How Long for Internet to Achive Ubiquitous 1,000-Fold Computational Increase?

Some believe the next-generation internet could require a three-order-of-magnitude (1,000 times) increase in computing power, to support lots of artificial intelligence, 3D rendering, metaverse and distributed applications. 

What that will entail depends on how fast the new infrastructure has to be built. If we are able to upgrade infrastructure roughly on the past timetable, we would expect to see a 1,000-fold improvement in computation support perhaps every couple of decades. 

That assumes we have pulled a number of levers beyond expected advances in processor power, processor architectures and declines in cost per unit of cycle. Network architectures and appliances also have to change. Quite often, so do applications and end user demand. 

The mobile business, for example, has taken about three decades to achieve 1,000 times change in data speeds, for example. We can assume raw compute changes faster, but even then, based strictly on Moore’s Law rates of improvement in computing power alone, it might still require two decades to achieve a 1,000 times change. 

source: Springer 

And that all assumes underlying demand driving the pace of innovation. 

For digital infrastructure, a 1,000-fold increase in supplied computing capability might well require any number of changes. Chip density probably has to change in different ways. More use of application-specific processors seems likely. 

A revamping of cloud computing architecture towards the edge, to minimize latency, is almost certainly required. 

Rack density likely must change as well, as it is hard to envision a 1,000-fold increase in rack real estate over the next couple of decades. Nor does it seem likely that cooling and power requirements can simply scale linearly by 1,000 times. 

Persistent 3D virtual worlds would seem to be the driver for such demand.  

Low-latency apps such as persistent environments also should increase pressure to prioritize traffic, move computing closer to the actual end user location and possibly lead to new forms of content handling and computation to support such content. 

Compared to today, where content delivery networks operate to reduce latency, content computation networks would also be necessary to do all the local and fast processing to support immersive 3D experiences that also are persistent. 

How we supply enough fast compute to handle rendering, for example, could be a combination fo device and edge computing architecture. 

Among the other issues are whether chip capabilities can scale fast enough to support such levels of compute intensity. 

So long as we have enough levers to pull, a 1,000-fold increase in computing availability within two or three decades is possible. Moore's Law suggests it is possible, assuming we can keep up the rate of change in a variety of ways, even if, at the physical level, Moore’s Law ceases to operate.  

But that also means fully-immersive internet experiences, used by everybody, all the time, also would be accompanied by business models to match. 

So in practical terms, perhaps some users and supported experiences will use 1,000 times more computational support. But it is unlikely that the full internet will have evolved to do so.

Are Scarce Access Assets Still So Valuable?

Telefónica Group, Crédit Agricole Assurances and Vauban Infrastructure Partners are joining to create Bluevia Fibra to build fiber to premises networks in rural parts of Spain. 

The consortium formed by CAA/Vauban will acquire a 45 percent stake in Bluevia from Telefónica España. Telefónica Group will retain a 55 percent stake in Bluevia. 

The 55 percent stake owned by Group Telefónica will be held by Telefónica España and Telefónica Infra, with 30 percent and 25 percent stakes respectively.

Operating with a wholesale model, Bluevia will offer wholesale FTTH access to all telecommunication services providers. Based on an initial footprint of 3.5 million premises currently passed, Bluevia will increase its network to five million premises by 2024.

Bluevia’s anchor tenant, as you might guess, will be Telefónica España. The deal is among many globally where service providers try to decrease the cost of building new infrastructure by partnering with investment firms looking for long-term, stable cash flows in the digital infrastructure area. 

Other joint ventures that, in part, are aimed at reducing investment and debt burdens, are happening in other markets, by other fixed network providers. Liberty Global, Telefónica and InfraVia Capital Partners have formed a joint venture to build seven million fiber-to-premises passings in the United Kingdom. 

Liberty Global and Telefónica will jointly hold a 50 percent stake in the venture through a holding company, with InfraVia owning the remaining 50 percent. Telefónica Group’s participation will be held through Telefónica Infra, the firm's infrastructure unit. 

Both deasl might also raise issues about the value of access assets to tier-one telcos and other different stakeholders. Though access assets always have been seen as sources of business value, the perception of value has changed over the past few decades. 

Though necessary, access infrastructure often is not viewed as adding proprietary value. So full ownership is less valuable than in the past, while the freed-up capital is deemed more valuable. 

Historically, scarcity has driven the value of access networks. It still does. Institutional investors value precisely that relative scarcity as a driver of long-term investment value, as such investors have valued real estate assets. 

