“Point & Counter-point with Bob Lucky”
Gordon Bell
Microsoft
May 5, 1998
The 1998 Bellcore Forum:*
Competing in the Millennium:
Vision, Innovation, and Delivery
*Audience response was used for this presentation, and
the attendees from Bellcore, LECs, CLECs, IECs/IXCs,
Cable companies, and equipment suppliers were polled.
The %s indicate the results of these polls.
1998 Bellcore Forum
Predicting future telecom
services or lack thereof
Introducing the Internet and Web driver
 Cyberspace…
the quest and vision … my opinion
 Laws of Prediction … or how to
understand the technology of our future
 The big telecommunication bets… if we
could only forecast the future
 Overthrowing the incumbents… a plan*
*Appended to the original
talk.
1998 Bellcore
Forum

By January 2001 there will NOT
be 1 billion people on the “net”.
Bet: Nicholas Negroponte $1K
Bet: Nicholas Negroponte
$1K:$5K… it happens by 2002.
Also $1 T of commerce by 2001.
Bet: Me? 77% 1998
NN?Bellcore
23% Forum
Why this is the keystone bet!

It determines the market
–
–

It says something about the utility
–
–
–

for networks
for access devices… especially PCs
commerce
communication
entertainment
Increased network capacity &
ubiquity enables
–
–
–
–
phones
videophones
television
serendipity
1998 Bellcore Forum
Interneters growth
10000
World Population
TVs & Phones
1000
“1 Gp by 2000”
Negroponte
PCs
100
Internetters
10
‘95
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
1998 Bellcore Forum
Interneters growth
12000
10000
8000
6000
4000
2000
0
‘95
World Population
extrapolated at 1.6% per year
Internet Growth
extrapolated at 98% per year
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
1998 Bellcore Forum
1998 Bellcore Forum
Growth in hype
WWW
Infoway promise:
“how great it’ll
be” (politicians,
academics, etc.)
books, Infoway
newspapers
regulation
Infoway
addiction
conferences
lawsuits
1998 Bellcore Forum
Data from Gordon’s WAG
Articles about security, privacy, &
fraud versus commerce ($M)
actual
commerce
articles about
risk and NOT
doing
commerce
pornography,
crime, FUD,
etc. articles
1998 Bellcore Forum
Data from Gordon’s WAG
Real growth in commerce?
1998 Bellcore Forum
The Virtuous Cycle
that drives the BW quest
Internet
(IP)
ubiquity
1998 Bellcore Forum
“
If we couldn’t predict the
Web,
what good are we?
”
Bob Lucky, Vice President
Bellcore, 1995
1998 Bellcore Forum
Exponentials
change everything
… you can’t see ‘em coming!
1998 Bellcore Forum
Business Week
even makes fun
of Telecom…
because you
can see them
coming
1998 Bellcore Forum
Business Week doesn’t know… Satellite isn’t an a B/W option
Phone
CATV
Satellite…
1998 Bellcore Forum
Why phone guys hate computer guys
0. Where would they be without the transistor,
RJ11 and UNIX that you de-standardized?
1. They’re nouveau rich we’re old money.
2. We brought ISDN to the party, nobody came.
3. They’re IP’ing on us including phones!
4. Packets don’t make links fatter or faster.
5. All they want is free, high bandwidth, 24
hour a day phone calls. Why do they need
bandwidth? They have nothing to show.
6. Don’t talk service. I reboot my PC every day.
Ever have to reboot your phone?
7. Just wait till the governments get on their
case.
1998 Bellcore Forum
Agenda… predicting and
forecasting





Introducing the Internet and Web driver
Cyberspace…
the quest and vision … my opinion
Laws of Prediction … or how to
understand the technology of our future
The big telecommunication bets… if we
could only forecast the future
Overthrowing the incumbents… a plan
1998 Bellcore Forum
Let’s look at Cyberspace
1998 Bellcore Forum
Cyberspace:
A Network of ... Networks of ...
Continent
Body
Region/
Intranet
Home
Campus
World
1998 Bellcore Forum
Cyberization: interface to all
bits and process information





