1998 Bellcore Forum Point & Counter-point with Bob Lucky Gordon Bell Microsoft May 5, 1998 The 1998 Bellcore Forum:* Competing in the Millennium: Vision,

1998 Bellcore Forum1998 Bellcore Forum

“Point & Counter-point with Bob Lucky”Gordon Bell

MicrosoftMay 5, 1998

The 1998 Bellcore Forum:* Competing in the Millennium:

Vision, Innovation, and Delivery*Audience response was used for this presentation, and the attendees from Bellcore, LECs, CLECs, IECs/IXCs, Cable companies, and equipment suppliers were polled. The %s indicate the results of these polls.


Predicting future telecom services or lack thereof

Introducing the Internet and Web driver Cyberspace…

the quest and vision … my opinion Laws of Prediction … or how to

understand the technology of our future The big telecommunication bets… if we could

only forecast the future Overthrowing the incumbents… a plan*

*Appended to the original talk.


By January 2001 there will NOT be 1 billion people on the “net”.

Bet: Nicholas Negroponte $1K

Bet: Nicholas Negroponte $1K:$5K… it happens by 2002.

Also $1 T of commerce by 2001.

Bet: Me? 77% NN? 23%


Why this is the keystone bet! It determines the market

– for networks– for access devices… especially PCs

It says something about the utility– commerce – communication– entertainment

Increased network capacity & ubiquity enables– phones– videophones– television– serendipity


Interneters growth

InternettersInternetters

PCsPCs

TVs & PhonesTVs & Phones

World PopulationWorld Population10000

1000

100

10‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04

““1 Gp by 20001 Gp by 2000””NegroponteNegroponte


Interneters growth

‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04

Internet GrowthInternet Growthextrapolated at 98% per yearextrapolated at 98% per year

World PopulationWorld Populationextrapolated at 1.6% per yearextrapolated at 1.6% per year

12000

10000

8000

6000

4000

2000

0



Growth in hypeWWW

Infoway addiction

Infoway regulation

lawsuits

Data from Gordon’s WAG

conferences

books,newspapers

Infoway promise:“how great it’ll be” (politicians, academics, etc.)


Articles about security, privacy, & fraud versus commerce ($M)

Data from Gordon’s WAG

articles about risk and NOT doing commerce

actual commerce

pornography, crime, FUD, etc. articles


Real growth in commerce?


Capac

. (sv

c

& re

spon

se)

The Virtuous Cycle that drives the BW quest

Applic

atio

n

inno

vatio

n

UserdemandInternet

(IP)ubiquityExcess capac.

-->>BW


““ ””

Bob Lucky, Vice President Bellcore, 1995

If we couldn’t predict the Web, If we couldn’t predict the Web,

what good are we?what good are we?


Exponentials change everything

… you can’t see ‘em coming!


Business Week even makes fun of Telecom… because you can see them coming


Business Week doesn’t know… Satellite isn’t an a B/W option

Phone CATV Satellite…


Why phone guys hate computer guys0. Where would they be without the transistor, RJ11 and

UNIX that you de-standardized?1. They’re nouveau rich we’re old money.2. We brought ISDN to the party, nobody came. 3. They’re IP’ing on us including phones!4. Packets don’t make links fatter or faster.5. All they want is free, high bandwidth, 24 hour a day phone

calls. Why do they need bandwidth? They have nothing to show.

6. Don’t talk service. I reboot my PC every day. Ever have to reboot your phone?

7. Just wait till the governments get on their case.


Agenda… predicting and forecasting



understand the technology of our future The big telecommunication bets… if we

could only forecast the future Overthrowing the incumbents… a plan


Let’s look at Cyberspace


Region/Region/IntranetIntranet

CampusCampusHomeHome

BodyBody

WorldWorld

ContinentContinent

Cyberspace: A Network of ... Networks of ...


