Volume Six 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 6 -- Light, IP and Gig E, (280 pages) the majority of articles from the March 2000 COOK Report through the March 2001 issue have been reorganized into topics that unfold and overlap over time. To focus more sharply on technology evaluation we have omitted some articles on network operations and all but two articles on ICANN. The six sections of Light, IP and Gig E cover the following six critical issues:

• They Internet "Way" (Gigabit Ethernet and Architetrural Issues) pp. 3 - 49

• National trials of "True Internet" - Canada, Holland, Sweden pp. 50 - 125

• Toward a Bandwidth Commodity Market pp. 126 - 169

• Internet Telephony Issues pp. 170 - 203

• Other Oncoming Technical Developments that Devour Bandwidth pp. 204 - 258
• ICANN pp. 259- 273

  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 $375 a PDF (electronic) copy. The report is available in electronic form only.

  The rest of this message contains:

  1. State of the Internet 2001 -- The complete preface to our study --

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

  3. Description of the Handbook's Audience

  4. Pricing and Ordering Information

  Light, IP and Gigabit Ethernet

  A Road Map for Evaluation of Technology Choices Driving the Future Evolution of Telecommunications

  The State of the Internet 2001

  Contrary to some opinions, the COOK Report finds that the Internet revolution is not spelled dot com. The revolution is in fact to be found in a total revamping of the transport of bits. While the dot com empires of 1999 collapsed in 2000 the cost effectiveness of pushing the Internet Protocol over glass yielded more dividends than ever before.

  A growing amount of telecom traffic has migrated to a growing amount of fiber. The pure Internet play throws out SONET effectively doubling available fiber in the case where redundant loops were used. Whereas lighting each new fiber used to call for new bays of OC-48 SONET equipment at perhaps $100,000 a bay and up, a strand can now be lit at a gigabit by a $7,000 Ethernet switch on each end.

  While gigabit Ethernet over glass is the current preferred Internet way, ten gigabit Ethernet transport will be arriving by year's end. If 40 lambdas per strand were high end in 2000, 160 is likely to be common by year¹s end. With the completion of multiple metro fiber build outs, end-to-end fiber may now be taken for granted by most business customers. The explosion of bandwidth as the result of more fiber and technology that squeezes more bandwidth from each strand has meant that, in some instances, the delivery of a gigabit costs about what a T-1 did a decade ago.

  The bottom line is that telecommunications which is prepared to forego traversing the legacy PSTN is now upwards of 1000 times cheaper than that which powers a circuit-switched voice call. While corporate managed VPNs have been able to avoid the PSTN for some time, a new development has emerged in Canada where customer management of optical wavelengths using the OBGP protocol holds the promise that by year¹s end users of Canada¹s new public sector gigabit Ethernet over fiber infrastructure will be avoiding carrier clouds entirely.

  At the basic levels of both transport and network management the Internet revolution is shaping up to tell the PSTN that it is no longer needed. In telephony meanwhile protocols are being developed that will allow the diversion of large amounts of PSTN traffic to the Internet. ENUM is the major such protocol. This will allow Internet carriers to offer and deliver many services to PSTN attached phones that the PSTN itself cannot negotiate. Other protocols such as instant messaging are shaping up as coordinators for PSTN activity and "off-on" switches that can control Internet connected devices.

  Fiber to the home is becoming more common and companies like World Wide Packets are gearing up to make gigabit Ethernet termination equipment that will give connected families, telephone, fax, high end video, ordinary TV and data off of the same line. Canarie the Canadian advanced internet agency has some interesting ideas about these developments stating that Divergence rather than Convergence may be the key to low cost fiber to the home. Here is a narrative paraphrase of the language of a slide from the presentation 'Optical Communities' in September 2000.

