So Moore's Law Is Not "Dead"

Though it is logical to worry that Moore’s Law improvements cannot continue, the latest analysis of transistor counts by IC Insights suggests the law remains intact. Though growth rates in some product categories have slowed, doubling of transistors per chip every two years remains a guideline that the industry continues to follow,” IC Insights says.

That is important because Moore’s Law allows computing and storage costs to keep dropping, while performance keeps increasing. That enables any number of useful innovations, ranging from applied artificial intelligence to voice-controlled appliances of all sorts, more-precise e-commerce operations, automated and robotic machines and higher-resolution video. 

Moore’s Law that states there is a doubling of the number of transistors per chip every two years.  A corollary is that price remains the same or drops as well. 

source: IC Insights

Many argue Moore's Law is dead, which would have vast implications for all products and services using computing, storage or information processing, if alternative means of continually boosting device and application performance could not be found. But such alternative means already are recognized.

Wireless Has Transformed Network Architectures, More Coming

Wireless and the internet have radically transformed access network topologies. In the past, the architecture featured a long distance (core) network, distribution networks (metro trunking network) and access networks (local loop) plus premises wiring. 

Mobile networks--depending on how one wishes to describe it--substitute a wireless access network for cables or add a wireless tail to the cabled access network. These days, the indoor private network tends to use Wi-Fi rather than cabled Ethernet. 

source: Ericsson

Wireless local loop is a concept some service providers have employed for many decades, largely as a solution for customer access in lower-density scenarios, and initially seen as a voice solution.

 Wireless internet service providers and satellite providers are other connectivity providers that have for decades used either point-to-point or point-to-multipoint microwave networks to provide communications. But many thought DECT might become a standard for wireless local loop, in the mid-1990s. 

Satellite direct has been a delivery technology since the 1980s for video and other services, including both direct to consumer and master-antenna services aimed at residential complexes. Geostationary satellites provide internet access today, while new constellations of low earth orbit satellites are likely to do so in the future, with additional use of non-traditional platforms that might include free-floating balloons or other high-altitude platform systems (HAPS).  

source: Semantic Scholar

The point is that wireless “last mile” or “first mile” approaches have become more common since the early 1980s, reaching significant adoption in the 4G era in the form of mobile internet access, sometimes as a substitute for fixed access. Many believe 5G fixed wireless will be more attractive, as it will better match cabled network speeds and prices. 

Fixed wireless based on 5G will allow new entrants such as T-Mobile to attack the home broadband market that has, up to this point, been dominated by cable TV companies. That can be quite attractive for an attacker with zero present market share. 

Fixed wireless using 5G might also provide new opportunities for existing providers where other approaches, including fiber to the home, do not seem especially attractive. 

But network architectures are affected in other ways, as well. Small cell networks extend the metro optical fiber network much deeper towards end users, creating a “fiber to the small cell” network. 

At the service level, the 5G network core being fully virtualized, network slices through the core network, terminating at wireless and mobile endpoints, represent a new level of service assurance formerly possible only with virtual private networks.

Moore's Law Matters for Rural Internet Access

At some point, Moore’s Law matters for rural internet access supply and costs. The reason is that communication networks serving low-density areas are expensive, but Moore’s Law materially reduces such costs by constantly increasing the power of computing solutions and slashing the cost of such capabilities. 

That can be seen in the cost of a transistor over time, which allows the cost of computing to decline in half every 18 months to 24 months. 

The reason we are able to use millimeter waves commercially for consumer communications is Moore’s Law, which reduced the cost of applying sophisticated signal processing so much that the formerly-unusable millimeter wave spectrum now can be used even for consumer communications and access networks. 

The Tennessee Advisory Commission on Intergovernmental Relations estimated in a 2017 report that connecting 160,000 unserved homes in areas of the state ineligible for funding through the FCC’s Connect America Fund would cost $125 million to $799 million. That works out to about $78,125 per location. Other estimates place network costs at $33,000 per customer even at 70-percent take rates. Lower take rates raise the cost per customer. 

No consumer-reaching commercial network could ever hope to break even on a network with such high costs, as even networks costing $2,500 per location often face challenging economics. 

source: NTCA

But Moore’s Law, applied to space-based network launch costs, for example, has reduced costs for low earth orbit satellites by 20-fold over the last decade. 

