Volume Seven of an Annual Handbook on the Commercial Internet's Business, Technology and Management Issues

An Anthology of Recent Interviews and Articles from The COOK Report on Internet

The COOK Report Annual Handbooks provide vital reference material in the form of a handbook that can assist Internet technical and investment strategists. For Volume 7 -- Empowering the Customer or Empowering the Telco? (458 pages) articles from the April 2000 COOK Report through the February 2002 issue have been reorganized into topics that unfold and overlap over time. The ten sections of Empowering the Customer or Empowering the Telco? cover the following ten critical issues:

• WHAT HAPPENED? (Technical, Economic and Policy Consequences Behind the Collapse of 2001) pp. 1-13

• BUSINESS MODELS UNDER STRESS pp. 14 - 67

• ARCHITECTURE - EMPOWERED TELCO OR EMPOWERED USER" pp. 68 - 103

• CANADIAN LEADERSHIP pp. 104 - 156

• THE COMMONS: PROPERTIZINING AT THE EXPENSE OF INNOVATING? pp. 157 - 203

• GETTING THE BANDWIDTH WHERE IT IS NEEDED - BUSINESS MODELS pp. 204 - 239

• BANDWIDTH SOURCES ­ ETHERNET and SONET pp. 240 - 302

• INTERNET TELEPHONY AND REGUALTORY ISSUES pp. 306 - 353

• ROUTING and PEERING pp. 354 - 384

• ICANN'S ROLE: Disenfranchising the Customer pp. 385 - 450

  For existing subscribers, the annual handbook has become a means of organizing all the material from past newsletters for reference and review. For many others, it serves as a valuable introduction to the COOK Report. The cost is $385 a PDF (electronic) copy. The report is available in electronic form only.

  The rest of this message contains:

  1. State of the Internet 2002: Assessing the Technical, Economic and Policy Consequences Behind the Collapse of 2001 -- A shortened version of the preface to our study --

  2. The complete Table of Contents of the full report.

  3. Pricing and Ordering Information

  Empowering the Customer or Empowering the Telco:

  Betting Your Company's Future on Your Understanding of the Right Mix of Tecnology, Economics and Policy

  The State of the Internet 2002

  In its examination of the impact of Internet technology on global telecommunications during 2001, this report will bring into focus changes that are reshaping one of the world's largest and most critical industries in ways unforeseen only a year ago. Neither the Internet nor the phone companies are going away. However, while technology continues to reshape possibilities for industry markets, it is now having economic impacts in 2002 that will increase the risks and opportunities for informed managers, financial planners and policy makers.

  As the reverberations from the collision of the tectonic plates of Internet and "telco" seek some new equilibrium the architecture of the Internet is shifting and becoming more complex. Issues of control seem more and more important. To the extent that a nethead versus bellhead philosophy is still meaningful the difference between the two is reflected less in the technology being used and more in ideas about where control is to be located.

  Trends: Technology and Economics

  The most significant technology trend that we see is one that will present managers, investors and policy makers with a choice pointed out by the title of this report. Empower the user. Or empower the telco. Choices are being made. The technologists are driving control of lambdas into the hands of end users. Peer-to-peer, as software and infrastructure, is enabling the formation of communities of users at the networkıs edges. Here the goal is generally to make the center and anything associated with it disappear. Huge fortunes are being wagered on the web based client server model. The bell heads and walled garden guardians may find out too late that their centralized content control model is not the only way to do business. The impact of technology on network architecture will be the most important trend to watch in 2002.

  But, as many have found out to their dismay, we can no longer make intelligent decisions in telecommunications absent a thorough understanding of the industryıs economic picture. Indeed analysis of technology trends done without understand of their economic impact, are, in this climate, of limited use. Therefore, the remainder of this summary will turn to economic issues.

  The COOK Report started publication a decade ago as the Internet was in its early stages of commercialization. Ten years and a trillion dollars in global investment later we have witnessed dramatic changes in global telecommunications. But what we have now is not what any reasonable person would call "success." The old technology did not collapse under the onslaught of a triumphant new global packet network bringing vast amounts of inexpensive bandwidth to every home and business.

  One reason it did not was that the technologists were so certain of the superiority of their product and were so good at driving the hype that got them their early stage capital investment they were able to sail forward without a long term viable business model for what they were doing. Build it and you will be saved - somehow. The provisioning of vast amounts of cheap bandwidth was seen as a sustainable business model for the Internet.

