverage from huge cell towers will naturally migrate seamlessly into offices and even homes via Wi-Fi networking. No more dropped calls in the bathroom.

Quite the contrary, even licensed services often interfere with each other unintentionally. Unlicensed services clearly interfere with each other, microwave ovens can interfere with WiFi or 2.4GHz cordless phones (2.4GHz phones can interfere with WiFi). Sharing the same spectrum among totally different multiple owners is a recipe for quite a bit of interference. You don't see the problem because interference no longer produces something that is obvious to you as interference, its just dropped data packets or momentary drop outs in your phone conversation, and you would simply blame that on poor coverage by your carrier. Interference is an incredibly difficult problem to deal with from a technical perspective.

• End municipal exclusivity deals for cable companies. TV channels are like voice pipes, part of an era that is about to pass. A little competition for cable will help the transition to paying for shows instead of overpaying for little-watched networks. Competition brings de facto network neutrality and open access (if you don't like one service blocking apps, use another), thus one less set of artificial rules to be gamed.

The exclusivity deals are long gone, and guess what, there's no competition. Just like there is no serious competition for home phone service. Why? Its an incredibly capital intensive process to build stuff out. If they deregulated electricity and natural gas distribution it would be a disaster, no one would come into that market, and rates would go through the roof. Also, TV channels are nothing like "voice pipes." The usable bandwidth of a phone line is a few kHz, whereas the usable bandwidth of a single cable channel (and there are many) are a few MHz. Coaxial cables have relatively speaking low attenuation and good shielding. From a technical perspective, they are one of the best bandwidth delivery mechanisms short of single mode fiber optic. What you object to is how they were being used 20 years ago. Now a days, there are being used in a much more efficient manner, with phone calls and data being passed through various channels. Also, Verizon is now rolling out fiber optic to the home (FIOS), but for the user it is expensive, and for Verizon its incredibly expensive. Again, major capital outlay.

• Encourage faster and faster data connections to our homes and phones. It should more than double every two years. To homes, five megabits today should be 10 megabits in 2011, 25 megabits in 2013 and 100 megabits in 2017. These data-connection speeds are technically doable today, with obsolete voice and video policy holding it back.

Technically doable, yes... Realistically doable, no... If everyone can suck down data at 100Mbps, then the longhaul pipes upstream better be able to handle traffic increasing by 1 or 2 orders of magnitude. You're going to run into other bottlenecks, and again, it's going to cost money which no one wants to spend. Ignoring long distance capacity, the last mile link speed can be increased like you said, but again, its a matter of cost not "obsolete voice and video policy" holding it back.

The basic problem is that the businesses you are talking about are very capital intensive and so it is very difficult to compete in the sector. From a feature perspective capability is often driven by the technology. There are companies out there that exist to come up with new and innovative features (like Qualcomm). Handset manufacturers make money selling handsets, and their new handset better be better than their last one, and their competitor's last one. If they don't constantly come up with something new, they're in trouble.
Service providers on the other hand get a certain amount of recurring money by providing service. Adding new features doesn't necessarily bring in more subscribers, but it does cost them more money. They have more limited competition, and hence their objective is to set pricing to maximize their profits with feature cost and pricing going in as part of a calculation versus losing customers. Its really not the provider's fault, its just how capitalism works.

Mike

Interesting,

Seems to me in my research the only real technology which gets around all these exclusive blocking agreements is Cellular Over Internet Protocol, VOIP-COIP.com It simply puts a dial tone on any cell phone, no smart phone required, no SIM card swapping when traveling internationally, no optional cost for data plans, no hassle, clear calls and you can use it worldwide and call worldwide for a fraction of roaming fee costs. With VOIP-COIP.com you get home phone, office and wireless mobile for less than VOIP and any mobile plan individually.

Raj

Very insightful. The question that has been bugging me for a while is: How is Google offering free calls within US and Canada? From what I understand, telephone carriers, whether AT&T, Skype or Google Voice, will have to pay to complete calls to landlines and wireless. So, if you assume that the average user makes 10 calls a day and it costs half a cent for every call completion, it would still cost Google $1.5 a month. Am I missing something or is Google bypassing paying landline operators and wireless carriers somehow?

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