But network infrastructure scarcity is largely eliminated as a competitive issue when assets are structurally separated, it can be argued. While it also can be argued that owners’ economics often are important, compared to renting access from a wholesale provider, the loss of potential margin and differentiation is counterbalanced by the reduction of capital investment burdens as well. 

Wholesale access also arguably changes the nature of competition. When every retail provider has the same access to network features (latency, speed, wholesale price), competitive distinctiveness has to be found elsewhere. 

And, most of the time, such distinctiveness happens with non-network features and value, typically when different features are bundled as part of network-based offers. The larger point is that competition seems to be shifting away from “scarcity” and towards other elements of the experience. 

In the mobility business, spectrum scarcity remains an issue, but is improving, relatively speaking. That is reflected in declining per-MHz spectrum costs, even if physical infrastructure costs intensify. 

And much traditional infrastructure--especially towers and radio sites--no longer are considered “must have” assets to own. To the extent networks are differentiated, it is on the basis of ownership of spectrum assets and other bundled features, not radio sites. 

Executives likely hate the idea, but physical access assets are more commoditized, and less value-driving, than access assets used to represent. Increasingly, it is the intangible assets that drive value.

Elite Gamer - Your Way To Faster Online Gaming

Gaming-focused services that minimize latency are totally logical. What is not so clear is whether such services run afoul of #NetNeutrality in some way. The same would apply for other latency-sensitive apps, including some #metaverse experiences and some #videoconferencing use cases. http://dlvr.it/SVgF04
http://dlvr.it/SVgF04

Is Cable Home Broadband Market Share Dominance Reached a Turning Point?

Comcast continues to claim that fixed wireless is not damaging its home broadband business, and that might well be correct. For any ISP, a customer move is an opportunity to gain or add an account, so lower rates of dwelling change should logically reduce the chances of adding new accounts. 

In the second quarter of 2022, Comcast reported a net loss of customer relationships and “flat” home broadband accounts. 

That might suggest to some observers that stepped-up telco fiber-to-home and fixed wireless account gains might be starting to change market share dynamics. Those trends possibly were not obvious in the first quarter of 2022. 

All that said, there are possible signs of change. Fixed wireless already is driving net home broadband additions for T-Mobile. In the fourth quarter of 2021, fixed wireless represented 74 percent of Verizon net home broadband additions.  

Comcast did not gain net accounts for the first time, ever, according to market watchers. Verizon added significant numbers of new home broadband accounts in the same quarter.  

One might suggest that, eventually, share loss could become a sustainable trend, as internet service providers step up marketing of FTTH and fixed wireless services. Home moves and housing starts always have been significant drivers of home broadband account gains. 

Both of those might be slowing, so slower growth overall is not unexpected. But market share shifts need to be watched, as mobile and fixed network operators increase availability and marketing of competitive home broadband services.

25 Gbps or 50 Gbps?

As long as I can remember, optical network access platform upgrades have offered potential buyers two choices: upgrade with a next-generation choice that is available now, or wait for a faster version available in a few years. 

The choice of access platforms supported by 25 Gbps or 50 Gbps optical access platforms poses such an issue: upgrade now with backwards compatibility or wait for the next platform that offers more performance. 

As always, some operators, faced with an immediate upgrade choice, are going to choose the existing standard. Others who can wait will often do so.  Technologists often debate the merits of alternative choices.

But deployment remains a business issue. What must be done to maintain or improve market share, how much time is available to do so, what resources are available, what will customers demand, what will they pay, what are our competitors doing and where are we most vulnerable to share loss?

Some of you with longer memories will remember that debate about upgrades to 40 Gbps versus 100 Gbps. Network choices have changed as all telecom networks become data networks, but two decades ago the choices were shaped by backwards compatibility with the legacy telco networks versus upgrades more in tune with the way data network standards tend to progress (1, 10, 100, 1,000 times). 

U.S. Cable Operators Might Still have 65% Market Share in 2027

U.S. cable operators will still have 65 percent share of the home broadband market in 2027, analysts at GlobalData predict, despite more fiber-to-home and fixed wireless deployments. 

That might sound incongruous--and perhaps it will prove too optimistic--but relative stability in the home broadband market can be explained in a few ways. 

Competent competitors with lower cost structures and lower or equivalent costs to upgrade bandwidth--and that will still be the case for cable operators in 2027--should be able to limit share losses, even if competitors equally skilled try to attack them. 

source: GlobalData 

The other issue is that upgrading most telco facilities to fiber to home will take time. There is only so much capital that can be put to work; only so much construction capacity; only so much network infrastructure than can be produced in any year. 