  The problem is that ten years on the bandwidth business model has not proven to be a viable one. The question is whether bandwidth is something on which a business model can be built" Or is bandwidth, like a highway, just an enabler" We started out a decade ago talking about the information super highway and then proceeded to try to build multiple global privatized versions. Imagine if Ford had spent tens of billions building a global interstate for its cars. While GM. Daimler-Chrysler and Honda and Toyota had each done the same thing. What has been built are highways with largely identical performance and capable of huge indiscriminate through-put of "vehicles" or packets. They have lead to an unsustainable business model. "Become a customer of my commodity system." "No. Not his. Mine. I just doubled the speed and I will sell you access for 20% less. I only had to borrow another billion dollars against my non existent profits." Yes we have a train wreck. Any wonder?"

  But remember after all the investors were being sold a product that moved at 'Internet speed' and hyped as a global, winner-take-all, economy-of-scale, build out where one year in Internet time was said to equal seven ordinary years and where there would be a "winner" with first mover advantage. The new Internet world was hyped as one where regulation was unneeded because it would slow the rate of adoption of the new technology.

  Consequently, all the big players operated in their own informational vacuums. Through an informal old boy-girl network, they interconnected where necessary and as fast as they could spend their capital. They built global commodity systems frosted with a whiff of secret sauce that alleged that one system was better than another. "Trust us," they said as they continued to run full tilt ahead. The trust that was granted is coming back to haunt us.

  Just within the past few weeks we are seeing evidence of a new and potentially very disturbing basket of problems generated by the all the hype about the technology that applied Mooreıs Law to telecommunications for the first time. We have been spending much of the past month talking with folk from the financial analyst community. We heard concerns expressed about sales of 20 year IRUs on dark fiber among Enron and the other large new global Greenfield fiber network players. It was asserted that it looked as though income from the IRU was booked up front at the time of the sale with the IRU on the same fiber then being resold by the purchaser to another party so that income from the resale could again be booked as profit. We asked where we could find some documentation on this and were told that there wasnıt much. That the information had been gleaned primarily from listening to quarterly phone briefings of analysts by management.

  But suddenly the situation changed. On January 1, 2002 the Washington Post published a confirming story by Peter Behr. The headline: Broadband strategy plunged Enron into trouble. Behr wrote: "Enron's recent financial disclosures show that its claims of success in broadband included large gains from trades with private partnerships it had set up itself. And using aggressive accounting practices, it assigned exaggerated values to the broadband contracts it traded with others in the industry, greatly inflating its actual revenue and profit, Enron insiders and analysts say."[Snip]

  "The [profit] margins were whatever they decided,'' said a former Enron vice president familiar with the broadband trading, who spoke on the condition of anonymity. In many instances ''they were trading with themselves,'' he said. As prices for fiber-optic circuits plummeted, Enron tried and failed to lure telecom giants that used broadband - such as MCI WorldCom Inc. and Verizon Communications Inc. - to trade with it and create a true market. Carol Coale, an analyst at Prudential Securities who heard Enron's repeated claims that its trading operations were growing rapidly, said: ''These guys were great spin doctors. They had the answers. The answers were lies.'' http://www.washingtonpost.com/wp-dyn/articles/A46876-2001Dec31.html The entire article is well worth reading. As the self-regulated industry had been saying: "trust us."

  So What Were We "Trusting"?

  The "stupid network," taken as a concept, captured important differences in the operation of the new Internet companies while it ignored the huge revenues and deeper pockets of the old line telcos. It was propelled by a reality defying arrogance that allowed a Bill Schraeder to build a global company with a billion dollars a year in revenues in a matter of months and then bankrupt it in a matter of a few more months. Remarkably, we are now - a year after the train wreck began - watching a growing string of bankrupt or soon to be bankrupt global super highway builders. The fall out has left the infrastructure industries that they depend on paralyzed, seen the loss of trillions in market value, hundreds of thousands unemployed in the midst of a global recession and left policy makers with no creative idea of what to do. We are marching toward a denouement designed to allow the ILECs to try to be the last ones standing by allowing them to use their control over the "last mile" to re-monopolize service. This after all, is what the "free market" has given us. We owe the great boom of the last 20 years to our faith in the free market so if we just hang on a while longer someone or something will save us. Indications that the new technology may also bankrupt the ILECs are not yet on the radar screens of most analysts.

