Rise of the Stupid Network

Why the Intelligent Network
was once a good idea, but isn't anymore.

One telephone company nerd's
odd perspective on the changing
value proposition.

INTRODUCTION: OBSOLETE ASSUMPTIONS
& ENDURING MENTAL MODELS

Design-by-assumption works as long as assumptions hold. Assumptions are
shortcuts to useful efficiencies, provided they are not violated. The
classic telephone company value proposition, embodied in today's telephone
network, holds:

* that expensive, scarce infrastructure can be shared to offer premium priced services,
* that talk -- the human voice -- generates most of the traffic,
* that circuit-switched calls are the "communications technologies" that matter, and
* that the telephone company is in control of its network.

Telephone companies still behave as if these assumptions hold despite:

* up to several thousand-fold declines in key infrastructure costs over the
last two decades
* a 20 year double-digit annual growth rate in the volume of data
traffic, so that the volume of data traffic is now overtaking the (also
growing, but more slowly) volume of voice traffic,
* the many different data types that now travel over the telephone
network (despite the fact that the network is not optimized for all
these data types),
* the many different types of "communications technologies," from
television to Ethernet, that are not part of telephone network
architecture, and
* the Internet, which, because it makes the details of network operation
irrelevant, is shifting control to the end user.

The Intelligent Network is a straight-line extension of the four assumptions
above -- scarcity, voice, circuit switching, and control. Its primary design
impetus was not customer service. Rather, the Intelligent Network was a
telephone company attempt to engineer vendor independence, more automatic
operation, and some "intelligent" new services into existing network
architecture. However, even as it rolls out and matures, the Intelligent
Network is being superseded by a Stupid Network:

* with nothing but dumb transport in the middle, and intelligent
user-controlled endpoints,
* whose design is guided by plenty, not scarcity,
* where transport is guided by the needs of the data, not the design
assumptions of the network.

The Stupid Network is not all here yet. It is in its infancy. It needs to
get stronger and, well, a bit more coordinated.

Some telephone company people realize that things are changing, and must
change. But they are hemmed in by conscious, deliberate, long established
telephone company practices. Many are also hobbled by less conscious
telephone company mental models of "communications," "technology," and
"customer needs." While these people may realize that the old ways are
becoming obsolete, they live in a world conditioned by an encompassing,
arcane legacy that only remembers "rational," incremental change.

(Note: here "telephone company" refers to large companies whose main
business is to provide circuit switched voice calling service. In the United
States, most of these are the heirs of the Bell System legacy -- but Sprint,
MCI, GTE, SNET, and others might also try on this shoe, and if it fits...)

COMPUTERS AS SCARCE RESOURCES

It used to be more expensive to complete telephone calls than it is today.
The operator-completed call gave way to call completion by
electro-mechanical switch. Then, in the late 70s, the era of computer
controlled electronic switching made placing calls even cheaper and more
reliable.

In those days, computers, including those that controlled switching, were
still considered expensive, scarce resources. When I worked in the nascent
electronic toy industry in 1979, a single insight that eliminated six
transistors paid my way. And the same factor -- the need to save two
expensive bytes of memory -- laid the basis in this era for the Year 2000
Problem (stay tuned to the eleventh hour news for more on THIS story!).

Now computer circuits are thousands of times cheaper. Moore's Law is what we
call the ongoing improvement in computing cost and power. But in the 70s it
was not generally known to be a `law' -- to most telecommunications engineers
(and to humanity in general), it has become the most game-changing wild card
played in recent times.

Telephone networks have been designed for optimal use of scarce resources.
The local exchange in your city, which handles the last four digits of your
telephone number, theoretically could handle up to 10,000 telephones, e.g.,
with numbers 510-547-0000, 0001, 0002, et cetera through 510-547-9999. But
the switching office is not designed to handle 10,000 simultaneous calls. It
is designed to handle far fewer, maybe one tenth of that, based on the
assumption that even in the busiest time of the day, only a fraction of its
telephones will be active at any one time.

