Cable Cuts Take Internet Down

Two international submarine cables in the Mediterranean Sea were damaged on Jan. 30, causing significant disruptions to Internet and phone traffic in Egypt, Saudi Arabia, India and all of the Gulf states.

The two damaged cables are the FLAG Europe-Asia cable, operated by FLAG Telecom, and SeaMeWe-4 (South East Asia-Middle East-Western Europe-4), a consortium cable owned jointly by fifteen telecommunications companies. These two cables account for the majority of international communications capacity between Europe and the Middle East.

The two cable cuts leave the older SeaMeWe-3 system as the only cable in service connecting Europe to the Middle East via Egypt.

The cable cuts have reduced the amount of available capacity on this direct route to Europe by 75 percent (620 Gbps). Until service is restored, many carriers in Egypt and the Middle East must now route their European traffic around the globe, through South East Asia and across the Pacific and Atlantic oceans, or use satellite transport to some extent.

Global capacity executives are watching to see whether a new boost in undersea capacity on some routes across the Pacific will disrupt trans-Pacific pricing. Some also have expressed concern that new routes between Europe and India might have the same effect. The latest undersea cable disruption shows how important multiple and diverse routes have become, though.

What is Dell Planning?

If you go to the Dell Web site and try to buy a Dell Axim, a Windows Mobile-powered personal digital assistant, you can't. So maybe Dell simply is coming out with a new version of the device.

Still, 3GSM happens in February. And 3GSM is the place you'd want to be at if announcing anything important in the wireless space.

Of course, the Axim was a PDA, not a phone. But 3GSM is a phone show. And many of us stopped using our Palms some time ago when our smart phones provided all that functionality inside the phone itself.

If Dell were to introduce a mobile, 3GSM is where they'd want to do it.

Lower European Mobile Data, Texting Prices

Ofcom Chief Executive Ed Richards is lobbying European Commission telecom regulators to slash the allowed prices of international text messaging and mobile Internet access, says Jonathan Prynn, Evening Standard reporter. It appears Richards has in mind prices lower than currently offered by mobile operator O2. O2 charges £3 for one megabyte of data transferred.

So it appears Richards seeks prices significantly lower than the £4.11 per megabyte level that tends to be the average now. European mobile carriers probably will hope to stave off such regulation by voluntarily dropping their tariffs in time for an announcement at Mobile World Congress meeting in February.

The moves would be good for consumers, and obviously financially damaging for carriers. As always is the case, the lower tariffs also would make it harder for upstart competitors to grow their companies by undercutting the high tariffs.

Sprint WiMAX "Functional Separation"?

With new reports out that Sprint might try to resurrect its failed alliance with Clearwire, this time perhaps with new minority investors (Intel, Google and Best Buy), one wonders whether Sprint ought to do what wireless operators are doing elsewhere and create a separate transmission company from which it can buy wholesale capacity.

Functionally separating retail operations and network functions might make sense in this case, given the other pressing demands for capital Sprint also faces. It isn't clear that Sprint derives significant competitive advantage from retaining ownership of the transmission facilities.

Best Buy might also be more inclined to invest in the new WiMAX network if such wholesale access were built into the investment agreements, as Best Buy might want to brand its own services.

Google is more interested in fostering an open networks environment and might not be that interested in any sort of Google-branded service. But wholesale access might be interesting if Google wants to experiment with applications that require such access, and wants to do so in a "real world" environment.

Ethernet Keeps Growing

Ethernet continues to gain a more prominent role in networking capabilities being deployed by service providers in North America, Europe, and Asia Pacific, with most carriers reporting 90 to 100 percent increases in Ethernet traffic for the past two years, according to analysts at Infonetics Research. IP and MPLS traffic has grown 70 to 80 percent over the same period, Infonetics says.

A new optical transport layer also will emerge, Infonetics believes. This new layer will be a fused Ethernet-WDM packet transport with circuit-like capabilities via Ethernet transport tunnels, also known as COE, or connection oriented Ethernet. That means more adoption of T-MPLS and PBT, Infonetics believes.

There was a time when some argued that "connectionless" protocols such as IP would replace "connection oriented" protocols such as time division multiplex, SONET and asynchronous transfer mode. As it turns out, there's a reason why connection-oriented protocols, or at least protocols that emulate connections, are important. Some traffic types, especially video and voice, are susceptible to impairments that can arise when connectionless protocols are used.

Value-Based Pricing

Communications services in the past have been priced based on usage (minutes or distance, for example). These days, there's a greater range of retail pricing, including flat fee for buckets of usage, for example.

But with the advent of IP-delivered video services, service and application providers have a chance to price services in a more natural "value to me" basis. If one looks simply at retail pricing and "bandwidth consumed," text messages "cost" the most based on bandwidth consumed, with voice second. Video and Internet services "cost" very little on a "bandwidth consumed" basis.

But that isn't the point. Text, voice and other communications applications are valued one way; video entertainment or simple Web access another way. In other words, in the communications space, "cost" is not the same thing as "price."

Target and Wal-Mart sell some products as loss leaders to get traffic into the store, so people buy lots of other products with varying profit margins. Communications services aren't any different. Some have have margins for providers, others have slim margins. The key, though, is value to the end user, not "bandwidth consumed."

Text messages "cost" very little, as the network to enable sending and receiving them is a sunk cost. But cost isn't price. Users demonstrate by their behavior that they value text messaging highly, on a "bandwidth consumed" basis. If one letter of a text message requires one byte, then sending or receving 6,553 messages consumes about a megabyte of data.

So a 160-character or smaller message might "cost" 10 to 15 cents. So a megabyte worth of text messaging represents as much as $655 to $983 for domestic usage. International messages obviously "cost" more.

A month's unlimited usage of entertainment video might cost $50, consuming more than a megabyte in a single second of use.

The point is that the retail price of any particular message or service has little to do with the actual "cost" of providing it, any more than the "price" of perfume, luxury automobiles, shoes or applications.

"Price" for a video service has to be vastly lower, on a "bandwidth consumed" basis, than texting, instant messaging or voice. That has little to do with user-perceived value, though.

Nokia Gets Cross Platform Support

Nokia has acquired Trolltech, a development platform for applications that can run on the Internet, accessed from a PC or a mobile phone. That might mean support for applications that run across operating systems, for example. The acquisition illustrates a couple of trends.

Mobiles need to acquire the ability to run Web applications, and need to do so in ways that are similar to the use of those apps on a PC, so users don't have to relearn a behavior. Cross-platform support also means Nokia can benefit from the huge numbers of developers working in the C, Flash, Java and other environments, for example.