Coupling to all information and
information processors
Pure bits e.g. paper, newspapers, video
Bit tokens e.g. money, stock
State of: places, things, and people
State of: physical networks
1998 Bellcore Forum
Network
Interface
Platform
Platform, Interface, & Network
Computer Class Enablers
“The
Mini &
Computer” Timesharing
Mainframe
PC/WS
Web browser,
telecomputer,
tv computer
tube, core, SSI-MSI, disk, micro, floppy, PC, scalable
drum, tape, timeshare
disk, bit-map servers,
batch O/S
O/S
display, mouse,
dist’d O/S
direct >
batch
terminals via
commands
WIMP
Web, HTML
POTS
LAN
Internet
1998 Bellcore Forum
“Everything will be in
Cyberspace”


Is this a challenge? goal?
quest? fate?… or
Cyberization enables
new computing platforms that
require new networks to connect
them
–
–
Infrastructure supports the content
Three evolutionary dimensions
1998 Bellcore Forum
All the platforms we have and
will inevitably build have to be
totally interconnected to have
Cyberspace.
That’s your job!
The price has to be right…
you cannot count on voice
revenue forever!
1998 Bellcore Forum
Connecting all these plain old computers
into Cyberspace… an opportunity
1998 Bellcore Forum
Mobile
videophone
1998 Bellcore Forum
Honda
Robot
1998 Bellcore Forum
People
surrogates
1998 Bellcore Forum
Steve Mann
in
Cyberspace
1998 Bellcore Forum
Medtronics
Implanted
Cardioplastic
1998 Bellcore Forum
For openers…
audio, pix, T, P, ECG,
location…
1 GB
1998 Bellcore Forum
Not shown:
ECG; GPS;
Compass;
altimeter
PCS; Pilot
Libretto,
.5mm
pencil
1998
Libretto PS,
Ricoh Camera;
Swiss Army
BellcoreKnife
Forum
Cyberspace: one, two or three
networks? in 2005, 2010, 2020
Data
Telephony
Television
1998 Bellcore Forum
DVD
>97
Game
Cons.
Television
Cable world
Cable
Broad-
VCR
cast
DBS
ITV?
RADIO
Telephony
Wireworld
less
phone
CLEC LEC
IEC
Cable
PBX I’net
I’net
Phone
The
LAN
Internet PBX
I’net
RADIO
xDSL
TV
ISP
Pvt. Intranet
WAN Extranets
Wire& LAN
less
The Worlds of
TV, Telephony
Datacom a.k.a.
Computing &
Internet
Datacom
world
1998 Bellcore Forum
Cyberspace: A spiraling quest
in 3D real space
Computation
Communication
Cyberization
Programs, Content & messages
1998 Bellcore Forum
Agenda… predicting and
forecasting





Introducing the Internet and Web driver
Cyberspace…
the quest and vision … my opinion
Laws of Prediction … or how to
understand the technology of our future
The big telecommunication bets… if we
could only forecast the future
Overthrowing the incumbents… a plan
1998 Bellcore Forum
On prediction…and betting
why historically have we been
right or wrong?
1998 Bellcore Forum
“ market for maybe five
computers.
”
I think there is a world
Thomas Watson Senior,
Chairman of IBM, 1943
1998 Bellcore Forum
Harvard Mark I
aka IBM ASCC
1998 Bellcore Forum
Predictions require
some history.