The network works as long as engineering assumptions (e.g., the length of a
call, the number of call attempts, etc.) do not change. But let the
assumptions change episodically (e.g., Rolling Stones tickets go on sale),
or structurally (calls to Internet service providers last several times
longer than voice calls), and the network hits its design limits -
completing a call becomes a matter of try, try again.

What if network design were based on another assumption -- that computation
and bandwidth were cheap and plentiful?

DOING "INTELLIGENT" THINGS WITH PHONE CALLS

Once the telephone companies began doing digital switching, the idea that
you could do "intelligent" things with calls was not far behind. The concept
of network control was extended to let various centralized resources -
digital switches, databases (Service Control Points) and signal processing
systems (Intelligent Peripherals) -- communicate among each other by
extending the telephone network's control protocol (SS7).

As noted above, the main force motivating the Intelligent Network was a
telephone company attempt at "vendor independence" so telephone companies
could get better deals from their suppliers. Thus, Intelligent Network specs
were meant to encourage vendors to design their equipment to work in a
multi-vendor environment -- to interoperate. As a side benefit, almost an
afterthought, some of the newly specified equipment could also interoperate
with the business systems of certain customers -- but only via limited,
cautiously designed interfaces. Virtually all of these services center
around call completion, automation, and billing. This, in a nutshell, is the
concept marketed as the Intelligent Network. Some Intelligent Network
service examples include:

* Routing calls to different numbers than the one that the caller
originally dialed (this is the basis of e.g., 800 service).
* Giving caller choices before the call is completed ("push one for
domestic reservations," etc.).
* Saying, "Calling Card, Collect, Third-Party, or Operator" to control
payment options.
* Verifying that the calling card number is valid in "real time."
* Supplying calling party numbers directly to customers for database lookup
(which is why I must verify from my home phone that I got my Citibank
card in the mail).

Expensive computers, intertwined in central network operations, do this.
Belief becomes reality. But wait! The telephone companies are now losing
design hegemony -- the news that "The Internet is here!" is beginning to
penetrate the telephone company inner sanctum.

MEETING CUSTOMER NEEDS

The astute reader might by now suspect that the main beneficiaries of the
Intelligent Network are the telephone companies themselves. Nevertheless,
telephone companies propound a "philosophy" that the Intelligent Network
makes it easy to introduce new services and new technologies, and to meet
new customer needs.

New customer needs, when they are detected, filter into the telephone
company slowly. Some needs, the ones with big, obvious, immediate payoffs,
get attention from decision makers, who then request a business case, which
must then get approved. The next step is the development plan, followed by
the Operations, Administration, Maintenance, and Provisioning Plans. Then if
all goes well, the telephone company might begin the process of
implementation. This can take years, or even decades (witness ISDN).

If you hate hanging on hold, you are part of a huge latent market -- do you
know anybody who doesn't? Yet, telephone companies have yet to use
Intelligent Network capabilities to effectively ameliorate this problem.
Now, suppose Internet Telephony gets as good as telephone company telephony
(see below), and some enterprising independent programmer wants to make a
product that solves the problem of being on hold. They would simply write an
end-user application and sell it from their web site. If it works, and
people like it, they will sell lots of it. If not, they might try again. But
they don't have to go through any long, bureaucratic economic justification,
business planning, and technical development processes -- they just do it.
Internet Telephony, because the Internet Protocol works at the level that
user software manages the session, takes the telephone company out of the
value equation.

THE INTERNET DIS-INTERMEDIATES
THE TELEPHONE NETWORK

The Internet breaks the telephone company model by passing control to the
end user. It does this by taking the underlying network details out of the
picture.

Let's look at how this works in the case of voice. To the telephone company,
there is one main way of transmitting voice -- sampled in 8 bit bytes, 8000
times a second, for an aggregate rate of 64 kbit/s. The entire telephone
network is designed around this rate. But if you want to send voice on the
Internet, you can encode it at any rate you want, and send it at any rate up
to the one that the slowest underlying network link supports. The recipient
must have the right decoder running in her intelligent terminal, too.

