Tuesday, October 27, 2020

It's Hard to Win a Zero-Sum Game

Zero-sum games are hard to win, in part because every winner is balanced by a loser. Many mature mobile communications markets are largely zero-sum games these days. Market share, by definition, means one supplier gains exactly what another supplier loses. 


That is not the case for new, emerging or growing markets, where virtually all contestants can, in theory, gain while nobody loses. 


The substitution of machines for human labor is something of a zero-sum game as well.
The notion of tradeoffs is key for zero-sum markets. Consider minimum wage laws or unionization of employees. The issue is not whether those things are good or bad, but simply the tradeoffs that are made. 


Higher minimum wage laws. produce higher wages for a smaller number of employees, in part because higher wage minimums increase the attractiveness of substituting machines for human labor. 


Higher union membership and bargaining power tends to produce higher wages for union members, but often at the cost of the number of people who are employed at unionized businesses. 


The other trend we see is that when forced to make a choice, unions tend to prefer saving a smaller number of jobs in return for gaining higher wages. Workers with less seniority normally are sacrificed in such deals. 


We can disagree about whether Uber and Lyft drivers are independent contractors or employees. But it is not hard to argue that if employee classification leads to higher minimum wages, it also will lead to fewer Uber and Lyft drivers able to work. 


We can make any choices we want about which outcome we prefer: more work for more people or higher wages for fewer workers. But the choices will inevitably be made. It’s a zero-sum game.


As more and more telecom markets reach saturation, zero-sum outcomes will appear in market share statistics or the number of 4G phone account subscribers versus 5G subscribers.


Mobile operators can bend the curves a bit by changing value propositions, adding new features and bundling devices and features (up to a point) to encourage customers to switch to more-expensive plans, when they come up with compelling offers. But all of that occurs within a business that is largely a zero-sum game in many markets.


"When I Use a Word, it Means just What I Choose it to Mean"

Telecom terminology changes from time to time. These days, a “core network” for a private 4G or 5G network requires software we formerly associated with a mobile network core, such as base station control functions, routing, synchronization, timing and so forth.

These days “voice” often refers to the interface people use to interact with their phones, smart speakers or car communication systems, rather than the older notion of voice phone calls. 

Broadband used to be defined as any data rate of 1.544 Mbps or higher. These days it is some higher number that we adjust periodically. 

“Mobility” used to refer to use of mobile phones and cellular networks. These days it often refers to ride sharing. 

“Over the top” has been used in the past to describe video entertainment, messaging or voice applications provided by third parties and accessed by users and customers over any internet connection. Today it might more properly describe any service or application accessed over a communications network that is not owned by the supplier of access services.

“When I use a word, ‘it means just what I choose it to mean” the Lewis Carroll character Humpty Dumpty says. That’s an exaggeration as applied to use of terms in telecom, but the general drift is correct. 

Wednesday, October 21, 2020

2020 was Tough for Mobile Subscriptions, Better for Fixed Network Internet Access

With the caveat that usage is not identical to revenue earned from that usage, 2020 has generally not been a favorable year for mobile operator subscription growth, with a couple of exceptions, according to the Economist Information Unit. 


Fixed network internet access has held up better in most markets, with the strongest growth in the Middle East and Africa. 

source: Economist Information Unit 


Regions that saw the strongest fixed network subscription growth will see lower rates in 2021, while mobile subscription growth will improve in virtually every region in 2021.


Friday, October 16, 2020

Brownouts are an Issue, But Might be Almost Unavoidable

Brownouts tend to be a typical feature of most networks using internet protocol.  Where most measures of availability (reliability, we sometimes call it) measure times or percentages of times when a resource is unavailable to use, brownouts represent the times or percentage of times when a network or resource does not operate at designed levels of availability.


Just as an electrical brownout implies a severe drop in voltage but might not be an outage, a network brownout follows a sharp degradation in link quality but might result in the affected circuits still being technically “up,” Oracle says. “This decline may be triggered by congestion across the network or a problem on the service provider’s end.”