  This leaves us in a strange situation. One where we are so smart that we can shove billions more photons down the same thread of glass this year than we could last year. But it is also one where we are also so ideologically blinded that we remain wedded to the building and maintenance of multiple privately owned systems when experience now shows us that there is no business model that can pay for multiple competing privately owned commodity systems.

  A dozen years ago we created a Federal corporation to clean up the savings and loan fiasco. But in 2002, with a critical global industry on edge, no one can see a large enough picture to understand what to do. If local and national governments are a public good, and if a freely accessible global commons of locally built highway systems maintained from business and user taxes is also a public good, perhaps the only feasible foundation on which to restructure telecommunications is a nationally maintained blanket of publicly-owned glass threads.

  Asking about the Internet's business model is like asking about the Interstate Highway Systemıs business model. Who owns it? Who controls it? And to whose advantage is it used? How are Fordıs interstates better than those of GM?

  [Two paragraphs SNIPPED]

  Roxane Googin, Editor of the High Tech Observer, in a short essay in David Isenberg's Smart Letter 64 has captured the essential problem: "But even though the attackers are starving, they are forcing marginal bandwidth prices below the ILEC's cost of provisioning -- not only replacement but also provisioning. So the ILECs are going to get squeezed because they have this complex, labor-intensive infrastructure that is no longer supported by a viable economic base."

  "In this kind of nightmare scenario, nobody wins. It is just a big mess because the attackers are [also] going under. Meanwhile, they have crippled the incumbents. We are witnessing the perfectly predictable outcome of this process: no equipment sales, and no more progress." [Snip] "So we have to fix the problem. This means restructuring the debt and owning up to what the real issues are. This owning-up hasn't been done yet."

  "Then we have to reallocate the assets to the right parties. Unfortunately some markets don't behave in a traditional market way. Typically common-good markets, like transportation systems, tend to be regulated markets, because the capital outlay upfront is associated with an unknown return in the future. This regulation is rather contentious, whether it is the old telecom, the airlines, or even trucking. There are just some markets that don't behave well, and I'm afraid that this is one of them. So we have a lot to think about."

  "Time is of the essence. The reason that we are in this downward spiral is because telecom is draining the vitality of the entire economy. On the margin, this is where our last decade of growth came from, and now it has stopped. It would be helpful if policy-makers knew the problem from this perspective."

  We think Googin's analysis is correct and we will soon publish a detailed interview with her showing why. Interviewing her has led us to wonder if the technology analysts ever talk with the financial analysts" For years, from the technology side of the fence, we have pointed out what others have said about how the decreasing costs of the Internet Protocol and fiber based technologies mean the ³end² of the traditional telco. The conventional wisdom was that the next generation telcoıs would succeed and absorb the old circuit-switched incumbent local exchange carriers. It is beginning to look like the opposite is true. Furthermore, if Roxane Googin is correct, the carnage wonıt stop with the bankruptcy of the next gen companies but will spread to the incumbent local carriers themselves. This is what we mean when we suggest that the Internet has yet to find a successful business model where it can deliver to our homes and businesses low cost bandwidth as an enabling technology without destroying the global telecommunications industry on which it depends.

  In our coverage in 2002 we shall look in detail at what Roxane Googin is saying about the phone companies. Here is a summary of her analysis.

  Why the ILECs Are in Trouble as Data Grows and Voice Shrinks

  While the general perception is that an over supply of dark fiber is driving bandwidth prices down to the detriment of everyone, reality is a little bit more complex. The costs of lighting that fiber are very large. Considering the ILEC investment in SONET, the costs for them to light new fiber are so significant that a recent article in Light Reading pointed out that it is becoming cheaper for them to buy a lightwave from another carrierıs lit fiber than to light their own. The point is that all the way up and down the circuit switched telco food chain carriers without the expenses of the first generation SONET infrastructures are able to sell bandwidth at less than the ILECıs cost of production.

  A major problem of the ILEC is its huge investment in SONET based networks that bit-for-bit are not as competitive with what can be delivered by the newer players that have built IP based networks that rely on newer, cheaper SONET or on gigabit Ethernet and coarse wave division multiplexing. But the ILECs are locked in with several hundreds of billions of dollars worth of OSMINE compliant SONET equipment that their balance sheets say they are amortizing at 25 plus years. As a result they have, and will have long into the future, huge interest payments to meet. (Of course the new TCP/IP, fiber based greenfield players are also heavily invested in SONET and have themselves large interest payments due.)