Moore’s Law also allows us to do sophisticated spectrum sharing and spectrum aggregation, again improving our ability to supply connectivity services at lower costs than was possible in the past. 

Moore’s Law also powers the increasing bandwidth of optical fiber and hybrid fiber coax, enables the application of artificial intelligence to voice processing and pattern recognition, all of which mean e-commerce insights and customer service capabilities grow more powerful over time. 

Moore’s Law underpins our ability to create virtualized networks that cost less to build and operate, as well. 

That is not to underestimate the importance of financial subsidies or human agency,, as in many rural areas even the most-efficient platform might fail to generate sufficient revenues to sustain operations and service. 

Lower costs per bit for mobile bandwidth as well as fixed network  capacity have been the trend for decades. Slowly, those advantages will accrue in rural areas, even if the bandwidth gap between urban and rural areas does not completely close.

India Mobile Battle Over Revenue Recalls U.S. Battle over Common Carrier Regulation

Adjusted gross revenues taxes represent four percent to eight  percent of India mobile operator gross revenue. But there had been a dispute between mobile operators and the Indian government about the definition of gross revenue, resulting in a 14-year battle that ended in 2019 when the highest Indian court upheld the government’s definition. 

source: Bloomberg

At stake is possible sustainability of Vodafone-Idea, as the firm does not generate enough cash flow to pay the owed amounts. Bharti Airtel owes a sum representing perhaps three full quarters of cash flow. The owed sums also represent something like a fifth of Airtel and Vodafone Idea debt. 

The government said AGR included all revenue, from all sources. Operators sid it applied just to connectivity revenues earned from communications service supplied to customers, and not to any other sources, such as interest income, for example. 

The disagreement is reminiscent of the distinction between regulated, rate-controlled telecom service and non-regulated services supplied by U.S. telcos. That dispute also concerned the regulation--and hence taxes upon--new services, as distinct from legacy services.

That important difference grew in 1960 as then-monopolist AT&T began to offer data processing services, with a Federal Communications Commission decision referred to as Computer I. The decision established a principle that data processing would not be regulated under common carrier rules. 

The issue was further clarified in 1979, when a regulatory distinction was drawn between “basic” service (common carrier regulation) and “enhanced” service (computing or data services, for example, which are unregulated) by the Second Computer Inquiry, generally referred to as Computer II. 

If a service provider offered a pure transmission over a path that is transparent in terms of its interaction with customer supplied information, the FCC considered this to fall into the basic service category. 

Basic service includes processing the movement of information and computer processing, which includes protocol conversion, security, and memory storage. The category of basic service is everything from "voice telephone calls" to a phone company's lease of private line service. 

If a carrier offers services over common carrier transmission facilities that employ computer processing applications that act on the format, content, code, protocol or similar aspects of the subscriber's transmitted information; provide the subscriber additional, different, or restructured information; or involve subscriber interaction with stored information, the FCC considered that to fall into the enhanced services category, not governed by common carrier rules.

EIU Finds U.S. Internet Access Prices Lowest Globally, When Compared to Incomes

Many observers believe that fixed network internet access in the United States is expensive and slow. According to the Inclusive Internet Index produced by the Economist Intelligence Unit, the U.S. market in fact has the most affordable internet access, based on retail price in relation to income. 

source: Economist Intelligence Unit

Adjusting for local purchasing power, fixed network internet access costs around $50 a month in almost every country. Adjusting for purchasing power parity normalizes internet access prices for general price level differences across countries. 

Doing so is revealing: In most countries, prices hover around a $50 a month level, after the PPP adjustments. 

source: ITU

The Inclusive Internet Index (3i), produced annually since 2017 by The Economist Intelligence Unit and commissioned by Facebook, benchmarks countries on the Internet’s availability, affordability, relevance and the readiness of people to use it. 

