WAVE Report

By James Sneeringer
WAVE Issue #0203 2/2/02

COMNET is an annual communications and networking conference and expo in
Washington DC. This conference is right in our backyard, and we have
attended it for several years. This year was marked by a significantly
lower turnout than last year's, in exhibitors, programs, and attendees.
The expo floor plan was noticeably more open (due to fewer booths), and it
was never hard to find a seat at the presentations. This was hardly
surprising considering the depressed telecom market.

Being in DC makes it easy to book members of government as speakers, and
COMNET has traditionally been a good place to gain insight into the
regulation of telecommunications. This year was no different, with two
hour-plus panel sessions on the current state and future of telecom
regulation in the US and elsewhere.

While at the conference, we attended several keynotes and sessions, and
walked the expo floor.


Ivan Seidenberg, President and co-CEO, Verizon Communications

Seidenberg stated that over the last 10 years, the telecom companies have
moved into the role of IT leaders, due to their lead in capital
expenditure and number of customers. Verizon's goal now, he stated, was to
drive high-speed access to every consumer, either with 3G phone service or
with increased DSL capacity. Verizon rolled out their 1xRTT phone service
on Monday; Seidenberg stated speeds will reach 56 to 70 kb/sec across that
connection, and that service will be available to a substantial percent of
the east coast by the end of 2002. During questions he admitted he was
still frustrated with the both the quality of service and the lack of
applications for Verizon DSL offerings.

His comments on public policy towed the ILEC line, that the Congress must
relax unbundling requirements to stimulate investment. He stated that
Verizon sees no reasonable return on investment (ROI) from fiber
installation, due to the requirements that they be open for use by CLECs
(competitive local exchange carriers).

When asked if he was worried about cable voice offerings, he stated yes,
but that cable companies do not reach business customers as Verizon does,
or have competency at the complicated billing associated with voice.


Patrick Nettles, Executive Chairman, CIENA Corp.

CIENA manufactures optical networking equipment. Nettles' address focused
on the financial basis for moving to next generation optical networking,
and as a precursor he presented a very thorough discussion of financial
indicators that can be used to gauge the extent of market recovery.
Overall the outlook now is mixed, he stated, with some indicators, such as
stabilizing equipment levels and capital expenditure to revenue ratios,
pointing to a recovery soon. Other indicators, though, such as bond
default and bankruptcy levels, point to continued depression. Most of the
slides can be seen in an earlier presentation on the CIENA site, in Adobe
PDF format:


During questions, Nettles stated that for ILECs, voice over packet (VOIP)
is most likely just a detail, rather than driving investment. Since voice
is not growing, he asked, why would ILECs spend large amounts of money to
replace existing infrastructure that is already paid for? Space
requirements will probably be the driver--as ILECs need space in central
offices, they will replace big voice switches with data-centric versions
that are one-tenth the size.

Dr. Ian Foster, Head of Distributed Computing Lab, Argonne National Lab,
and Professor of Computer Science, University of Chicago

Grid computing is a system of distributed computing, in which anywhere
from several to thousands of individual machines are networked to create
virtual computing systems. Resource sharing and service management is
automated. The technology is in its infancy, and currently used mostly for
science applications, such as linking thousands of computers to analyze
chemical compounds. It could have multiple applications in e-business in
the future, according to Foster, including complex data mining, load
balancing, and creating computing "utilities" that can allocate and sell
computing power on-demand.

During the talk Foster announced version 3.0 of a grid computing toolkit
called Globus. Globus, and grid computing thus far, is both open-source
and open-architecture. The hope is that Globus will provide the
technological backbone, and industry will add value with outsourcing,
support contracting, and applications. More information can be found at:



Town Meeting: What's Ahead in Communications Policy and Regulation?

This panel consisted of representatives from the National
Telecommunications and Information Administration (NTIA), State
Department, FCC, and House of Representatives Energy and Commerce
Committee. The moderator was excellent, leading the panel through most of
the major issues in telecom regulation today.

National Broadband Policy
Nancy Victory, Administrator of the NTIA, stated that while the Bush
administration is focused on the importance of broadband, they have no
time table set for announcing a national policy. The administration has
met with hundreds of groups and received about 100 responses to a request
for comments, and the NTIA is studying the question of the appropriate
role for the government. Kevin Martin, an FCC commissioner, also stated
that the FCC has several open proceedings to address subjects such as
deregulation, national performance measurements, and unbundling rules. He
stated the commission hopes to have answers on many of the open issues
within six to nine months.

