IP Convergence: Beyond VoIP, Beyond Cost Savings

The release of ”The Diverse and Exploding Digital Universe”, a report produced by IDC and sponsored by EMC, is fascinating on several levels. First, the fact that someone is trying to quantify the digital universe is an interesting and welcome exercise. Second, the extent to which the size of the digital universe is consumer generated is gratifying. Third, the extent to which enterprises exercise control over digital content is disconcerting. Fourth, the growth of your “digital shadow” as IDC calls it is more than disconcerting. And fifth, you realize after reading the report that we have not developed any coherent public policy to govern the digital universe.

To the first point, putting aside the obvious self interest EMC has in publicizing the extent of digital storage, it is a very useful exercise to capture the growth of the digital universe. Information is the key to successful management and studies such as these add to our understanding of the broader trends and dynamics taking place in the digital universe.

The second point and third points are in reaction to this statement in particular –

"While 70% or more of the digital universe is created,
captured, or replicated by individuals — consumers and
desk and information workers toiling far away from the
datacenter — enterprises, at some point in time, have
responsibility or liability for 85%."

It is great to see that individuals are the primary generators of digital content and that the production of digital content is not concentrated in the hands of the few. This makes sense since the tools required to generate digital content are much more democratic than the tools of the last century. Today someone with a computer, web camera and an iPod can create halfway decent content. Add in an actual video camera and some editing and mixing software and you can pretty much create high-quality content that used to require full-blown production studios. Now you can simply upload that content to the Internet whereas in the past you had to either be a broadcaster, publisher or movie distributor.

The scary part is that 85% of that content falls under the control of enterprises at some point. While for the most part these enterprises have refrained from exerting control over the content there have been cases where they have tried. The good news is those attempts largely failed. The bad news is they only failed because they became public and public opinion was quickly marshaled against the efforts. That is not a sustainable process in the long term and soon enough the public is going to grow tired of these spontaneous crusades.

Where things start to get scary is the notion of a “digital shadow”. As defined in the IDC report, your digital shadow consists of “digital images of you on a surveillance camera and records in banking, brokerage, retail, airline, telephone, and medical databases. It is information about Web searches and general backup data. It is copies of hospital scans. In other words, it is information about you in cyberspace. Your digital shadow, if you will.”

IDC estimates that your digital shadow comprises roughly half of your digital footprint. In other words, half of your digital footprint consists of content you created and half consists of information about you that is collected from a multitude of sources. It is this latter aspect, and particularly the ability to aggregate that information, that really scares me whether such aggregation is performed by enterprises or government.

Which brings me to my last point. There is no coherent public policy governing the generation, transfer, use, and disposal of digital information. European regulators have made some attempts in this area, most notably with the Directive 95/46/EC on the protection of personal data as well as Directive 2006/24/EC on the “retention of data generated or processed in connection with the provision of publicly available electronic communications services or of public communications networks and amending Directive 2002/58/EC.” Nothing comparable exists in the U.S. unless you count the disclosure statutes of numerous states.

What concerns me is that the approach of the U.S. government is to encourage enterprises to establish their own policies that they will enforce through the control they exert over 85% of the consumer-generated content. These policies will serve the enterprises well and give them access to a treasure-trove of personal information that they can do with largely as they please especially if they share it with law enforcement. This Administration’s efforts to collect calling data and credit card data attest to that.

But what about consumers? Don’t they have a right to this information? Indeed, don’t they have a property right in their information? In the United States we allow citizens to kill an intruder in our home. Shouldn’t we have some equivalent right (albeit less severe) for intruders into our digital “home”? What we are seeing develop is an information gap between what enterprises know about their customers versus what customers know about enterprises. A similar gap is widening between what the government knows about you and you about your government. That gap has to be closed and the quickest and most complete way to do that is to acknowledge the property interest that individuals have in their digital information. Once acknowledged, we can then begin to apply traditional property law and policies and close the information gap that is widening all too fast.