  When people first started looking at Fiber to the Home (FTTH), they deemed it to be too expensive because it assumed all services would be converged ­ date, voice and video. They noted that expensive terminal equipment would be required to segregate voice, data and video services at the home. Meanwhile voice traffic has largely gone wireless. Note that lifeline voice can significantly increase system costs by demanding high reliability and depending for this on DC battery power, 911 services. Perhaps it is time to conclude that the big driver for residential broadband is not voice or video. It is the Internet. Very soon Internet will carry video and second line voice. So instead of building a converged network such as FSAN, HFC, etc build an Internet network only. Divergence rather than Convergence may be the key to low cost FTTH.

  While the power of the new systems is awesome, there are additional issues that will keep very interesting the life of anyone who must evaluate these changes and plan a winning strategy for the future. While one better be aware of the key differences in the power of the technology when compared to the circuit switched world's way of doing things, one also needs to understand that progress has, in this case, waded out into new and uncertain territory. There are some growth and scaling issues where the answers are not yet clearly understood.

  For example readers should consider Bill St. Arnaud's paper on scaling issues of Internet growth. < http://www.canet3.net/library/papers/scaling.html>  If the suppositions in this paper prove to be correct, then the role of backbones will have to be rethought and much Internet topology rearranged. One of the developments that influenced his thinking occurred on December 4, 2000 when Essex Corp announced an advance that enabled it to push as many as 4,000 lambdas down a single strand of fiber. On December 8, St. Arnaud posted the following to his Canarie mail list.

  "[Here are some excerpts from a recent article in Lightreading that I believe illustrates the point that Ultra dense wave division multiplexing systems is not about bandwidth, but connectivity. A number of companies are starting to realize that today¹s Internet architecture (which is still fundamentally based on the old telco network model) will not scale. As intelligence moves to the edge, the existing network architecture must grow at some function related to the square of the number of users. However [the problem is what to do] if the increase in the number of the customer¹s own wavelengths and the fiber in the network only grows linearly? Intriguingly such a customer owned network architecture starts to closely resemble the neuron architecture of the brain. Perhaps mother nature long ago discovered the most efficient architecture for distributed intelligence? - - BSA]"

  From the December 4, 2000 issue of Lightreading.... http://www.lightreading.com/document.asp?doc_id=2760

  "We don't need thousands of wavelengths for bandwidth, we need it for connectivity,² says Simon Cao, chief technology officer at Avanex Corp. (Nasdaq: AVNX), a company that's developing high channel-count wavelength systems. Cao figures that the availability of thousands of channels in combination with tunable lasers will make it possible to eliminate complex optical switches, by using wavelength routing instead . That idea is the driving force behind all of Avanex's developments, he says."

  "Despite its careless capacity talk, Essex has also thought out how to take advantage of the extra connectivity. Moodispaw reckons that Essex¹s solution will be perfect for customer-owned wavelengths in the access network. About 1 Gbit/s would be adequate to supply a gigabit Ethernet line to a business. Each customer pays less for its wavelength, but the service provider is able to sell to a lot more customers, so everybody is happy."

  What this means is that we likely soon see customer owned wavelengths of a gigabit. Such wavelengths will be plentiful, affordable and matched to the speeds of the Internet's basic gigabit Ethernet end-to-end architecture. When only the rich and mighty carriers owned fiber and the very expensive lasers that could pump bits and the even more expensive SONET equipment that sustained the bits, we imagined that bandwidth was a valuable commodity obtainable only from "on high," or from upstream. Indeed the carriers recognized their position and charged large sums for the scarce commodity that they delivered.

  This situation has dramatically changed. If you own a piece of fiber in a metro area network, you can power that fiber with a lambda delivered as gigabit Ethernet for a one time investment of about $15,000. When you run out of bandwidth, adding the multiplexer necessary to turn the one lambda into four is also affordable. In this sense bandwidth can now be generated by customers and used very cheaply at the edge of the network over hops that in ideal conditions can be as much as 100 kilometers. Suddenly these customers can throw cheap bandwidth at quality of service issues. Their whole outlook on life starts to change rapidly. George Gilder was observed to say that "the companies that exploit bandwidth recklessly, will win."