  The ILECıs ability to meet those payments is contingent on their ability to continue to deliver profitable voice minutes. Given their enormous investment in local plant and in the people needed to maintain that plant, they need to protect, at any cost, their installed base of voice traffic. For many years voice traffic has been growing at a few percent a year and data traffic growing two to three times as rapidly. While data traffic is now a majority on all their networks, voice traffic still accounts for 80% of their income. According to RHK revenue per megabit of voice is seven times that for a T-1 (1.5 megabit) Internet connection. Clearly efficiencies in the cost of production are to be found on the data side of the equation, given the impact of both dense wave division multiplexing and the efficiency of IP.

  The voice minutes on which the ILECs and older carriers depend to pay the costs of running their infrastructure on a month-to-month basis are being siphoned away from the telcoıs SONET based networks. The Internet has caused digital to be perceived as ³cool.² The ILECs brag about their new digital infrastructures in their quarterly reports. For example on November 5th 2001 BellSouth bragged that over the preceding decade it had invested in "749 broadband (ATM/Frame Relay) switches and 20,000 SONET rings in service in its network." BellSouth "expects to end 2001 with approximately $4.5 billion in data revenues." It "projects to end 2002 with 22-25% growth in network data revenues." But note that there is not a word that we have been able to find in this ILEC statement or in any other that data is profitable for them.

  As Googin explains it: "while they tell us they get 80% of their revenues from voice, they never say they get 80% of their profits from voice. They simply do not tell us this information. Given that data represents over 50% of their network traffic and about 20% of their revenues, it is probably not profitable for them at all. They therefore do get 80% of their revenues on under 50% of their traffic. Since their network is monolithic, and largely of fixed cost, one can assume that data runs at a loss."

  The Data Voice Mix begins to Change

  In 2001 the trends in data growth that had long been forecast finally began to hit home. Softswitch services pioneered by next gen carriers like Level Three digitized vast amounts of voice traffic and sent them over IP networks as data. Sky rocketing phone card sales at less than two cents for a voice minute siphoned voice data from ILEC networks. On December 14 in a promotional announcement from Singapore for Ciscoıs voice-over-IP products Andrew Vlachiotis, Director of New Technologies Group of Cisco quoted a study that stated that for the first time since 1993, the Private Branch Exchange (PBX) market has declined 16.2 percent in the second quarter of 2000 from the same period in 1999. This is remarkable when compared with 10-15 percent growth rates for the previous five years according to Vlachiotis. [Editor: the fact that the timing of the change may be Y2K related adds another lever of uncertainty into the process of figuring out what these numbers really mean.] Furthermore, as we have documented in the lead article of our November 2001 issue, the release of Windows XP and the maturation of a whole family of SIP based proxy servers has come together with Softswitch technologies to enable the corporate PC to become a desktop voice phone. We are beginning to witness what will become a flood of circuit switched voice minutes exiting the ILECıs expensive networks. But these voice minutes donıt evaporate. What they do is become encapsulated inside inexpensive IP data packets.

  Sure enough, examination of ILEC quarterly reports shows that ILEC voice minutes delivered starting with the June 2001 quarter have not only turned flat but have actually started to DECLINE. Now if each data minute brings in about one cent, each voice minute brings 7 to ten cents in revenues. Since 80% of their income is from voice under these conditions a 5% decrease in voice minutes could mean a 20% decrease in revenues. The technology changes being brought on by IP ALTERNATIVES to ILEC circuit switched SONET services are going to deprive the ILECs of the income needed to operate their networks, repay bondholders, and make a profit.

  [Ten paragraphs SNIPPED]

  Powell utterly misses the point. Not only about size enabling price reductions for, as the market consolidates into larger players, the players are raising their prices. Powell also has no clue about the technology cost changes that are now building. A year from now his pronouncements on Internet broadband may seem like a minor blip before the on-set of the whirlwind. Still, absent major complaints from an educated public and from sectors of the telecom industry that understand there will be no role for them if we allow government to turn voice and data communication over to cash rich Microsoft to charge whatever prices they can extort, we are headed for ugly day of reckoning. As the current telcos fold what is not yet clear is whether even Microsoftıs $35 billion in cash will be enough to pick up the pieces. Certainly it and Cisco ($19 billion in cash) can pick up a lot of the carnage. Others will no doubt step in as well. Of course it is possible that the Feds may act in time to "save" the ILECs.

