AT&T Rural Access Lines Illustrate Problem

It isn't yet clear what AT&T will conclude about its rural network holdings, in particular the issue of whether to invest in faster broadband capabilities, or sell the assets. It's a hard question since there are few, if any, potential buyers at the moment. AT&T is slated to announce its decision about rural assets in November 2012, so we should know fairly soon.

Fitch Ratings notes that AT&T has suggested it is considering various technologies — both wireline and wireless — to increase available broadband speeds in rural markets. But AT&T also has said a sale or restructuring of those assets would be considered.

But buyers do not seem available. Firms such as CenturyLink, Windstream and Frontier Communications still are digesting large earlier acquisitions, and are not viewed as able to bid for such assets at the moment. 

AT&T could essentially "do nothing," and allow market share for high-speed access to gradually shift to cable competitors. That essentially would lead to a dwindling revenue base, and a diminished equity value for those assets, but some might argue sale or harvesting strategies are the most logical, given the minimal revenue upside from a major upgrade cycle in rural fixed networks, compared to investment in mobile networks. 

In essence, that illustrates a broader business problem. It increasingly is difficult to earn a reasonable financial return from rural fixed network assets, in part because of competition from cable TV operators, satellite providers, terrestrial wireless firms and other telcos. 

How Big an Impact Will RCS Have?

“Rich Communications Suite” is one mobile service provider answer to the question of how carriers can compete with “over the top” messaging.

Juniper Research forecasts that RCS will support 83 billion messages each year in five years’ time. That still will be less than one percent of total messaging traffic in 2017, though.

Text messsaging (short message service, or SMS), instant messaging, social messaging and email will represent the vast majority of messages.

Juniper Research points out that it took about 30 years for text messaging to reach its current ubiquity, so RCS should not be expected to displace the older alternatives too quickly.

Mobile messaging traffic will nearly double from 14.7 trillion each year in 2012 to 28.2 trillion by 2017, Juniper Research also predicts. 

For Retailers, Mobile Strategy is Not Easy

"What to do about mobile" is no easy question for most retailers to answer. There is widespread agreement that consumers of business and consumer products and services use their mobile devices to conduct research, and increasingly, to make purchases.

Some 86 percent of Apple iOS device owners research products and services on their mobile phone and 69 percent make purchases, compared with 76 percent  and 53 percent, respectively, for Android users, 57 percent and 35 percent  for BlackBerry users, and 47 percent and 32 percent for Windows users, respectively,  according to a Forrester Research survey of more than 53,400 North American respondents.

But Forrester Research analyst Julie A. Ask points out that the majority of firms have less than $500,000 to spend annually on mobile services, barely enough for a simple app and mobile-optimized website. "A few years from now, it will take millions, if not tens of millions, and years to catch up,  if they even can," says Ask.

76% of U.K. Enterprises Will Adopt Mobile Apps

About 76 percent of polled U.K. information technology managers plan to adopt mobile apps for business within the next year, according to  Integralis, which surveyed 300 U.K. IT decision makers in enterprises.

About 58 percent say they will adopt apps such as email, calendars and contact management tools in the next twelve months. 

Communication apps, such as Webex Skype and iCloud are likely to be adopted by 44 percent of respondents. Some 39 percent  of respondents planning to offer access to Internal apps for functions such as updating leave calendars. 

Collaboration tools such as Dropbox and Sharepoint will be deployed by about 35 percent of surveyed executives.

In the coming 12 months, 30 percent of respondents also expect to purchase core mobile business applications. 

The 25 to 44 age group is much keener than respondents 45 years and older to embrace use of mobile apps. 

Those trends are partly a reflection of growing use of smart phones, growing availability of cloud-hosted and delivered applications and also growing use of personal devices at work. Over time, those changes will affect the fortunes of current and new distributors of business apps and services.

When smart phones are the lead device, when apps can be accessed from any computing device with an Internet connection and when the purchase and installation of such software is about as simple as clicking on an icon, the business of distributing apps will change. 

U.S. LTE Service Costs More Than Elsewhere

A comparison by Wireless Intelligence, a unit of the GSM Association, suggests that being in the biggest LTE market has not brought low prices to U.S. consumers.

