curtis, taking your points one at a time,
>>who do you think will solve this problem of cable systems not having sufficient capacity to handle the job...<<
This is by no means a real problem "yet," at least not a widespread severe one, although the path seems clear to me that it will be at some point in the future.
If "application creep" holds true to form, being the inevitable thing that it is, it could become a real problem. The cablecos and the ILECs know only too well that their upper layer services such as Internet access and VPN services could backfire on them, through some new twists in the cannibalization process that we all have become only too familiar with by now.
This cannibalization process thing is one of the most fascinating, and still the most curious part about this entire market place. It exists within a given company, and it exists between companies, and between certain categories of vertically stacked sectors within the supply chain.
The "c" principle was brought to popular attention recently on several different fronts. One was at the physical level, when it was cited that DSLs would only serve to displace the telcos' T1s at a fraction of the cost. In this manner, the higher priced T1s and even their ISDN lines were thought to be vulnerable to cannibalization by the more favorably priced xDSLs. The other had to do with Voice over IP, or VoIP, which, if offered by incumbent telcos, would kill off the more lucrative profits afforded by traditional switched voice services. Cannibalization.
I think that it's become clear by now, however, that widespread use of DSL would result in far many more DSL loops than there would ever be T1s in residential/soho areas. This is true for several reasons. First, because T1s have always been priced outside the reach of most consumers, and secondly, because T1s are overkill from a protocol and feature richness standpoint in a newer paradigm that does not depend as much on switched and synchronous attributes.
The heftier load that the latter represents adversely affects price-point decisions by both the customer and the provider in several ways, that is, when the "only" requirement is to satisfy Internet access requirements. Although, I have to say that I believe that the costs of T1s are, and have been, artificially high for some time now. Price decreases have not adeqautely tracked with integration and other economies. Artificially high.
T-1s have embedded capabilities and inherent restrictions that don't really apply here, or they apply too much, whichever, and are superfluous when mere Internet access is required. In short, the T1 carries a lot of baggage, in this respect, and it is overkill, even if only from a number-of-moving-parts perspective.
And yet, this last statement may soon become an anachronism, because the 1.5 Mb/s yield of a T1 may not be sufficient in time. Let's face it, it's already slower than the advertised rates afforded by many cablemodem offerings and several grades of dsl...
So far I've spoken only about the effects of cannibalization at the PHYSICAL layer. But the physical layer is not where the real potential for cannibalization looms.
Rather, it is at the HIGHER layers ((Layer 2's ATM and Layer 3's IP)) that entire service bundles can be absconded from the traditional providers, in a relatively short span of time, if those providers of the physical facilities allow it to happen. It is at Layers 2 and 3, in fact, that Sprint hopes to take share with their ION offering, using other peoples lines. Ditto for INC by T, and by MCIWorldcom's end-to-end whatchamacallit service.
These are not intended to be merely Internet access offerings. Hardly. They will be providing VoIP over these, along with telecommuting, conferencing, etc. Oy! I'm getting a headache trying to envision the "mechanics" of this right now.
I know that this threat, or opportunity, depending on your vantage point, has been discussed during chalk talk sessions among telco engineers and strategists, but I'm not sure whether they have really taken it seriously at the basic belief level.
And I sense that the "average" cable owners have given it even less thought, although with all the talk nowadays concerning streaming video and voip, this may now be changing.
On the other hand, L3, I'm quite certain, has considered this very strongly in their plans, as I think that the folks out in ATT Labs and other orgs have (among themselves, of course).
One of the things that weighs favorably on the side of the incumbents, most decidedly, is the popular "notion" that bandwidth availability is always going to be scarce and hard to come by, and therefore they will keep the lid on its availability for as long as they can.
To put it one way: The cable operators will not be allowing their subscribers (some of whom are also other service providers, most notably ISPs and some program) to have access to anywhere near the bandwidth levels that their own core services require.
Yet, it would be altogether feasible from a technological standpoint to enter into such a wholesale-retail relationship with other SPs, and to allow users more bandwidth than they would have, otherwise. But it is unlikely to happen too soon, for fear of losing control of the major share of the market action that would be garnered by the smaller SPs.