  On January 29, 2001 Bill St. Arnaud observed "Although I may disagree with Gilder on some of his predictions, I think he's gotten this one right. To date most advanced optical network research is based around the assumption that bandwidth is a precious and rare commodity and therefore we must optimize the network topology and try to extract every possible bit of capacity. One of the underlying assumptions of the existing CA*net 3 network and proposed CA*net 4 network architecture is that bandwidth can be wasted. Rather than concentrating on applications and technologies that optimize the use of bandwidth, we want to concentrate on applications and technologies that waste bandwidth but in doing so derive the maximum benefit for the user - hence our focus on "customer empowered" optical networks. There is no question in our mind with customer empowered networks that bandwidth will be wasted, wavelengths will be orphaned and seen from the perspective of a central carrier the network topology will be less than optimum. But in a world of thousands of wavelengths and near infinite bandwidth who cares? The true measure is whether the customer can easily and rapidly deploy new broadband applications and services."

  "At CANARIE we are initiating a number of projects with this premise in mind - OBGP which will allow customers to setup and tear down their own wavelengths at will, WDD- wavelength disk drives will drive new concepts in distributed super computing, object oriented networking enables the wavelength to become a software object, community based condominium fiber networks, and much, much more. Stay tuned for more announcements and developments in this area."

  Arnaud's words portend a seismic shift in the telecommunications landscape. With the exception of some important qualifiers we believe that he is correct. One must understand that, for the time being, bandwidth is cheap only in proportion to the distance that it must travel. Very high bandwidth sent over long distances is still quite expensive. Bandwidth that must be provided on a corporate wide scale for mission critical activities is also somewhat expensive. What Arnaud is talking about will change the world. The only question is how fast.

  To sum up. Costs are falling. Depending on the regulatory environment, the amount of capital necessary to become a small scale telecommunications provider is rapidly shrinking. Independent back yard gigabit Ethernet providers can deliver broadband services at a fraction of the cost but equal in quality to what is accessible from larger more traditional companies.

  There appears to be a choice of two paths to our telecom future. One is to go with the highly innovative pure Internet approach of gigabit Ethernet over condominium fiber. Such a choice empowers the customer, facilitates decentralization over centralized control and provides small and innovative businesses with the environment that they need in order to flourish. The other path is to try to fore stall the innovation by squashing competitors with a massive vertically integrated company founded on older technology and leveraging access to content and over a network monopoly so pervasive that people will find they have no choice but to buy it. What could be in store for us all, if things go in this direction, was summarized by Scott Cleland CEO of the Precursor Group on Friday January 19th, 2001. "Precursor believes AOL-TW has budding 'Microsoft-like' potential to grow increasingly dominant by being the leading national company that brings together the various online interfaces (content, Internet access, buddy lists, instant messaging, etc.) to become the de facto consumer online access market standard much like Microsoft Windows brought together the various desktop applications to become the de facto consumer software market standard."

  On the one hand, the AOL infrastructure, which, compared to what the Canadians are doing, can most kindly be called archaic, has to be a terribly attractive vision for the ILECs. After all, it will give them plenty of time to finish depreciation of their copper plant. On the other hand innovative Internet technology ventures have the most to gain from taking the Canadian road. To facilitate making this choice with more certainty, in this publication we offer a recapitulation of COOK Report interviews on the shifting market domain of the optical network. These interviews are unique in that they treat complex key technical issues with attention to depth and detail found no where else. We believe that they form a set of resources that will permit readers to decide for themselves what direction is most beneficial to the future of their enterprise.