According to the study, Verizon Wireless charges $7.50 for each gigabyte of data downloaded over its LTE network. 

That is three times the European average of $2.50 and more than 10 times what consumers pay in Sweden, where a gigabyte costs as little as 63 cents.

People sometimes immediately think there is something nefarious going on when they hear such things. It isn't mysterious, though. Retail service costs everywhere around the world are directly related to the cost of supplying the underlying infrastructure, and the U.S. market has among the highest overall costs 

It really isn't much more complicated than that. 




Costs vary from region to region both in absolute terms and as a percentage of income per person. 

Smart Phone Adoption Tops 1 Billion Globally

Suppliers have been selling smart phones since at least 1992. Only recently have they gotten to be a majority of devices sold in some markets, though.  

Australia, U.K., Sweden, Norway, Saudi Arabia and UAE each have more than 50 percent of their population on smartphones. 

An additional seven countries—U.S., New Zealand, Denmark, Ireland, Netherlands, Spain and Switzerland—now have greater than 40 percent smartphone penetration. In the United States, Google research indicates. 



By way of comparison, Nielsen recently pointed out that U.S. smart phone penetration had surpassed the game console as the "most adopted" newer technology in the home environment. 

In terms of growth rates, nothing compared to the adoption of tablets, up about 400 percent over the last 12 months, Nielsen data suggests. 



Qualitatively, the smart phone adoption wave has key implications for any business that currently assumes people will use a PC when interacting with Internet content and information. increasingly, that is not a very good assumption.

As Facebook Expands in Mobile, Mobile Security is Added

Starting now, Facebook users will be able to download mobile security software from avast!, AVG, Avira, Kaspersky, Panda, Total Defense, and Webroot. 

Existing suppliers Microsoft, McAfee, Norton, TrendMicro, and Sophos will begin offering anti-virus software for mobile devices as well. Users can visit the AV Marketplace now to download free anti-virus software for PC, Mac and mobile handsets. 

In Praise of Deterministic "Flows"

Many of you are too young to remember the fierce debates about the principles that "should" guide the development of the "next generation network." That was before Internet Protocol stopped being an "interim" or "legacy" protocol and seemingly become the foundation for all next generation networks.

Telco architects had a different vision, based on the asynchronous transfer mode protocol, and popularly known at times as "broadband ISDN." Integrated services digital network was an earlier generation of thinking about the "next generation network." 

"Open Systems Interconnect" was supposed to replace IP. It didn't, obviously. But the backers of ATM knew something important, namely that some applications and services can tolerate delay and latency and packets arriving out of order. 

But some applications and services really do not work very well unless packets arrive in order, and that can be very challenging when so many packets have to arrive, so rapidly, that simple error correction methods, such as re-transmitting, do not work. 

That is true for video, and especially for high-definition video. Other services, such as real-time voice, likewise are intolerant of packets arriving out of order, because it is not elegant to retransmit the garbled bits and reinsert them into the stream fast enough to preserve quality.

In other words, the architects behind ATM knew something important about at least some forms of network-transmitted content, sessions and information, and that was that "best effort" often does not work for isochronous traffic. 

In other words, engineers now have to work around the "best effort" architecture of IP to replicate what would be built in to ATM, namely quality of service measures that handle different flows of information in a differential manner. 

Some will argue IP can be made to work that way. Others see problems ahead. 

 

Martin Geddes - Lean Networking from Martin Geddes

Mobile is the Way Most People Use Broadband, Voice, ITU Report Says

A new report by the  International Telecommunications Union confirms what you already know: mobile broadband has surpassed fixed broadband, on a global basis, as the way most people use the Internet.

And mobile is the way most people use voice services. 

From Mobile "Payments" to "Wallet" to "Commerce"

When nomenclature changes in a business, it usually indicates that supplier expectations of potential profit also have shifted. But sometimes, shifts of language also indicate that different segments of the supplier part of the market have decided to engage.