The computer hadn’t been invented.
Watson’s prediction held for 10 years.
 You
need history to predict.
1998 Bellcore Forum
Moore’s Law vs Moron’s Law
for prediction… differences
in Cyberspace perception
1998 Bellcore Forum
Moore’s Law 60%/yr. Memory
-- 4 x size every 3 years
10 G
1G
100 M
10 M
1M
100 K
10 K
1K
0.1 K
1970
1980
1990
2000
2010
1998 Bellcore Forum
Extrapolation from 1950s:
20-30% growth per year
Tera
Giga
Storage
Backbone
Processing
Memory
??
Mega
Kilo
1
1947
Telephone Service
17% / year
1957
1967
1977 Bellcore
1987 1997
2007
1998
Forum
W AN Data Rate s (fibe r)
10,000.
Bandwidth, Gb/s
1,000.
Ba ndwidth
ha s be e n
improving
100.
10.
Experimental
62% /year
1.
Commercial
43% /year
.1
.01
1970
1980
1990
2000
1998
Bellcore Forum
Ye a r
Moron's Law (cf. Newton)
“the residual effects of regulation
ensure that telecom carriers will
never provide what the customer
wants and … it comes five years too
late.”
--venture capitalist Roger McNamee.
“Computer folks ... fear that Moron's
Law will trump Moore's and stunt the
revolution's growth over the next 30
years.”
1998 Bellcore Forum
Newton's First Law. Bodies at rest ...






LECs, PUC and FCC are at rest,
supplying assuredly profitable
(by definition) local service.
Cable TV raises prices to cash out
CLECs and IECs “cherry pick”
lucrative corporate (not consumer)
local service
LECs see reduced revenue and profit
LECs, PUCs, and FCC raise prices
LECs downsize to remain at rest,
buy cable and CLECs
remainForum
at rest
1998to
Bellcore
& maintain monopoly
Electricity and LECs to Merge
Wires to the home …
Guys and trucks
Poles and holes…
Same customers
Geo-monopolies
PUC interaction
Core competency:
lobbying
1998 Bellcore Forum
Why computer guys hate phone guys
0. Ads say “someday you will”. Just do it!
1. All they give us is POTS to IP on.
2. It’s not the price of bandwidth (that they said
would be free) … it’s the availability
3. They won’t buy packet switching. Computers
let everyone be telecoms. They’ll pay.
4. The net is the net. Services are services.
Content is content. Stop trying to own ALL.
5. Telephone quality is an oxymoron. With 64
kbps, we should be getting CD quality.
5. Name any monopoly that has love & respect
6. It’s taken 35 years to1998
learnBellcore
that computer
Forum
calls last 24 hours/day, not 5 minutes.
1998 Bellcore Forum
Why no one likes cable guys
0. But you just increased my rates
1. They don’t even own the poles or holes.
They’re just schmucks in trucks.
2. They are too close to the broadcast
industry and that eliminated logic.
3. We’d all like to be unregulated too
then we can raise rates faster and do
whatever we want.
1998 Bellcore Forum
Telecom View of Cyberspace:
We will tell you the services.
Subscribers
The Network
and all the
Sevices you
would ever
want.
1998 Bellcore Forum
Silicon Valley View of Cyberspace:
provide a switch and entrepreneurs
will create the services
Subscribers
All the Services
you might or
might not want
Worldwide
mostly IP
Switch
1998 Bellcore Forum
Telecom Equipment Industry 1998
Solutions
Applications
OS
AT&T Nortel
Siemens
ROLM
NEC
Computers
Switching/
DSP
1998 Bellcore Forum
Future Telecom Industry
Applications
Ericsson, Aspect, Nortel, Octel, others
Applications
Microsoft, Delrina, many others
Databases
OS
Informix, Microsoft, Oracle, Sybase, others
Microsoft, Apple, Sun, Novell, LINUX
Switching
Ericsson, Nortel, Bay, 3Com, Fore, others
Computers
Compaq, DEC, Dell, IBM, many others
DSP
Processors
Dialogic, NMS, Rhetorex, others
Intel, AMD, Motorola, others
1998 Bellcore Forum
Computer vs Telecom
Proc. & mem 2x/1.5 yr
Prices decline
Email, web, audio, etc.
Packet switching…
… will too, do voice!
64Kbps gives great audio
IP
Fungible bits for
phone fax data tv…
Connect & bits go free.
Just give us any old net!
we’ll compute the rest
Technology-based …its
Information Services
Moore’s Law
Access B/W 2x/4yr
Trunk BW 2x/ 9 mos.
Prices increase
Voice, voicemail, fax
Circuit switching...
…is required for voice
Telephone Quality Voice
… is an oxymoron
ATM, ISDN & POTS
Unique bits and
ala carte pricing
Billing & lawyer costs
We want it all:
net, nodes, content
Lobbying-based … its
Telecommunications
1998
Bellcore Forum
Moron’s Law
The beginning of the end…
or a new beginning?
“You have to separate the hype from
the reality. We have customers, real
customers paying hundreds of
millions of dollars to us today. When
you look at Level 3 and Qwest, how
many customers do they have?”
---- R C Notebaert, Ameritech
“We’re not going to wake up and find
our voice business is gone”
--- M Turner, US West
1998 Bellcore Forum
A technology
e.g. packet switching
can come from nowhere
and wipe you out!

