Author Archives: Doug Dawson, CCG Consulting

New CableLabs Standard will Improve Cable Networks

coaxial cableCableLabs just announced a new set of specifications that is going to improve cable HFC networks and their ability to deliver data services. They announced a new distributed architecture that they are calling the Converged Cable Access Platform (CCAP).

This new platform separates functions that have always been performed at the headend, which is going to allow for a more robust data network. Today, the cable headend is the place where all video is inserted, all cable management is done, where the QAM modulation and RF Modulation is performed, and most importantly where the CMTS (cable modem termination system) function is done.

The distributed CCAP allows these functions to be separated and geographically distributed as needed throughout the cable network. The main benefit of this is that a cable operator will be able to push pure IP to the fiber nodes. Today, the data path between the headend and the neighborhood nodes needs to carry two separate paths – both a video feed and a DOCSIS data feed. By moving the CMTS and the QAM modulators to the fiber node the data path to the node becomes a single all-IP path that contains both IPTV and IP data. The new CCAP node can then convert everything to RF frequencies as needed at the node.

We’ve been expecting this change since for the last few years Chinese cable networks have implemented the distributed network functions. Probably one of the biggest long-term potentials for this change is that it sets the stage for a cable company to offer IPTV over DOCSIS frequencies, although there is more development work to be done in this area.

There are several immediate benefits to a cable system. First, this improves video strength since the TV signals are now originating at the neighborhood nodes rather than back at the headend. This will be most noted by customers who are currently at the outer fringes of a cable node. The change also will boost the overall amount of data delivered to a neighborhood node between 20–40%. It’s not likely this mean faster speeds, but instead will provide more bandwidth for busy times and make it less likely that customers lose speed during peak hours. Finally, it means that a cable company can get more life out of existing cable nodes and will be able to wait longer before having to ‘split’ nodes to provide faster data to customers.

Cable companies are not likely to rush to implement this everywhere. It would mean an upgrade at each node and most cable companies have a node for every 200–400 customers—that’s a lot of nodes. But one would think this will quickly become the standard for new nodes and that cable companies will implement it over time into the existing network.

This is the first step of what is being called the IP transition for cable companies. Most of my readers are probably aware that the telcos are working feverishly towards making a transition to all-IP. But cable companies are going to want to do that for a different reason. There is a huge amount of bandwidth capability on coaxial cable and if the entire cable network becomes IP from end-to-end then the huge data capacity in the cable network would be realized. Today cable companies use a broadcast system where they send all cable channels to every home and they then provide data services on whatever bandwidth is left. But in an all-IP system they would only send a customer the channels they are watching, meaning that most of the bandwidth on the system would be available for high-speed Internet services.

So think of this as the first step in a transition to an all-IP cable network. There are a number of additional steps needed to get there, but this pushes IP out to the neighborhood nodes and starts the transition.

Taxing the Internet

Numismatics_and_Notaphily_iconStarting on September 1, Chicago is trying something new and will be adding a 9% tax onto almost every service provided on-line. The city, along with the state of Illinois, is having huge budget problems and they are obviously leaving no stone unturned in looking to fill the tax coffers. But Chicago is the first local jurisdiction in many years that is trying to tax Internet-based services, something that will have wide repercussions.

So what are they trying to tax? The short answer is every information service that uses the Internet. For instance, the tax would apply to services that provide searchable databases—things like the LexisNexis system used by lawyers to find legal cases and precedents. As the data we use moves to the web this is a huge source of potential revenue for the city. Consider all of the services around today that charge people to access data. The Ordinance lists services like access to consumer credit reports, real-estate listings, car prices, stock prices, economic statistics, weather statistics, job listings, resumes, company profiles, consumer profiles, marketing data—any information or data that has been compiled, entered, and stored in a provider’s computer and then sold to others. The tax is also going to apply to taxable leases of personal property that include “cloud computing, cloud services, hosted environment, software as a service, platform as a service, or infrastructure as a service.

This tax does not apply to buying things over the Internet; it is not a sales tax on tangible assets, for instance, it would not apply to all of the physical products bought from Amazon. It would instead apply to companies like Netflix and Spotify and any other web service that sells electronic products. It would be up to the companies selling the onlune services to collect the tax and to remit the revenues to Chicago.