The release of the proposals by the European Commission for reform of the European regulatory framework for telecom firms is surely just the beginning of what is to be a major political battle within Europe. The proposals garnering the greatest attention at the moment are the ones aimed at the forming a European-wide regulatory authority and allowing national regulators to “functionally separate” the incumbent carriers if other measures fail to introduce competition.

On the subject of the European-wide regulatory authority, I must say I think it is a bad idea and I think the U.S. experience should serve as a vivid example of the problems with such an approach. There was a time, back in the late 1980s and early 1990s when individual states in the United States began experimenting with liberalization of the telecommunications market. New York and Illinois were the early pioneers in this effort. Other states, including Maryland, Massachusetts, Florida, Michigan, California, Washington, and Connecticut, recognized that market liberalization was good for investment and local business and moved quickly to initiate rulemakings or modify their telecommunications laws to open the local telephony market to competition. By the time the Telecommunications Act of 1996 was passed by Congress, more than a dozen states had ended the local telephone monopoly and implemented measures to promote local exchange competition. At least a dozen more states (including Tennessee, Georgia, Pennsylvania, North Carolina, Texas, and Colorado) were in the process of initiating changes to their laws and regulations as well so that basically half of the states were in the process of liberalization.

But once the Telecommunications Act of 1996 passed and the experiment in local competition was nationalized, what started as an orderly progression towards effective market liberalization quickly disintegrated into an orgy of regulatory gamesmanship and litigation. That the Telecommunications Act of 1996 was a mistake was made clear when the FCC issued its first “local competition order” – a nearly 800 page order that attempted establish comprehensive local competition rules, most of which were eventually overturned after years of litigation.

How the FCC could get it so wrong when nearly half the states were getting it right is a lesson on the dangers of centralization that the Europeans would do well to heed. But putting aside the substantive policy problems that a central authority would have, the situation in Europe is a bad idea for the simple reason that it is going to have the effect of freezing progress, not accelerating progress towards liberalization, as parties litigate the contours of the authority of this new pan-European regulator. National regulatory authorities hostile to the idea of a pan-European regulator will simply shut down, forcing interested parties to pursue their cause at the pan-European regulatory authority, ultimately triggering litigation by the losing party. This process could take years to sort out during which time critical issues will remain unresolved. Moreover, this process involves substantial legal and political cost and resources for the parties involved, which lends a decisive advantage to incumbent operators. Most nascent competitors lack the legal and political resources necessary to effectively pursue a legal claim over the course of several years from the national regulator, up to the pan-European authority, and eventually back to the national regulator where the matter will be resolved on some form of remand. So not only will progress be frozen pending the outcome of litigation, but the outcome is more likely to be favorable to incumbent interests since they are the only parties with the resources to see the process through to its conclusion.

My feelings about the proposal to allow national regulatory authorities to impose functional separation on incumbent operators are much more favorable from a substantive perspective, but I still have questions about the procedure. The proposal says national regulatory authorities can impose functional separation as a measure of “last resort” and only after receiving approval from the European Commission. I am not sure European Commission approval is a necessary component to this and it would probably be better if the European Commission simply clarifies the authority of national regulators in this regard.

For the moment, these are just proposals for reform. It remains to be seen whether the European Commission will adopt them, but it demonstrates once again that the Europeans are setting the example for the world on how to effectively liberalize telecommunications markets. Here in the U.S., policy makers seem unable to tackle the primary obstacles to more effective competition and are devoid of any creative ideas as to how to overcome them.

News the other week that Telecom New Zealand is being split into three divisions – wholesale, retail, and network – is further evidence that the folks down under are far more aggressive in their efforts to introduce competition.  The other day, I applauded Australian Communications Minister, Helen Coonan, for her public rebuke of Telstra’s bill insert blaming regulation for its market failures.  Together with New Zealand’s action, these are the strongest examples of courageous policy makers taking the necessary steps to introduce long term, sustainable competition into the telecommunications industry despite the protests of the incumbents. 

Now we also see the European Regulatory Group issuing a report saying functional separation may be appropriate in some markets.  Also, it appears that Eircom Ltd., the incumbent telephone company in Ireland is voluntarily proposing a wholesale/retail split of its operations.  