  What is clear is that our free market blinders, especially under this Republican administration, will prolong the impact of the collapse by destroying the last vestages of the public commons on which the Internet was built. In doing so, it will ensure that the ability of small companies to innovate instead of having to beg for niche roles in the delivery of monopoly services is destroyed.

  The COOK Report's On-Going Mission

  Whatever happens, we shall follow, as they progress, the continuing technology developments that are reshaping the global telecom industry. By observing changes in the ability of users to implement their own networks and architectures, we shall help readers identify trends in the changing locus of power during a time of upheaval. By watching the cash rich players develop new strategies and following varied attempts to build alternative infrastructures, we identify those who will likely be able to pick up the pieces. Finally, we shall advocate a public policy that sees the Internet as a family of enabling technologies rather that a means of more efficient monopolies for distribution of content. In doing this, we hope to be able to influence an increasing awareness that the quickest end to the troubles of the industry will be found in a path that uses the financial power of the government to create a new foundation that will be open to innovators and not run solely to benefit a new set of would be monopolists.

  [ Final Three paragraphs SNIPPED]

  Postscript: One fascinating and intuitively obvious solution was just raised by Peter Cochrane, the former CTO of British Telecom in an article Braodband Won't Happen by Accident. See the Canarie list on 12/30/: http://www.canarie.ca/MLISTS/news2001/0228.html. Here Cochrane suggests that as the ILECs collapse those who step into to pick up the pieces could affordably run fiber to neighborhood POPs where 802.11b nodes could enable a wireless local loop.

  Gordon Cook, Editor and Publisher January 6, 2002

  TITLE, CONTENTS AND SECTION SUMMARIES

  Empowering the Customer contains the full text of 68 articles appearing in the COOK Report on Internet between April 2000 and February 2002. They are organized into ten sections and presented in usually in chronological order within each section. The articles in each section are preceded by their individual executive summaries. The report is structured to guide the reader, through a series of gradual steps starting with the summary and leading to increased levels of detailed description of the way in which the complex systems that make up the Internet fit together and interoperate.

  Empowering the Customer or Empowering the Telco:

  Betting Your Company's Future on Your Understanding of the Right Mix of Tecnology, Economics and Policy

  Contents

  Chapter 1: WHAT HAPPENED?

  Introduction January 2002, pp. 1 -5

  The Internet's Dilemma: What Good Is the Stupid Network If the Other Guys Own It? Future to Offer Access to a Public Highway Grid or Exile to Corporate Controlled Walled Gardens and OS'? An Analysis by Gordon Cook pp. 6 - 13

  Chapter 2: BUSINESS MODELS UNDER STRESS

  Executive Summary: pp. 14 - 17

  AT&T Explains Its Optical Network Architecture In Search of Business Models for a Slower Growth Era -- Carriers Try to Cope with Hang Over of Fiber and Debt after the Great Optical Build out of the 90's pp. 18 -28

  Level 3 Wants to Be Global Carrier's Carrier -- An Introduction to its Structure and Lines of Business pp. 29 - 34

  Level 3 Communications: Smart People Have Designed a Flexible, Intelligent But Capital Hungry Global Build Out -- Can L3 Find Enough Customers Quickly Enough to Support its Infrastructure Investment and Pay its Debt? Likely Yes Uncertainty Is How Much Infrastructure It Will Have to Shed -- Interviews with Ron Vidal and Rob Hagens Show a Business Model in Flux pp. 35 - 51

  Global Crossing Completes Build Out -- Moves to Focus on Value Added Managed Network Services and Virtual Private Networks Commodity Bandwidth Sale to Carriers No Longer its Primary Focus -- LEC Division Sold to Citizens, pp. 52 - 61

  Difficulty in Measuring Demand: Caspian Networks Bandwidth Study Questioned in Comments Prepared for COOK Report by Andrew Odlyzko - Larry Roberts Responds, pp. 62 - 67

  Chapter 3: ARCHITECTURE ­ EMPOWERED TELCO OR EMPOWERED USER?