Obviously this new law will be challenged because it taxes a whole lot of things for the first time. It will also be interesting to see if this law is infringes on the protections provided several times by Congress in the Internet Tax Freedom Act as well as multiple times by the FCC, most recently as part of the Net Neutrality ruling.

But the city might have found a clever loophole. They are not taxing Internet access, but rather are taxing access to information and information services that happens to be stored somewhere else and then delivered over the Internet. It will be up to courts to sort out that nuance (or for Congress to pass a new law which is more specific).

One has to think that this law is very bad for businesses in Chicago. A 9% tax on anything is significant. Businesses spend huge amounts of money today on access to online databases and on cloud-based services that are moving their own information to the cloud. In effect, this law would tax companies for accessing their own data that they have chosen to store somewhere other than at their own business. I would not be surprised if this law drives businesses that spend heavily for such IT functions out of the city.

This also affects most people who live in the City directly. Almost everybody today who has an Internet connection buys some service over the web, be that a movie service like Netflix or Amazon prime or a music service like Spotify or Apple.

This kind of tax potentially adds a lot of cost for on-line service providers. Every town, county and state in the country has a different basis for assessing sales and service taxes like this one, and so this is going to require companies like Spotify to incorporate the tax assessment and collection process when they sell a subscription – something they don’t do today.

One would think that there will be a lot of avoidance of such a tax. It’s not hard for a business with multiple locations to be billed from a location that doesn’t get the tax. And since most on-line services don’t verify people’s addresses, somebody living in Chicago could most likely avoid these fees just by telling a Spotify that they live somewhere else. It’s hard to think that the City is ever going to be able to dig deep enough into online transaction to ever audit this.

But the real issue is not how the people in Chicago will deal with this. I am sure people and businesses there will take steps to avoid the new taxes if possible. The bigger issue is that other localities will copy the Chicago example if this holds up in Court. There is an old maxim that politicians have never seen a tax they don’t like, and so its not hard to foresee this tax spreading all over the country. And that is going to add costs to the online services we buy today, and since more and more things are migrating to the cloud this will become even more significant over time.

Court Jumps into OTT Fray

Fatty_watching_himself_on_TVIn a really surprising ruling, a federal judge has ruled that FilmOn X should be able to get access to local network programming like a cable TV company. US District Court judge George Wu ordered that FilmOn X be treated like a cable company and is entitled to retransmit broadcaster’s content.

For those not familiar with FilmOn X, check them out on the web. They have a huge amount of  on-line content that includes local TV from around the world as well as 600 other channels. There is a little bit of everything from non-traditional sports, music from around the world, and channels of almost any topic you can imagine. They also carry a mountain of for-pay video-on-demand content that ranges from music to major league baseball. All of the free content is ad-supported. Viewers can also create their own channels.

FilmOn X also had their own version of the Aereo model and they offered a premium subscription model in a few markets, which gave customers access to 120 HD channels on any computer or smartphone through the use of a dongle. Just like Aereo this was done from antenna farms.

The company has been in a battle with the major networks in the US since its inception. The company began carrying the local networks on the Internet in 2010. In 2011 they were ordered by a court to stop the practice. But in 2012, the local channels were all allowed back onto the system through a federal appeal and FilmOn X carried local content on its broadcast dongle product. But in 2013 the US District Court of the District of Columbia issued a nationwide injunction against the antenna service.

This latest ruling overturns that injunction and seemingly gives FilmOn X the same right to content as a cable company. Obviously this is going to be appealed further and one has to doubt that the networks are going to negotiate retransmission agreements with the company while the appeals are still being fought in court.

But the case raises serious questions. Although addressing a different set of issues than the Aereo case, it still sets up conflicting district court decisions. Aereo had taken the legal tactic of dancing around the issue of whether they were a cable company by concentrating on the issue of copyright infringement. FilmOn X took a more direct legal approach and argued that they had the rights to rebroadcast the content as a cable company. And apparently the court bought it.

Realistically nothing is going to happen in the area of on-line content until the FCC decides where it wants to go with this. Recall that in January of this year the FCC opened up a Notice for Proposed Rulemaking to look at the issue of on-line content. FilmOn X was mentioned several times in that document and the FCC is asking if on-line companies can have the same rights as cable companies to get content.

