Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Information Velocity Partners, LLC
Michael Elling, @infostack
michael@ivpcapital.com
973-222-0759
AMERICA’S REAL DEFICIT
2
© I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
© I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
3
MODERN DIGITAL INFORMATION REVOLUTION
Rate
Of
Change
Hi
...
WE KILLED MOORE & METCALFE 10 YEARS AGO
4
© I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
HOW TO KILL COMPETITION
• 1996 telecom act: a well intentioned farce
• open access not applied universally
• average cost ...
COMPETITORS & CAPITAL MARKETS NOT BLAMELESS
• vertical business models
• that’s the way it was done
• digital fundamentall...
• wired vs wireless
• telco vs cable
• video vs voice
• broadcast vs 2-way
• pc vs smartphone
7
WHY? CONFLICTING & CONFUSI...
•fcc: broadband summit: adoption &
usage february 7, 2013
•silicon flatirons: digital broadband
migration february 10-11, ...
HOW DO WE GET FROM A TO D?
9
i. it’s not about
• regulation vs deregulation
• competition vs monopoly
• liberal vs conserv...
MOORE IS ALIVE AND WELL
10
Source: Matthew Komorowski.
© I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
DIGITAL PRICE REFLECTS MARGINAL COST
analog: 20 cents
digital**: 2 cents
coax: $450
fiber***: $45
11
1996: marginal cost
o...
© I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
12
Supply Demand
Cost User-Interface
Coverage Usability
Ca...
SUPPLY/DEMAND MODELED ACROSS THE STACK
• geographic boundaries
• location and density of demand
• network assets and bound...
A 3-D COMMUNICATIONS GRAPH & REFERENCE MODEL
14
geography/density
servicelayers
• consistent
• objective
• comprehensive
•...
IS COMPLEXITY BEST UNDERSTOOD THIS WAY?
15
y
z
x
infostack™
© I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
OR USING A CONSISTENT GRAPH TO MODEL PAST &
FUTURE?
16
Fiber/Wlx/HetNets
Ethernet/MPLS
IP/Opto-electric
Mediation/SDN/CDN
...
A GRAPH TO OBJECTIVELY UNDERSTAND
• the cloud, the smartphone, OTT
• hetnets, technology and business model transitions
• ...
INTERCONNECTION AND OPEN ACCESS WORKS
• Dial 1 equal access
• Computer 2/3
• Wireless A/B/PCS interconnect/roaming
• Numbe...
Applications
Networks
App/Net A
Settlement
Exchanges App/Net B
CLEARING TRAFFIC NORTH-SOUTH & EAST-WEST
y
z
x
infostack™
©...
LEADING TO FAST INTERNET FREE EVERYWHERE
• huh? but doesn’t someone always pay?
• yes, but remember that 3 digital waves i...
PAST FORMS OF FREE
• 800
• VPN
• Ad sponsored content
• WiFi
• Email
y
z
x
infostack™
© I N F O R M A T I O N V E L O C I ...
22
FIFE
Efife
Michael Elling
Information Velocity Partners (IVP)
michael@ivpcapital.com
973-222-0759
© I N F O R M A T I O...
Upcoming SlideShare
Loading in …5
×

America's Bandwidth Deficit 2014

1,404 views

Published on

The US had the lead 15 years ago, but after policy and market missteps has lost the lead. Masayoshi Son drove that point home in Washington DC recently. http://bit.ly/1cRiNHN We need strategies like his and a better understanding of the complex and confusing issues to realize a full-duplex, mobile, HD future.