  Executive Summary: pp. 68 - 70

  The End-to-End Principles and Internet Policy In "Rethinking the Design of the Internet" Blumenthal and Clark Pose Dilemma of Central Control vs Trust at Edge -- We Ask Can an Analog of Error Checking Role of TCP Be Implemented in the Application Layers and Trust Moved to the Network's Edges? pp. 71 -76

  The Blumenthal Clark Paper "Rethinking the Design of the Internet" -- Excerpts and Editorial Comments pp. 77 ­82

  Trust as Qualified Reliance on Information, by Ed Gerck pp. 83 -88

  New Peer-to-Peer Technologies Impact Internet Maturation of Peer-to-Peer in Computing Spreads to Internet as Customer Control at Network Edges New Non DNS Dependent and Customer Defined Architectures Enabled pp. 89 ­ 93

  Customer-Owned IP Networks --Completing the IP Revolution Through Customer-Owned Networks - an essay by Timothy Denton pp. 94 - 96

  Broadband in Canada Enabling Local Control of Local Infrastructure A Pragmatic Regulatory Approach to Enabling Community Fiber Networks and Commercial Interconnection by Francois Menard pp. 97 - 102

  France to Build National Broadband Infrastructure, p. 102

  CA*net 4 Proposal and Supporting Documents Released, p. 102

  Sweden's IT Commission Publishes General Guide to Future Proof IT Infrastructure Booklet Shows How to Plan Physical Fiber Network Architecture p. 103

  Chapter 4: CANADIAN LEADERSHIP

  Executive Summary: pp. 104 -107

  Ca*net 4 Plans Customer Control of Wavelengths Regional Nets, Universities and Eventually Researchers to Be Able to Establish Lambda Peering ­ Switches to be Modified to Enable Customers to control wavelength configuration and routing -- Making Telecom a Customer Owned Asset Holds Promise of Use of ³Surplus² Bandwidth, pp. 108 -125

  Netera Offers CWDM Gig E Backbone -- SUPERNET to Bring Fiber to Entire Province --Focus on Alberta in Assessing Canadian Development in Current Economic Downturn -- A Canadian US Policy Technology Overview and Comparison, pp. 126 ­ 137

  Peer to Peer, Optical Test Results, and Bandwidth Commoditization, pp. 138 -139

  Bandwidth, User Tools Migrate Toward Network Edge Fueling Idea of Always on Disciplinary Computational Grids User Control of Bandwidth Raises Interest in Shaping Network Environment to Needs of Subject Matter Communities, pp. 140 - 149

  CANARIE to Build Worldıs Largest Disk Drive p. 149

  Chicago Civic Network - Fiber to Link --More Than 1600 City Institutions RFI for Condo Style Build Yields 63 Responses pp. 150-153

  Request For Information Chicago CivicNet pp. 154-156

  Chapter 5: THE COMMONS: PROPERTIZINING AT THE EXPENSE OF INNOVATING?

  Executive Summary: pp. 157- 160

  Review of Lessigıs The Future of Ideas: the Fate of the Commons in a Connected World Comparing the Commons in the US and Canada We Conclude that its Future and that of Advanced Telecom is Canadian pp. 161-167

  As the Hague Conference Diplomatic Conference Ends the Internet and the Public Domain Are at Risk - An Essay by Jamie Love pp. 168 - 170

  How Media Companies are Conspiring with Hardware Companies to Misuse Copy Protection in Order to Cripple What Consumers Have Rights to Do An Excellent Survey, by John Gilmore pp. 171 ­ 174

  Censorship in Action: Why I don't Publish my HDCP Results, by Niels Ferguson pp. 175 - 177

  What is the Digital Divide Really About? --Marketing IT Hardware, Software & Services or Helping Communities Sustain their Economies & Independence? Larry Irving Lashes Out at Dave Hughes over the Digital Divide pp. 178 - 182

  Dave Hughes and the "Digital Divide" 25 Years of Building a Philosophy Assessing the Value of the Personal Computer and Internet as if People and Locally Controlled Grass Roots Economies Really Mattered pp. 183 ­ 192

  Anatomy of a Small Revolution by Dave Hughes pp. 193 - 203

  Chapter 6: GETTING THE BANDWIDTH WHERE IT IS NEEDED - BUSINESS MODELS

  Executive Summary: pp. 204 - 205

  LayerOne Gear in Telco Hotels Provides Cost Effective Optical Interconnect for Carriers --- Ciena Core Director Provides Service that Grooms Circuit Interconnection Between Fiber of Many Carriers pp. 206 ­219

  Changing Bandwidth Provisioning Models in Metro Area Fiber Markets --- Net Access Chooses Acquisition of Dark Fiber and Self Provisioned Circuits Over Purchase of Shared Gig Ethernet Prices of Telseon and Yipes! Viewed as Too High and Cogent's Business Model Seen to Be Unsustainable pp. 220 - 230