Among high-income nations, the United States ranks third. 

source: EIU

Spanish Internet Tends to be Symmetrical, U.S. Services are Mostly Asymmetrical

Compared to the way fixed network consumer internet access is supplied in the United States, Spanish fixed network access tends to be symmetrical. Uploading of 4K video is the most-obvious driver of need for higher upstream bandwidth. Uploading of HDTV quality video normally requires only single-digit upstream speeds.  

source: Speedtest

Videoconferencing is another consumer app that generally requires more symmetrical bandwidth as well. Gaming and e-learning applications using video arguably also increase the need for more-symmetrical bandwidth. 

source: Researchgate

That noted, downstream entertainment video is the overwhelming driver of bandwidth globally, and arguably drives the primary need for downstream bandwidth. The other issue is that access platforms traditionally have been asymetrical. Newer optical fiber to premises networks tend to feature symmetrical bandwidth. So much hinges on what sort of platform--hybrid fiber coax, mobile network or which generation of optical fiber access is deployed.

source: Cisco

5G Use Cases Mostly Will be Enterprise Driven

Enterprise applications--not consumer use cases--will drive the value of 5G, many, including Marcus Weldon, Nokia Bell Labs president, believe. He speaks about this in this Futurithmic Podcast episode 13: Waves of innovation with Marcus Weldon. 

There are both consumer and enterprise use cases, of course, but most are likely to be found in enterprise segments of the business. Consumers will in some cases benefit from faster internet access speeds or virtual reality or augmented reality. 

But except for “faster access,” most of the AR/VR use cases will be supported by enterprise business models, though consumers will be end users in many cases, as Facebook is used by consumers, but has a business-to-business revenue model. 

source: Nokia

Fixed wireless, for example, will be used to deliver consumer internet access, but provides revenue upside for service providers because it allows them to compete with cable operator services at lower cost than building fiber-to-premises networks. 

Immersive experiences will be provided by AR/VR that is a feature of some other product. 

How Fast Might Private 5G Networks be Adopted?

Some believe private 5G someday might be as common as Wi-Fi is today, the reason being that millimeter wave 5G signals will not generally be able to penetrate building walls and energy-efficient glass. 

“Buildings will have to create their own internal 5G networks because they won’t be able to get it from the outside network,” Arie Barendrecht, WiredScore CEO says. “Low-E glass is one of the best insulators from the 5G coverage, and if a building is over 15 stories, it gets worse.” 

Barendrecht thinks that in two to three years there will be an expectation from tenants that their buildings will support 5G service and speeds. 

One might suspect his forecast is too aggressive. By some estimates, Wi-Fi, which was commercially introduced in September 1999, had reached adoption of about half of U.S. homes by about 2005. The other half used Ethernet cable networks. 

Also, offloading in-building access to Wi-Fi will still be possible. And the voice default might still be to 4G, which does have (compared to 5G) much better inside signal strength. And carriers will have more incentives to support VoIP as well, taking advantage of Wi-Fi offload.

The displacement of Ethernet cabled networks by Wi-Fi, in enterprises, took at least a decade. 

source: Xirrus

Not until about 2010 or 2011 were there as many as one million public Wi-Fi hotspots globally. Some say public hotspots reached five million locations by 2013. Some argue that, by 2015,  there were 70 million public Wi-Fi hotspots in operation. 

source: Xirrus

That history suggests some circumspection about the pace at which most buildings will have private 5G networks.

Actress Hedy Lamarr was Awarded a Key Patent in 1942 Paving Way for Wi-Fi

Actress Hedy Lamarr was familiar with both radio technology and the weapons industry. She had the idea of using multiple, changing frequencies to make signal sabotage harder, and referred to it as frequency hopping. We now call this spread spectrum .

Hedy Lamarr

Composer Antheil had extensive experience with the synchronization of player pianos, or pianolas. The two took inspiration from this to develop a secret communication system for the remote control of torpedoes, based on a frequency hopping mechanism that switched between 88 different frequencies. In 1942, they received a patent for this system. 

U.S. and World Internet Access Prices Have Dropped Continuously Since 2008

U.S. prices for mobile service and internet access have been dropping virtually continuously since 2000, something also a trend in the rest of the world. Since 2010 alone, U.S. fixed network internet access prices dropped 45 percent to the end of 2019, for example. 

source: Federal Reserve Bank 

One analysis of the costs of fixed network internet access conducted by the International Telecommunications Union, using the purchasing power parity method, shows that by 2016, internet access prices--adjusted for differences in local prices--actually were quite consistent across nations.

In all countries, prices hovered around a $50 a month level, after PPP adjustments. 

source: ITU

The point is that, even if nominal retail posted prices in the U.S. market seem higher than in Western Europe, Japan, South Korea or China, PPP prices in all countries are about the same. 