The FCC can put all of these lawsuits to rest by defining the rights, or lack of rights, of on-line providers. It’s fairly clear in reading the NPRM that the FCC has a bias towards allowing content on-line and is probably seeking a legal way to do that since they are required to follow the various cable laws that have been passed by Congress.

It’s hard to think that on-line content providers are ever going to be able to comply with all of the rules included in the current cable regulations. Those rules very rigidly define tiers of programming. They also define the retransmission process whereby cable companies can rebroadcast local content. But there are a ton of other requirements that range from closed captioning to emergency alert systems that also apply to cable companies. It’s going to be a challenge to give just a few of these rights to on-line providers while making cable providers continue to comply with all of the rules.

For now this ruling is just one more confusing court ruling that has defined the on-line broadcast industry so far. There have been several conflicting rulings as part of earlier cases with Aereo and FilmOn X that muddy the legal waters for the business model. But this is something that the general public very much wants and traditional cable will be in a lot of trouble if local content ends up on the Internet. It is that content along with sports that are the primary drivers behind maintaining the cable companies’ grips on customers.

Control of the Future Voice Network

FCC_New_LogoThe FCC is looking at how to transition from the traditional TDM-based PSTN to an all-IP telephone network. A number of carriers have submitted proposals that provide their vision of an all-IP network. Today blog looks at AT&T’s vision of the future IP network.

AT&T has proposed to the FCC that there be a handful of major switching hubs created in the country. Every carrier would then send their voice traffic to these hubs to be sorted and handed back to the various terminating carriers. Their argument is that the whole idea behind the IP transition is that the network be made as efficient as possible; they are promoting this idea as the simplest network to implement.

But is it the most efficient? Over the years I’ve done a lot of traffic engineering, meaning that I’ve helped companies analyze where their voice traffic comes from and goes to. What I’ve seen is that approximately 80% of voice traffic for most companies stays in a relatively small circle of perhaps 60 miles. This distance can vary a bit by company depending on how far away they might be from a major metropolitan area, but this basic traffic rule seems to apply pretty much everywhere I’ve looked.

So let me first look at the practical application of what AT&T is proposing. One would have to assume that if there was only a handful of nationwide interconnection points that they would be put in the same places as the major internet hubs – Atlanta, Chicago, Washington DC, New York City, Dallas, etc. What this idea means is that states not near to those hubs—say Montana, Nebraska, Maine, etc. would have to ship all the voice traffic from their state to the nearest big hub and back again.

While it might be more efficient to have only a few hubs, it certainly would not be efficient from a transport perspective. Somebody has to pay for all of that transport to and from the main hubs, and that is the real purpose behind the AT&T proposal. Under their proposal carriers other than them would pay to have all traffic brought to these main hubs. That is a major change from the way the industry works today.

Today there are two different sets of transport arrangements—one for regulated telcos and one for competitive CLECs and other kinds of carriers. Regulated companies today provide joint trunking between each other. For instance, if there is a fiber route between AT&T and another telco, AT&T generally owns the part that is within their territory and the other telco owns the part in their own territory. Sometimes this is negotiated differently, but under this arrangement both sides bear some of the cost of carrying voice traffic.

CLECs and other competitive carriers have a different situation. CLECs are allowed by the Telecommunications Act of 1996 to establish a point of interface (POI) at any technically feasible spot within a LATA (or region). Once that point is established, the CLEC is responsible for all costs on their side of the POI and AT&T (or Verizon or CenturyLink) is responsible for the costs on the other side of the POI.

AT&T’s suggested new network gets rid of both of these arrangements and instead moves all of the points of interconnection to the small handful of locations, and in doing so shifts 100% of the cost of the transport onto other carriers.

In a further money grab, AT&T would (as the assumed owner of these large hubs) charge a fee to other carriers for handing traffic from carrier to another. These fees exist today and are called transit fees. But today transit fees are charged on a relatively small percentage of voice calls since there are no fees charged for all of the jointly-owned arrangements I described above. Instead, under this new arrangement there would be a transit fee charged for every call that is handed from one carrier to another.

AT&T’s proposal is ridiculous for several reasons. First, the transit fees are not cheap and they cost more today than the traditional access charges that the FCC has been trying to eliminate. So AT&T’s proposal would increase the cost of making voice calls. The proposal is also a blatant attempt to shove all of the cost of carrying voice traffic to somebody other than AT&T. And finally, it forces companies to carry calls a much greater distance than they go today. This likely will lower call quality and increases the danger of the voice network going down due to a fiber cut or other network problem.