In 2010, for example, the language was about “mobile payments.” By 2011, the language had shifted to “mobile wallet.” In 2012, the language is “mobile commerce.” In part, that reflects a change in expectations about revenue potential.

In the U.S. market, for example, Isis has shifted its own revenue models from “transaction fees” to “advertising and marketing services.” And Google Wallet always has focused on advertising and marketing.

The mobile commerce language illustrates something else. A large number of observers, proponents and suppliers now say the issue is ways to use mobile devices and consumer behavior to change retailer business processes.

That includes a much broader array of potential suppliers, and a much wider range of business problems to be solved by the application of mobile technology. At least some of that change has been assisted, if not driven, by the widespread interest in tablet devices.

Retailers and suppliers of retailer technology have seized upon the tablet as an ideal device for changing the interaction with shoppers inside stores.

That isn’t to say that innovation about actual payment processing has ceased. PayPal has made major efforts to gain a foothold in processing of retail store transactions, a move that would fuel its business move from online to offline.

Other suppliers of online or offline services likewise see opportunities to sell solutions that bridge offline and online sales. The Merchant Customer Exchange, for example, is an effort by retailers to better control the mobile commerce process in ways that are more friendly to place-based retailers.

Managed Services Not Meeting ROI Expectations in Australia, Study Finds

Some managed service providers are not fully meeting the total cost of ownership and return on investment expectations of their customers, according to an IDC Australia study.

The study found that 23 percent of 100 Australian IT managers and decision makers surveyed have incurred an increase in costs under a managed services provider, not a decline, as one normally would expect. 

“That’s one of the highest figures in the entire region of Asia-Pacific — it’s higher than New Zealand, and the only place higher is Malaysia. Everywhere else, like Singapore for example, it's at five percent,” said IDC Australia associate research director Dustin Kehoe.

About  44 percent of the C-level respondents say costs have increased or costs have stayed the same. About 56 percent actually saw cost savings, the study found. 

375 Million Use Consumer Cloud, 500 Million be End of 2012

Some 375 million consumer were using some form of cloud service earlier in 2012, while perhaps 500 million will be jumping to an estimated 625 million in 2013 and then doubling over the course of four years to reach 1.3 billion by 2017,  according to IHS iSuppli. 

So many use cloud services because many cloud services are provided at no incremental charge to end users, or cost very little. 

Mobile and Cloud Will Change the Channel

Will the coming era of cloud-based apps and mobile access change the channel business? It seems impossible to believe otherwise.

As companies embrace anytime, anywhere communications--driven by the ubiquity of mobile devices--has the time finally come (yet again) to toss aside IP hardphones or even softphones? It’s a question at least some are asking.

“Once IP communications take over (if not already), the artifacts of telephony, including digit dialing and wired access will become obsolescent and will be replaced by a range of mobile IP-based communications tools,” says consultant Russell Bennett.

Consider the implications. If the mobile device becomes the object that uses broadband access, what happens to markets for fixed access? If the mobile displaces the desk phone, what happens to demand for hosted PBX services, SIP trunking or even fixed broadband?

To the extent that the typical channel partner, and the typical fixed network services provider, makes money selling fixed network voice and data, a shift to mobile will shift demand to mobile services, and away from fixed network services.

The shift to cloud computing, which is related to growing use of mobile devices and connections, doesn’t necessarily help channel partners or fixed network service providers, either. Consider the use of basic business productivity suites.

Once upon a time, business and consumer buyers purchased such products as “shrink wrapped” physical products, at retail outlets. These days, such purchases are not made, or are made online. In other words, distribution shifted from retail partners to online partners.

At the same time, average selling prices have dropped. In some cases, retail price now effectively is “zero,” when users use Google Docs, for example.

But, you might argue, there also are subscription-based business versions. Yes, that is true.
According to Cloud Sherpas, money can be made iin the cloud-based document suites business, despite the fact that no enterprise or smaller business pays very much for such apps. Business access to Google Apps costs $5 a month, or $50 a year.

But ask yourself whether a typical channel partner can make a living selling products priced at $50 a year.

In the channel partner business, the analogy is mobile-only business broadband and voice. You might argue that the channel partner only has to shift its products from fixed network to mobile product lines. But it isn’t that simple.