MOS memories and micros were
introduced in 1972.

By 1976, MOS memories wiped out
core memories.
1998 Bellcore Forum
“
There is no reason
anyone would want a
computer in their home.
”
Ken Olsen
President, Chairman and
founder of Digital, 1977
1998 Bellcore Forum
Equating
yourself
to the average
“user/buyer”
is risky . . . unless you’re an
average user.
1998 Bellcore Forum
“
ISDN will be ubiquitous
by 1985.
”
Irwin Dorros, VP Long Lines
ATT, 1981
“ Unfortunately we’re stuck with ISDN
speed using POTS for the next 5
years.”
Gordon
Bell, ACM
1997
1998 Bellcore
Forum
Network bandwidth
becomes available
slower than the most
conservative
prediction.
1998 Bellcore Forum
will not have
“ AT&T
screwed up its
purchase of NCR by
1996.
”
Robb Wilmot, advising
Robert Allen in 1992 ($100)
1998 Bellcore Forum
We under-estimate the
devastating power of
companies & planners,
lawyers & government,
to foul up predictions.
But to really foul up requires
an econometric and market models!
1998 Bellcore Forum
“
By 1997
Video-on-Demand will
be available and
operating in six cities
”
When will this happen?
2000 8%, 2005 46%, 2010 25%,
never 21% Raj Reddy & Ed Lazowska
1992 (winners get fed)
1998 Bellcore Forum
“
By April 1, 2001
videophones will ship in
50% of the PCs
and be in 10% daily use.
Will this happen by:
2001 25%, 2005 50%, 2010 18%,
2015 3%, never 4%
Gordon Bell vs Jim Gray
1996 (one paper,
loser gets
fed)
1998 Bellcore
Forum
Always bet against the
optimistic researcher.
They are wrong in the
short term, but
ultimately right.
1998 Bellcore Forum
“Build it and they will come”



Vision: Provide bandwidth and they will
come to share supercomputers, do
telemedicine, telescience, ship pictures
around. Traffic continues to double.
The web was serendipity!
"A user ... would build a process and
launch it into the network ... with explicit
instructions about things to look for and
what to do … ."
1998 Bellcore Forum
1998 Bellcore Forum
If you do the right thing,
serendipity works!
1998 Bellcore Forum
NCs will NOT outsell PCs 9:1
by 2000.…
NCs include those embedded in TV sets,
phones, and used as PC alternatives.
Bet with Larry Ellison, CEO Oracle:
While the devices connected to the web (e.g.
instruments, cameras, appliances, printers,
phones, and television sets) may be greater
than PCs, the number of personal access
devices that are NOT PCs will be less than
9:1.
1998 Bellcore Forum
Don’t bother betting where
the goal is just PR. It is
safe to bet against Larry
Ellison even if he has lots
of money.
Elllison bought Ncube. It failed as an
MPP computer, failed again as a
database engine, and finally failed as a
video-on-demand
server.
1998
Bellcore Forum
Observations on predicting