Cyberization: interface to all bits and process information

Coupling to all information and information processors

Pure bits e.g. paper, newspapers, video Bit tokens e.g. money, stock State of: places, things, and people State of: physical networks


Platform, Interface, & Network Computer Class Enablers

Net

wo

rkIn

terf

ace

Pla

tfo

rm

“The Computer”Mainframe

tube, core, drum, tape, batch O/S

direct > batch

Mini & Timesharing

SSI-MSI, disk, timeshare

O/S

terminals via commands

POTS

PC/WS

micro, floppy, disk, bit-map

display, mouse, dist’d O/S

WIMP

LAN

Web browser,telecomputer, tv computer

PC, scalable servers,

Web, HTML

Internet


“Everything will be in Cyberspace” Is this a challenge? goal?

quest? fate?… or Cyberization enables

new computing platforms thatrequire new networks to connect them – Infrastructure supports the content– Three evolutionary dimensions


All the platforms we have and will inevitably build have to be totally interconnected to have Cyberspace.

That’s your job!

The price has to be right… you cannot count on voice revenue forever!


Connecting all these plain old computers into Cyberspace… an opportunity


Mobile videophone


Honda Robot


People surrogates


Steve ManninCyberspace


MedtronicsImplanted

Cardioplastic


For openers… audio, pix, T, P, ECG, location…1 GB


Libretto, .5mm pencil

PCS; Pilot

Libretto PS, Ricoh Camera; Swiss Army Knife

Compass; altimeter

Not shown: ECG; GPS;


DataData

Cyberspace: one, two or three networks? in 2005, 2010, 2020

TelephonyTelephony

TelevisionTelevision


CLEC

I’netPhone

CableI’net

ISP

Broad-cast

Cable

PBX

VCRDVD>97

xDSLTV IEC

LECDBS

TheInternet

LAN

Pvt.WAN

Cablephone

LANPBX

GameCons.

Wire-less

Wire-less

Television world

Telephony world

Datacom world

The Worlds of TV, Telephony & Datacom a.k.a. Computing & Internet

ITV?

RADIOI’net

RADIO

IntranetExtranets


Cyberspace: A spiraling quest in 3D real space

ComputationComputation

CommunicationCommunication CyberizationCyberizationPrograms, Content & messages








On prediction…and betting why historically have we been right or wrong?


I think there is a world I think there is a world

market for maybe five market for maybe five

computers.computers.

““

”” Thomas Watson Senior, Chairman of IBM, 1943


Harvard Mark I aka IBM ASCC


Predictions require Predictions require some history.some history.

The computer hadn’t been invented. Watson’s prediction held for 10 years.

You need history to predict.


Moore’s Law vs Moron’s Law for prediction… differences in Cyberspace perception


Moore’s Law 60%/yr. Memory -- 4 x size every 3 years

10 G

1 G

100 M

10 M

1 M

100 K

10 K

1 K

0.1 K1970 1980 1990 2000 2010


Tera

Giga

Mega

Kilo

11947 1957 1967 1977 1987 1997 2007

Extrapolation from 1950s: 20-30% growth per year

StorageStorageBackboneBackbone

MemoryMemoryProcessingProcessing

Telephone ServiceTelephone Service17% / year17% / year

????


WAN Data Rates (fiber)

.01

.1

1.

10.

100.

1,000.

10,000.

1970 1980 1990 2000

Year

Ba

nd

wid

th, G

b/s

62%/year

43%/year

Bandwidth has been improving

Experimental

Commercial


Moron's Law (cf. Newton)“the residual effects of regulation ensure that telecom carriers will never provide what the customer wants and … it comes five years too late.”--venture capitalist Roger McNamee.

“Computer folks ... fear that Moron's Law will trump Moore's and stunt the revolution's growth over the next 30 years.”


Newton's First Law. Bodies at rest ... LECs, PUC and FCC are at rest, supplying

assuredly profitable (by definition) local service.

Cable TV raises prices to cash out CLECs and IECs “cherry pick” lucrative corporate

(not consumer) local service LECs see reduced revenue and profit LECs, PUCs, and FCC raise prices LECs downsize to remain at rest,

buy cable and CLECs to remain at rest & maintain monopoly


Electricity and LECs to Merge

Wires to the home …

Guys and trucks

Poles and holes…

Same customers

Geo-monopolies

PUC interaction

Core competency: lobbying


Why computer guys hate phone guys0. Ads say “someday you will”. Just do it!