Brownouts are in one sense “a feature not a bug,” a deliberate design choice that prioritizes resiliency over guaranteed throughput. That is the whole architectural principle behind internet protocol, which sacrifices routing control and quality of service on defined routes in favor of resiliency gained by allowing packets to travel any available route. 


And since the availability of any complex system is the combined performance of all cumulative potential element failures, it should not come as a surprise that a complete end-to-end consumer user experience is not “five nines,” though enterprise networks with more control of transport networks and end points might be able to replicate five nines levels of performance. 


The theoretical availability of any network  is computed as 100 percent minus the product of the component failure rates (100 percent minus availability). For example, if a system uses just two independent components, each with an availability of 99.9 percent, the resulting system availability is less than 99.8 percent. 


Component

Availability

Web

85%

Application

90%

Database

99.9%

DNS

98%

Firewall

85%

Switch

99%

Data Center

99.99%

ISP

95%

source: IP Carrier 


Consider a 24×7 e-commerce site with lots of single points of failure. Note that no single part of the whole delivery chain has availability of  more than 99.99 percent, and some portions have availability as low as 85 percent.


The expected availability of the site would be 85%*90%*99.9%*98%*85%*99%*99.99%*95%, or  59.87 percent. Keep in mind that we also have to factor in device availability, operating system availability, electrical power availability and premises router availability. 


In choosing “best effort” over “quality of service,” network architects opt for “robustness” over “reliability.” 


Source: Digital Daniels

Building Something from "Nothing"

“You can only build something from nothing with a private equity mindset,” says Matthias Fackler, EQT Partners head of infrastructure Continental Europe. It’s an interesting phrase. In the case of connectivity assets, it might imply a view that infrastructure--in some cases--is worth "nothing" or very little.


The statement also illustrates two key issues in the connectivity business: low revenue growth and low profitability.


source: STL Partners


So almost by definition, if private equity firms are active in an industry, it means there are financial stresses. 


Private equity is about the buying of public assets, taking them private and then selling, typically when a public company asset is deemed to be underperforming. Quite often, the goal is to sell the assets within five years. That virtually always means that long-lived investments such as capital investment in networks are avoided, with the emphasis on operational restructuring. 


Public companies tend to “buy to keep.” Private equity always “buys to sell.” In other words, private equity acts as a turn-around specialist. They arguably excel when able to identify the one or two critical strategic levers that drive improved performance. 


They have a relentless focus on enhancing revenue, operating margins, and cash flow, plus the ability--as private entities--to make big decisions fast. That might be a greater challenge than is typical as a result of the Covid-19 pandemic, which is depressing connectivity provider revenues and profit margins.  



Thursday, October 15, 2020

NVIDIA Maxine: AI and Neural Network Assisted Conferencing

Moore's Law Shows Up in iPhone, Nvidia Video Conferencing SDKs

Moore’s Law continues to be responsible for extraordinary advances in computational power and equally-important declines in price. Apple’s new iPhone uses lidar that used to cost $75,000.


Separately, researchers at Nvidia now have Maxine, a software development kit for developers of video conferencing services that uses artificial intelligence and a neural network to reduce video bandwidth usage to one tenth of H.264. Nvidia expects Maxine also will dramatically reduce costs. 


Maxine includes application programming interfaces for the face alignment, gaze correction, face re-lighting and real time translation in addition to capabilities such as super-resolution, noise removal, closed captioning and virtual assistants, Nvidia says. 

These capabilities are fully accelerated on NVIDIA GPUs to run in real time video streaming applications in the cloud.

Maxine-based applications let service providers offer the same features to every user on any device, including computers, tablets, and phones, Nvidia says.


Generative AI Capex Seems an Order of Magnitude Higher than Cloud Computing Investment

For some hyperscale firms, the risk of investing in generative artificial intelligence, though real, is mitigated by the ability to grow rev...