The very name, Internet, denotes that it is designed to network networks.
You can use Internet Protocol on an Ethernet to communicate with an X.25
network, an FDDI network, or a modem -- lower layer protocols are submerged,
made irrelevant. So if you are on an (e.g., 10Mbit/s) Ethernet, and your
endpoint application wants to send better quality 256 kbit/s voice, no
problem. You can't do that with the telephone network.

Or, with a different application (on the same endpoint and network) you can
send six different interwoven 10 kbit/s voice streams to six different
destinations at the same time. And you don't have to tell your Stupid
Network provider anything about it, or pay a premium to install anything
special. The network provider becomes virtually irrelevant -- the user
controls the relevant capabilities.

TRUE VOICE, FALSE START

I contrast the flexibility of a Stupid Network with my experience as a
member of AT&T's True Voice technical team. AT&T True Voice was a valiant
attempt to improve circuit switched voice quality as much as possible in the
context of current network architecture. If we had not been constrained by
network architecture, the easiest way would have been to increase the
sampling rate or change the coding algorithm. But to actually do this, we
would have had to change every piece of the telephone network except the
wires. So we had to work within the designed 64 kbit/s data rate.

An astute AT&T perceptual psychophysicist (and a friend of mine) determined
that voice quality could be substantially improved by boosting the bass part
of the signal, that part of the audio spectrum between 100 and 300 cycles
per second. But as we set out to implement this conceptually simple
improvement, we kept running into the problem that there were too many
places in the network that had built in "intelligent" assumptions about the
voice signal -- echo cancellers, conference bridges, voice messaging systems,
etc. -- and too many devices that depended on these acoustic assumptions for
their correct operation -- modems, fax machines, and a surprising number of
strange devices with proprietary analog protocols. After about two years of
intense effort, we made a noticeable difference, one that most listeners
preferred (if asked explicitly), but it was not as large as it could have
been. There was too much "intelligence" intertwined with the basic
transport.

The True Voice experience led me to see the advantages of a network -- a
Stupid Network -- that would let you stuff bits in one end and get them out
the other without getting tangled up in cobwebs of legacy assumptions. Want
a different voice quality? With a Stupid Network, you'd get a different
program, install it in your intelligent end user device and run it.

A NETWORK ENGINEERED FOR USE

There is no longer first-order economic justification for a telephone
company to engineer and control scarce, expensive, network resources -- the
basic conditions no longer obtain. The age of plentiful computing is here. I
have a multi-color, three dimensional screen saver that uses the entire
capacity of my 200 MHz Pentium. The designers of the Intelligent Network
never imagined such "wasteful" use of processing "intelligence." The age of
plentiful bandwidth is just around the corner, as several families of
technologies (fiber, satellite, cable modems, xDSL, LMDS, and low power TV,
to name just six) line up to break the local bandwidth bottleneck, and as
the capacity of backbone fiber has risen from 2 to 6 to 10, 20 and 40 Gbit/s
over just the last few years.

The age of centralized control is ending too, with the rise of the next
generation of Internet -- and especially the appearance of circuit-like
Internet mechanisms, such as those in the latest version of Internet
Protocol (IPv6), designed to tame delay and improve real-time two-way
Internet voice.

JUST DELIVER THE BITS, STUPID

A new network "philosophy and architecture," is replacing the vision of an
Intelligent Network. The vision is one in which the public communications
network would be engineered for "always-on" use, not intermittence and
scarcity. It would be engineered for intelligence at the end-user's device,
not in the network. And the network would be engineered simply to "Deliver
the Bits, Stupid," not for fancy network routing or "smart" number
translation.

Fundamentally, it would be a Stupid Network.

In the Stupid Network, the data would tell the network where it needs to go.
(In contrast, in a circuit network, the network tells the data where to go.)
In a Stupid Network, the data on it would be the boss.