Tauzin-Dingell Bill
Andrew Levin, a staff member on House Energy and Commerce Committee,
stated that it was likely that Tauzin-Dingell would pass the House but
fail in the Senate this year. He believes it could pass Congress within
the next 2 years. He also stated that there is some congressional support
for other initiatives to encourage broadband growth, including a tax
credit, bonus depreciation for high-tech investment, and extending the
universal service concept to include broadband. He did not elaborate on
how much support each idea had.

The goal of Tauzin-Dingell, according to Levin, is regulatory parity. He
stated that cable and ILECs are regulated under the 1996 Telecom Act
according to what they used to do: video distribution and local telephony,
respectively. Now that both offer data connectivity, many members of
Congress feel it is appropriate to level the playing field. Kevin Martin
(FCC) warned that the concept of parity can also mean increasing
regulations on the cable industry; but he would be wary of additional
regulatory burdens squashing investment.

3G and Spectrum
Nancy Victory (NTIA) stated that since the fall, the FCC has been
investigating opening up some existing bands, to provide more spectrum for
3G. These include both government and other bands (she did not elaborate),
and either sharing them with 3G, or moving the incumbent licensees out to
other slices of spectrum. They are hoping to finish the assessment by late

Andrew Levin (House E&C Committee) questioned whether 3G is a high
priority for some members in Congress. They believe, according to Levin,
that the applications are not here yet, and that the spectrum would be
better used to improve voice wireless, to increase competition for local
voice services. He stated that some members want to see increased
efficiency from carriers in using their current spectrum allocation, by
using smaller cells and killing analog service, before allocating any new

ILEC Long Distance and Telecom Investment
Several ILECs have been approved to offer long distance service in recent
months, after meeting requirements set forth in Section 271 of the 1996
Telecom Act. David Gross, Deputy Assistant Secretary for International
Communications and Information Policy at the State Department, said as
more ILECs meet Section 271 requirements in more states, mergers are
inevitable, both foreign and domestic. There are national security
ramifications to this. Andrew Levin (House E&C Committee) clarified that
foreign investment is fine, as long as a government does not control the
foreign company. Members of Congress will expect telecom mergers to be
closely scrutinized by the executive branch.

FCC and Return on Investment
In response to a question from the audience, Kevin Martin stated that the
FCC must be aware of the impact its policies have on financial markets,
but stressed that specific markets or companies will not receive special
consideration as a result.

The State of Telecom Regulation in the US

This was another panel discussion the following day. Present were
representatives from the Association of Local Telecommunication Services
(ALTS), representing the CLECs (competitive local exchange carriers), the
New America Foundation, a policy think-tank, the U.S. Telecommunications
Association (USTA), representing the ILECs, and the Yankee Group, a
telecom consulting firm. They touched on many of the same issues as the
previous day's presentation, though the discussion was a bit more

National Broadband Policy
Opinions on the State of the Union address ranged from disbelief Bush did
not mention broadband, to belief that it would have been inappropriate in
what was essentially a war speech. Karen Kornbluh, a Fellow at the New
America Foundation, stated that until a critical number of people have
broadband, growth and application development would be slow. For example,
what good is a teleconferencing app. if only 1/4 of the people for the
meeting have broadband? Karen believes that a big national announcement
about broadband might have a positive effect on take-up rates, bringing us
closer to the magic number of users.

Tauzin-Dingell Bill
With CLEC and ILEC reps at the same table, this dominated the
conversation--although little new was said. Jonathon Askin, General
Counsel of ALTS, stated that ILECs thrive on regulatory chaos to maintain
their monopoly--when uncertainty looms, many customers perceive the big
companies to be more stable. Tauzin-Dingell, he stated, helps the ILECs
whether or not it passes, by creating a whole new round of regulatory
uncertainty. The continued debate serves the ILECs.

In response to a question from the audience--who is taking what sides on
Tauzin-Dingell, the consensus answer was:

Anti Tauzin-Dingell: CLECs, cable providers, long distance providers
Pro Tauzin-Dingell: ILECs

FCC and Return on Investment
Despite the opposition, Tauzin-Dingell continues to gain traction in
Congress. An important reason for this is the perception that passing it
will stimulate a new round of investment in broadband by the ILECs, by
removing the financial burden of unbundling. Berge Ayvazian, CEO of the
Yankee Group, pointed out that the jury is still out on whether
unburdening the ILECs, or increased competition, would produce the best
growth in investment. Dan Fiffien, of the USTA, responded that the ILECs'
greatest fear is that the FCC will disregard the effect of its decisions
on return on investment. Karen Kornbluh (New America) warned that the
answer might not be deregulation of the ILECs, but rather a change in
regulation, which could be very complicated.