  As we ponder these developments, we realize that we may be standing on the cusp of events that may overturn the economic structure of the first five years of the commercial Internet. Then the largest backbones, UUNET and Sprint, set the price of bandwidth and determined conditions for connection to the Internet. But last week WorldCom announced that it was debranding mighty UUNET and Mike O'Dell, the chief architect of the Internet¹s largest global backbone, left the company. The problem is that these services take more and more resources to pay for ever larger routers and support huge growth rates in traffic. It is beginning to look like revenue derived from running such a facility may no longer match expenses as the availability of alternative sources of cheap bandwidth and Internet transit increases. For the largest backbones, sources of power only a year or two ago may now be turning into liabilities. The economics of bandwidth are in flux to such an extent that there is growing suspicion that for many large players business models that were sustainable five years ago have lead to the acquisition of huge debt today and that the next year may bring a round of major bankruptcies as the new economies of the technologies described in this report render traditional business models based on old technologies unsustainable.

  In the end the path of the Internet as the stupid network driven by these new technologies will predominate. We begin this six part report with a section on the basic Internet architecture and technologies of "Light, IP, and Gig E" to be followed by a section on their adoption in Sweden, Holland and of course our long special issue on Canada.

  Gordon Cook February 2, 2000

  TITLE, CONTENTS AND SECTION SUMMARIES

  Light, IP and Gig E contains the full text of 38 articles appearing in the COOK Report on Internet between March 2000 and March 2001. They are organized into six sections and presented in chronological order within each section. Each section is introduced by an executive summary (written especially for this volume) that explains where and how the material contained in that section fits into the "bigger picture". The articles in each section are also 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.

  A Road Map for Evaluation of Technology Choices Driving the Future Evolution of Telecommunications - 2000 COOK Report Interviews

  Navigating Internet operation and investment successfully in 2001 depends on your assesment of the technology changes described in this 280 page report.

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

  Contents

  Light, IP and Gigabit Ethernet A Road Map for Evaluation of Technology Choices Driving the Future Evolution of Telecommunications - 2000 COOK Report Interviews 1

  Part One: The Internet Way 3

  Executive Summary Part One 4

  Packet Design Has Unique Research Role Seeks Improved Routing to Offset Problems Inherent in MPLS Judy Estrin, Kathie Nichols, Van Jacobson Want Cost Benefits of Convergence By Leveraging Strengths of TCP/IP Architecture 7

  Gigabit Ethernet Rides Economy of Scale As It Erases LAN WAN Boundary Gigabit Ethernet Makes Network Less Complex, Easier to Manage - - 10 Gig Standards Will Demand Choices Affecting ATM SONET WAN Functionality 13

  Gig and Ten Gig Ethernet Bypassing Carriers and Revolutionizing Transport at Internet's Edges ‹ Gigabit Ethernet Combined with Metropolitan Area Fiber Enables New Data Network Business Model in Montreal 23

  10 Gigabit Ethernet Draft Almost Out Gig & 10 Gig E Enable SONET Free IP Data Nets Availability of Cheap Transport Technology for Both MAN and Wan Enables Enterprises to Drop Carrier Managed Services 32

  Gigabit Ethernet Empowers Fiber to Home Increasing Availability of Fiber from Utilities & CATV Enables Creation of Micro Telecommunications Providers ‹ World Wide Packets' Gigabit Ethernet Gear to Enable Delivery of Vast Bandwidth to Home and Small Business 38

  Cogent Communications Guarantees 100 Mbs Internet for $1000 per Month Buys Dark Fiber and Builds National Network Optimized Entirely for Data Business Model Emphasizes 100 BaseT LAN Connections in Buildings it Serves44

  Part Two: National Trials of "True Internet" - Canada, Holland, and Sweden 50

  Executive Summary 51

  Canada and the Next Internet Revolution Canarie Builds Next Generation Optical Internets Government and R&E Leadership Push IP Cost Advantage ‹ Special Report Shows Prospects for Customer Owned Fiber Networks in Rare Innovative National Environment 55

  Canarie¹s Role in Charting Canada¹s Telecom Future Increasing Bandwidth & Lowering Costs for R & E Community St Arnaud Offers Overview of OBGP, Fiber Infrastructure Growth, Condominium Fiber Business Model and Scaling Issues 57

  A Revolution in the Cost of New Fiber Networks IMS Executive Explains His Role in the Creation of Fiber Brokering and Condominium Dark Fiber Networks ‹Plummeting Cost Makes it Possible to Bring Fiber to Most End Users 63