  Texas.net - Business Oriented ISP Serves State's Four Major Metro Areas -- Focus on Leased Lines, Usenet Outsourcing and Management Services for Web Farms -- So Far Has Not Needed to Follow Net Access' Dark Fiber Model pp. 231 - 238

  Optical Border Gateway Protocol Now Internet Draft p. 239

  From Corning a Much Cheaper Method of Laying Fiber p. 239

  The Future Of Telecom As Customer Owned Assets p. 239

  Chapter 7 BANDWIDTH SOURCES ­ ETHERNET and SONET

  Executive Summary pp. 240 -243

  Tools For Access And Scaling: Ethernet In The First Mile, 10 Gig In Backbone, ENUM In PSTN --Jonathan Thatcher & Howard Frazier Explain Standards Goals of EFM, Discuss How Ethernet Is Changing The Access Space Impacting Product Development, Timelines, & Broadband Infrastructure, pp. 244 - 266

  Debate on Dynamic Bandwidth Allocation Ignites on EFM Standards Mail List Carriers Want Traffic Engineering Capabilities Amount of Administration and Provisioning in the EPON PHY an Issue -- Addition of DOCSIS Like Features Seen as Enabler of Third Party Access Discrimination pp. 267 ­277

  Who Controls Ethernet in the First Mile? Copper Belongs to the LEC. What About Fiber? Half PON Suggested as a Low Cost Option for Open Access pp. 278 ­ 280

  Passive Optical Networks as a Means of Getting Affordable Fiber to the Home Important but Troublesome Topic Debated in Ethernet in the First Mile Protocol Development Mail List pp. 281 - 288

  SONET Has a Future: New, More Flexible, Less Costly Breeds Mesh with High Speed Ethernet -- Cost of 10 Gig E Expected to Be Only 15% less than OC192 SONET -- New OIF UNI Offers Signaling & Routing Protocols & Moves Rapid End-to-End Provisioning Closer pp. 289 -302

  Chapter 8 INTERNET TELEPHONY AND REGUALTORY ISSUES

  Executive Summary pp. 303 - 306

  ENUM Pushes Convergence by Facilitating VOIP Access To Global PSTN Numbers -- Rutkowski's Opposition Deflects IETF- ITU Plans Appeal to Free Market Is Delaying Rollout Of Services And Impacts Viability Of Business Use of VOIP Technologies Mail List Debate Shows Significance Not Well Understood pp. 307 - 326

  End Notes: Dave Hughes Blasts Alaskan Telephone Association Before FCC -- A Look At FCC Resources For Small ISPs -- A Critique Of Tauzin-Dingell pp. 327 ­ 330

  Voice Over IP Near Inflection Point? Windows XP & Maturing of SIP Based Components May Create Large Swing of Voice Traffic to IP Networks -- Jonathan Rosenberg Describes Elements of VOIP Infrastructure & Operation - Richard Shockey and Francois Menard also Comment pp. 331 - 339

  Infrastructure and Business Model Issues Windows XP Seen as Generator of VoIP in the Enterprise XP: New Source of Competition for SIP Proxy & PSTN Termination Services Proxy Server Bundling & Placement on the Desktop Are Major Unknowns pp. 340- 342

  IPTEL Working Group Users Assess Changes in VoIP Traffic pp. 343 - 344

  Menard Predicts Development of Open Source VoIP Infrastructure and Willingness of Canadian ISPs with Open Access to Innovate -- Suggests SIP Invites to Do QoS Gateways and Enable Direct Payment and Interconnection & Foresees SIP Servers Added by Vendors Directly to Routers pp. 345 - 346

  Dale Hatfield Describes Conservative "Market Oriented" FCC Policy Perspective Explains Software Defined Radio and Politics of Spectrum Licensing pp. 347- 353

  Spectrum is Not Property by Robert J. Berger p. 353

  Chapter 9 ROUTING and PEERING

  Executive Summary pp. 354 - 355

  Routing Infrastructure: Issues and Problems Craig Partridge Finds that End of Era of Rapid Growth Provides Opportunity to Implement Fixes pp 356 - 362

  How to Tell the Difference Between a Switch and a Router p. 362

  Summary of IETF Working Groups on Multi Homing, pp. 363

  BGP Routing System Scaling Problems IETF Sets Out to Redesign BGP4 -- A Known Problem: Noel Chiappa in Pages of April 1997 COOK Report Called for Redesign of BGP pp. 364 - 366