By Prysmian Group estimates, for example, FTTH will serve only about 26 percent of U.S. households by 2027, and that includes cable ISPs and independent ISPs, not just incumbent telcos. So telco FTTH share will be less than 26 percent in 2027, if Prysmian proves correct. 

source: S&P Global Intelligence

In fact, other analysts at S&P Global Intelligence  think FTTH share of home broadband (again including telcos and other competing ISPs) will only reach about 17 percent by 2025. 

As cable industry executives have pointed out for quite some time, the amount of new FTTH infrastructure that can be deployed by telcos--for reasons of capital limitations, market opportunity or other choice--is limited.

It takes time to build out a new ubiquitous access infrastructure in a continent-sized country. Also, as cable operators themselves start to deploy FTTH, it will be increasingly necessary to delineate market shares by type of competitor, not choice of physical media. 

Telco FTTH is not going to move the market share needle as much as some might hope.

Business Case Drives Platform Choices, Always

Fixed network next-generation platform choices are virtually never as “easy” as choices possible for mobile networks. For starters, mobile platform choices are always global and unitary: there is one standard to replace the prior standard. 4G is replaced by 5G as 5G will be replaced by 6G. 

In the fixed networks segment there always are multiple choices. Cable operators have multiple architecture choices when driving optical fiber deeper into the network, or can switch platforms entirely and replace hybrid fiber coax with fiber to the premises. Then there is the timetable: upgrade HFC now and then switch to FTTP later versus moving directly to FTTP. 

Fixed network operators have several choices of FTTP platform as well. Capabilities are one matter, but deployment cost; business strategy; expected financial return; capital investment and expected level of competition all are issues to be considered. 

source: Broadband Library 

When an immediate upgrade from copper is envisioned, some might argue XGS-PON is more future-proof, if more costly. But scale matters, in some instances. Capex for one choice that is four to five times that of the other relevant choice can be a powerful incentive. 

Split ratios and the number of wavelengths also might be considerations if one platform has range significantly different from other platforms. A network architect might require more wavelengths per fiber if longer distances are covered, to support dropping wavelengths along the route to serve enterprise or other high-volume customers. 

source: Medium 

In all cases, though, the business case influences platform choices. "First installed cost" is never the only consideration.

Switching Locations Lose Relevance for Network Architectures

Of all the changes in fixed or mobile network architectures over the past few decades, one of the notable physical layer changes is the application of optical fiber more densely in distribution and access networks.

But also noteworthy is the disappearance of switching or computing locations as demarcation points.

In the past, we could always demarcate the access network from the distribution network at a central office or rermote terminal location. That makes less sense these days, as processing is increasingly distributed.

Both fixed and mobile networks use similar architectures in the core network, diverging mostly in the access network. Core network transport these days always uses optical fiber media. Transport networks (sometimes known as distribution networks) that move traffic from the access network to the core network also are commonly based on optical fiber platforms. 

source: Dgtl Infra 

Access networks that move traffic from customer sites to transport aggregation points rely on different media (cable versus wireless radios). 

The other common change is that both fixed and mobile networks can be described without reference to places where processing operations occur. In virtualized and distributed networks, that can happen at many different places. 

In past days transitions between portions of the network would happen at processing locations such as central offices, which traditionally terminated the access network. These days, processing no longer is a consistent demarcation point between network segments (core, transport/distribution and access).

Covid Lockdown Productivity is an Illusion

A study by economists Robert J. Gordon and Hassan Sayed argues “the pandemic appears to have created a resurgence in productivity growth with a 4.1 percent rate achieved in the four quarters of 2020.”

In other words, while many office and retail workers were working from home, productivity accelerated, the study says. Some will take that as confirmation that work from home actually does raise productivity. 

Maybe not. “We use the data to show how severely the quarterly pattern of aggregate productivity growth is distorted in 2020 by the change of the industry mix in which low-productivity industries suffered disproportionate losses of output,” say the National Bureau of Economic Research researchers. 

To be sure, the 2020-22 average productivity growth rates of 17 industries are highly heterogeneous, ranging from +10 percent to -9 percent at an annual rate.

“To provide insight, we divide the 17 industries into three groups: goods, work-from-home (WFH) services, and contact services,” the researchers say. “We show that WFH industries account for more than all of the positive productivity growth during 2020-22.”

What must be explained is productivity growth as output plummeted. The answer appears to be that “the apparent countercyclical behavior of productivity in 2020:Q2 reflected not a sudden outburst of creative innovation, but rather in large part a shift in the mix of output and employment toward higher productivity sectors of the economy,” the authors say. 

“While output and employment dropped everywhere, they declined at a much faster rate in the sectors where labor productivity and wages are relatively low,” say Gordon and Saved. 