  Clash of Broadband Private vs Public Sector Business Models Will Impact Canadian Economy Francois Menard Describes Complexity of Canadian Regulatory, Carrier, and Content Struggles ‹ Suggests That Viable Outcome Likely Only With Community Networks Infrastructure 69

  "Scaling the Internet" - Excerpts from a Draft Bill St Arnaud in New Paper Examines Traffic Issues His Hypothesis Suggests That Scaling Problems May Force Traffic Off Backbones 90

  Optical Community Networks - A Canarie Presentation - September, 2000 - excerpts92

  CA*net4 Design Document - A Canarie Presentation - October 30, 2000 - excerpts 99

  Optical Border Gateway Protocol is CA*Net3 Experiment To Enable Peering Without Purchase of Transit Through Carrier Cloud - - Direct Connection of Lambdas Could Reduce Backbone Transit Traffic Enabling Internet to Cope with Gig E Bandwidth Explosion 104

  Some Optical Networking News 112

  Explosion in Capacity Chased by Explosion in Use 113

  SURFnet Users Pay Cost of Connection While Gov't Funding Buys Advanced Infrastructure Capabilities ‹ Technology Direction Similar to Canadian While Emphasis on Infrastructure as Enabler of Applications Results in Independent Approach to European Networking 114

  Swedish Ruling Party Endorses Building National Broadband Infrastructure: Goal Vital to Sweden¹s Security Interview With Swedish Commission Member Explores Development of Infrastructure Policy Goals of Five Megabits per Second IP to Every Swedish Home and Apartment 122

  Part Three: Toward a Bandwidth Commodity Market 126

  Executive Summary 127

  Driven by Need for Risk Management Bandwidth Commodity Market Coming Efforts Underway to Create Tools Where Rapid Market Changes in Demand and Supply Can Quickly Match Buyers and Sellers Stan Hanks Explains How These Developments Will Reshape Internet Industry 130

  Bringing Risk Management to the Internet Lin Franks Explains Issues Involved in Commoditzation Describes Her Evangelist Role in Management and Training Issues Inherent in Trading Bandwidth 139

  Commoditization of IP Bandwidth Some Unresolved Technical and Structural Issues Interview With Noel Chiappa Emphasizes Uncertainty About Ability of Routing System To Cope With Massive Changes 143

  Bandwidth Commoditization Technology Enablers Sycamore Networks Focuses On Intelligent Optical Networks Using Software To Control Light Paths ‹ Web Based Interfaces To Give Users Ability To Set Up end Tear Down Circuits Permitting Bandwidth Management 149

  Ceo Of AIG Telecomm Emphasizes Difficulty Of Commoditizing Bandwidth Reaction to Commodization Issue Depends on Amount of Dark Fiber Owned and Affect on Control Over One¹s Customers According to Eric Raab 155

  Scaling the Internet via Exchange Points Many Players Jumping into Rapidly Expanding Global Market Technology and Business Model Issues as Seen By Equinix 161

  Part Four: Internet Telephony Issues 170

  Executive Summary 171

  Assessing the Current State of IP Telephony Data and Voice Converging at the Protocol and Application Levels Telephony Becomes Tool To Be Activated From a Web Page While New Web Oriented Applications Make QoS Less an Issue 175

  ENUM Protocol Seen as Directory Lookup Tying Internet Telephony Services to PSTN ‹ All Numbers in PSTN Can Be ENUM Provisioned to Identify What Services Their Owner Uses - ENUM Enables VOIP Services to Find Ordinary PSTN End Points - Is Seen as Driver of Convergence 182

  ITU and IETF in Agreement on ENUM Administration Letter from ITU To ICANN Blocks .tel gTLD Applications As Competition to ENUM ‹ Administration Modeled on Neutral Tier 1 Database Holder of Pointers to Records of Provisioned Services 192