There is a much simpler alternative to what AT&T is suggesting, which is to let carriers negotiate how and where they hand off traffic. There are already huge numbers of local and regional interconnection points in existence, most established to hand-off local traffic in the local market. Carriers should be free to continue to use arrangements that work and with which they are happy. Think of these local arrangements as voice peering arrangements and they quickly make technical sense. Nobody is going to be unhappy if local connections transition to IP instead of TDM. But making the IP transition doesn’t mean that the whole nationwide network has to be massively reorganized. That is far more inefficient and costly than letting carriers find their own solutions.

A Few Lessons from Big Companies

Text-messageI spend a lot of time reading about corporations and I think there are some lessons to learn from them that are relevant to small companies.

Selling Product versus Building Relationships. There are many  large companies that sell products without developing relationships with their customers. In our industry the large cable and telcos come to mind. They are all rated among the worst of all corporations in delivering customer service and they even antagonize many of their customers. This works fine for them until they get competition, and then the customers who don’t like them quickly jump ship to the new competitor.

But there are large businesses that go out of their way to build customer relationships because they believe that loyal customers are their most important asset. Consider car manufacturers. They realized a long time ago that they were not going to be good at customer service, so they created a network of dealers who are local businesses with ties in each community and these dealers have built trust over generations. And there are many other companies that deliver great customer service. Tech firms like Amazon, Apple, and Google have been consistently rated among the top ten in customer satisfaction for the last few years – showing that tech firms can put an emphasis on customers and still thrive.

My most successful clients build relationships with their customers and as a result have built a loyal customer base. Many of them are or were monopolies, and there was a time when most of my clients could not tell me who their ten largest customers were. But I rarely see that today and small telcos and cable companies have learned to build loyalty through building relationships.

Growing Fast versus Growing Deliberately. Many large companies need to grow fast to be successful. Once you have taken venture capital money or gone public then the pressure is on to grow profits quickly. But growing too fast almost always changes a company in negative ways. It’s really common to see companies go into the growth mode and then forget who they are. Most tech companies, for example, started with a small core of people who worked hard as a team to develop the core company. But when it’s time to grow, and companies hire mountains of new people it’s nearly impossible to maintain the original culture that made the company a great place to work.

Growth can be just as hard for small companies. It can be as hard economically and culturally for a small company to grow from 5,000 to 10,000 customers as it is for a large company to add millions. Small companies are often unprepared for the extra work involved with growth and find that they overwork and overstress their staff during a growth cycle. Growth creates a dilemma for small companies. If you hire the people needed to staff the growth period your company will be overstaffed when growth stops.

And so a lesson about growth can be learned from large companies. They will often staff growth through temporary employees, contractors, and consultants rather than take on people that they may not need later. Companies of any size are hesitant about hiring employees that they might not need a year from now.

High-Tech versus High-Touch. A lot of large businesses are trying to feign a good customer service experience by electronically ‘touching’ their customers often. I recall last year when Comcast introduced a texting system to communicate with customers. After they sent me half a dozen text messages in the same week, I disconnected the texting function because I really didn’t want to hear from them that often. But there are large companies who are convinced that if they electronically reach out to customers often that they are engaging in relationship building and proactive customer service.

And perhaps they are with some customers. But I am more appreciative of a business where I can talk to a person when it’s needed. Not that I mind electronic communications. I like to know that AT&T has auto-billed me and I like knowing when charges hit my credit cards. But I don’t want to be bothered by a business when they aren’t passing on information I want or need.

The important point here is that you have to touch your customers sometime and whether you reach out electronically or in person it’s better than no-touch and not talking to your customers. I know telecom companies that call every customer at least once a year to ask them if they like the service and if everything is okay. Such calls are welcomed by most customers and this is a great tool for businesses to build relationships. But just be prepared that if you ask your customers how you are doing that you need to be ready to deal with negative feedback. That is how to build happy customers.

Have We Entered the Age of Robots?

robbyI read a lot of tech news, journals, and blogs and it recently dawned on me that we have already quietly entered the age of robots. Certainly we are not yet close to having C-3PO from Star Wars, or even Robbie the Robot from Lost in Space. But I think that we have crossed that threshold that future historians will point to as the start of the age of robots.