“This shift in the industry mix reflects a relatively large decline in the employment of workers in low-paid industries where work involves close contact among employees, customers, or both, such as bricks-and-mortar retail trade and leisure/hospitality, and a relative increase in the employment of workers who could continue to work at home in relatively high-paid industries such as finance and information technology,” they note. 

In other words, we simply subtracted low-productivity workers from the sample, leaving a higher preponderance of “high-productivity” workers in the sample. 

Leave aside for the moment the question of whether knowledge worker productivity actually can be measured. The boost in productivity documented here actually results from removing substantial portions of the low-productivity workforce from the statistics. 

So average productivity rose, even if much of the real economy was shuttered. 

The point is that we need to be careful about claims that work from home actually increased productivity. This study only confirms that lots of low-productivity employees were out of work. We actually know very little about WFH productivity effects.

What is a "Problem" and What is a "Success?" Sometimes They Get Confused

Can you name a single government program that achieves 99 percent of its goals? And if any such program achieves 99 percent of its actual numeric goal, does it make any sense to say such an outcome is not worth cheering? 

Where it comes to home broadband, if you pay attention to the actual numbers, the “unconnected” problem is a “last two percent of locations” issue, and always is. The actual size of the “cannot buy broadband” problem also is definitional. There are almost no continental U.S. home locations where internet access at “broadband” speeds is unavailable, if one includes satellite access among the relevant platforms. 

That is why home broadband availability suffers in areas with lots of rural households and also tends to be best in urban areas. 

In fact, one often sees descriptions of home broadband that are examples of innumeracy, such as the claim that 0.2 percent represents “so many” locations when it actually represents “so few.”

On the other hand, customer choice also is disregarded, though it is a huge factor in choices made about whether to buy home broadband services. 13 percent of households say they do not want to use the internet. 

In addition to that, at least 15 percent of U.S. residents report they are mobile-only for their internet access. Assume that equates to about seven percent of households. 

So add up those two categories--do not want to use the internet and use mobile for internet access--and you have as much as  20 percent of U.S. households that have good reasons for not buying home broadband services. 

“Availability” is far less an issue. 

The key issue is the oft-repeated insistence that something is a “big problem” when perhaps that is not the case. Problems can exist, and still not tell the story. One percent and two percent issues remain issues. But that should not obscure the main story, which is that 98 percent to 99 percent of instances are perhaps not problems at all.

Orange, Masmovil in Spain to Merge Their Assets

A merger of Orange and Masmovil in Spain will create a new entity with about 25 percent share of the access business revenue in Spain (both mobility and fixed network services). 

At least some observers believe the proposed deal with provide clues about regulator willingness to allow more consolidation in EU markets that reduce the number of main competitors from four to three. 

The deal would create a telecom market with three leaders: Movistar (Telefonica), the new firm and Vodafone.

source: CNMC 

The firms are likely to make the argument to regulators that the deal should be approved to allow the new firm, jointly owned by Orange and Masmovil, to speed up investments in 5G and next-generation platforms.

Home Broadband Resisters: Mobile and "Not Interested in the Internet" are the Big Issues Now

Can you name a single government program that achieves 99 percent of its goals? And if any such program achieves 99 percent of its actual numeric goal, does it make any sense to say such an outcome is not worth cheering? 

Where it comes to home broadband, if you pay attention to the actual numbers, the “unconnected” problem is a “last two percent of locations” issue, and always is. The actual size of the “cannot buy broadband” problem also is definitional. There are almost no continental U.S. home locations where internet access at “broadband” speeds is unavailable, if one includes satellite access among the relevant platforms. 

That is why home broadband availability suffers in areas with lots of rural households and also tends to be best in urban areas. 

In fact, one often sees descriptions of home broadband that are examples of innumeracy, such as the claim that 0.2 percent represents “so many” locations when it actually represents “so few.”

On the other hand, customer choice also is disregarded, though it is a huge factor in choices made about whether to buy home broadband services. 13 percent of households say they do not want to use the internet. 

In addition to that, at least 15 percent of U.S. residents report they are mobile-only for their internet access. Assume that equates to about seven percent of households. 

So add up those two categories--do not want to use the internet and use mobile for internet access--and you have as much as  20 percent of U.S. households that have good reasons for not buying home broadband services. 

“Availability” is far less an issue.

Garbage In, Garbage Out

Not every job can be done remotely, and perhaps we should also recognize that though employees like it, productivity is not necessarily improved or maintained when workers are full-time remote. What is true “in the office” is likely also true “out of the office:” 80 percent of total worker value is created by 20 percent of the activities at work, and perhaps also by 20 percent of the workers. 

