SMART Letter #12
October 10, 1998



    SMART Letter #12 - October 10, 1998 

    For Friends and Enemies of the Stupid Network   

 Copyright 1998 by David S. Isenberg -- -- 1-888-isen-com   




ANNOUNCEMENT: Lots of NEW! stuff at    

   My epitaph: "Finished updating his website." :-) 



 + Lead essay: A Tale of . . . Municipally Owned Infrastructure 

 + Steve G. Steinberg's "Stupid is Smart" from Wired 6.08   

 + U. S. Senator Bob Bennett on Year 2000 (Comments by David I) 

 + Conferences on My Calendar, Copyright Notice, Administrivia  




Municipal nets show new models for local competition.   

By David S. Isenberg.   


[This piece originally appeared in America's Network,   

October 1, 1998 as the second column in my new series:  

"Intelligence at the Edge." ]    


Even the most ardent get-the-government-off-our-back-sters  

have to admit that municipal government does a pretty good  

job with roads and sewers. As I grope in the legal debris   

of the Telecom Act of 1996, I ask myself what, if anything, 

makes telecommunications infrastructure different?  


The best example that I know of telecom infrastructure-as-  

public-good comes not from America's network, but from  

Sweden's. In 1994, the city of Stockholm chartered a    

company named Stokab to provide dark fiber to all comers at 

cost-based rates. In an amazing two years, Stokab built a   

96-fiber pedestal on virtually every city block in  



Stockholm chartered Stokab because it recognized that rate- 

lowering competition and a proliferation of new telecom 

services attracts clean, high wage, information-based   

businesses. The city envisioned a virtuous circle where 

advanced infrastructure led to an educated workforce, a 

prosperous economy, and an attractive lifestyle. In 

addition, Stockholm did not want multiple competitors   

digging up its historic streets time and time again.    


Focus On Fiber  

To date, Stokab's business plan is on-track, and 1998 will  

be its first profitable year. Its customers include 

wireline and wireless telecommunications companies, cable   

television (CATV) providers, Internet service providers,    

and companies that need private, high-speed metropolitan    

area networks, like banks and insurance companies.  


MFS (now Worldcom) was one of Stokab's first customers. In  

1994 MFS found a European foothold with Stokab, which   

provided entree to the exclusive international carrier  

club. Tele2, Sweden's second carrier, was another early 

customer; Stokab lowered Tele2's barriers to competing  

against Telia, Sweden's former PTT. 


The secret of Stokab's success is direct access to city-    

owned ducts and tunnels. Stokab hung fiber optic cable in   

the subways, and pulled it alongside steam pipes, water 

pipes, electric cables and sewer lines. The city-owned  

company found remarkably little red tape from municipal 

agencies. And in the odd case of "dig we must," Stokab had  

little difficulty in obtaining the necessary city permits.  


Stokab's second secret is its focus on dark fiber.  

According to Anders Comstedt, Stokab's managing director,   

initially Stokab was to become a full-service   

telecommunications company. But while Stokab's directors    

knew infrastructure, they quickly realized that fielding    

telecom services was a totally different game. So Stokab    

made the crucial decision to zero in on infrastructure. 


Stokab's focus on dark fiber creates a clean interface  

between what it does and doesn't do. Also, the decision 

promotes trust, in that it keeps Stokab from competing  

against its customers. Stokab provides a physically 

separate fiber for each customer, designing each customer's 

network to individual specifications. Customers light their 

own fiber, and provide all service layers above that. (The  

only exception is that Stokab operates city's own data  



Other Cities, Other Models  

Comstedt has seen other municipal telecom ventures stumble  

as they climb the value chain. When it comes to marketing   

telecom services, he says, "That's when they screw up. They 

get outsmarted by other people. They don't develop the way  

they initially had in mind." He has seen municipal electric 

companies rush to bundle telecom services into their    

offerings but, he says, "sooner or later you're in a    

situation where commodity products need to be cost- 

effectively produced."  


Billy Ray, manager of the Glasgow, Ky. municipal Electric   

Power Board, debates this observation. For eight years  

Glasgow, population 14,000, has operated one of the most    

visible U.S. municipal information services. Its citizens   

can buy 53 channels of CATV for $15 a month, and 4-megabit  

symmetrical Internet service for $22 a month (including 

cable modem rental). Like Stokab, Glasgow has driven rates  

down and brought information intensive business and white-  

collar jobs to town. It also shows that a municipal company 

can operate infrastructure plus offer retail telecom    


Nonetheless, next to Stokab, Glasgow makes me uneasy. Does  

Glasgow's success depend on the smallness of the town and   

the inspired leadership of one individual? Will it scale to 

a big city, where greed can grow unchecked by public    

awareness, where incompetence is easier to hide behind  

anonymity? Will it transfer to other towns, where   

leadership is less visionary? To me, the Stokab model seems 

more robust, because it gains strength from the magic hand  

of open competition at every level above dark fiber.    


Tragically, both efforts would be against the law in four   

U.S. states. Furthermore, thanks to lobbying by the 

regional Bell operating companies, several other states are 

mulling anti-city ownership laws.   


Cities benefit from having cutting-edge infrastructure, and 

they benefit from competition. If a city wants its own  

telecom infrastructure, why make it illegal in this land of 

the free, the home of America's network?    