Firewalls: Securing the Network from the Gateway to the Desktop

David Strom led this session, which covered the basics of the four types
of firewalls: high availability hardware for enterprise, colocation
hardware for service providers, soho hardware for the small business and
broadband customer, and desktop software firewalls to protect individual
PCs. There were two interesting details from this session. First, Strom
emphasized that cable broadband IP addresses are giant targets for
hackers. He stated strongly that anyone with a cable modem, who cares
about security, should have a soho unit between their computer and the
cable modem. Second, Strom described an emerging firewall product:
firewall on a card. This is a complete hardware firewall--processor,
memory, everything--contained on a PC expansion card. Seems like a great
way to conserve space. These are not hand-holders, though--one must have
expertise to configure them properly. Two companies he mentioned are
Merilus and Omnicluster.


On the Expo Floor

Canon Canobeam

This is an infrared optical wireless broadband product from Canon. Ranges
are from 500 meters to 2 kilometers, and data rates from OC3 to 1
gigabit/sec. Haze does not affect it but fog might; they stated the
general rule is that the system can see about twice as far as the human
eye. There is a dynamic tracking feature available that can account for 2
degrees of movement in any direction, to maintain the beam.

The Canobeam system was started about 10 years ago, and an early
application was linking broadcast TV camera feeds to uplink trucks over
distance. Today most customers are either universities and businesses, for
building-to-building connectivity, or ISPs, to close a fiber loop. Canon
has noticed a slight uptick in interest since September 11, "as companies
dust off their disaster recovery plans." Canobeam systems are being used
both for redundant links, and for quick-deploy back-up. The system seemed
quite easy to set up. Prices are for pairs of units, and range from
$16,500 to $48,500, depending on data rates and effective distance.


Comcast Business Communications

This provider of data services to businesses is a wholly owned subsidiary
of Comcast Cable. They deal exclusively in fiber to the business, which,
it was stated, often involves construction. Not a cheap install. They have
been in business for a little under 5 years, starting in Philadelphia.
They stated the size of their business customer ranges from $2000 to
$100,000 per month, with a minimum traffic of about 2 T1's. They are
strictly local; long haul connectivity is handled with peering
arrangements. It was interesting to hear how a cable provider is going
after enterprise--customers which are perceived by many as belonging to
the ILECs.


Metallic Power

This is a very interesting technology, still in development: regenerative
zinc fuel cells. Like a hydrogen fuel cell, zinc fuel cells generate
electricity by combining the fuel (zinc) with oxygen in the presence of an
electrolyte. Once the fuel is depleted, the process can be reversed by
using electric power to separate the oxygen and zinc, and recover the fuel
to be used again. Metallic Power states several advantages to the system
they are developing:

- zinc has a much higher energy density (electric power generated per unit
of volume) than either hydrogen fuel cells or lead-acid batteries
- zinc is non-toxic and non-flammable, unlike hydrogen or gasoline (for a
- the fuel can be used, recovered, and reused indefinitely
- it is a low maintenance, sealed system
- the zinc does not have to pressurized (unlike hydrogen)

Metallic Power is currently developing a rack-based UPS (uninterrupted
power supply) for the networking and telecom industries. They predict it
will be able to generate 2 kW of 48V DC or 120V AC for 4-8 hours, at any
temperature between 32 and 100 degrees F. Compare this to the less than
half an hour of power most UPS units are capable of. They plan to ship
the first order by the end of 2002. A major hurdle is durability;
currently the oxygen exchange membrane fails after about 500 hours of
cumulative load, although they believe that number will go up. Something
to keep an eye on.


Zone Digital Video Systems

This company produces a networked, plug-in digital video surveillance
system, but the head turner is their prototype facial recognition
software. It is capable capturing one frameshot of a face per second from
digital video, compressing that face, and comparing it to a database of
known faces. It was able to produce identity matches in less than 2
seconds while I watched. The prototype was stand-alone, but they plan to
integrate the facial recognition technology with the networked digital
video system.



ReefEdge manufactures management and security tools for 802.11b wireless
networks. Wireless LAN security is a hot topic currently, and was
mentioned in at least two of the sessions we attended. Several security
experts spoke of driving through business districts with an 802.11b
antenna and sniffer program on a laptop, picking up literally dozens of
networks, many of which were not properly secured.

ReefEdge laid out the following product description:
When installed, a ReefEdge Connect Bridge sits at each hub for the
wireless access points (the base station antenna units), and a Connect
Server sits on the wired network. When a user enters the network, the
Connect Server handles authentication (can be used with existing
authentication servers such as NT), then passes the session to the nearest
Connect Bridge. Once authenticated, all traffic between the bridge and the
user is encrypted via IPSec. Outgoing traffic from the user is decrypted
at the bridge, to preserve network bandwidth. As the user moves throughout
the system, the session is passed directly from Bridge to Bridge; it does
not pass through the Server. Thus scaling the system is simply a matter of
adding more Bridges and antennae.