Existence proofs are essential, otherwise
it’s faith and luck.
Numbers and data are our friends to use.
Bet against the optimistic researcher.
They are ultimately right, while initially
wrong.
Bet on predictors who are grounded,
intuitive, imaginative, and lucky.
Because it could, doesn’t mean it will.
It’s usually just the economics, stupid…
look there first!
Don’t count of Newton’s First Law…
because greed (an outside force) usually
beats fear (inertia). 1998 Bellcore Forum
What percent of biz traffic by
contacts, (not traffic) will be:
Item Bell/Lucky
Fax
Voice
Voice/Video confer
Overnite mail
Snail mail
Email
Newspaper?
Web?
Television?
1994
11 10
15 50
2
2
2
3
20 25
50 10
2000
7 10
15 30
10 10
1.5 5
10 25
56 30
1998 Bellcore Forum
Agenda… predicting and
forecasting





Introducing the Internet and Web driver
Cyberspace…
the quest and vision … my opinion
Laws of Prediction … or how to
understand the technology of our future
The big telecommunication bets… if we
could only forecast the future
Overthrowing the incumbents… a plan
1998 Bellcore Forum
Some of my recent bets!
Would you bet with me?
1998 Bellcore Forum
PC growth is not stalled...
Bet: (Walt Mossberg, WSJ)
There will be continued growth of
PCs (I.e. things that run Windows, NT,
or CE) at a double digit rate for until
2001.
Bet with me? 87% With Mossberg? 13%
1998 Bellcore Forum
Web will reach 50% of the U.S.
households...
Negroponte predicts 1Bp and $1T/yr
of commerce by 1/2001.
Bet: with Dave Nagel, AT&T one dinner
The web will reach 400M world-wide
users OR 50% of U.S. households by
end of 2001.
Do you bet with me? 57% Nagel? 43%
1998 Bellcore Forum
One million people will access
the web via TV sets...
Bet::
At least one million users will
access the web/internet via their
television sets by the end of 2001.
Via: phone line,
16%
xDSL
19%
cable modem
17%
settop box/cable 39%
not at all
9%
1998 Bellcore Forum
Average bandwidth to homes
will not soon be huge…
High bandwidth links are being delivered
today in trials of 10K+ using cable & xDSL.
Bet:
The average bandwidth to all U. S. homes
with PCs will be <56 Kbps in 1/2001.
The availability of bandwidth coming to
consumers and small businesses by
1/2001 via Cu twisted pair aka LECs or
IECs will be comparable to ISDN today.
<56Kbps 71%
>128Kbps
29%
1998 Bellcore
Forum
A gigabit net will not be in
place for research users…
Bet: Raj Reddy et al … fine food & drink
10K users at 10 sites of > 500
users/site in 3 states will NOT interconnect through a gigabit path by the
end of 2000.
Do you bet with me? 65% Or with Raj? 35%
Based on market need, this service will be
available by: 2000 10%, 2005 53%, 2010 29%,
1998 Bellcore Forum
2020 5%, never 4%.
Telepresentations will be a
well-defined app by 2001.
ACM97 aka its 50th on March 3-5, 1997 was
the first telepresented conference with Mbone
multicast and servers
Bet with Denise Curruso, NY Times
More people will view conferences that are
made telepresent from Cyberspace than those
attended it in meatspace by 2001. Note this
bet was won within 6 months.
Bet:
Even this meeting will be telepresented by
2001 37%, 2005 35%, 2010
never 18%
199810%,
Bellcore
Forum
ACM 97 (Mar. 1997) attendee
poll… what’s your opinion?
By 2047 will the majority telecommute?
(68% of ACM attendees said yes)
Will representative democracy be
replaced by electronic participatory,
democracy by 2047? (ACM: 38% yes)
TV, the internet and telephone will
converge by 2002 (ACM) !… clearly
1998
Bellcore Forum
optimistic and very
wrong
Let’s poll (forecast) when
certain events will (or will not)
happen
1998 Bellcore Forum
Forecast of Internet
Telephony & Videotelephony
IP will carry $2B of existing voice or
fax traffic by: 2001, 2005, 2010
IP will carry 20% of existing voice or
fax traffic by: 2001, 2005, 2010
IP will carry 50% of voice and fax traffic
by: 2005, 2010, 2020, never
*Note email can be used to carry fax
1998 Bellcore Forum
traffic, but not visa-versa.
Forecast of xDSL & CABLE of
Internet to US Homes & Businesses
xDSL use will cross-over ISDN
installations by 2001 55%, 2005 37%,
2010 8%
xDSL will deliver service to 10M by
2001 10%, 2005 69%, 2010 22%
Cable will provide WWW to 1Ml by
2001 61%, 2005 31%, 2010 8%
Cable will deliver WWW to 10M by
2001, 2005, 2010
1998 Bellcore Forum
Forecast of convergence?
The datacom network (IP) will carry
Television programs by
1/2001, 2005, 2010, 2020, never
There will be a single net to access
the majority of telephony, data, and
television sources by
2005, 2010, 2020, never
1998 Bellcore Forum
Forecast of the access device
One-half the homes with PCs will be
“always on” by: 2001, 2005, 2010, 2020
The main (in units) web access device
in 2001 will be: the PC, Telecomputer
aka videophone, Set-top, TV, other
The main web access device in 2005
will be the PC, Telecomputer, Set-top,
TV, other
The main web access device in 2010
will be the PC, Telecomputer, Set-top,
TV, other
1998 Bellcore Forum
Agenda… predicting and
forecasting