Published in: Technology
  • Be the first to comment

  • Be the first to like this

America's Bandwidth Deficit 2014

  1. 1. Information Velocity Partners, LLC Michael Elling, @infostack michael@ivpcapital.com 973-222-0759
  2. 2. AMERICA’S REAL DEFICIT 2 © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  3. 3. © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C 3 MODERN DIGITAL INFORMATION REVOLUTION Rate Of Change Hi Low Telco Monopoly Wireless Monopoly And USF Carterfone Modems/Fax Cable licenses Private Inventions Equal Access for Voice, Data, Wireless 1996 Telecom Act Special Access Deregulation Broadband Equal Access Revoked WiFi Equal Access By Steve Jobs 70-100% competition 30-70% competition 0-30% competition
  4. 4. WE KILLED MOORE & METCALFE 10 YEARS AGO 4 © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  5. 5. HOW TO KILL COMPETITION • 1996 telecom act: a well intentioned farce • open access not applied universally • average cost models (TELRIC) out of touch with technology reality • baby bells have singular (political) mission • 2002 deregulate special access • highly concentrated market • easy to implement anti-competitive pricing • mid-mile impact on last-mile margins kills latter • 2002-05 band-x • universal death of equal access • final consolidation of baby bells and IXCs (rebuilding Mama) 5 © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  6. 6. COMPETITORS & CAPITAL MARKETS NOT BLAMELESS • vertical business models • that’s the way it was done • digital fundamentally different from analog (not understood in 80s-90s) • easiest way to maintain monopoly • antithesis of smart capital • classic irrational exuberance • opex/capex tradeoffs not well understood • linkages between upper & lower layers & across networks not perceived • antithesis of good analysis • price cap and rate of return trained • rapidly evolving landscape provided few historical markers • inability to model supply and demand drivers 6 © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  7. 7. • wired vs wireless • telco vs cable • video vs voice • broadcast vs 2-way • pc vs smartphone 7 WHY? CONFLICTING & CONFUSING FORCES • mobility/BYOD • blogging/tweeting • social networks • app ecosystems • 4 screens • old business models & network/service definitions gone • end-user wants choice, flexibility and control • role of corporation, institution, individual all changing divergence of demandconvergence of supply © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  8. 8. •fcc: broadband summit: adoption & usage february 7, 2013 •silicon flatirons: digital broadband migration february 10-11, 2013 •isen.com: freedom2connect march 4-5, 2013 •fcc: 3.5Ghz workshop march 13, 2013 •fcc: technology transitions policy task force workshop march 18, 2013 •free state foundation: completing the transition to digital march 21, 2013 •fcc: gigabit communities workshop march 27, 2013 •no focus on marginal cost or cost savings • it’s all high investment & high growth • everything is new; revolution, not evolution • big & confusing challenges ahead •no focus on changed or changing network theory • “its just a technology transition” • nothing learned from recent past • perpetuating failures of the pre-1983 past •no clear consistent path • lack of good data • muddle along strategy • lots of illogical and inconsistent policy • “less” regulation because of “bad” regulation 8 TODAY: WHAT STAKEHOLDERS AREN’T SAYING key industry discussions net takeaways © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  9. 9. HOW DO WE GET FROM A TO D? 9 i. it’s not about • regulation vs deregulation • competition vs monopoly • liberal vs conservative ii. it is about • analog vs digital • closed vs open • vertical vs horizontal • average cost vs marginal cost • moore’s, metcalfe’s AND zipf’s* laws *--3 major laws behind network theory, moore is processing, metcalfe is network effect, zipf is congestion management set priorities determine approach i. learn from 3 prior digital shifts (WAN, data, wireless) and role of equal access & pricing ii. get on same page semantically; stop debating meaning (like ‘net neutrality’) iii. rigorous data collection and analysis (quantitative and qualitative) iv. develop ex ante marginal cost models clearing expected supply and demand v. develop a “communications graph” and common reference framework © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  10. 10. MOORE IS ALIVE AND WELL 10 Source: Matthew Komorowski. © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  11. 11. DIGITAL PRICE REFLECTS MARGINAL COST analog: 20 cents digital**: 2 cents coax: $450 fiber***: $45 11 1996: marginal cost of wireless minute* 2013: marginal cost of broadband gigabyte *--1983: voice digitization, 1990: data digitization **--imputed from MicroCell 400/$40 bucket ***--imputed from Google KC $70/gig price © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  12. 12. © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C 12 Supply Demand Cost User-Interface Coverage Usability Capacity Ubiquity Clarity Universality SUPPLY & DEMAND MODELED “EX ANTE” DRIVES MARGINAL COST & PRICING