In the U.S., divestiture was instituted by the hand of a judge.  Will history repeat itself or will U.S. incumbents learn from the past and their overseas brethren?  

The release of a white paper by ETNO (the Eurpean Telecommunications Network Operators Association, a coalition of incumbent network operators) purporting to demonstrate that network investment would increase if policy makers would just stop insisting on unbundling and allow “inter-platform” competition to flourish is of course a re-packaging of the same arguments put forth here in the U.S. by the Bell Companies (unfortunately with great success). 

Thankfully, ECTA (the European Competitive Telecommunications Association, a coalition of competitive carriers) has offered a rebuttal to these arguments.  Like their U.S. counterparts at Comptel, ECTA must now counter what is sure to be a huge political and public relations push by the incumbents to roll back the regulatory progress made over the last ten years. 

We have seen this investment debate before and it runs a predictable course.  Let’s hope that ECTA has learned from the mistakes of the past that allowed the incumbents to be successful in the U.S.  These lessons include –

1.            Establish a political constituency.  If the debate is about what price competitors pay for access to the incumbent’s network, the competitors have already lost.  Incumbents are typically one of the largest employers in a country and those employees vote.  Moreover, incumbents are typically some of the largest political donors.  Competitive carriers do not match up well in this regard for the simple reason that they do not have a bloated payroll from a century of political largesse.  So, competitive carriers need to establish a political constituency of their own.   Ideally, competitive carriers will be able to rally the business, academic, and scientific community to their cause.  After all, these are some of the most telecommunications-intensive industries in the economy who surely have benefited from the improved service and reduced pricing that competition has spurred.  Competitors need to encourage the business, academic and scientific community to be active participants in the debate.  Of course the incumbents have the advantage here as well since they often are large contributors to universities and scientific organizations who are naturally loathe to antagonize such generous benefactors. 
2.            Simplify the debate.  The incumbents have a very facile argument – if carriers want to compete, let them build their own network.  Competitors shouldn’t expect to have subsidized access to the incumbents’ network to compete.  Inter-platform competition between stand-alone platforms is more robust than competition “created” by forced resale and unbundling.  Unfortunately, when rebutting this argument competitors fall into the trap of trying to explain how access prices are cost-based and how unbundling works.  The better response is to simply say that if government wants to grant carriers free access to public and private rights of way, give them 100 years of advertising and public relations support, and commit 100% of their telecommunications business to them, then competitors will indeed build their own networks.  Since that is what government did for the incumbents, it is only fair they do the same for competitors.  After all, how are competitors supposed to compete with a bunch of “welfare queens?”
3.            It’s not about investment, it’s about risk.  The incumbents always talk about investment incentives, but really what they are asking for is risk insurance.  They don’t want to place their capital at risk.  They want a guaranteed return on investment.  You can’t blame them for asking.  It’s the policy makers that are to blame for actually minimizing the risk.  But the reality is no politician wants the largest employer to cut back on spending and initiate layoffs.  Moreover, in the competition for broadband penetration rankings, there is no easier way to increase broadband penetration than to give your incumbent carte blanch.  With tens of millions of subscribers, a minimal sales and installation effort can result in millions of new broadband subscribers and an uptick in the rankings.  So the lesson for competitors is not to present themselves as such a threat to the incumbents.  Unbundling and resale is not about taking market share from the incumbents.  It is about improving service to consumers and maximizing the value of an aging asset (the old copper network) and guaranteeing sales on a new asset (next generation networks).  Incumbents should embrace a business model that allows them to monetize their aging asset in the form of resale and unbundling while investing in next-generation networks that easily out-compete legacy networks.  Competitors would be foolish to rely on unbundling and resale as a long-term strategy if they knew the incumbents were aggressively investing in next generation networks.  So naturally they too will invest in new networks and if they don’t, shame on them.  And if the incumbents are concerned that unbundling and resale of their next generation network will erode their market share, then they are admitting that competitive carriers are better at sales, marketing and customer service. 
4.            It is not a zero sum game.  Telecommunications traffic continues to grow at phenomenal rates.  Competitive gains do not equate to incumbent losses.  It is a growing pie that all parties can share.
5.            It’s a national security issue.  In today’s world, telecommunications is a critical component of everyday life for individuals, for business, and for government.  Major telecommunications outages have as great an impact as power outages on economic activity and the conduct of government.  Moreover, control over the flow of information should be as dispersed as possible in order to ensure an informed electorate.  Consolidation and control of the telecommunications infrastructure in the hands of a single incumbent is a poor strategy for protecting critical infrastructure and ensuring the free flow of information.  Nations need robust telecommunications infrastructures that are only possible when you have a “network of networks” seamlessly interconnected.  The more interconnection points you have, the more robust your network of networks is.  And if you have interconnection at all levels of the network (which is what unbundling is all about), your network of networks is more robust still.