Instead of fancy "intelligent" network routing translation, in a Stupid
Network, intelligent end-user devices would be connected to one or more high
speed access networks -- always listening for relevant information, for data
addressed to their owner. Sometimes a "communication" might be a few bits,
perhaps a short, pager-type message. Other times, it might be longer, like
email. In the event of the need for two-way voice communication, an initial
message might state the identity of the "caller," and/or inquire of the
whereabouts of the owner. The intelligent end-user device could apply its
knowledge of where its "owner" was, and who the caller was. Then, if it were
programmed to do so, it could launch a message to its owner, telling of the
call, the caller's identity, location, and any other information. It could
also forward as much information as practical.

End user devices would be free to behave flexibly because, in the Stupid
Network the data is boss, bits are essentially free, and there is no
assumption that the data is of a single data rate or data type.

IDIOT SAVANT BEHAVIORS
FOR DIFFERENT DATA TYPES

In the current telephone network, voice is the assumed data type, unless
specially ordered, high cost services are ordered. But in the Stupid
Network, because the data is the boss, it can tell the network, in real
time, what kind of service it needs. And the Stupid Network would have a
small repertoire of idiot-savant behaviors to treat different data types
appropriately. If the data identified itself as financial data, the Stupid
Network would deliver it accurately, no matter how many milliseconds of
delay the error checking would take. If the data were two-way voice or
video, the Stupid Network would provide low delay, even at the price of an
occasional flipped bit. If the data were entertainment audio or video, the
Stupid Network would provide wider bandwidth, but would not necessarily give
low delay or absolute accuracy. And if there were a need for unique
transmission characteristics, the data would tell the Stupid Network in more
detail how to treat it, and the Stupid Network would do what it was told.

The Stupid Network would let you send mixed data types at will -- limited
only by the knowledge and imagination of the application programmer
community. One way voice messages, multi-way voice conferences, two-way
video, email, documents, audio and/or video entertainment, whatever, could
be mixed and interspersed at will, within and between sessions. You would
not have to ask your Stupid Network provider for any special network
modifications -- its only function would be to, "Deliver the Bits, Stupid."

One thing about the Stupid Network is clear -- the physical elements that
comprise the network would be neither expensive nor scarce. There would be
little profit margin in shipping dumb bits. There would be lots of high
value Business Ideas supported by the Stupid Network, above and beyond
transport.

LEADING INDICATORS

A rudimentary form of the Stupid Network -- the Internet -- is here today. The
telephone companies are beginning to realize this. Fearing erosion of their
control and, more importantly, their revenue stream, they have been quick to
call for the banning of Internet Telephony, quick to call for the federal
imposition of charges on Internet access, and slow to implement widely
available, reasonably priced broadband services. This creates a chicken and
egg problem -- while the hungry wait for dinner and breakfast.

A powerful leading indicator of the Stupid Network will arrive when
entrepreneurs who have no vested interest in maintaining telephone company
assumptions begin to offer profitable, affordable, widely available data
services. Watch Metricom's Ricochet modem service, an early entry in this
market. Will entrepreneurial broadband service follow? There are several
early efforts, for example, Sky Station International, which plans to launch
self-propelled balloon-based transcievers over major cities to deliver
personal 1.5 Mbit/s service. Meanwhile, we will see how advances in Internet
Technology (such as IPv6 and the Internet II initiative of leading
universities) evolve -- here the ability of the Internet to offer low delay
services, such as two-way voice, is the key indicator.

To counter these threats, the telephone companies are now speeding
deployment of Intelligent Network services, much like sailing merchants
responded to the threat of steam by inventing faster sailing ships in the
mid 1800s. The beneficiaries of this accelerated Intelligent Network
deployment are big businesses -- who can offer cheaper help-desk type
services with lower human labor costs. Nevertheless, despite this current
Intelligent Network buy-in, if big business finds that it is better served
by the Stupid Network and premises based intelligence, it will not hesitate
to switch.

The Telecom Act of 1996 and the World Trade Organization telecom agreement
of 1997 can be seen as attempts to preserve oligopolistic hegemony of the
telephone companies. The thrust of both is to allow big companies to band
together to create a marketplace dominated by a few large players in place
of government control. Will there be unintended consequences of these
agreements? Count on it! Will they hasten or impede the advent of the Stupid
Network? Hmmm.

