Here's to the "Mighty Q's" recovery!
<NAGEL: We've been working on a second-generation system for the last five years in the labs. We're going to be rolling that out and doing a trial of that in a fairly major city next year. Which gets fiber much farther out to the customer.
Question: Fiber to the home?
Answer: NAGEL: Eventually. This is a second-generation architecture that begins to move the fiber farther and farther out. You don't do it until you need it, but fiber to the neighborhood is sort of a first step.>
Posted at 9:14 p.m. PDT Sunday, May 9, 1999
AT&T's new networked world
Challenge: Building quality convergence for its customers.
AT&T Corp. is reconstructing its end-to-end network of years ago, but with a twist:
Local phone service will be furnished in many areas through high-capacity cable TV
networks, including those purchased from Tele-Communications Inc. AT&T also is
preparing to leave behind the conventional method of handling phone calls in favor of
Internet techniques. The current method creates a dedicated connection from one
phone to the other, while so-called Internet Protocols route multiple conversations
and data sessions through shared pipelines.
David C. Nagel, a former top Apple executive and now AT&T's chief technologist,
and Frank Ianna, AT&T's president of network services, visited the Mercury News
recently to talk about these transitions. The following transcript was edited by Mercury News staff writers Jon Healey and
Stephen Buel.
Q What does the shift to communications via Internet Protocol mean for consumers?
A NAGEL: I think IP means lower cost. It means more integration of services.
When I flew into Newark (N.J.) the other night, I checked five voicemail boxes: I have my New York apartment, I checked
my office in California, my home in California, my office in New Jersey and my cell phone. That's nuts! I don't want to do
that anymore.
IP means being able to have a single mailbox, a single place to go. It helps us engineer things so that they're not as complex
as they are today.
Another thing that we haven't talked about that is really important is the always-connected thing. That's another big deal.
First of all, you save a lot of time. But you can also do a lot of things that you can't do with dial-up. You can do alerting.
You can have services that tell you when your kids are getting out of school or when your stock should be traded.
Q How are you going to make the services AT&T offers over cable more reliable than TCI's high-speed data services are
today?
A NAGEL: We're going to slowly get the overall reliability of this whole network up to the standards that we consider to
be acceptable standards.
The problem is, this is a convergence of industries. We've got the data industry on one hand converging with the telephone
industry. Customers typically don't like to make negative progress when these kinds of things happen. So I think they're
going to hold us to a very high standard, which means we're going to have to upgrade the data stuff to telephone standards.
Q AT&T is testing a conventional phone-over-cable service in Fremont. When will you start to try out the Internet
Protocol phone techniques?
A NAGEL: We've got equipment in the laboratory right now. Certainly by the end of this year we'll have a prototype
service up and running.
My guess is, we'll have it in the hands of what we call friendlies, those are people who are not going to pay for it, (in the)
early part of next year. And hopefully by the middle of next year, we'll have the quality and performance and all the features
cranked up.
Q Will you eventually charge people by the amount of information they send and receive?
A NAGEL: I don't think so. I think the inevitable is charging by the connection. If you want a phone, it's $5.95 a month.
Use it as much as you want. Because the marginal cost is approaching zero -- per minute, per packet, per whatever.
IANNA: The packaging, I think, will look more like flat-rate pricing and package pricing.
Q Phone, cable and Internet companies today don't seem to offer consumers what they really want, which is something
that's convenient and understandable. Isn't this a substantial problem?
A NAGEL: What you're seeing is an industry that's trying to figure out how to differentiate itself with a basically
undifferentiable product. Everybody's long distance is pretty much the same. So you slice and dice, you give people airline
miles.
I think the thing that's going to happen now, we did introduce Digital One Rate (a wireless phone plan that charges the same
for local and long distance calls) and customers did like it. As soon as we can move our economics to that kind of thing,
you're going to see a lot of Digital One Rate plans that are really simple. You've got your cellular phone, you've got your
data networks, you've got this, you've got that, you've got TV, $99 a month, all you can eat. Everyone can understand that.
The other thing is, we're trying to move to differentiation. One of the reasons we're buying cell phone companies and cable
TV companies is so we can provide every conceivable communication service someone wants. You can have your e-mail,
you can have your voice mail, you can have those things integrated, you can have them displayed on your TV, you can have
them read to you over your phone.
Q Why not enable people to customize their own packages via the Internet?