Finally, European policy makers should recall that during the 1980s and early 1990s the United Kingdom resisted efforts at unbundling in favor of inter-platform competition.  At the same time, the U.S. was implementing unbundling.  The result was enormous growth and investment in the U.S. telecommunications infrastructure and nominal activity in the U.K.  This caused the U.K. to change course and pursue its current policy path.  So the experiment in inter-platform competition was already tested and abandoned as a failure.

A key element of virtualization is the concept of abstraction. Abstraction can take many forms and  many applications with profound  benefits.

This is the first of a  five  part series on the evolution of virtualization, with the following planned articles:

Virtualization – Part 2 - The Abstraction of the Computer
The definition of a computer (CPU, data bus, memory, input/output, and disk)  , the  abstraction of programming a computer (machine code, assembly language,  3rd generation programming languages (3GL),  4GL and  5GL), the  separation of a CPU from disk and the   application  of a Storage Area Network (SAN),  blade servers and the realization of GRID computing.

Virtualization – Part 3  - The Abstraction of Applications
Concepts of a Application Programmers Interface (API),  examples and pitfalls for APIs and the abstraction of  Web Services.

Virtualization – Part 4 – Virtualization of Voice Communications
Telephony basics in the  circuit switched voice network and the evolution of the  packet switched voice network , aka VoIP.

Virtualization – Part 5  -  Real World IT  Examples and Benefits
The anatomy and benefits  of Virtual Data Centers and  Call Centers

We’ll start the series on a model that is near and dear to our hearts – the Internet.

Vint Cerf  is one of the founding fathers of the internet and created a transport model of moving packets from one network to another. Seems pretty straight forward but,  back in the day this was not an easy task as the networks were typically homogenous deployed by a single hardware vendor (DEC, AT&T, NCR, Apollo, Banyan, etc… ). Each vendor had their own proprietary methods of defining a ‘packet’ (that is,   the number of bits in a ‘packet’; the order of the bits in a ‘packet’; the number of bytes in a ‘packet’; and the meaning of each bit/byte in a ‘packet’), and the way these computers spoke to each other (i.e. the protocol).

The first  major challenge was to allow these desperate networks to exchange data. The challenge was met by defining common communication protocols (i.e. TCP/IP, UCP, etc …)  , and   a  common packet &  addressing structure.

This allowed high powered users (Scientists at the world's research institutions) to efficiently communicate across an environment largely made up of  heterogeneous computers.  Within this structure, application developers at each vendor (DEC, AT&T, NCR, Apollo, Banyan, etc…)  developed tools, using the agreed upon common protocols  ,  to transfer files (FTP), login into another computer (TELNET) and exchange email (POP3, SMTP).


Tim Bernes-Lee was one of those high powered users and wanted to find an easier way of navigating thru the internet without having to issue ftp commands or walk thru folders ( i.e. directories).  He created an abstraction between what the internet looked like and the commands that facilitated communications .  Tim created the notion of the world wide web.  The world’s first web site  was brought online in 1991. 

Tim is credited for creating the following words we all use everyday:  www, http and HyperText Transfer Protocol.