In some cases, business buyers will be able to “buy direct,” without a channel partner. In other cases, the retail prices might be low enough that there is little gross revenue or profit margin for any channel partner.

Sam Kumar, CEO of  Denver competitive local exchange carrier Microtech-Tel, argues that CLECs no longer can compete with cable TV operators in the SMB business broadband access business. If the carrier cannot compete, then the carrier’s channel partners will have difficulty as well.

The obvious implication is that channel partners will have to shift product lines to cable high-speed Internet access, and away from incumbent telco or CLEC products.

A major disruption of the hosted PBX or premises phone system business is a bit further off. But if a business buyer can obtain enough of the same call management features from a mobile service, that a buyer would formerly have gotten from a hosted PBX solution, buying ultimately will shift. If the device to be supported is a mobile or a tablet, and if reasonable functionality can be provided, then purchasing should shift to “mobile direct” modes.

What should agencies do? Mobile product lines are a strategic necessity. Cable broadband is a tactical necessity.

In both the telecom and value added reseller businesses, it is harder to sustain revenue earned from traditional products, leading participants to search for better revenue models. Value added resellers generally are looking for recurring revenue streams, while telecom agents generally are looking for products other than recurring communications services.

Whether or not most agencies can diversify into pre-sale or post-sale products distinct from the residuals earned from selling carrier services is the big question.

The answers are not easy, but in all likelihood will revolve around the value telecom agents can add, either pre-sale or post-sale, for services other than the actual communications services. If you think about the traditional distinction between a “consultant” and an “agent,” you’ll get the idea.

The consultant does not represent service providers, does not earn any revenue from any communications services, but is paid for advice. In principle, that is what a commissioned telecom agent would have to learn to do, as well.

Peter Radzieski, owner of RAD-INFO, a consultancy, charges clients if what they want is information about who sells dark fiber, for example. He charges for the advice, whether or not a deal results (RAD-INFO works with about 65 service providers, so there sometimes is commission revenue involved).

He suggests that one way agencies could create post-sales revenue is by getting into the telecom expense managment business, for example, or managing mobile devices, or providing security services.

Another avenue is to “become the outsourced telecom department” for customers,” he says. In other cases an agency might be paid for integration activities. When a wide area network has to be created, it might be necessary to stitch together elements from a variety of suppliers. In those cases, an agency might be paid for integration tasks.

The point is that everything hinges on the “added value” beyond selling a circuit. As always is the case, management, integration, configuration, troubleshooting, monitoring, security and provisioning are some of the time-consuming tasks that a customer might essentially outsource to an agency capable of handling those chores.

But that’s the rub: an agency has to be able to provide those valuable services, credibly. The possible issue is that such services are time consuming. In principle, some agents might take a different tack and simply add on an incremental fee for some of the post-sale chores that inevitably arise around billing issues, for example.

The obvious downside is that a customer might then decide whether to buy direct from a carrier. Another possible avenue could be “white labeling” of carrier services, where the agency gets a wholesale price and then can sell at any retail price.

It won’t be easy to create pre-sale or post-sale revenue streams. But neither, given the difficult revenue model for selling pure communications services, does it seem likely agencies will be able to prosper, longer term, without those new revenue sources.
Will the coming era of cloud-based apps and mobile access change the channel business? It seems impossible to believe otherwise.

As companies embrace anytime, anywhere communications--driven by the ubiquity of mobile devices--has the time finally come (yet again) to toss aside IP hardphones or even softphones? It’s a question at least some are asking.

“Once IP communications take over (if not already), the artifacts of telephony, including digit dialing and wired access will become obsolescent and will be replaced by a range of mobile IP-based communications tools,” says consultant Russell Bennett.

Consider the implications. If the mobile device becomes the object that uses broadband access, what happens to markets for fixed access? If the mobile displaces the desk phone, what happens to demand for hosted PBX services, SIP trunking or even fixed broadband?

To the extent that the typical channel partner, and the typical fixed network services provider, makes money selling fixed network voice and data, a shift to mobile will shift demand to mobile services, and away from fixed network services.