  Cable and Wireless Cuts off Peering with PSI for Five Days -- Both Networks Get Low Marks in NANOG Debate on Peering Policy pp. 367 - 370

  Peering Revisited Tier Ones Move Peering Interconnects into Exchange Points pp. 371 ­ 375

  Dreams of IPv6 Continue But Investment in v4 Infrastructure and Unresolved Routing Issues Continue to Thwart Deployment -- Meanwhile IETF Routing Director Resigns More Static Public Internet May Push Innovation into Efforts Like Peer-to-Peer pp. 376 - 384

  Chapter 10 ICANN Disenfranchising the Customer

  Executive Summary pp. 385 - 388

  Congress Gives ICANN Second Look: Auerbach and Froomkin Testify Before Senate that Compared to House is in Early Learning Stage pp. 389 - 391

  Hearings on ICANN Governance Prepared Statement of Karl Auerbach before the Senate Commerce, Science and Transportation Committee pp. 392 - 396

  ICANN Governance Prepared Statement of A. Michael Froomkin Professor of Law University of Miami School of Law P.O. Box 248087 Coral Gables, FL 33124 before the Senate Commerce, Science and Transportation Committee Communications Subcommittee pp. 397 - 402

  Testimony of the Domain Name Rights Coalition and Computer Professionals for Social Responsibility pp. 402 - 405

  ICANN and Verisign in Alliance to Reinstate De-facto NSI Dot Com Monopoly in Return For Financial Support of ICANN --- ICANN's Pattern of Fraudulent and Deceitful Action Continues With Board's Capitulation to Staff and Vint Cerf in Melbourne pp. 406 ­ 416

  Where ICANN Would Like to Push the Internet p. 417

  Ex Employee Files $150 Million Lawsuit Against NSI Alleging Knowledge of Violations of ICANN Agreement and Other Wrong Doing - NSI Closes Domain Policy List, Mueller Critiques ICANN's Position on Root pp. 418 - 421

  Vint Cerf's Doublespeak on ICANN Elections As Decision About the at Large Elections Nears ICANN Tries to Find Any Excuse Maintain Grasp of its Insiders pp. 422 - 423

  ICANN Update: Thanks to Continued Support from Faceless Bureaucrats at Commerce ICANN Expands its Payroll and Continues its Efforts to Police DNS and Extend Governmental and Corporate Intellectual Property Control over the Internet pp. 424 - 428

  Mikki Barry on the Real Nature of ICANN's Authority: US Gov't Rubber Stamps ICANN Requests as Karen Rose Is Left Free To Make Her Own Policy, pp. 429 - 432

  Latest .biz Lawsuit May Help Define ICANN's Legal Status pp. 433-434

  The REAL ICANN Versus the Public ICANN an Essay by Dave Hughes and Gordon Cook pp. 435 - 437

  Postscript: Taking Advantage of the September 11 Attacks ICANN Moves Control Agenda to Front Burner pp. 438 - 442

  ICANN Annual Meeting Security Sideshow Fails to Upstage Completely the Nasty Question of an At-Large Membership pp. 443 ­ 444

  ICANN, Ignoring California Statute, Refuses to Show Its North American at Large Director its Books -- Opportunity for Independent Review of Finances Lost pp. 445 -450

  Contents

  pp. 451 - 457

  Pricing and Ordering Information

  Empowering the Customer or Empowering the Telco:

  Betting Your Company's Future on Your Understanding of the Right Mix of Tecnology, Economics and Policy

  2001 COOK Report Interviews

  is priced at $385.00 per copy shipped electronically as six Adobe Acrobat PDF files.

  Those who are not subscribers to the COOK Report may save 5% on the cost of a subscription if they order both at the same time. The PDF format of the report will be available for posting on an employee only intranet for $1250. Those with web based site license subscriptions may order the report for adding to their webs at $1000.

  This Annual Handbook is NOT provided as part of a regular subscription to the COOK Report.

  Volume Six in this series is still available. Light IP and Gig E from the COOK Report on Internet for $175.

  Inquiries by email welcomed. But orders should be placed by phone or entered on our secure web site where you may pay with charge card.

  Ordering Instructions for

  Empowering the Customer or Empowering the Telco

  click HERE

  OR contact: cook@cookreport.com

  (609) 882-2572