There are research teams all over the world working to get robots to do the kinds of tasks that we want from a C-3PO. As the recent DARPA challenge showed, robots are still very awkward at doing simple physical tasks—but they are now able to get them done. There are research teams that are figuring out how to make robots move in the many subtle ways that humans move and they will figure it out.

The voice recognition used by robots still has a long way to go to be seamless and accurate. As you see when you use Apple’s Siri, there are still times when voice recognition just doesn’t get us. But voice recognition is getting better all the time.

And robots still are not fabulous at sensing their surroundings, but this, too, is improving. Who would ever have thought that in 2015 we would have driverless cars? Yet they are seemingly now everywhere and a number of states have already made it legal for them to share the road with the rest of us.

The reason I think we might have already entered the Robot Age is that we can now make robots that are capable of doing each of the many tasks we want out of a fully functional robot. Much of what robots can do now is rudimentary but all that is needed to get the robots from science fiction to real life is more research and development and further improvements in computing power. And both are happening. There is a massive amount of robot research underway and computer power continues to grow exponentially. I would think that within a decade computing power will have improved enough to overcome the current limitations.

All of the components needed to create robots have already gotten very cheap. Sensors that cost a $1,000 can now be bought for $10. The various motors used for robot motion have moved from expensive to affordable. And as real mass production comes into play, the cost of building a robot is going to continue to drop significantly.

We already have evidence that robots can succeed. Driverless cars might be the best example. One doesn’t have to look very far into the future to foresee driverless cars being a major phenomenon. I can’t think that Uber really expects to make a fortune by poorly paying and mistreating human drivers such that the average Uber driver last less than half a year. Surely Uber is positioning themselves to have the first fleet of driverless taxis, which will be very profitable without having a labor cost.

We see robots being integrated into the workplace more so than into homes. Amazon is working feverishly towards totally automating their distribution centers. I think this has been their goal for a decade and once its all done with robots the part of the business that has always lost money for Amazon will become quite profitable. There are now robots being tested in hospitals to deliver meals, supplies, and drugs. There are robot concierges in Japan. And almost every factory these days has a number of steel collar workers. You have to know that Apple is looking forward to the day soon when they can make iPhones entirely with robots and avoid the bad publicity they keep getting from their factories today.

The average person will look at video from the recent recent DARPA challenge and see clumsy robots and be convinced that robots are still a long way off. But almost every component needed to make robots better is improving at an exponential pace, and we know from history that things that grow exponentially always surprise people by ‘bursting’ onto the scene. I would not be at all surprised to see a workable home maid robot within a decade and to see a really awesome one within twenty years. I know when there is a robot that can do the laundry, load the dishwasher, wash the floor, and clean the cat litter than I am going to want one. Especially cleaning the cat litter—is somebody working on that?

Your Weakness Might be Your People

Staff-buttonToday I’m going to talk about something that most company owners or general managers don’t want to be reminded about. I’ve read a number of things lately that remind me that often the employees at a company, while your biggest resource, can also sometimes be your biggest weakness.

What do I mean by that? For one thing, I’ve read several industry security reports lately that all say that company employees are the largest single reason that networks are getting compromised. Many companies now have pretty good firewalls and so hackers are no longer trying to break directly into company networks. Instead they are using techniques that get your employees to let them inside.

One of the primary new hacker tools is spoofed email. They will get valid email addresses for somebody inside the company, and then create fake and infected emails from that person to others in the company. Their hope is that somebody inside the company will open and download a file containing a virus from an infected spoofed email. Generally, once they see the structure of your email addresses it’s not that hard to figure out other email addresses inside the company.

The other way that hackers get in is with the older techniques of having somebody inside a network go to a web site that’s infected. I just reported in a recent blog that Menlo Security tested the top million websites (by traffic volume) and found that 6% of them contained malware of some sort. Much of this malware is just tracking spyware that isn’t too harmful, but some of it can be the deadliest malware on the web.

Cisco said last year that malware from web advertising is possibly the biggest new security threat. And malware is no longer just on suspicious web sites but can be found on very mainstream websites. This is due to the very odd system we have for getting advertising to websites. I discussed this in a blog earlier this year, and such malware is just as likely to come from a major news site as it is from someplace more suspicious.