These abstractions have lead to an  unprecedented number of users to the internet in very little time.   A concept that some call, “Internet Time” . 

“Internet Time” is defined by Wikipedia   as:

“Internet time was a common catchphrase that originated during the late-1990s Internet boom. In this period, people who worked with the Internet had come to believe that "everything moved faster on the 'net", because the Internet made the dissemination of information far easier and cheaper. Fast-moving developments were therefore said to run "on Internet time".

Efforts in virtualization of the internet are focused in/around layer 3 of the OSI stack,  in the next article in this series we will take a dive into the machines themselves to understand abstraction as it relates to their operation and subsequent evolution, in Part 2 - The Abstraction of the Computer.

We’ll then take a quick look at the applications that ride over them in Part 3 – The Abstraction of Applications.

After understanding the abstraction of the Application,  we’ll look at a very basis of communications – Voice , in Part 4 -  Virtualization of Voice Communications.

In the final article we will put all of these pieces together in understanding the anatomy and benefits of Virtual Data Centers and  Call Centers , in  Part 5 - Real World IT  Examples and Benefits.

Global Crossing's Pan-European duct and fibre network was constructed during 1999 and 2000. It may be hard to believe, but at that time, the Google search engine just came out of the dorm room for beta testing, and digital camera's were using floppy disks (Whatever these were: Ask your grandparents) for storage.

Even though our fibre and wavelength-based IP network will continue to be state-of-the art for many years -- avoiding the horror scenarios related to IP/VOIP conversion and convergence problems that legacy networks have -- this does not mean that there are no improvements to be made to stay aligned with new technology.

One of our Operations Europe "hobby" projects is to display our network using web-based tools such as Google Earth. Both our Carrier and Enterprise customers demand precise geographic information to avoid single-point-of-failures. They further need to have detailed map information for their support staff and suppliers to reach GC network locations for repairs and transport systems upgrades.

Mapping 25,000 km of underground duct and cable systems is not an easy thing to do: The diversity of the European continent (our home-built fibre network runs through twelve countries) has resulted in multiple non-aligned country or even regional grid coordinate systems. Some used a key city as reference point, others used a meridian, or any other arbitrarily selected location. As long as there were no border-crossing network activities, this perspective was not an issue, and it would not have been an issue at all, if GPS and Google hadn't taken over the world.

Merging all vector-based (AutoCAD) network design data into a single view thus required the mapping of dozens of disparate regional grids into one, earth-centered, GPS coordinate system: A cumbersome process requiring many (non-) linear translations [Kudos to our wiz-kid Nivaldo!].
At that point, the network data is ready for use in systems like Google Earth or Yahoo Maps.

The result is remarkable: This image was created as overlay of our duct route near one of our Northern France amplifier sites on Google Earth.
It was shot after zooming in to an approximate altitude of 600 m (2000 ft). Next to the blue line displaying our duct route as converted from AutoCAD, the original trench dig is still visible from on this satellite image, even though the route was completed seven years ago. The image further shows that, after conversion, an accuracy of a few meters is quite feasible. The amplifier station is the white building on the top-right hand side, next to an old chimney (station access lines are not shown here). 


Our fibre customers are pleased: Not only can they trace the exact location of their network, but their families can also see where daddy or mommy will be for their provisioning or system commissioning activities, and they can check out nearby tourist sites using tools like Panoramio (acquired by Google last month).

Bringing historic data in line with today's technology effectively means: Staying behind. Our task is to stay ahead, so we're now working to link the web-enabled network data into an image and connection database repository, allowing both ourselves and our customers a detailed virtual and real-life perspective of routes, sites and buildings, space, footprints, equipment, and most important for a carrier: All fiber allocations and (meet-me) interconnections at distribution frames.
I expect to get a first version ready for beta testing out of the dorm room in the next few months. Once complete, this solution will hopefully last for at least another few years (or until the next Google Earth software upgrade...).

So what's the next advancement, you may ask? My best bet: Operate our virtual network on Second Life.