  Klensin Internet Drafts Propose Radical DNS Revamp - New Class Means New Root ‹ Drafts Are Aftermath of Network Solutions Split With IETF on ENUM and Internationalized Domain Names 194

  Instant Messaging Coordination of People and Devices Becomes Standards Track High Priority ‹ Serves as an Enabler for Many New Applications, New Uses of Bandwidth and Intelligent User Agents 198

  Part Five: Other Oncoming Technical Developments that Devour Bandwidth 204

  Executive Summary 205

  Three Dimensional Data Web Set To Emerge New Protocols Enable Manipulation of Quantitative Data by Data Web Browsers ‹ Open Standards Likely to Give Huge Boost to Data Mining Activities ‹ Work Pushed By Terabyte Challenge Consortium Enables Remote Interaction of Data Sets 208

  IPv6 from the Viewpoint of Mobile Wireless Continued Cell Phone Growth to Cause Deployment of IPv6 Nets Interconnected to Non Disappearing IPv4 Infrastructure Substantial Work Remains to Bring V6 and Data to Cell Phones 220

  Among Scaling Issues IPv6 Solves Only IP Number Problem NATs Depend on Both IP Numbers and Routing Issues Since IPv4 and v6 Interconnect But Do Not Interoperate -Introducing v6 Means Running Two Networks ‹ 3G Makes v6 Cellular Viable 227

  Napster - MP3 File Sharing Application - A Hugely Popular Bandwidth Sink Defies Control Efforts of Network Administrators 230

  Broadband Spread Spectrum Wireless Extends Internet Reach of ISPs & Field Research Scientists - - Increased Radio Speed and Decline in Price Enabling Smaller ISPs to Compete with Cable and DSL Internet Access NSF PI Dave Hughes Explains How Wireless Data Gathering by Environmental Scientists Will Yield Huge Increase in Network Traffic 233

  Akamai Pushes Web Content to Edge Content Distribution Overlay Independant of Tier 1 Backbones and Peering Is Created Using Proprietary Tools Based on DNS ‹ Avi Freedman as Chief Architect Heads Effort to Place Servers in Networks of 1,000s of ISPs Worldwide via Incentives of Bandwith Saving & Better Response 248

  Part Six: ICANN 259

  Executive Summary 260

  Cracking the Code: an Analysis of US Internet Governance, E-Commerce and DNS Policy - - Why US Dominance of E-commerce Indeed is Dead if ICANN Fails & Why the US Has Most to Lose from Continuing a Policy Founded on Indefinite Control of the Root 262

  Commerce Department Formation of ICANN Seen as Illegal End Run Around the Administrative Procedures Act and the United States Constitution Michael Froomkin's Findings to Be Published in Duke Law Journal - Lawrence Lessig Lauds Froomkin's Creation of Framework that Could Force Reform 269

  Contents 274

  THE AUDIENCE FOR THE HANDBOOK

  "Light, IP and Gig E" is intended to enable strategists understand the complexities facing their engineering and operations staff. ILECs and CLECs and other phone companies will also find it useful. Familiarity with the issues discussed within the Handbook will provide their corporate MIS people and strategists with a valuable knowledge base of the issues facing the survival of their companies

  However, since these infrastructure issues are also critical to the continued growth and success of the Internet industry, this "Handbook" is expected to be a tool for use by those in the banking and investment community. If those in the financial community understand the changing technical and power relationships in the industry, they will be able to improve the quality of their investment decision making. Finally the Handbook should also be useful to corporate strategic planners who will be advising their companies' decision making in Internet applications for vertical industry markets.

  PRICES AND HOW TO ORDER LIGHT, IP AND GIG E

  "Light, IP and Gig E: A Road Map for Evaluation of Technology Choices Driving the Future Evolution of Telecommunications - 2000 COOK Report Interviews" is priced at $375.00 per copy shipped electronically as an Adobe Acrobat PDF file.

  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 Five in this series is still available. Battle for Cyberspace from the COOK Report on Internet for $200.

  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: click HERE

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