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Equipment makers such as Ciena (CIEN) sang the praises of Carrier Ethernet (all true) and spoke of the various impediments to deploying it: standardization of inter carrier interfaces, administration & operation, quality of service.  It strikes me that the bigger problem is much more basic than the ones being presented.

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Lacking in these sweeping statements is a reference to a crisp and concise quantitative explanation of traffic growth. This lack of hard data supporting this bandwidth explosion has weighed heavily on us, particularly because we have seen the damage that nebulous predictions of traffic growth caused in 1999-2001.

Everyone remembers the claims of Internet traffic doubling (even more prescient here) every 100 days in 1999? This was pure fiction, yet the political and investment communities accepted it because it was a useful tool for justifying the irrational activity underway. History does not repeat, it rhymes, and the “Video Bandwidth Explosion” sounds very similar to what was said in the Telecom bubble.

Using data from the Japanese Ministry of Internal Affairs (MIC) one can draw conclusions about the growth in Japanese Internet traffic on a per subscriber basis. The conclusions are not what you would expect given the advanced nature of broadband in Japan, and are troubling when compared with image created by the market.

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This is a sizable increase (41%) in capex for a project that was designed to minimize cost. It is indicative that the decision AT&T made to substitute advanced technology to deliver an incremental solution in favor of laying fiber isn’t going as planned. The price of mediocrity just went up.

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Shareholder activism along the lines of Carl Icahn’s Motorola crusade is sadly absent in the Networking component, equipment, and carrier business that I follow. Companies such as Centillium (CTLM) and Sycamore (SCMR) are allowed to drift along in a zombie-like state at the expense of investors. Even Robert Chapman has abandoned his cause at Vitesse.
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People tout the big benefits of fiber but refuse to allow those who put capital at risk to make big profits. They seem to be afraid that someone, somewhere, might actually make some money.

A report from the Broadband Stakeholder Group summarizes ongoing worldwide fiber to the home (FTTH) projects . The report highlights the need for FTTH in the UK, something BT (BT) has steadfastly refused to do.

I cannot blame BT- asking them to deploy an expensive network and then be forced to lease it out to competitors (with no downside investment protection of course) is a ridiculous thing to expect of a profit driven entity.
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There has been a lot of discussion today about Video and the explosion of bandwidth needed to carry it but Peer to Peer traffic is now the largest consumer of bandwidth on your networks. Do you view P2P technology as an opportunity or threat and why?

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In the absence of a conclusion, let’s turn to our friends in the marketing-research cabal.

Telephony magazine writes about a research report by The Yankee Group which projects 28M WiMAX subscribers in 2010 or 2011. That’s growth from around 250k to 28M in 3-4 years or 250,000 to 28,000,000 with all the zeros. Over 100x growth. In Less than 4 years. Bacteria aspire to growth rates like this.

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Everyone talks about the explosion in Video traffic. Everyone talks about the explosion in the bandwidth required to carry it. No one talks about who is going to pay for it. There is one likely source: transit bandwidth inflation.

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It isn’t clear whether AT&T actually expected to deliver these innovations. They certainly were beat to market by Cable with the cable modem, and I can’t think of a single application innovation out of the company in the last 16 years.
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The big deal isn’t the iPhone itself, which is what the mainstream investment, gadget and tech media is focusing on. It’s the way that it will fundamentally challenge how carriers have coupled services with connectivity with a hardware distribution monopoly.

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