The main defense against these kinds of problems is to continuously talk about these issues so that your employees are aware of them. The interesting thing is that employees are far likelier to open or download a file from an infected email at work than they are at home. For some reason employees are not as cautious with suspicious emails at work as they are on their home computers. If something is spoofed to look like it came from somebody inside the company they are likely to open it.

The other issue that brought this to mind recently is that I have several clients who have been the victims of embezzlement by employees. Of course, this is a crime that has been around forever and almost every time this happens people are shocked that it could happen to them. My first college degree is in accounting and I had several courses that dealt with these issues since it’s something that auditors are supposed to look for and uncover.

Accountants understand that there are two primary kinds of embezzlement. There is the loner who finds a way to write checks to themselves or to a bogus vendor they have created. This kind of embezzlement is almost always due to lax financial controls. If every check that is written must be approved by somebody who is going to make sure that a payment is legitimate, then it’s very hard for somebody to pull this off. Generally companies get into this kind of trouble when they have somebody with the sole authority to write checks or where people can somehow bypass the controls. Sadly, the temptation to steal is just too much for some people.

The other kind of embezzlement is a lot harder to catch and comes when a number of employees collude together to commit fraud. In that situation they are often able to bypass even the best internal controls. For instance, one employee can ask for a payment to a bogus vendor while another  employee cohort can vouch that it’s legitimate. I remember a huge case of this when I worked at Southwestern Bell many years ago where a large group of employees at the company colluded to buy huge amounts of telecom cable and electronics and have it delivered to a fake company warehouse.

It’s a shame that we live in a world where you have to worry about these sorts of things, but it happens to a lot of companies sometime during their corporate life. Almost invariably the person who is stealing from the company seems like the least likely candidate and surprises everybody.

I didn’t write this blog to cause you to be suspicious of your employees or staff. But it never hurts once in a while to think about these things because, sadly, one of your biggest weaknesses really can be your employees. And that can really hurt.

LTE-U

Cell-TowerRecently, the NCTA asked the FCC to make sure that wireless carriers don’t interfere with WiFi spectrum. I wrote a blog a few weeks ago talking about all of the demands on WiFi, and the threat that the NCTA is warning about is another use of the already busy WiFi spectrum.

Cellular carriers are using LTE technology to deliver 4G data. Cellular carriers today deliver 4G data and voice using spectrum for which they have paid billions (at least in the US and Europe). But in urban areas the LTE spectrum is already stressed and the demand for the existing spectrum is growing far faster than the carriers can find new spectrum to offload the extra demand.

The cellular carriers have had their eye on the 5 GHz unlicensed band of spectrum that is used for WiFi. This is a big swatch of spectrum that in some markets is larger than the band that some carriers have for LTE. Recently, various carriers have been experimenting with using this public spectrum to deliver LTE. Huawei and NTT demonstrated this capability last August; Qualcomm showed this capability at the CES show earlier this year. It’s rumored that T-Mobile plans to run a trial of this technology this year.

This new technology is being called LTE-U (for Unlicensed). NCTA filed at the FCC on behalf of their cable company members who use this WiFi spectrum to deliver WiFi for various uses such as distributing data wirelessly around a home or to bring data to settop boxes. They are worried that if the cellular companies start using the spectrum that they will swamp it and make WiFi useless for everybody else, particularly in urban areas where WiFi is under the most pressure.

That certainly is a valid concern. As my recent blog noted, the list of companies and technologies that are planning on using WiFi spectrum is large and growing. And there is already notable stress on WiFi around crowded places like large hotels, convention centers, and stadiums. The fear is that if cellular carriers start using the spectrum this same crowding will spread to more places, making the spectrum useless to everyone.

The cellular carriers argue that the swath of WiFi is large enough to allow them to use it without hurting other users. They argue that nobody can use all of the 400 MHz of spectrum in that band all at once. While that is true, it doesn’t take a huge pile of LTE-U customers at one time to locally overdraw the WiFi spectrum in the same manner that they are overloading the cellular spectrum today.

