 |
|
 |
By Susan Richards de Wit
Originally Published: August 27th, 2001
By: Business In Vancouver
Deregulating the telecom industry led to too many companies
building too many networks and not enough attention paid to
traffic control, say experts
The aftermath of deregulating the telecom industry is now
sinking in. Lack of forethought, overbuilding and market
flooding, technology restrictions and high back-end and
front-end costs have created a traffic jam worse than
imaginable even by Vancouver commuters' standards.
Think of the Internet as a huge highway with all 50 lanes
open, but cars stuck on the on and off ramps. Welcome to the
bottleneck -- or the "last mile."
"Companies like Nortel and Lucent have focused on building
the backbone -- the highway system," explains Roy Trivett,
local angel investor and cofounder of Architel Systems
Corp., which sold to Nortel Networks for approximately $700
million last year. "The focus has been on building the big
expressway. But there is a lot of capacity that is not being
used."
The result is "dark networks" -- networks that have been
installed, but are not being used. "The reason the network
capacity is not being used is because the connection from
the backbone to the consumer in the home or small business
is where the bottleneck is -- the pipe gets really narrow
when it gets there. Fibreoptic technology is needed, but we
have copper cables and copper can't carry the same amount of
information," says Trivett.
In high-tech circles, the last mile is common knowledge,
however, no one is talking publicly about it yet. Nortel's
people have all been silenced since the stock market crash
-- and so have smaller companies and government bodies who
do business with Nortel.
The stage for what is happening today was set in the
mid-1990s when deregulation in both Canada and the U.S. led
to a tremendous influx of new competition into a
traditionally closed marketplace. Suddenly where there had
been a few dozen companies -- local phone companies,
long-distance carriers and telecom equipment suppliers --
there were now hundreds of new entrants.
At first investors took little issue with this since it was
thought that with the advent of the Internet the increase in
demand for transmission of data (in addition to voice
traffic) would create more than enough business to go
around.
Enter the last leg problem.
With too many companies building too many networks, market
conditions have caused once-dominant telecom companies to
approach the brink of insolvency. One-time titan AT and T
(T:NYSE; www.atandt.com), for example, plans to break up its
company over the next couple of years because of extreme
competition. And Nortel Networks continues to fire thousands
of employees.
"What we have had is one hell of a reality shake-down," says
Lindsay Meredith, associate dean, faculty of business and
marketing professor at Simon Fraser University. "The telecom
industry continues to go through a horrendous shake-out and,
as a result, high-tech stock prices are finally coming down
to realistic levels. I suspect that high-tech stocks will
now proceed on much more realistic valuations."
James Topham, market leader, high tech at KPMG, says, "We
don't have the same reaction in Canada yet as far as our big
telecommunications companies go. Telus and Bell Canada are
having major changes Canada-wide, but we don't see the same
systematic decline that AT and T recently had."
With Canada being further behind in the deregulation
process, Topham suggests local companies should learn from
those that have gone before.
So the race is on to develop technologies in the hope of
finding a solution for the last mile. Or is it? Only a
handful of companies continue to work on the issue in
Western Canada, while technology ranges from optical
networks to wireless applications.
Fsona Communications Corp. (www.fsona.com), a young,
privately held Richmond-based company, addresses the last
mile through its point-to-point, free space, fibreless
optical networks. David Oberman, director of sales at Fsona,
says that its product has the leading edge in metropolitan
markets because it has a "shortcut" to the superhighway.
"There is no digging trenches or laying fibre with our
technology. And because you get fibre speed and bandwidth
without permits, we can get businesses online more quickly.
And it's economical - compared to digging a trench lane for
fibre," says Oberman.
Fsona's technology, the Sonabeam, is a high-speed,
point-to-point optical connection. It requires a line of
sight - meaning transmission from one receiver to another
must be unblocked. With fibre you can go around corners and
through the streets, with fibreless optical networking you
have "jumps" -- or links from the top of one building to
another to get your high-speed connection.
The Sonabeam is fast: "We can provide 125 megabits per
second -- 100 to 200 times faster than a cable connection.
It is so fast that you can watch a DVD movie --
high-resolution, stereo sound, full screen -- while you are
downloading files and carrying on a conversation on the same
link. And that would only consume a third of the bandwidth
of that connection available to you. It's a fast ethernet
connection."
Will the race to fill the dark networks be made redundant by
wireless applications? Oberman doesn't think so. He says
that they will continue to complement one another -- each
having their own market space. "Where you can't dig up
ground, you can't have fibre such as across a river, in old
buildings or sacred grounds. There has to be alternative
ways to get high speed connection," he says.
Redback Networks Inc. (RBAK:Nasdaq; www.redback.com), with
offices in Vancouver, offers an intermediate solution to the
last mile. Their subscriber management system, primarily
DSL, allows a carrier such as Telus to offer its services
within a district or city. This technology is nothing new.
"Our technology does two things," says Mark Weiner, senior
director of corporate marketing in Los Angeles. "If we are
talking about the superhighway's on and off ramps, it
increases the rate at which the green light flashes to allow
cars onto the superhighway. It also makes those same on and
off ramps many lanes wider."
DSL is a cost-efficient method, but it's still not the
high-speed connection that comes from fibre or wireless
optical networks.
Fsona's Oberman says, "Fibre has unlimited bandwidth. To
access the full capability of fibre, you have to pay for
what you want to use. If you are willing to spend the money,
you can get the connection now. The backbone is out there,
but the buildings in the area are often not connected. This
is an additional hurdle to cross. We need lower-cost ways of
connecting to the backbone." Oberman says that his wireless
optical network is economical -- costing approximately
US$25,000 to connect two points, approximately two
kilometres apart, while it costs US$100,000 or more to lay
fibre.
So what's stopping us? Does it boil down to cost? Stuart
Culbertson, deputy minister of the Information, Science and
Technology Agency (www.ista.gov.bc.ca) and chief information
officer for the Province of British Columbia, says that
access and solving the last mile is due primarily to the
cost, both to the consumer and to service providers. He says
that presently it is not cost-effective for service
providers to offer high-speed connections into homes and
small businesses.
"Some areas do receive fibre because the [Canadian
Radiotelevision Telecommunications Commission] has pushed
service providers to operate beyond their jurisdiction. The
CRTC regulates where fibre can be laid," says Culbertson.
Once we have affordable technologies, how can we be sure the
demand will be there? Trivett says that's a given: "There
are now so many users that the Internet has become a
household appliance. Non-technically savvy people have begun
to use the Internet on a daily basis."
As the network industry continues to shrink, redistributing
itself, we have to wonder where this will all end up and
where this last mile issue will place in the shake-out.
SFU's Meredith refers to the popular automobile analogy:
"Keep this in mind -- think back almost 90 years ago to when
the automobile was introduced. There were over 25 brands of
automobiles and the market shake-out that subsequently
followed reduced that number to four or five. Perhaps this
is all a little deja vu."
So the last, golden mile is in sight. For a price. BC
Liberal leader Gordon Campbell is optimistic: "We just have
to commit ourselves to it [solving the last mile and gaining
affordable high-speed access]. We all intend to use right of
way and to provide high-speed broadband access. The private
sector will help provide us access -- to charge a fair
market value for right of way."
|
 |