  13. 13. SUPPLY/DEMAND MODELED ACROSS THE STACK • geographic boundaries • location and density of demand • network assets and boundary points • fixed vs mobile • traffic type • service layers • broadly defined by lower, middle and upper layers • narrowly defined by: physical, transport, switch, control, session, billing, application • vertical completeness vs integration • horizontal scale counters rapid obsolescence • application/market clouds • commercial, institutional, residential • work, social, play • text, data, voice, multimedia, video • every individual uniquely situated 13 y z x infostack™ © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  14. 14. A 3-D COMMUNICATIONS GRAPH & REFERENCE MODEL 14 geography/density servicelayers • consistent • objective • comprehensive • common language • illustrative and graphic • highlights relationships • educational • promotes data collection • aids supply/demand modeling • estimate marginal cost at every layer and boundary point the infostack™ why? y z x infostack™ © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  15. 15. IS COMPLEXITY BEST UNDERSTOOD THIS WAY? 15 y z x infostack™ © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  16. 16. OR USING A CONSISTENT GRAPH TO MODEL PAST & FUTURE? 16 Fiber/Wlx/HetNets Ethernet/MPLS IP/Opto-electric Mediation/SDN/CDN Session Control/Settlements Application Billing/Support Communication/Commerce/Content Applications “the past = vertically integrated biz models bound by geographic & regulatory constraints” “the future = horizontally scaled intranets serve infinite demand” infinite market segments, generative competition, and virtual economies silo-ed supply/demand, non-generative markets Upper vs boundaries vary by application & market segment across layers Middle Lower © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  17. 17. A GRAPH TO OBJECTIVELY UNDERSTAND • the cloud, the smartphone, OTT • hetnets, technology and business model transitions • interoperability, device availability, roaming • USF and rural broadband reform and development • spectrum allocation, reuse, sharing • backhaul and mid-mile costing; transport caching and CDNs • development of balanced settlement solutions • corporate VPNs and centralized procurement • equal access, net neutrality and monopoly bottlenecks • prices, terms and bundles • marginal cost of operations and investment • restructuring and repurposing of existing assets & companies 17 y z x infostack™ © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  18. 18. INTERCONNECTION AND OPEN ACCESS WORKS • Dial 1 equal access • Computer 2/3 • Wireless A/B/PCS interconnect/roaming • Number portability • Must carry • WiFi/802.11 y z x infostack™ © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C 18
  19. 19. Applications Networks App/Net A Settlement Exchanges App/Net B CLEARING TRAFFIC NORTH-SOUTH & EAST-WEST y z x infostack™ © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C 19
  20. 20. LEADING TO FAST INTERNET FREE EVERYWHERE • huh? but doesn’t someone always pay? • yes, but remember that 3 digital waves in 80s-90s taught us much about equal access and marginal cost… • …& got us to where we are; but few have learned the lessons • 17 years of competition in the WAN led to 90% of long-distance communication thought of, perceived as, or actually was, “free” • despite that industry revenues in 2000 > 1983 • same trends in internet, cloud and wireless (802.11 fully, 1G-4G partly) • price reflecting marginal cost at every layer and boundary point is highly generative and stimulative (look at google fiber kc) • balanced settlements will lead to new services, infrastructure investment and centralized procurement and subsidization • competition leads to ubiquitous and universal (free) service: fife 20 y z x infostack™ © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C
  21. 21. PAST FORMS OF FREE • 800 • VPN • Ad sponsored content • WiFi • Email y z x infostack™ © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C 21
  22. 22. 22 FIFE Efife Michael Elling Information Velocity Partners (IVP) michael@ivpcapital.com 973-222-0759 © I N F O R M A T I O N V E L O C I T Y P A R T N E R S , L L C

×