A NAGEL: You're absolutely right, you should be able to get on a Web site, dial up how many bits you want per second
or your quality of service. I envision a future in which you can do exactly that, and you can tailor your stuff to meet your
exact needs.
And you can probably do that on the fly. You know, ''Aunt Gladys showed up, I need an extra phone line.'' Click, extra
phone line. Give her her own number from wherever she was in Des Moines. That's the kind of thing that you do want to
do, and that's exactly what all this re-engineering, once it's done, is going to enable you (to do).
Q You mentioned earlier that the TV gets the Internet into more homes. How do you see the TV acting as an interface for
people?
A NAGEL: Just look at the numbers. Plus or minus a few percent, 50 percent of the people in the U.S. now have a PC.
So it's 50 percent that don't. Ninety-seven percent of the people or more have a TV. A lot more people are familiar with
and comfortable with a TV than they are with a personal computer. I think it's because they're getting harder to use.
When we did the announcement in New York on the Microsoft deal, someone said, ''Well, are users going to be able to
load software on their set-top boxes?'' I said ''No. That's the whole point; it's an appliance.'' If you make it a PC, you're
going to cut out half the market, in effect. So the whole idea is to use the TV.
Q But what about pricing? I don't know how much of a factor it is, but I imagine some people find the extra $20 a month
for dial-up or the extra $40 to $50 a month for high-speed Internet access to be something that they don't what to take on.
A NAGEL: I'm not saying it's going to go from 50 to 100 percent, but my point is it's a lot more accessible. People are
comfortable with TVs. In the new world, people will program their TVs to record their favorite program because they're not
going to be there. They're going to be doing end-user programming, but no one had better say that to them because they
won't do it.
A lot of people, roughly half, don't want a PC; they can't afford it. But even if they could afford it they don't know what the
hell they'd do with it. Everyone knows what they want to do with their TV. They want to watch it and they're going to be
able to do stuff like record stuff really easily without watching the blinking 12:00.
Q How can you handle the bandwidth demand? Right now, people who are on @Home complain about slowdowns in the
afternoon and stuff like that. If each of them is sending a 300k stream, you're dead. Your cable isn't big enough.
A NAGEL: We recognize that that's a problem. But remember, this is sort of first-generation data stuff. We're going to
have to get through a couple of years probably of figuring out how to solve these various problems.
IANNA: There are logical things you can do to evolve the architecture to take into account the things that will occur. You
start to see traffic patterns evolve that you can begin to engineer for and take into account in advance.
NAGEL: We've been working on a second-generation system for the last five years in the labs. We're going to be rolling
that out and doing a trial of that in a fairly major city next year. Which gets fiber much farther out to the customer.
Q Fiber to the neighborhood, fiber to the curb, fiber to the what?
A NAGEL: Keep going.
Q Fiber to the home?
A NAGEL: Eventually. This is a second-generation architecture that begins to move the fiber farther and farther out. You
don't do it until you need it, but fiber to the neighborhood is sort of a first step.
Q What's the relationship between customer demand and network capacity going to be? Is it going to be as tumultuous
over the next five years as I'm imagining?
A IANNA: You'd always love to be able to say, ''I had the exact technology ready to deploy'' when that market demand
comes there. I think we saw an example with Digital One Rate where I'm seeing growth rates on the wireless network they
never saw before. You did one relatively simple marketing thing, the product didn't change a lot. Traffic on the network is
going to double this year. My biggest problem right now is keeping up with demand. So are we going to be smarter the next
time we do something like that? I hope so.
Q That is also Pac Bell's biggest problem now in keeping up with demand for its DSL. It seems to be an @Home problem.
Is that going to be lots of companies' problem for a long period of time, while networks adjust to demand?
A NAGEL: It is going to be a time of rapid change in the next couple of years.
Q There's a group of people in this country, tens of millions, for whom there are going to be no choices for a long, long
time. What's going to happen with them? You raised the point earlier about the severe disadvantages that people will face if
they can't get to this stuff. I don't hear anybody in the industry talking about what's going to happen for all of them. You're all
after the high rollers -- which is very sensible. What's going to happen to all the low rollers and the people who live remotely
enough that they can't get any of this stuff?
A NAGEL: We're in business. And so one of the things that we do is we try to maximize our business opportunity. If we
don't, we're dead. Companies are not philanthropic in general and they increasingly cannot afford to be, in a highly
competitive environment. We're going to have to see the government step in and provide the conditions under which people
will go out and provide these services. |
