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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony

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To: Frank A. Coluccio who wrote (2773)6/24/1999 12:07:00 AM
From: Frank A. Coluccio  Read Replies (1) of 3178
 
"Netheads versus Bellheads -- Research into Emerging Policy Issues in the
Development and Deployment of Internet Protocols"

Authored by Timothy Denton, with Francois Menard and David Isenberg


Reprinted with permission from the author, Gordon Cook,
publisher of the Cook Report on Internet.

cookreport.com

Visit the site and peruse the past issues. I think that you will enjoy the experience, if you've not been there before.

You will note that Menard & Co's piece, referenced below, covers many of the same issues that we've been talking about here for the past two years. Although their take on the issues is a lot more deliberate, more in depth, and refined. Let me know what you think. Enjoy.

Regards, Frank Coluccio
-----------------------------------

In a mailing to subscribers, Gordon Cook wrote:

"Every once in a long while I see something so good that it can't wait for a
regular monthly issue of the COOK Report. Thanks to Francois Menard for
sending me on Monday the paper to be found at
canniff.com.

"This 45-page policy paper:

"Netheads versus Bellheads -- Research into Emerging Policy Issues in the
Development and Deployment of Internet Protocols" authored by Timothy
Denton, with Francois Menard and David Isenberg, is so cogent that I see it
as the greatest threat yet to the 43 million tons of buried local loop copper.

"Most readers of the COOK Report know the facts recounted in this paper.
What makes it brilliant and groundbreaking is that it is written with
consummate clarity. It defines terminology within the text in such a way
that the reader never feels burdened. It articulates two opposing design
philosophies for next generation networks: the Internet design philosophy
and the PSTN design philosophy.

"Furthermore, it explains very clearly WHY they are different and WHY those
trapped in the worldview of each simply can't conceive of a DIFFERENT way
of doing things. More importantly, it articulates who is empowered by each
philosophy.

"It serves as the beginning of a guidebook for telecom policy makers to use
as a touchstone in setting policy and -- more importantly -- in
understanding clearly who wins and who looses in policy choices.

"One must hope that this group will produce follow up studies of design
considerations for other networks -- perhaps cable TV and wireless could be
next. The series could be capped by a policy maker's guide to the impacts
of choices in all three areas and how each relate to others and to the
global internet. The first study is so well done that, if the remainder
were ever similarly executed, policy makers in Canada, US and Japan might
actually be able to adopt decisions that would benefit their citizens
rather than the stockholders of the countries' legacy technology companies.

"This paper is really the logical successor to Isenberg's Stupid Network
paper of two years ago. Here are some quotes to whet your appetites.

page 3

"A . . . major implication of the Nethead view is that the end-to-end
Internet model promises to do away with the idea that anyone would have a
monopoly in the definition of services. If the Internet open-architecture
model prevails, a telephone company of the future will still be able to
define services, but so will every other user of the communications system
capable of writing good code. The challenge posed by the Internet model to
the telephone system is much more than a change of pricing, or a change of
service definitions. It promises a vast enlargement of who it is that is
able to define what services will be. In short, the relevant remaining
monopoly lies not in the possession of facilities, but in the exclusive
ability to define services."

"Some of these services will be inferior, from the point of view of a
Bellhead. They will satisfy consumer wants, nevertheless. This is why
Netheads do not treat quality of service as the be-all and end-all of what
they get out of the Internet, any more than Microsoft, for instance,
concerns itself whether your system enters a "general protection fault" and
freezes."

"A[nother] major implication of the Internet model is that value is not
created in the network, but at the edges, by users. This means that new
applications, new value, can be created at the edge of the network, without
the permission, control, or involvement of the network owner. And when
network ownership is de-coupled from value creation, carriers derive no
benefit from this new value beyond the new traffic it spawns. For this
reason, the Bellheads will fight the Internet vision with all their strength."

"Whether network architectures will evolve or be pushed towards a broader
conception of who can define services is the key issue for the Next
Generation Internet. Such a result might occur through the actions of
government, mandating new forms of unbundling and interconnection with the
PSTN, or it might come about from changed facts. Optical fiber planted in
municipal rights of way will soon be used to avoid the last-mile local loop
and bypass the PSTN altogether. This would herald a complete undermining of
the ability of incumbents to impose restrictive network architectures."

"It is therefore essential that those who regulate the telecommunications
system and those who advise upon its structure be aware that the broadening
of who may define services is at stake in the development of the next
generation Internet."

page 4

"The telephone companies no longer have a choice to continue to build,
operate and provision separate networks for data and voice. They are forced
by competitive pressures to integrate them. And if these systems are to be
integrated, or converged, a fundamental issue arises: which design
philosophy is to prevail, the Internet's or the PSTN's?"

page 5.

"an entire system and design philosophy of communications will have to be
overcome. This new system of communications does not involve setting up and
tearing down circuits and obviates billing by the minute. How the current
system [Cook: telephony based circuit switched PSTN] proposes to defend
itself from this vision, and perpetuate the old model, is the subject of
this paper."

page 6

"1.2 THE TELEPHONE COMPANY POINT OF VIEW

From a reading of the technical and policy papers proposed by the Bellhead
side of the debate, it is clear that they [the Bellheads] conceive the
Internet to be a
threat to their business model, and missing a control component, on a path
of convergence with the PSTN.

Their vision of the Internet is that it threatens the business model of the
telephone companies by:
Generating expenses without corresponding increases of revenue [and]
Raising the possibility that services will no longer be defined from within
the capabilities of the PSTN."

****************************************************************
The COOK Report on Internet Index to seven years of the COOK Report
431 Greenway Ave, Ewing, NJ 08618 USA Exec summaries, glossary etc
(609) 882-2572 (phone & fax) cookreport.com
cook@cookreport.com What's Behind Ican and How it Will
Impact the Future of the Internet cookreport.com
****************************************************************
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