Gert Nieveld July 4, 2007

Mesaging is undoubtedly the fasted growing method of e-communication in the industry today, spanning both consumer and enterprise segments.  In the wireless industry alone, the statistics on text messaging volume are staggering.  CTIA's president Steve Largent was quoted as saying that 158 billion text messages were sent in the U.S. alone in 2006, translating to approximately 300,000 per minute, which is almost a 100% growth compared to 2005.  He also notes that consumers can use text messaging to save lives.  Huh?  Well, Amber Alerts is now wireless, so you can receive text message with the Amber Alert information (that is displayed on digital signage) when one occurs, provided you submit your mobile phone number and area zip codes.  BTW, I encourage everyone to sign up for this.  The reason?  We all look at a text message when we receive one, and most of the time we respond to it.  This is a very viral form of communication, and an extremely high margin service; up to 85% in some cases.  Combine this with Instant Messaging, and the transactional volumes far exceed voice by a huge margin.

Aside of the convenience and trendiness aspects of SMS, texting is also very cost effective.  When users are low on their cell phone minutes, they often resort to sending text.  Also, due to excessive roaming costs, sending text messages is a way of avoiding expensive voice roaming and ILD rates from the mobile operators.

Identity-based services are a unique way to bridge communications between the wireless and wireline worlds.  Many innovative service providers are creating offerings which provide a single number (or second line) to the external community, but which allow the subscriber to manage inbound calling to various destinations (mobile, home phone, work phone, etc.).  GrandCentral and TalkPlus are two such providers of this service.  This identity is can be enabled through a VoIP DID-based carrier such as Global Crossing, which provides phone numbers and voice origination and termination capabilities.  Unique solutions like this are rapidly growing in the industry and are likely to continue, bringing voice beyond basic peer to peer dialing.

Another innovative use of identity based services is one where the purpose is to hide the true identity of the called party.  Jangl provides such an application to Match.com which enables dating prospects to communicate with each other without having to know each other's phone number.  Obviously, you don't want to advertise your phone number to what seems to be a decent date but who turns out to be an obsessive nut job.  Again, a powerful use of application-based communication.

Applications such as this can leverage more than just voice.  Text messaging can also be applied just as easy (if not easier) to these identity services, which opens up a powerful enabler and revenue opportunity.  In fact, most users with a mobile phone expect SMS to be a supplementary service, even when using a service such as one of those above.

Text messaging has, and will continue to be a key communication service requirement coupled with voice.  Wireline has some catching up to do, but you can expect some very innovative additions to enable messaging services to continue to be an essential component of the converged services equation.  Expect more from Global Crossing.  Stay tuned.....

Besides for its beautiful palaces, parks, and the Documenta international contemporary art exhibition (starting June 16!), the German town of Kassel is renowned for the Brothers Grimm who lived and worked there in the early 19th century.

Both brothers were professors of language. To preserve historic data, they took the task upon themselves to write down traditional German folk stories. I’m sure you’re familiar with tales such as Snow White, Hansel and Gretel, the Sleeping Beauty, and Cinderella.

A 600 km long Fairy Tale Road runs from the town of Bremen (the Hanseatic city in northwestern Germany) to Hanau (near Frankfurt), passing many sites and gingerbread towns that have contributed stories to the brothers Grimm archives. It is a popular route with both young and old children.

Based on tales in the public domain, these folk stories often also include the less positive side of human nature: Only the Disnificated versions have happy endings.

One of the darker stories is that of the Pied Piper of Hamelin (German: Hameln): A tale about a piper that uses his magic flute to rid the town of Hamelin from the burden of a rat plague. The town magistrates, however, refuse to recognise his effort and deny him his fee. In response, the piper uses his magic to lead all the children away from the town, never to return.

Although related to an actual event from the 13th century, the moral lessons of the Pied Piper story are still applicable in today’s world. The same appears to be true for the rat plague part.

Some weeks ago, our operations organization received fault reports about fiber outages in Germany. Several rats apparently managed to dig or chew their way through the concrete and metal isolated walls of an optical amplifier station.
Once on the inside, they developed an appetite for dark fiber connections, with a special preference for Italian fibers. It’s unclear if these fibers offered the rat family a higher nutritional value than other fibers.

