1. The telecommunications industry at a crossroads: Uncertain economics overpower mazy technological innovation Master in Engineering Policy and Management of Technology Instituto Superior Tecnico, Lisbon, Portugal P. Ferreira February 1 st, 2002

2. Agenda 7080900010 TCP/IPWWW ARPANETNSF Telecommunications Act Local Loop Backbone optics Private ownership FEDERALFIRMSMARKET CHALLENGES 1 2 3 4

3. The Early Days The cold war times: the ARPANET (’69) BBN (AS#1) (70s) and packet switching TCP/IP (’74) and the OSI model (80’s) The NSF backbone (early 90s) 1

4. Technology & Innovation The World Wide Web (‘89) and browsers (’93) Classless Inter-domain Routing (’91/’92) Border Gateway Protocol (’94/’95) Peering: Bill&Keep, Complex routing policies 2 Source: Matrix Internet and Directory Services (MIDS) 200006800 23000 30000 80000 30000 400000 2300000 35000

5. Private Business The industry (infra-structure): Quest: fiber deployment Cisco: the routing oligopoly AT&T: telephony and data businesses Akamai: web-site mirroring and caching Services and e-business: Amazon: sales front-end eBay: general item auction Vehix: automotive “vortal” BandX: bandwidth trading 3

6. Private Business Telecommunications Act of 1996 The current backbone: Optical Networks and cross-connects (e.g. cost model) Wavelength division multiplexing Peering agreements and interconnection The access loop: Unbundling and competition Digital subscriber line and cable modems (e.g. cost models) Wireless technologies 3

7. Future Challenges Pricing models: Flat rate, Usage rate, Congestion rate Quality of service: IntServ, DiffServ, CBR Bandwidth trading: Extreme competition with SLAs Moore’s law, direct linking, GigaPOPs 4

8. Conclusions (with an EP perspective) policy competition unbundling technology backbonelocal loop economics 80s 90s 00s Mazy innovation Overpowered by Uncertain economics

9. Bibliography Technology: “ADSL Deployment”, David Pearah available at http://itel.mit.edu/xdsl/public/tprc-paper.pdfhttp://itel.mit.edu/xdsl/public/tprc-paper.pdf "A Rose by Any Other Name: Unbundling, Open Access and Cable Data Networks", Tseng et. al. available at http://itel.mit.edu/ under research, papers & publications, 2000http://itel.mit.edu/ “Wireless Networks in Europe: A three step evolution”, James Guyton available from www.murrow.org under publication/theseswww.murrow.org “Provision of sufficient transmission capacity for broadband mobile multimedia: a step toward 4G”, Manuel Dinis and Jose Fernandes, IEEE Communications special issue, August 2001 “QoS Support for an all-IP system beyond 3G”, Tomas Robles et. al. IEEE Communications special issue, August 2001

10. Bibliography Technology: “Optical Networks and the Future of Broadband Services”, Ferreira et. al. Special Issue of Intl. Journal on Technological Forecasting and Social Change, available on the web at http://web.mit.edu/~pmf/wwwhttp://web.mit.edu/~pmf/www “Best Effort versus Spectrum Markets”, Lee McKnight, W. Lehr and R. Linsenmayer available on the web at http://www.tprc.org/tprc01/agenda01.htmhttp://www.tprc.org/tprc01/agenda01.htm “A broadband access market framework: towards consumer service level agreements” McKnight and Lehr, available at http://itel.mit.edu under publications/2000http://itel.mit.edu "Do Appliances Threaten Internet Innovation?", Gillett et. al. IEEE Communications special issue, October 2001

11. Bibliography Business models and industry: (for more info visit www.murrow.org)www.murrow.org Creative destruction:Internet telephony Business survival strategies inMIT press - spring 2001 The global internet economy MIT press – spring 2001 Internet economics MIT press - 1998

12. Academic Research Sites School of Information Management & Systems http://www.sims.berkeley.edu/ Information Network Institute http://www.ini.cmu.edu/ Internet Telecoms & Convergence http://itel.mit.edu Program Research on Information Economy http://www.si.umich.edu/~prie/