The shift to cloud computing, which is related to growing use of mobile devices and connections, doesn’t necessarily help channel partners or fixed network service providers, either. Consider the use of basic business productivity suites.

Once upon a time, business and consumer buyers purchased such products as “shrink wrapped” physical products, at retail outlets. These days, such purchases are not made, or are made online. In other words, distribution shifted from retail partners to online partners.

At the same time, average selling prices have dropped. In some cases, retail price now effectively is “zero,” when users use Google Docs, for example.

But, you might argue, there also are subscription-based business versions. Yes, that is true.
According to Cloud Sherpas, money can be made iin the cloud-based document suites business, despite the fact that no enterprise or smaller business pays very much for such apps. Business access to Google Apps costs $5 a month, or $50 a year.

But ask yourself whether a typical channel partner can make a living selling products priced at $50 a year.

In the channel partner business, the analogy is mobile-only business broadband and voice. You might argue that the channel partner only has to shift its products from fixed network to mobile product lines. But it isn’t that simple.

In some cases, business buyers will be able to “buy direct,” without a channel partner. In other cases, the retail prices might be low enough that there is little gross revenue or profit margin for any channel partner.

Sam Kumar, CEO of  Denver competitive local exchange carrier Microtech-Tel, argues that CLECs no longer can compete with cable TV operators in the SMB business broadband access business. If the carrier cannot compete, then the carrier’s channel partners will have difficulty as well.

The obvious implication is that channel partners will have to shift product lines to cable high-speed Internet access, and away from incumbent telco or CLEC products.

A major disruption of the hosted PBX or premises phone system business is a bit further off. But if a business buyer can obtain enough of the same call management features from a mobile service, that a buyer would formerly have gotten from a hosted PBX solution, buying ultimately will shift. If the device to be supported is a mobile or a tablet, and if reasonable functionality can be provided, then purchasing should shift to “mobile direct” modes.

What should agencies do? Mobile product lines are a strategic necessity. Cable broadband is a tactical necessity.

Mobile, in a real sense, is inseparable from cloud computing. The reason is simply that mobile devices increasingly provide value as "computers." And the thing about cloud computing is that it means new applications can be launched immediately, upgraded immediately or changed immediately, without little overhead.







In both the telecom and value added reseller businesses, it is harder to sustain revenue earned from traditional products, leading participants to search for better revenue models. Value added resellers generally are looking for recurring revenue streams, while telecom agents generally are looking for products other than recurring communications services.

Whether or not most agencies can diversify into pre-sale or post-sale products distinct from the residuals earned from selling carrier services is the big question.

The answers are not easy, but in all likelihood will revolve around the value telecom agents can add, either pre-sale or post-sale, for services other than the actual communications services. If you think about the traditional distinction between a “consultant” and an “agent,” you’ll get the idea.

The consultant does not represent service providers, does not earn any revenue from any communications services, but is paid for advice. In principle, that is what a commissioned telecom agent would have to learn to do, as well.

Peter Radzieski, owner of RAD-INFO, a consultancy, charges clients if what they want is information about who sells dark fiber, for example. He charges for the advice, whether or not a deal results (RAD-INFO works with about 65 service providers, so there sometimes is commission revenue involved).

He suggests that one way agencies could create post-sales revenue is by getting into the telecom expense managment business, for example, or managing mobile devices, or providing security services.

Another avenue is to “become the outsourced telecom department” for customers,” he says. In other cases an agency might be paid for integration activities. When a wide area network has to be created, it might be necessary to stitch together elements from a variety of suppliers. In those cases, an agency might be paid for integration tasks.

The point is that everything hinges on the “added value” beyond selling a circuit. As always is the case, management, integration, configuration, troubleshooting, monitoring, security and provisioning are some of the time-consuming tasks that a customer might essentially outsource to an agency capable of handling those chores.

But that’s the rub: an agency has to be able to provide those valuable services, credibly. The possible issue is that such services are time consuming. In principle, some agents might take a different tack and simply add on an incremental fee for some of the post-sale chores that inevitably arise around billing issues, for example.