THE STUPID NETWORK'S NEW VALUE PROPOSITION

The shift from scarcity to plenty is often the harbinger of new value
propositions. For example, as computer power got cheaper and cheaper in the
1980s, there was much talk of a shift in value from hardware to software,
but it was not easy to see how the shift would unfold. In fact, it appears
that only one person (Bill Gates) understood it fully. The changes that now
portend the Stupid Network are likely to shift the telecommunications value
proposition from "network services" to something else. If I knew what it
was, I would not be wasting my time writing these words.

Given that disclaimer, I have three brief observations:

1. It is rare that a market is completely killed by the next generation of
technology. Neither TV nor the VCR killed the movies. Neither the
minicomputer (alas, remember them?) nor the PC killed the Mainframe. We
still have ships and railroads, though their markets are both
diminished and changed by the car and airplane. The "paperless office"
exists -- but mine is cluttered with books, memos and magazines that are
printed on paper. So it is likely that the Stupid Network and the
Intelligent Network will exist side by side for some time, or even
share merged definitions, functions, and value. It is also likely that
"deliver the bits" companies will exist in a Stupid Network world, but
given much lower profit margins, they will not look much like telephone
companies.

2. Telephone companies themselves could cannibalize their own product.
Smarter companies often field new products that replace current
profitable product.

* Sony does this several times a year -- it tries to learn from its
own mistakes faster than its competition, fielding new products
that improve on its old before such improvements become obvious to
their foe.

* Boeing does it -- the 757 and 767 cut into the top of its 727
market and the bottom of its 747 market with fuel efficient, and
crew efficient new designs -- we can only hope that Boeing does not
become complacent now that it is has beat out its strongest
competitors.

* Intel does it -- having been the first to articulate Moore's Law,
it now drives it with a new, more powerful chip every 18 months or
so, long before the old chip is obsolete -- it realizes that if it
stops, there are other chip makers that would be glad to take
leadership of that market.

Telephone companies could do it too, but it is unlikely as long as
their senior managers prefer to talk with lawyers, regulators,
consultants and financiers more than with experts in their own employ.

3. Telephone companies could reinvent a place for themselves as purveyors
of new values propositions brought by the Stupid Network. They will
have to, because their old value proposition will erode as the Stupid
Network grows. In a "deliver the bits" world, so much information, and
so many courses of action, will be available, that there will be a
great need for known, trusted authorities. Businesses with brand
reputation and staying power will be guarantors of transactions,
holders of critical information, organizers and filters of information,
and even voices of reason, leadership, and "objectivity." (Of course,
they will need to HAVE reason, leadership, and objectivity to do this.)
There will be other roles for big companies in the world of the Stupid
Network, and "forgetting organizations," who are able to abandon old
models when new ways no longer support old assumptions, will find them.

THE CHOICE BETWEEN LIVING AND DYING

Former Shell Group Planning Head, Arie deGeus, in his master work, "The
Living Company" (Harvard, Boston, 1997), examined thousands of companies to
try to discover what it takes to adapt to changing conditions. He found that
the life expectancy of the average company was only 40 years -- this means
that telephone company culture is in advanced old age. De Geus also studied
27 companies that had been able to survive over 100 years. He concluded that
managing for longevity -- to maximize the chances that a company will adapt
to changes in the business climate -- is very different than managing for
profit. For example, in the former, employees are part of a larger, cohesive
whole, a work community. In the latter, employees are "resources" to be
deployed or downsized as business dictates. As the Stupid Network arrives,
as the business idea shifts from scarce physical infrastructure to something
more knowledge based, company culture will need to adapt to the truth that,
"Nobody knows as much as all of us."

Whatever we discover to be the new Stupid Network value proposition, my
working hypothesis is that it will be based on intelligent end user devices,
intelligent customers, employees whose intelligence is valued as a corporate
asset, and companies that can learn.