It will not come as surprise to you, that the site of this event happens to be along the German Fairy Tale route, only a short distance away from the town of Hamelin. Luckily, our field support organization has several modern pipers standby on a 24x7 basis, so the damaged fibers have been replaced and repeat will be avoided by installing new overhead duct trays for these tasty fibers.

The only thing that still needs to be done is to get rid of the rats. We will probably outsource their animal-friendly evacuation to a specialised company.
As long as we don't forget to pay the bill we won’t have to worry about our kids.

Gert Nieveld, 07/05/22

In my previous blog on this subject I indicated that HDTV primarily revolves around flat screens and motion picture studio efficiency. In fact, flat screen TV systems are not purchased for their claimed HDTV capabilities but for esthetic reasons: Flat is Cool. Few of the flat screens are compatible with the true HDTV (1920 x 1080) format. The current quality improvements are based on the use of “DVD-quality” signals in digital format via the air, via satellite, or via cable networks. Given the low replacement ratio (in the range of ten years) for the 1.5 billion TV’s on earth, not much will likely happen with “HDTV” for the consumers in the coming years.

Now compare the quantity of TV’s with the 800 million PC’s and 1.5 billion mobile phones that are out there. We’re used to replace these items every three years, so this is the area where fast changes can happen. The 2006 UK regulator Ofcom report shows, that young adults now watch less TV than their parents. Computer games, chatting, and other internet activities are successfully competing with traditional television, and TV programs are watched selectively rather than passively. The end of the couch potato era is in sight! Taking the TV to the PC and the mobile phone is a logical step, and potentially a killer application. The format to do this is IPTV.

The Focus Group of the International Telecommunication Union (October 2006, Korea) defines IPTV as  “Multimedia services such as television/video /audio /text / graphics delivered over IP-based networks managed to provide the required level of QoS/QoExperience, security, interactivity and reliability”

Each line of business positions to get a piece of the potentially very rich IPTV cake: Equipment manufacturers advertise the IPTV capabilities of their routers; Local telecom providers focus on the quality aspects to compete with the cable companies and fill the gap of the ever reducing voice revenue; Cable companies see in IPTV a new way to move towards two-way services and offer video on-demand (VoD) via set-top boxes; Coffee companies advertise that their beans enrich IPTV viewing, and so on. They all plan to incorporate IPTV in their service offering as a new ‘triple”, or “quadruple” play subscription package. They all hurry to state that IPTV is not to be mistaken for free open Web TV.

Of course, Web TV is exactly what we’re heading for on our PC’s and mobile phones. The plans to offer IPTV as subscription service with set-top boxes are, at best, interim solutions that will fail to generate profitable revenue. Today’s PC users (connected either via DSL, Cable, WiFi/WiMax) are rapidly getting used to high-speed internet connections in range of 3 Mbps to 30 Mbps. These internet users are the early adopters of Web TV. The other internet users will join them as soon as their internet access connection allows for the speed, which is a matter of time. Compression technology improvements have resulted in the ability to view TV at data speeds of 500kbps – 750kbps.  Modern internet connections support watching different TV channels on multiple PC’s.

But what about the Quality of Service, you may ask?
Since 2000, various proprietary and open source codecs have been created that allow an acceptable display of TV programs, both for linear TV as well as for canned motion pictures.
Besides the H.264 standards that were agreed upon by the ITU members in the past decade, multiple open-source MPEG-4 codecs evolved to fulfill the market need. Codecs such a DivX, 3viX, and XviD were created, with additional services, such as subtitles, included in new container structures like OGM and Matroska. Simplified versions have been made for the mobile phone, such as 3GP. Check out the Doom9 site for guides and version details. No need to worry about all these new codecs: The PC or SmartPhone media player will detect the required codec and automatically fetch it from the internet in a matter of seconds (except when you’re tied to a proprietary set-top box, of course).