Introducing the Internet and Web driver
Cyberspace…
the quest and vision … my opinion
Laws of Prediction … or how to
understand the technology of our future
The big telecommunication bets… if we
could only forecast the future
Overthrowing the incumbents… a plan
1998 Bellcore Forum
Ten Niches to the IECs
economic support base.
Reducing voice revenue is the
only avenue for changing the
LEC-PUC-FCC controlled
access infrastructure!
1998 Bellcore Forum
Overthrowing bandwidth limiting
incumbent IECs to get Internet access
…ten, critical niches










Plain Old Cellular replaces POTS
64 Kbps quality audio vs telephony quality
Cable for Internet AND voice over IP
CLECs aka Competitive LEC suppliers
Newcos (e.g. Covad): IP service with xDSL
Startup IP based telephony companies
Large users by-pass LECs and use IXCs and IP for
inter-organization telephony
Fax services over Internet undermines base
Bellcore plan for ISPs to provide “telefony”
Maintain FCC support FCC for voice over IP without
FCC/PUC interference
1998 Bellcore Forum
Telephone Quality Voice is an
Oxymoron! We can do better.





Analog to digital transition must occur!
E.g. a 6 Mhz TV channel can deliver about
six higher DVD quality digital channels
IECs use 64 Kbps channels to supply
approximately 8 kbps, low-quality voice
New channels can offer higher quality
audio using >33 kbps.
Datacom must drive to offer scalable audio
bandwidths from 2 kbps-500 kbps
1998 Bellcore Forum
Attack plan for ISPs to deliver
voice
•According to the rules, ISPs cannot offer
telephony if it looks like a telephone
•Thee ways that make IP telephony NOT be a
telephone:
•Increased quality… use all the bandwidth
that can be obtained e.g. 33, 56 or
whatever to provide high, not telephone
quality voice
•It is a videophone
•It is a computer and conference device
1998 Bellcore Forum
How a New Player or ISP can
Attack Incumbents e.g. LECs*
• Dial Me Up, Faster and Faster!!!!
IXC
Internet
Backbone
Telafony
Gateway
Voice over IP at 7.3 Kbps
Using Modems
ISP+
LEC
*courtesy of Bellcore
1998 Bellcore Forum
Plan for Pipes and Wires
ATM
Switches
LEC
Network
IP
Routers
LECs are free pipe and wire access providers.
IP over ATM lets competitors buildout a network
1998 Bellcore Forum
FCC’s 4/10/98 Report to Congress:
How long will it remain?
If you use IP to transmit and store
information, including telephony
(unless it looks like a plain old
telephone call), its Information Services.
If you use circuit switching (no storage)
its Telecommunications (and FCC/PUC
controlled)
IP Telephony has to look different!
Bet:
This will hold until 1/2001.
1998 Bellcore Forum
The end
1998 Bellcore Forum