NFOEC: Smile!

It's not quite like skydiving without a parachute, but Drew Lanza called his NFOEC keynote a "suicide mission": trying to convince showgoers of "Ten Solid Reasons to Be Optimistic." Lanza, a partner with venture firm Morgenthaler, chose not to go the all-out kamikaze route of predicting a recovery; in a smart move, he 'fessed up early on that he has no idea when recovery will happen. Instead, he stepped through some observations about the communications industry's future, touching on some of the well worn arguments about how demand keeps growing and technology keeps advancing.

"It's going to be tough sledding for a couple of years," he said. "It's our job to hang in there and remember we've been through these kinds of blips before."

Lanza stuck mostly to grand issues, such as comparing the information revolution, which he said is only at its midpoint, with the industrial revolution. On a more immediate front, he saw hope in optical buildouts such as the RBOCs' proposed fiber-to-the-premises project (see Fiber Access Plans Proliferate and Analysts Narrow RFP Odds).

Some observers question the sincerity of that proposal, but Lanza thinks it's for real. His evidence? The RBOCs' debt, which measured $170 billion as of 2000 has been reduced by about $100 billion already. "Bandwidth is doubling every year, and they're paying down debt. I think they're getting ready to do something," he said.

Some of Lanza's reasons didn't seem that "optimistic" for optical, however. One point was that Moore's Law -- the maxim that semiconductor complexity keeps growing -- still holds, and that similar rules have applied for other technologies. Storage is a prime example, as disk drives hold 1,500 times more than they did around 1990, compared with about 40x growth in modem/DSL access speeds during the same period.

A 1,500x improvement has made all kinds of new applications possible. For example, Lanza has heard pitches for an über TiVO, a personal video recorder that could grab four hours of all channels at once -- an entire evening of TV [ed. note: shudder], rather than specific shows.

That's not necessarily a sign of trouble, but it's a cool application that doesn't require any fiber-to-the-wherever networks. Lanza listed the ongoing march of technology as a reason for optimism, but it could also help keep optical spirits down for quite a while.

For those of you keeping score, here are Lanza's 10 reasons, paraphrased:
  • The industry is poised to wire the planet
  • Communications are being recognized as a basic human right
  • R&D cycles have gotten faster
  • Moore's Law lives on
  • The industry's finances are returning to sanity
  • Electronics advances spur photonics
  • Internet commerce is, like, huge
  • All content is going digital
  • IP is becoming ubiquitous
  • The information revolution is at its midpoint

— Craig Matsumoto, Senior Editor, Light Reading

vrparente 12/4/2012 | 11:27:35 PM
re: NFOEC: Smile! The list would have benefited from including population growth. That (at the very least) correlates positively with network/telecom growth. A port at home (home network), at school, at work, plus services industries, etc.

And for anyone that doubts the importance of population growth, rest assured that population figures have continuously shown real growth --excepting perhaps the black plague.
lastmile 12/4/2012 | 11:27:34 PM
re: NFOEC: Smile! Survive.
That is what the RBOC's are going to do.
They will use the FCC and their lawyers to sustain their business.
But all the RBOC's are not alike. We need just one out of the few to start competing with cable and offer us customers a triple play service that beats the hell out of the junk that the average customer is used to today. If that happens, then the atleast one of the Bells will survive.
The triple play would consist of:
1. Broadband
3. Wireless
Note: POTS does not feature because true broadband will cater for voice. Meanwhile, many more companies will die waiting for the RBOC's to do "something"
keelhaul42 12/4/2012 | 11:27:34 PM
re: NFOEC: Smile! I wonder if anyone can provide a list of the companies that have died waiting for the RBOC's to do "something", "something" being defined as rolling out a new [broadband] service. And it's not just the RBOC's: the major cable companies have sat on their hands too.
At the core of it lies the ability to recognize new markets and risk capital to meet them. Does anyone expect the RBOC's to do this?
Instead what we get is RBOC's dragging their feet on broadband rollouts, lobbying the FCC to cripple potential competitors in that arena, and feverishly pursuing long distance VOICE services which are experiencing drastic price erosion even without new entrants offering those services.
Beam me up, Scotty.

rjmcmahon 12/4/2012 | 11:27:32 PM
re: NFOEC: Smile! We need just one out of the few [RBOCs] to start competing

Well, we'll need to start telling each other some better jokes if we going to spend our time waiting for such a Godot.

Waiting for Godot:
A Play in Which Nothing Happens Twice
From Insights, 1990


The play is about waiting. This waiting is as likely to be the height of foolishness as the absolute of virtue. But man, no matter how tattered and inarticulate, is still there; he has not yet walked off and left the stage to darkness. Even if Godot never comes, the wait might as well include laughter.

I've got one. "You can pick your friends, and you can pick your nose, but you shouldn't pick your friend's nose." ;-)
outtahere 12/4/2012 | 11:27:18 PM
re: NFOEC: Smile! I think that the matter of population is more noise than signal. First, population is in negative growth mode for Japan and most of Europe where it is below the replacement rate. Second, in the US population growth (not the actual population) has fallen about 9% since 1990 -- such that population rises by only about .8% per year. Yes, it's positive but hardly something to get really excited about. I think that the US population will only rise a total of about 6-8% between now and 2010 (according to US Census Bureau forecasts). I'd say that network design will be more impacted by the applications users desire to use than it will be by the number of users using them.

Also, in terms of benefits to building networks, it's not so much how the population grows, but where it resides. After all, if the population growth were to occur in rural areas, the implications are very different than if the population grows in dense urban areas (where optical gear makes more sense).

Finally, I wouldn't bet the future of the industry on a rise in population. After all, population has been growing (as you point out) in the US and at the same time lots of industries have suffered nonetheless for reasons due to regulations, competition, etc. In short, population growth is neither necessary nor sufficient condition for the industry to benefit -- but it doesn't hurt, ceteris paribus.
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