1. All they give us is POTS to IP on.

2. It’s not the price of bandwidth (that they said would be free) … it’s the availability

3. They won’t buy packet switching. Computers let everyone be telecoms. They’ll pay.

4. The net is the net. Services are services. Content is content. Stop trying to own ALL.

5. Telephone quality is an oxymoron. With 64 kbps, we should be getting CD quality.

5. Name any monopoly that has love & respect

6. It’s taken 35 years to learn that computer calls last 24 hours/day, not 5 minutes.



Why no one likes cable guys

0. But you just increased my rates

1. They don’t even own the poles or holes. They’re just schmucks in trucks.

2. They are too close to the broadcast industry and that eliminated logic.

3. We’d all like to be unregulated too then we can raise rates faster and do whatever we want.


Telecom View of Cyberspace: We will tell you the services.

The Network and all the

Sevices you would ever

want.

Subscribers


Silicon Valley View of Cyberspace: provide a switch and entrepreneurs

will create the services

Worldwide mostly IP

Switch

SubscribersAll the Services

you might or might not want


Telecom Equipment Industry 1998

SolutionsSolutions

ApplicationsApplications

OSOS

ComputersComputers

Switching/Switching/DSPDSP

AT&TAT&TAT&TAT&T NortelNortelNortelNortel SiemensSiemensROLMROLM

SiemensSiemensROLMROLM NECNECNECNEC


Applications

Applications

Databases

OS

Switching

Computers

DSP

Processors

Microsoft, Delrina, many othersMicrosoft, Delrina, many others

Microsoft, Apple, Sun, Novell, LINUXMicrosoft, Apple, Sun, Novell, LINUX

Ericsson, Aspect, Nortel, Octel, othersEricsson, Aspect, Nortel, Octel, others

Dialogic, NMS, Rhetorex, othersDialogic, NMS, Rhetorex, others

Ericsson, Nortel, Bay, 3Com, Fore, othersEricsson, Nortel, Bay, 3Com, Fore, others

Compaq, DEC, Dell, IBM, many othersCompaq, DEC, Dell, IBM, many others

Intel, AMD, Motorola, othersIntel, AMD, Motorola, others

Informix, Microsoft, Oracle, Sybase, othersInformix, Microsoft, Oracle, Sybase, others

Future Telecom Industry


Computer vs TelecomProc. & mem 2x/1.5 yr Access B/W 2x/4yr

Trunk BW 2x/ 9 mos.Prices decline Prices increaseEmail, web, audio, etc. Voice, voicemail, faxPacket switching… Circuit switching...… will too, do voice! …is required for voice64Kbps gives great audio Telephone Quality Voice

… is an oxymoronIP ATM, ISDN & POTSFungible bits for Unique bits and phone fax data tv… ala carte pricingConnect & bits go free. Billing & lawyer costsJust give us any old net! We want it all: we’ll compute the rest net, nodes, contentTechnology-based …its Lobbying-based … its Information Services TelecommunicationsMoore’s Law Moron’s Law


The beginning of the end… or a new beginning?

“You have to separate the hype from the reality. We have customers, real customers paying hundreds of millions of dollars to us today. When you look at Level 3 and Qwest, how many customers do they have?” ---- R C Notebaert, Ameritech

“We’re not going to wake up and find our voice business is gone”--- M Turner, US West


A technology A technology e.g. packet switching e.g. packet switching can come from nowhere can come from nowhere and wipe you out!and wipe you out!

MOS memories and micros were introduced in 1972.

By 1976, MOS memories wiped out core memories.


““ ””

There is no reason There is no reason anyone would want a anyone would want a computer in their home.computer in their home.

Ken OlsenPresident, Chairman and

founder of Digital, 1977


Equating yourself to the average“user/buyer” is risky . . . unless you’re an average user.


““ ””

ISDN will be ubiquitousISDN will be ubiquitous

by 1985.by 1985.

Irwin Dorros, VP Long Lines ATT, 1981

“ Unfortunately we’re stuck with ISDN speed using POTS for the next 5 years.”

Gordon Bell, ACM 1997


Network bandwidth becomes available slower than the most conservative prediction.


““

””

AT&T will not have AT&T will not have screwed up its screwed up its purchase of NCR by purchase of NCR by 1996.1996.

Robb Wilmot, advising Robert Allen in 1992 ($100)


We under-estimate the devastating power ofcompanies & planners,

lawyers & government,

to foul up predictions.But to really foul up requires an econometric and market models!