Policymakers typically want their citizens to have quality broadband access at affordable prices, but have the luxury of setting policy without consequences. Internet service providers face very real consequences if they guess wrong about competitor supply and consumer demand. 

As recently as 2016, for example, there were eight facilities-based mobile operators in India. In early 2020, there are just three, and many expect just two are expected to be in operation by 2021, as Vodafone Idea might simply go bankrupt. Sustainability therefore is a real ISP issue, and prices matter. But it is harder than one initially believes to determine what “price” is, in any market. 

Real Internet Access Prices are about $50 a Month, Globally

Some argue U.S. consumers suffer from high prices for internet access. It is a highly-nuanced matter, though. Some issues are methodological. To make a valid price comparison, any researcher has to choose a method--picking plans that are widespread enough to be comparable across many or most nations.

source: cable.co.uk

Then one has to adjust prices using some measure of currency conversion that accounts for relative price differences for all manner of goods and services in any particular country. The reason is that general price levels for the same products are higher or lower in different countries, across the board. 

Add to that cases where half of all purchases occur in bundles that obscure the “price” of service. 

Then there is the matter of value. Price is one thing, while typical speeds and service quality or(outage performance) are different. There is no convenient way to adjust prices to incorporate quality differences (cost per Mbps, for example).

Also, customers in different countries buy different plans. As always, the method of determining “average” matters. Median (half higher, half lower) prices can be quite different from “mean” prices (average of all plans) when plans cover a high range (high to low). 

It matters greatly which plans are most-often purchased, in other words. In the U.S. market, 60 percent to 75 percent of internet access plans are bought in a bundle, so there is no way to directly state the internet access price. Price has to be inferred. 

To my knowledge, nobody actually uses bundle prices to compare internet access prices across nations. So comparisons are made on the basis of published retail prices for stand-alone internet access. By definition, up to 75 percent of U.S. consumers do not buy internet access that way. 

So the price comparisons are made on the basis of retail tariffs alone, without considering the frequency of plan purchase. Under such conditions, all one can say is that published retail tariffs are at certain levels. That tells us nothing about which products customers actually buy, at what volume, and therefore the effective or actual purchase price.

The further nuance is that posted retail prices often are not “final prices” paid by consumers, since taxes, fees, equipment charges and so forth are included. No comparison of retail prices captures the final price. 

In the U.S. market, where 60 percent to 75 percent of all purchases are on bundle plans where price cannot be determined, prices are inferred based on allocations. The easy method is to take the total price of the bundle and then divide by the number of services in the bundle to derive an “average” price. 

There are obvious methodological issues. Video service tends to be twice as expensive as internet access. And internet access tends to be twice as expensive as voice service. So some method of weighting is required. So the cost pattern is 4:2:1. 

Consider a bundle costing $175 a month. The simple “divide total cost by number of services” method gives you a mean cost of $58 a month for each service.

That ignores the retail price differential for each service, however. Retail prices might have a pattern something like $90 for video, $50 for internet access and $30 for voice (after including taxes, fees, customer equipment rentals). So the $175-per-month bundle has video at 53 percent of total cost, internet access at about 29 percent of total cost, and voice at about 18 percent of total cost. 

So in a $175 a month package, internet access might cost about $50 a month (including taxes, fees, CPE). That is just an allocation, though. One could argue for a higher or lower price, making different assumptions about the cost of the other components. Video often represents a higher cost, voice arguably a lower cost, in many packages. 

And then one has to adjust for internet access price tiers, since faster service costs more than slower service. This deconstruction of bundle prices actually agrees with the cable.co.uk estimates. 

Those prices are not adjusted for price levels in each country, however. So comparisons often adjust for purchasing power parity, normalizing for general price level differences across countries. This look at country cost of living indexes, for example, shows areas in red that have higher living costs generally. So all prices would normally be expected to be higher in those areas. Note that these comparisons are not adjusted for purchasing power parity, though. 

source: Numbeo 

One analysis of the costs of fixed network internet access, using the purchasing power parity method, shows that by 2016, internet access prices--adjusted for differences in local prices--actually were quite consistent across nations.

In all countries, prices hovered around a $50 a month level, after PPP adjustments. 

source: ITU

The point is that, even if nominal retail posted prices in the U.S. market seem higher than in Western Europe, Japan, South Korea or China, PPP prices in all countries are about the same.