"[Ostensibly]...fiber to the home is too costly. [Supposedly,] wireless
techs will never be up to par. [Most likely,] this wont work and that
wont work because of this or that."
This kind of sing song may not prevail publicly today, but it seems only fitting, given the way that bald-faced company officials of protected markets often speak, that these are the rationales that we may be hearing before long, if we have not heard them already. And so it goes, as long as a lid is firmly place on the availability of bandwidth.
THREAT TO CORE REVENUES
The main providers of physical facilities (telcos, interstates, and cablecos alike) have vested interests in the other services that they provide, which are still far more profitable, namely domestic and international telephone services; dedicated data services; program television; pay-per-views; enterprise VPN services; etc. These services are their core revenue producers. They are therefore not keen on the idea of allowing these services to be delivered by other providers who ride over their raw bandwidth.
That would be, in a way, cannibalization, would it not? Yet, this is exactly where many ISPs and next-gen telco operators will build their platforms in the way of virtual service overlays: On Layer Twos, Threes and Fours that they own, placed atop the facilities-based providers' Layer One.
And the Telcos, Cablecos and even the CLECs will do what they need to do, to be sure, to prevent this from happening. Witness the recent howling that T made when it was suggested that they should open up the cable plant to independent providers.
Also note the caveats that the incumbents place in their use policies, and the exclusion of SPs from housing servers on these nets in many cases. These all seem to be rational measures taken by the dominant owners of the facilities, due to the all-to-familiar shortage realities (cop-outs?), but again, there may be subtle reasons why insufficient bandwidth will continue to exist that never get mentioned.
Subtle or not... any ideas? Again, these current exclusions are reasonable due to the realities of present-day circumstances. But the question to be asking at some point is: Are these circumstances the result of state-of-the-art limitations, or are they by design?
>>take a company like ATT for example...if they buy TCI that would give them cable and phone... would that place them at an advantage relative to the cable only or tele only companies?<<
There are some counteracting dynamics taking place here as we watch this unfold. The existing services enjoy two things: price elasticity, and ever-improving economies due to technological gains. These factors combine to allow the higher quality telco and cable cos to track decreasing pricing trends which the startups and the T/TCOMA genre will bring to bear on the market.
Just take a look at what's happening today in the domestic and international voice spaces. You can call London today for 12 c per minute using switched service providers, with bell-like clarity, while some ITSPs are struggling to make that mark with still-inferiour grades of service. I'm not suggesting that this will always be this way, but this is what's happening today, and probably for some time to come.
Expect the same to happen in the local exchange market within the next two years... where local calling plans will come down in price, as the next geners play leap frog with the incumbents.
>>give them cable and phone... <<
T's VoIP plans are still only Plans. They appear to be making headway in their labs, is what I hear in the press and infer from other sources, and perhaps they are in some trials right now, but in the foreseeable future will their product sound any better than BEL's, and will it indeed be less expensive? If it meets these crieteria, then what is to stop any ISP or ITSP from gaining access to their technology and emulating it using their (T's) very physical or virtual facilities?
And when the copy-cats do their thing, they will be able to do this without having to incur many of the associated costs of R&D and marketing, and the added uncertainties associated with user evaluations and acceptance. Nothing new here. This is how MCI made it to the big time, as many will recall.
>>do you think ATHM can handle the ramp up?<<
ATHM is an ISP. The problem that needs to be addressed here, I think, is what level of what service do they want to ramp up? If it's more of the same, i.e., more web surfing over cablemodem links and some light multimedia, the answer is yes.
If it has to do with anything more than some light multimedia, then I'm afraid that ATHM like any other ISP is at the mercy of the underlying facilities-based provider to ensure that adequate network resources are made available to it in a timely manner, at affordable prices.
When the m-m becomes too intense, i.e., when the line begins to blur between program TV and "other" forms of full motion video services (or when CableCos begin to blend their program tv services with other forms of offerings, similar to what the ISPs are delivering [?] ) , then I think that we will see some serious friction taking place, and the ensuing steep price moves for incremental capabilities on the parts of the incumbent facilities providers: The CableCos and the ILECs.
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