““

””

By 1997 By 1997 Video-on-Demand will Video-on-Demand will be available and be available and operating in six citiesoperating in six cities

Raj Reddy & Ed Lazowska1992 (winners get fed)

When will this happen?2000 8%, 2005 46%, 2010 25%, never 21%


““

Gordon Bell vs Jim Gray1996 (one paper,

loser gets fed)

By April 1, 2001 By April 1, 2001 videophones will ship in videophones will ship in 50% of the PCs 50% of the PCs and be in 10% daily use.and be in 10% daily use.

Will this happen by: 2001 25%, 2005 50%, 2010 18%, 2015 3%, never 4%


Always bet against the optimistic researcher. They are wrong in the short term, but ultimately right.


“Build it and they will come”

Vision: Provide bandwidth and they will come to share supercomputers, do telemedicine, telescience, ship pictures around. Traffic continues to double.

The web was serendipity! "A user ... would build a process and

launch it into the network ... with explicit instructions about things to look for and what to do … ."



If you do the right thing, serendipity works!


NCs will NOT outsell PCs 9:1 by 2000.…

NCs include those embedded in TV sets, phones, and used as PC alternatives.

Bet with Larry Ellison, CEO Oracle: While the devices connected to the web (e.g. instruments, cameras, appliances, printers, phones, and television sets) may be greater than PCs, the number of personal access devices that are NOT PCs will be less than 9:1.


Don’t bother betting where the goal is just PR. It is safe to bet against Larry Ellison even if he has lots of money.Elllison bought Ncube. It failed as an MPP computer, failed again as a database engine, and finally failed as a video-on-demand server.


Observations on predicting Existence proofs are essential, otherwise it’s faith and

luck. Numbers and data are our friends to use. Bet against the optimistic researcher. They are

ultimately right, while initially wrong. Bet on predictors who are grounded, intuitive,

imaginative, and lucky. Because it could, doesn’t mean it will. It’s usually just the economics, stupid… look there first! Don’t count of Newton’s First Law… because greed (an

outside force) usually beats fear (inertia).


What percent of biz traffic by contacts, (not traffic) will be:Item Bell/Lucky 1994 2000

Fax 1110 7 10

Voice 155015 30

Voice/Video confer 22 10 10

Overnite mail 23 1.5 5

Snail mail 202510 25

Email 501056 30

Newspaper?

Web?

Television?








Some of my recent bets!Would you bet with me?


PC growth is not stalled...

Bet: (Walt Mossberg, WSJ) There will be continued growth of PCs (I.e. things that run Windows, NT, or CE) at a double digit rate for until 2001.

Bet with me? 87% With Mossberg? 13%


Web will reach 50% of the U.S. households...

Negroponte predicts 1Bp and $1T/yr of commerce by 1/2001.

Bet: with Dave Nagel, AT&T one dinner The web will reach 400M world-wide users OR 50% of U.S. households by end of 2001.

Do you bet with me? 57% Nagel? 43%


One million people will access the web via TV sets...

Bet::At least one million users will access the web/internet via their television sets by the end of 2001.

Via: phone line, 16%xDSL 19% cable modem 17% settop box/cable 39%not at all 9%


Average bandwidth to homes will not soon be huge…

High bandwidth links are being delivered today in trials of 10K+ using cable & xDSL.

Bet: The average bandwidth to all U. S. homes with PCs will be <56 Kbps in 1/2001.

The availability of bandwidth coming to consumers and small businesses by 1/2001 via Cu twisted pair aka LECs or IECs will be comparable to ISDN today.

<56Kbps 71% >128Kbps 29%


A gigabit net will not be in place for research users…

Bet: Raj Reddy et al … fine food & drink10K users at 10 sites of > 500 users/site in 3 states will NOT inter-connect through a gigabit path by the end of 2000.

Do you bet with me? 65% Or with Raj? 35%

Based on market need, this service will be available by: 2000 10%, 2005 53%, 2010 29%, 2020 5%, never 4%.


Telepresentations will be a well-defined app by 2001.ACM97 aka its 50th on March 3-5, 1997 was the first telepresented conference with Mbone multicast and servers

Bet with Denise Curruso, NY TimesMore people will view conferences that are made telepresent from Cyberspace than those attended it in meatspace by 2001. Note this bet was won within 6 months.

Bet: Even this meeting will be telepresented by 2001 37%, 2005 35%, 2010 10%, never 18%


ACM 97 (Mar. 1997) attendee poll… what’s your opinion?