The obvious downside is that a customer might then decide whether to buy direct from a carrier. Another possible avenue could be “white labeling” of carrier services, where the agency gets a wholesale price and then can sell at any retail price.

It won’t be easy to create pre-sale or post-sale revenue streams. But neither, given the difficult revenue model for selling pure communications services, does it seem likely agencies will be able to prosper, longer term, without those new revenue sources.

You Can't Turn Off the PSTN Without Answering Some Basic Questions

The Federal Communications Commission has a Technology Advisory Committee (TAC) that is supposed to recommend ways the Federal Communications Commission can help prepare for the day when the PSTN is "turned off." Like many other committees, the day to day work doesn’t get much attention.

Among the issues is setting a date for terminating the PSTN is ensuring there is virtually universal broadband service everywhere, since the IP alternatives will require broadband. There are lots of other issues, to be sure.

But many of the issues will involve the framework for handling “carrier of last resort issues” and how common carrier regulation is applied. In a market expected to feature multiple ubiquitous networks, should historic common carrier regulations be extended to other providers, or should less restrictive frameworks be used?

Beyond that, there are other issues, such as the financial backdrop against which regulations are applied. Universal service funding mechanisms, and high cost support, in turn tend to hinge on the amount of social surplus generated by the industry as a whole.

Once upon a time, high gross revenues and high profit margins made possible a fundning of USF from business customer services. Over the last few decades, that has changed, and funding has come to rely on per-line consumer funding, from both fixed network and mobile network services.

And there is not as much surplus as there once was. In fact, over time, all the mechanisms will likely have to rely on taxes of mobile customer services, rather than shrinking fixed network revenues.

In fact, one might plausibly argue that, in the future, taxes on broadband and mobile services will be the dominant funding sources, not fixed network voice services. On the surface, those might not be seen as issues.

You would be hard pressed to find a single quarter in any recent year when the likes of AT&T and Verizon Communications did not show steady revenue growth and relatively stable earnings, with the ability to pay dividends. That isn't to say all providers are in the same condition. From time to time, many providers have faced some distress.

But Craig Moffett, Bernstein Research analyst, has been a notable “bear” on business prospects for the large mobile service providers. He now calculates that AT&T and Verizon Wireless are not even earning a return above their cost of capital.

In other words, AT&T and Verizon now are already losing money, investing in networks and services that do not earn back the cost of the borrowed money driving the investments. But most of the problem comes from the wireline businesses, he argues.

AT&T and Verizon executives would disagree, of course. In part, Verizon argues, returns have been depressed recently because of heavy investment, both in the FiOS program and wireless upgrades, but the revenue impact of the sluggish economy. Over the long term, those issues will recede, Verizon argues.

One might argue that recent developments in the global telecom business suggest growing strains at the very least, non-viability of some business models, in some markets, and serious strain in others. 

One might infer from the "wholesale only" broadband access models used in Singapore, Australia and New Zealand, that facilities-based "very high speed access" is not a business most providers can afford to be in.

Instead, networks providing that access, are a functional monopoly, too expensive for more than one provide to attempt. 

In Europe, the European Commission seems seriously concerned that European facilities-based broadband providers might not be able to afford the next round of upgrades, and seem to be considering policies that would boost the financial return from new and massive investments. 

Does anybody anymore seriously think global growth will be lead by anything other mobile services?

At some level, whether formally stated or not, the profitability of fixed networks will be an issue in future discussions of how to shut off the old PSTN.

The current discussion within the European Community about the investment impact of “net neutrality” rules is not a new debate. In the wake of the passage of the Telecommunications Act of 1996, dominant U.S. fixed-line providers argued, successfully, that mandatory wholesale rules, providing deeply-discounted rates for wholesale customers, would severely discourage investment in optical facilities. And, in fact, Verizon's FiOS effort did not get into high gear until after the Federal Communications Commission approved such rules.

These days, the EC discussion revolves to a great extent around the impact “network neutrality” rules could have on incentives for broadband investment. Specifically, operators argue that restriction of services to “best effort only,” without the ability to create differentiated service plans involving quality of service measures, will be a significant disincentive to the high rates of investment EC officials would prefer to see.