STUPID IS SMART by Steve G. Steinberg   

[This article originally appeared in Wired 6.08,    

August 1998, in the Crucial Technology section:    

I'm flattered to be subject of even a small Steve G. Steinberg  

article: he's the author of "Netheads vs. Bellheads" -- David I]   


David Isenberg has emerged from the belly of the beast. Last year,  

as a member of AT&T's technical staff, this self-described telco    

nerd sparked an influential debate with his essay "Rise of the  

Stupid Network." In that essay, Isenberg argued that the    

"intelligent" architecture of the telephone networks has retarded   

innovation, while the Internet, by offering "stupid bandwidth," 

has become a breeding ground for smart apps. Not surprisingly,  

the relationship between Isenberg and AT&T turned cool. Today, he   

runs his own shop, calling himself a "prosultant" ("con is  

negative," he sniffs) on next-generation networking. Here's 

the iconoclast on what's next for networks. 


Meet the New Net, Same as the Old Net:  

"We're already seeing intelligence start to rear its head in the    

Internet. New protocols, like RSVP (which tries to guarantee users  

a specified amount of bandwidth), require a smart network. We need  

to find stupid solutions to these problems to avoid the same kind   

of big monopolies we have in the telephone industry."   


Voice Isn't the Killer App: 

"The real win for voice-over-IP will be allowing people to mix  

real-time voice with data, images, and video. In the meantime, the  

circuit-switch guys will have to reduce prices to stay competitive -    

and still offer better quality."    


The Customer Doesn't Know Best: 

"If you're listening to your customer it's almost preordained that  

you'll miss the new market. And when the new market expands 

to encompass the old market . . . that's when companies can become  



Why AT&T is doomed: 

"Today, Internet telephony has crummy voice quality. The average    

telephone customer couldn't stand it. But suppose that Net people   

start using voice to, say, supplement online gaming. Because it 

starts off looking more like a Nethead game than a phone call,  

AT&T might not realize how cross-elastic it is with telephony   

until it is too late."


A YEAR 2000 STORY   

"I read a story recently about a major oil company that tested one of its

oil refineries. They found that the refinery had 90 separate systems that   

somehow used a microprocessor. Many of these were key systems. Of the 90

systems, they were able to come up with detailed documentation on 70. Of

these 70, they determined that twelve had date dependent embedded chips.

Of the twelve, four failed a Y2K test and will have to be replaced. Had 

any of the four failed on January 1, 2000, they would either have   

completely shut down the plant or would have caused a high level safety 

hazard which would have caused other systems to shut it down.  What is  

really worrying the company's experts now is the other 20 systems. They 

don't know what functions the chips in these systems have and are leaning   

towards replacing them all. This happens to be a relatively modern plant."  


Senator Robert Bennett, Chair,  

U.S. Senate Special Committee on The Year 2000 Problem 


[Note how this *quote* about a *story* about an *un-named* oil refinery 

serves as hard news about Y2K!  This absence of hard information    

itself is one of the BIGGEST part of the Y2K Problem.  When propaganda  

is the "hard" information available, stories like these become truth, even  

to a United States Senator.  Our leadership needs to get its nose out   

of the presidential crotch and challenge this "Major Oil Company"   

(and other major infrastructure companies, like *ahem* telecoms) to come    

forward and discuss test results openly.  More importantly, they (we!)  

need to challenge the major infrastructure companies that are not testing   

to begin facing their Y2K liabilities now. -- David I]  


[Note:  For info and insight on The Year 2000 Problem, you can subscribe    

(free) to Doug Carmichael's Y2K Week. Details at ]   




 + October 14-15, 1998, Toronto ON:  IP Telephony and   

   Voice/Data Convergence.  A distinctly Canadian view.  In 

   many respects Canada is showing the way to the rest of us    

   (e.g., CANARIE, the Canadian national optical network    

   initiative). or 416-927-7936.   


 + October 17-18, 1998, Hakone, Japan: Stupid Networks  

   and the 21st Century Society, hosted by GLOCOM, The  

   Center for Global Communications of the International    

   University of Japan.  Many SMART People know the 

   perpetually peripatetic Izumi Aizu, and Shumpei Kumon,   

   Executive Director of GLOCOM.  


 + CANCELLED??:  My appearance at ISP Forum, October 26-29, 

   Cannes, France: To make a sordid story palatable, seems  

   that my agreement with IIR regarding my appearance is no 

   longer in effect . . . there is some behind-the-scenes   

   work to correct this as SMART Letter #12 "goes to press."    


 + November 2-6, 1998, Washington DC: Next Generation   

   Networks (NGN98).  Produced by John McQuillan for the    

   Business Communications Review crowd.  This is a 

   conference that takes itself very seriously so I will    

   leave my fool's hat at home and wear my business suit.  


 + POSTPONED:  Solutions 98! -- Denton TX:    Sponsored 

   by University of North Texas.  New date is Feb 9, 1999.  

   New name: Solutions 99! Contact Mitch Land  



Redistribution of this document, or any part of it, is  

permitted for non-commercial purposes, provided that    

the two lines below are reproduced with it: 

Copyright 1998 by David S. Isenberg -- -- 1-888-isen-com


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David S. Isenberg     


18 South Wickom Drive   888-isen-com (anytime)

Westfield NJ 07090 USA  908-875-0772 (direct line)

                               908-654-0772 (home)


     -- Technology Analysis and Strategy --

        Rethinking the value of networks

      in an era of abundant infrastructure.


Date last modified: 11 Oct 98