By 2047 will the majority telecommute? (68% of ACM attendees said yes)

Will representative democracy be replaced by electronic participatory, democracy by 2047? (ACM: 38% yes)

TV, the internet and telephone will converge by 2002 (ACM) !… clearly optimistic and very wrong


Let’s poll (forecast) when certain events will (or will not) happen


Forecast of Internet Telephony & Videotelephony

IP will carry $2B of existing voice or fax traffic by: 2001, 2005, 2010

IP will carry 20% of existing voice or fax traffic by: 2001, 2005, 2010

IP will carry 50% of voice and fax traffic by: 2005, 2010, 2020, never

*Note email can be used to carry fax traffic, but not visa-versa.


Forecast of xDSL & CABLE of Internet to US Homes & Businesses

xDSL use will cross-over ISDN installations by 2001 55%, 2005 37%, 2010 8%

xDSL will deliver service to 10M by 2001 10%, 2005 69%, 2010 22%

Cable will provide WWW to 1Ml by 2001 61%, 2005 31%, 2010 8%

Cable will deliver WWW to 10M by 2001, 2005, 2010


Forecast of convergence?

The datacom network (IP) will carry Television programs by 1/2001, 2005, 2010, 2020, never

There will be a single net to access the majority of telephony, data, and television sources by 2005, 2010, 2020, never


Forecast of the access deviceOne-half the homes with PCs will be “always on” by: 2001, 2005, 2010, 2020

The main (in units) web access device in 2001 will be: the PC, Telecomputer aka videophone, Set-top, TV, other

The main web access device in 2005 will be the PC, Telecomputer, Set-top, TV, other

The main web access device in 2010 will be the PC, Telecomputer, Set-top, TV, other








Ten Niches to the IECs economic support base.

Reducing voice revenue is the only avenue for changing the LEC-PUC-FCC controlled access infrastructure!


Overthrowing bandwidth limiting incumbent IECs to get Internet access

…ten, critical niches

Plain Old Cellular replaces POTS 64 Kbps quality audio vs telephony quality Cable for Internet AND voice over IP CLECs aka Competitive LEC suppliers Newcos (e.g. Covad): IP service with xDSL Startup IP based telephony companies Large users by-pass LECs and use IXCs and IP for inter-

organization telephony Fax services over Internet undermines base Bellcore plan for ISPs to provide “telefony” Maintain FCC support FCC for voice over IP without FCC/PUC

interference


Telephone Quality Voice is an Oxymoron! We can do better. Analog to digital transition must occur! E.g. a 6 Mhz TV channel can deliver about

six higher DVD quality digital channels IECs use 64 Kbps channels to supply

approximately 8 kbps, low-quality voice New channels can offer higher quality audio

using >33 kbps. Datacom must drive to offer scalable audio

bandwidths from 2 kbps-500 kbps


Attack plan for ISPs to deliver voice•According to the rules, ISPs cannot offer telephony if it looks like a telephone•Thee ways that make IP telephony NOT be a telephone:•Increased quality… use all the bandwidth that can be obtained e.g. 33, 56 or whatever to provide high, not telephone quality voice•It is a videophone•It is a computer and conference device


How a New Player or ISP can Attack Incumbents e.g. LECs*

• Dial Me Up, Faster and Faster!!!!

Voice over IP at 7.3 KbpsUsing Modems

LEC

ISP+

InternetBackbone

IXC

TelafonyGateway

*courtesy of Bellcore


Plan for Pipes and Wires

LECs are free pipe and wire access providers.IP over ATM lets competitors buildout a network

LECNetwork

IPRouters

ATMSwitches


FCC’s 4/10/98 Report to Congress: How long will it remain?

If you use IP to transmit and store information, including telephony (unless it looks like a plain old telephone call), its Information Services.

If you use circuit switching (no storage) its Telecommunications (and FCC/PUC controlled)

IP Telephony has to look different!

Bet:This will hold until 1/2001.


The end

1998 Bellcore Forum Point & Counter-point with Bob Lucky Gordon Bell Microsoft May 5, 1998 The 1998 Bellcore Forum:* Competing in the Millennium: Vision,

Documents

bellcore forum slide

bellcore forum articles

bellcore forum capac

bellcore forum cyberization

bellcore forum platform

bellcore forum agenda

bellcore forum exponentials

cyberspace slide