Some will say the carriers are bluffing about requiring some path to revenue when investing in 100-Mbps or 1-Gbps access facilities. Some of us would disagree. The alternative is to invest in mobile facilities and applications instead.

In fact, some recent global estimates of market share suggest telcos globally are losing the consumer market share battle to cable companies. In fact, looking just at triple-play accounts, it appears cable operators have roughly 66 percent market share. In other words, telcos arguably are losing the market share battle in the consumer market. 

The point is pretty simple. If it appears telcos are losing ground in the consumer market, but dominating and growing the mobile market, and if revenue potential in fixed line network services appears to be waning, at some point it will be a wise executive indeed who decides mobility is really where resources and effort ought to be placed. 

Placing obstacles to a profitable return on massive new investments does not seem calculated to encourage operators to invest substantially more in fixed access networks. 

10-Gbps Wireless Access in 25 Years?

Observers disagree about how much bandwidth people will need, and how much will be available for sale, in various markets in the future. But some observers think the typical U.S. end user will have a breath-taking amount of access bandwidth.

Mobile devices will have the power of a supercomputer, argues Donald Newell, AMD Server CTO. To be more precise, a then-current smart phone will have more processing power than today’s servers, Newell argues. That isn’t even the most-surprising prediction. More startling, in all likelihood, is the notion that a typical wireless consumer will have access to 10 Gbps.

Cisco thinks terabytes is a reasonable expectation for U.S. consumers, in a couple of decades. Cisco's Dave Evans, Chief Futurist, thinks at-home consumers will have access to Evans says multi-terabit Internet connections.. "I could have an 8-terabit per second connection to my home," he says. "That's more connectivity to my home than most countries have."

As a result, the core networks will operate at petabit per second speeds, about 10 to the 15th power, about three orders of magnitude bigger than terabit networking," Evans says.

Phones will have more than a terabyte of local memory," adds Mark Lewis, chief strategy officer at EMC, who predicts that all of our digital information will be backed up over the cloud. "If I lose my phone, I can pick up a new one, enter my code word, and it will re-identify me and push all of my information out to my new device."

For wireless networks, typical speeds will be as high as 10 gigabits per second, as fast as the fastest optical core networks today, some would argue.

Bandwidth increases on that order of magnitude, at least in the wireless arena, will require more than spectrum allocation. It will require continued significant advances in signal coding and compression, with some likely changes in network architecture as well. Additional spectrum will help, but it is hard to see typical mobile users getting 10 Gbps without robust new developments in coding.

If not, using today’s technology, cell sites would be so small they would be virtually indistinguishable from a fixed connection, in which cases “mobility” would not be possible.

But 25-year horizons are not meaningful, and predictions for what the world will be like that far out almost always are incorrect. One might find more success betting against today’s 25-year predictions instead.

That is not to say Moore’s Law is repealed, or that users will stop demanding more bandwidth. It’s just that linear projections almost always are wrong, over the long term.

On a relatively immediate basis, though, some projections that can seem outlandish are directionally valid enough to support rational business planning. Netflix, for example, has supported its business by mailing DVDs to customers. It began doing so because there was at one point no way to support delivery over the Internet, even though its very name suggests that possibility.

Netflix CEO Reed Hastings claims that back when even cable modems and digital subscriber line were not available, “we took out our spreadsheets and we figured we’d get 14 Mbps to the home by 2012, which turns out is about what we will get.”

“If you drag it out to 2021, we will all have a gigabit to the home,” Hastings argues.

Still, Netflix took the rational route and did not build its revenue model on bandwidth that wasn’t available; it built on what was feasible at the time. Lots of application service providers based their businesses on inadequate bandwidth and server infrastructure in the early 2000s, and most failed because of those assumptions.

Now, lots of providers are about to make a business out of cloud computing, which is the same concept, but in an infrastructure environment that has changed dramatically.

Timing might not be everything, but it is close. For that reason, no rational executive can build a business today based on expectations of 10 Gbps consumer mobile connections. But the direction is clear enough.