Engineers tell me that LTE uses the spectrum more efficiently today than does most WiFi technologies. This is due to the fact that the LTE specifications very neatly limit the bandwidth that any one customer can draw while most WiFi applications will let a user grab all of the bandwidth if it’s available. This means you can fit a lot more LTE customers into the spectrum that might be assigned to one WiFi customer.

There is a characteristic of WiFi that makes it incompatible with the way that LTE works. WiFi has been designed to share spectrum. When one customer is using WiFi they can grab a huge swath of spectrum. But when another customer demands bandwidth the system dynamically decreases the first connected customer to make room for the second one. This is very different than how LTE works. LTE works more like a telephone network and if there is enough bandwidth available to handle a customer it will assign a band to the customer or else deliver a ‘busy signal’ (no bars) if there us not enough bandwidth. The problem with these two different operating systems is that LTE would continually grab spectrum until it’s all used and the WiFi users are shut out, much like what you might get in a busy hotel in the evening.

The LTE providers say they have handled this by introducing a new protocol called LAA (Licensed Assisted Access) which introduces the idea of coexistence into the LTE network. If it works properly, LAA ought to be able to coexist with WiFi in the same manner that multiple WiFi customers coexist. Without this change in protocol LTE would quickly gobble all of the free WiFi spectrum.

But this still doesn’t answer the concern that even with LAA there could be a lot of people trying to grab bandwidth in environments where the WiFi is already stressed. Such a network never shuts anybody out like an LTE system will, but rather will just keep subdividing the bandwidth forever until the amount each customer gets is too small to use.

It will be interesting to see what the FCC says about this. This was discussed years ago and the FCC never intended to let licensed cellular holders snatch the public WiFi spectrum. I will also be curious to see if wireless carriers try to charge customers for data usage when that data is being delivered over a free, unlicensed swath of spectrum. And how will customers even know that is where they are getting their data?

I hope the FCC doesn’t let the wireless carriers run rampant with this, because I think it’s inevitable that this is going to cause huge problems. There are already places today where WiFi is overloaded, and this new kind of data traffic could swamp the spectrum in a lot more places. The wireless carriers can make promises all day about how this won’t cause problems, but it doesn’t take a huge number of LTE-U users at a cell site to start causing problems.

The Power of the Bundle

coax cablesOne of the primary ways that the cable companies have built their market dominance is through bundling. We are all aware of the many bundles of cable TV, telephone, and Internet access that they sell, and for which they give you a discount.

But you have to wonder how much longer those traditional bundles are going to make sense. According to the American Cable Association, by 2020 most cable companies are going to be seeing zero profit margins on their cable product. And for many companies it’s not even that far away. I’ve done the math and many of my clients are already losing money on cable when you consider all costs of supporting the cable product.

I’m sure the very largest cable companies do a little better, but they can’t be making a lot of money on cable TV. They have economy of scale, which has to help, but other than Comcast who owns a number of the networks carried on their systems, the other big companies can’t be making a very big margin on cable.

The normal bundle discount works by providing a discount for buying multiple products. It’s not unusual to see a bundle discount of $20 for somebody buying the full triple play. Nobody outside the cable companies knows which products are discounted or how the cable companies count the discount on their books. I’m not sure that really matters to the companies, but it really matters to customers.

Bundles today seem to have become a tool for penalizing a customer for dropping a service rather than as a marketing tool to attract customers. Today most new customers at big cable companies are attracted by specials, and those specials then eventually revert to the bundle prices when the period of the special ends. So most new customers often don’t even know the bundle prices when they buy.

But you quickly learn the unbundled prices if you try to drop services. Let’s say you have cable and Internet product and are paying $69 for the bundle. If this bundle has a $15 bundling discount the products would cost $84 dollars if bought separately. If you want to cut the cord and cancel your cable, you will find that you will lose the whole bundling discount, and your remaining Internet connection might still cost you $45 or more per month, meaning that you save $24 or less from cutting cable. If you had planned on dropping cable and buying NetFlix and perhaps some other OTT service you might easily find yourself paying more after cutting the cord than you paid before with the bundle.

That is the power of the bundle. It is no longer a marketing tool to capture customers because the big cable companies only talk about their bundles prices in the very fine print in their advertising. Instead, the bundle is a way to penalize customers for cutting service. I see industry pundits wondering all the time why cord cutting isn’t happening faster. There are a lot of people in surveys who say they are going to cut the cord but then never do it. Since most cord cutters want to keep their Internet connection, I think a lot of cord cutters change their mind about cutting cable when they find out how paltry their savings are.