Today, computer and mobile phone users are enjoying mp3 audio on their phones and iPods. This highly compressed  music format has effectively taken over from the high quality audio CD. The same is happening with video. Consumers have embraced free “low-Q” video sites such as YouTube and Google. In the past year, free linear IPTV / Web TV services have seen explosive growth. Dozens of generic TV-portals are now offering free access to thousands of TV channels. Examples are Channelchooser and wwiTV. This number of portals will likely grow two orders of magnitude in the coming year.

Also for the mobile phone side there are TV standards, such as T-DMB. The free air to TV model, introduced in South-Korea late 2005, allows buyers of a T-DMB (Terrestrial Digital Multimedia Broadband) handset to watch TV without requiring a subscription. This is the way to boost the solution! In Germany, the mobile provider Debitel initially charged a fee for the TV service, which resulted in minimal growth. To boost sales, they are now offering a 6-month free introduction. T-DMB is not restricted to mobile phones. Also PDA, portable TV devices, and car navigation systems can make use of this service.

We’re slowly moving away from the Napster days. Consumers are getting used to pay for mp3 downloads via iTunes and its competitors. The same is bound to happen with TV (and games). Viewers will become used to pay a fee for on-demand motion pictures.  VoD is the reason that all providers are rushing towards IPTV. New anti-piracy tools, such as the video watermark system introduced by Philips this week, will help to protect (at least for a while) VoD material and revenue.

What will be the effect of IPTV on the ISP’s, Cable companies and other transport providers?
A recent Gartner report predicts that almost 50 million households will subscribe to IPTV service by 2010.
My perspective: Why subscribe to IPTV if you can get it for free via your regular internet connection?
In Europe, France leads the way: Companies such as FREE are including linear (terrestrial) TV channels in their package at no extra charge, focusing on new revenue via VoD services. According to a recent WorldBusiness article, PCCW in Hong Kong has highest local IPTV market penetration number,  but a fast ROI seems unlikely, especially if consumers can also watch TV via free web portals.

Similar to the music industry, where music producers and artists are bypassing the record companies by posting their music directly on the internet for a moderate fee, we will see traditional TV transport providers being bypassed by the content producers.
Most linear TV stations already serve their audiences with program replay and extended broadcast services over the internet. Best-in-class example is probably the BBC, offering a wealth of on-line information around their programs in over thirty languages, not only for their TV audience but also for mobile phone users.
Motion picture distribution will be done directly by the studios in cooperation with dedicated storage and on-line servers hosted by internet content providers such as Google, and/or via P2P download options.

In the coming years, I expect to see many local "legacy-based" TV distribution / metropolitan cable companies losing their business to the content and internet providers. A shake-out in this area is unavoidable.
For global IP-based network owners and service providers such as Global Crossing, I see only positive effects: Global IP traffic and capacity will increase even faster that it is doing today.

So what's next in the HDTV/IPTV theater? More about that in my third (and last) blog on this subject.
Gert Nieveld

This presentation from the blackhat conference in Europe last year speaks directly to the point about the security issues between IP-VPN and Ethernet that I took issue with in my last blog. 

A couple of the key points that I took from this presentation were:

• In the case of both Ethernet VPNs and IP-VPNs, in order to hack into a customers network from outside the network, the attacker must have access to the provider's core routers. (pg. 26)
  
• If an attacker has penetrated the customer's network through a backdoor or through weak physical security, he has some interesting options with an Ethernet VPN that do not exist on an IP-VPN network, especially in a VPLS environment. (pg. 34 and others)
  
• A reminder about how much I dislike spanning tree (pg. 38)

ps. he refers to as the Juniper M7i as a "big-iron" router, when in fact it is the smallest of Juniper's carrier-line of routers and doubles as a high-end Enterprise router.  An M7i may be used by a carrier in a very small site, but such a site is not likely to have thousands of customers as cited in his example.  A site with thousands of customers is much more likely to be riding an M40e at minimum, or more likely an M320.

Hat Tip to Jim Lippard

Technorati Tags: Ethernet, VPLS, IP-VPN, Security