It is too easy to blame insecure bosses for resistance to remote work. Even younger CEOs are expressing concern about the productivity impact of remote work, though some claim there is evidence of enhanced productivity. 

We can say with some certainty that people prefer working remotely. But that is a different issue than whether productivity is better, the same or worse. Employee satisfaction often is higher with remote work, but that also is not the same as asking whether workers are more productive. All we know is that they report being happier. But they also might be distracted. 

Also, we cannot be sure that team productivity is positively or negatively affected, even if we think we have some sense of individual productivity.    

In truth, since knowledge worker productivity is exceedingly hard to measure, all we often have are opinions of workers who claim they are more productive. Some cite email activity or meetings as evidence that productivity has not dropped. Some of us will question whether measuring email volume or number of meetings attended as useful measures of business outcomes, though.

In fact, it might be fair to say we do not really know what has happened to productivity as lots of office workers went remote. Productivity might be higher for some; the same for others and lower for some significant number of people. 

Much will hinge on the type of work done, the personalities of the actual people, the phase in career, and the amount of value random collaboration actually creates. 

 Remote work is not  going to go away, but it might not grow as much as much expect, either. The bigger issue is what we think we are measuring when trying to assess productivity. The adage “garbage in, garbage out” applies.

Congratulations Denmark

Congratulations (coming Sunday) to Denmark. Jonas Vingegaard is one step closer to winning the 2022 Tour de France after he extended his overall lead with a stunning stage 18 victory. A Danish rider last won the Tour de France in 1996. 

In a head-to-head battle with defending champion Tadej Pogacar, Vingegaard waited for his rival after Pogacar crashed. Sportsmanship! 

How Do You Compete with "Free?"

Why, over the past couple of decades, have connectivity service providers been so concerned about over-the-top application providers? In large part, because the change from a closed telco value stack to an open internet value stack both devalues traditional telco products and enables new competition. 

Put simply, “it is hard to compete with firms that give away what you sell.”  It also is hard to compete with providers who are willing to sell “at cost.” Consider the way “triple-play bundling” has worked in the fixed networks business. 

While it is true that both incumbents and attackers have used the bundling strategy, they have done so for different reasons. In nearly all cases, some services have been the equivalent of retailer  “loss leaders.” 

Telcos have been much more concerned with “merchandizing” video services to protect voice service revenues and profit margins, while cable TV operators have been more willing to merchandise voice services or mobile services to protect legacy video revenues. 

These days, most fixed network service providers hope to merchandize almost anything to protect home broadband market share, revenue and profits. 

Mobile service providers, on the other hand, want to protect broadband data access revenues and merchandize voice, text messaging, phones and video or content. 

In other words, can you compete with "free?" That complaint lies at the heart of issues connectivity service providers have had with over the top edge providers or app providers. 

For communications service providers, the issue has arisen mostly in conjunction with low cost or “free” services such as Skype or WhatsApp that supply voice or messaging services “at no incremental cost,” once a user has suitable devices and Internet access.

That has led many to say the economics of abundance makes new revenue models possible. Some would say “abundance,” a relative term, makes new models essential, in at least some cases. But the implications are startling.

The basic idea is that transistors, storage, computation and bandwidth are so abundant  the cost of their use--and digital products built on them-- is a price very close to zero. 

The corollary is that businesses based on the use of such resources can be viewed differently from businesses where physical  inputs are necessary and relatively expensive.

In other words, businesses based on abundant inputs can "waste" those resources. In a pre-broadband, pre-Internet-Protocol era, unicasting (content on demand) would have been nearly impossible. That is why video entertainment was broadcast or multicast. 

The same sorts of economics apply to digital products whose cost of replication is quite low, in comparison to physical goods. 

Or consider Facebook Messenger, or Skype or WhatsApp. It is the same general business problem: competitors who can afford to give away valuable apps and features, or price them very low, because their business models are built on some other revenue driver. 

Incumbents in the New Zealand home broadband market lost about  three percent account market share over the last year ending in March 2022, says IDC. 

Notable share gainers include Trustpower, Contact Energy, Electric Kiwi and Nova Energy,  energy retailers who now are bundling home broadband with their energy services. 

“The energy retailers have a distinct advantage over the telcos; energy retailers don't need to make a profit on their broadband services,” says Monica Collier, IDC New Zealand researcher. 

How to ”compete with free" is a major question in the Internet era, where many goods--especially of the non-tangible sort-- can be replicated and produced with low marginal cost.