If anything, cable companies are probably going to have more opportunities to bundle in the future than they do today. People have been steadily dropping voice lines for a long time. And while cable cord cutting is starting slowly, it is picking up steam. But to offset these losses the big cable companies are adding new products like security, energy management, home automation and IoT, and WiFi phones.

The cable companies are probably going to have the opportunity to sell OTT cable packages. It seems likely that the FCC is going to give anybody the ability to sell smaller OTT products over the web, and one has to think that they are going to let the cable companies compete with the same smaller products. Today, cable companies have a regulated set of rules for how they must build their programming tiers. But I suspect that there is going to be more profit for cable companies to sell a 40-channel package than what they are making with today’s big 300-channel packages.

And so we are probably going to see a lot more bundling, but rather than the triple play bundle it will be Internet access bundled with these other new products. And certainly the cable company is going to continue to use the bundling discount as a way to make it hard for customers to drop their service. So my guess is that bundling is not only here to stay but that it has a big future as a tool for cable companies to continue to strong-arm their customers to stay with them.

New Tech – July 2015

light beamsAs I do periodically, I’ve compiled a roundup of some of the coolest new technology that might be affecting our industry in the near future.

Light-Based Computers: Researchers at Stanford University have finally found an efficient way to transmit data between computer chips using light. This might finally enable light-based computers.

Light-based computing has two advantages over electricity-based computing. First, light transmissions are faster, meaning that data can be moved more quickly where it’s needed and will vastly increase the capacity of a chip. The other big advantage is that it will be greener and will not generate much heat. Today about 80% of the power poured into a chip is converted to heat, which is why you need a fan for your home computer and why data centers need huge amounts of power to keep them cool.

The breakthrough was done by taking advantage of the tiny imperfections found in any chip. They have developed an algorithm that will work with each unique chip to design the exact place where light gateways should be placed. This is a very different concept than today where chips are all uniform and the goal is to make each chip exactly the same. The architecture of the chip then uses many extremely thin layers of silicon, perhaps 20 layers in the width of a hair, and the creation of light gateways that work in 3-dimensions.

Faster Fiber: Scientists at the Qualcomm Institute in San Diego have been able to increase the power of optical signals in long-haul fiber by a factor of 20. They were able to send a signal 7,400 miles through fiber without amplification.

Long-haul fibers today use a whole range of different light spectrums in order to carry more data. However, as you cram in additional light paths you also increase interference between light paths which we call crosstalk. This eventually distorts the signal and requires the signal to be regenerated and re-amplified. The Qualcomm scientists have found a technique they call ‘combing’ that conditions the light stream before it is sent to greatly reduce the crosstalk.

This breakthrough means that existing fiber signals can be sent a lot farther without regeneration in applications like undersea fibers. But in normal fiber applications this technique means that about twice as much data can be crammed into the same light path – effectively doubling the capacity of fiber.

Biodegradable Chips: Engineers at the University of Wisconsin at Madison have developed a chip made almost entirely out of wood cellulose. The advantage of this technology is that we can create chips for many uses that will be disposable or recyclable with other trash. We have a huge worldwide waste problem with current electronics that should not be put into landfills due to containing heavy metals and other unhealthy compounds.

While these chips probably won’t be used for high-density computing like in data centers, this could become a standard way to make chips for the many things we use that are eventually disposable. One can certainly envision this as the basis of many chips for the Internet of Things.

A Replacement for GPS: DARPA is working on a replacement for GPS. GPS was developed by DARPA just a few decades ago, but there are already a lot of places where GPS doesn’t work, such as underground. Since GPS is satellite-based, DARPA is also worried about it being jammed in combat situations.

The new location system will be based upon self-calibrating gyroscopes that will always ‘know’ where they are at. This would create a location technology that is not satellite-based and not subject to outside interference. It also would work better than current GPS in three dimensions, meaning that it would more accurately be able to measure changes in altitude.

While the technology doesn’t need an external reference to calibrate itself or know its locations, they are also building in what they call ASPN (All Source Positioning and Navigation). This means a device would be able to pick up radio, television signals, or other spectrum to double-check their position so as to be able to confirm their location and recalibrate as needed.