[ NNSquad ] Re: NPR on Internet Usage Charging

[Stefano Quintarelli <stefano@quintarelli.it>]

Il giorno 19/giu/08, alle ore 02:28, Barry Gold ha scritto:
> What is needed, of course, is simply more (and cheaper) capacity.  
> Luckily, Moore's Law seems to still be in operation.  Whether  
> network demand will grow faster than Moore's law can keep up with,  
> remains to be seen.  All I can say is, in the past whenever there  
> has been substantial demand for something, _somebody_ has found an  
> economical way to deliver it -- and usually gotten rich in the  
> process.

I believe this is the essence of the problem

I attach a plot a commercial access throughput for different  
technologies (fixed and mobile (let me call them wireless)) that have  
been introduced in Italy from 110bps to 20Mbps. It confirms Nielsen  
Law of 50% to 100% increase per annum.

taking advantage of the copper already installed, three families of  
technologies have been introduced: plain modems, ISDN and DSL.
On the wireless side the access throughput trend was diverging  
compared to the fixed tend (i.e. the fixed had higher trhoughput)  
until the introducion of WCDMA and HAxPA.

Though Moore's law is active, on the fixed network we cannot benefit  
from it as there are physical limitations of the copper, unless we  
shorten it, that is progressively substituting with fibre, but there  
are good economic arguments that rather that shortening it to the  
curb, we should shorten it to nil, building FTTH which effectively  
will move the problem essentially in the domain of Moore's law (first  
and photonics later).

Problem is that with an approach similar to FTTC with VDSL, you can  
get comparable access throughputs with wireless, for much lower capex  
and opex. So, why restructuring the fixed network with FTTC/VDSL when  
you can go wireless ? This is a question that increasingly surfaces in  
operations of Telcos (and Telco gear suppliers).

In order for the fixed network to be clearly better than wireless, it  
needs to become FTTB/FTTH. But is this going to be enough to attract  
"subscribers" compared to the capex-cheaper wireless option ? (an  
option which, BTW, will allows you for mobility ?). This is clearly  
unproven.

Think of it: Wireless access connects people, Fixed access connects  
places.

This is the reason why they're pushing HDTV. though you carry your  
computer with you, you don't carry the TV set with you.

It's not an easy dilemma for the operator: go for fixed or go for  
wireless ? it's a bet that requires a lot of money and needs a couple  
of years to prove which is the winning side. Of course, the best thing  
would be to have both, like we have (almost) today with DSL and HSxPA  
(and there is in some countries), but that costs a lot and its  
sustainability is questioned as more and more "subscribers" leave  
their fixed access for the more practical wireless option.

But fixed network costs are essentially fixed and attribution to  
subscribers is a matter of cost allocation; when one user cancels the  
subscription to the fixed network (saving money), the operator looses  
remuneration but keeps the costs (unless all users on the same  
exchange cancel).

It's a classical Tragedy of the Commons, draining available resources:  
for the user the marginal benefit of "unplugging" is 1 and the  
marginal cost is 1/N where N is the affected population. So this will  
happen.

There is one more consequence which is user contendability. While  
fixed access is essentially a local monopoly, wireless access is not.  
So the fixed operator's arm counts all the users losses; but churning  
customers may choose other wireless access providers, so the chance  
for limiting damages from moving customers from the same operator's  
fixed business unit to the wireless one, is limited. Furthermore, the  
effecive availability of switching possibility amongst different  
wireless operators thanks to number and credit portability induces  
competition and price reduction.

This is the reason why operators are trying to find reasons to keep  
connected, not only people but also places. Once it was clear: voice  
was mobile and Internet was fixed. Now this is quickly becoming not  
true.

But for BTS (wireless radio access points) to proliferate as needed,  
wireless operators need fibre to feed them, though not until the  
customer premises but somewhat shorter. The access portion of the  
fixed network may well die, like a kind of Telco-ALS (Amiotrophic  
Lateral Sclerosis).

The opportunity for traffic management, in the operator's view, will  
not disappear until there is unlimited capacity (which is far from  
happening in the wireless access), but all the society-related issues  
are there (access control, wiretapping, innovation, competition, etc.).

So we need the fixed network but the present structure remunerability  
is challenged. Like roads.

In conclusion, I believe that if we want Network Neutrality (which I  
believe being almost essential for society progress) being a basic  
requirement for networks, we ought to accept fixed network being a  
market failure and hence some kind of public policy must intervene.

Ciao, s.

p.s. I'm not arguing that this is STRICTLY so in ALL countries, and in  
ALL places of a country; there are some differences from country to  
country with many factors interfering from orography to population  
distribution to age of cities, to ... I'm just adding a dimension to  
the discussion