Telecom Industry Panel Debates Market Recovery

The panel--which included Vint Cerf, vice president of Internet architecture and technology at WorldCom and the engineer credited with inventing the Internet, and Scott Kriens, chairman of Jupiter Networks--were unable to produce a consensus on signs that would indicate that the telecommunications industry is recovering from a troubling recession. The executives spoke at an event sponsored by the Churchill Club.

Kriens offered up a test based on bandwidth pricing. Since price per bit is artificially low due to oversupply, a recovery might be in the offing once prices start to go up.

"If prices go up--and it has to--people will pay it or stop using the network, and I don't think people will stop using the network," he said.

The panel did agree on stumbling blocks to a recovery. Among them is the lack of last-mile access and the failure of the incumbent local exchange carriers (ILECs) to open their central offices to competition.

"The Telecommunications Act of 1996 simply did not get enforced," said Cerf. "Why do you think we see so many dead DSL companies? They couldn't get access to the twisted pair [in the last mile."

Executives at the panel called on the FCC to open access to the last mile through the ILECs, cable companies and wireless operators.

Unlocking the last mile would open the door for high-bandwidth services to the home, executives said. Cerf pointed out that homes with a 1-Gbit Ethernet connection would be able to download one hour of high-definition television in 16 seconds. That would go a long way toward easing the capacity over supply, panelists said.

Cerf added that carriers need to focus more on value-added services. "We have to add value to every packet sent over the 'Net," he said.

As an example of new value-added services that could become available Cerf used a current WorldCom pilot program. The carrier is using e-mail to automate business processes such as purchasing and expenses. Those processes are available now only from a Web interface.

"Eventually, we hope that this is something we can do with other companies, and that is one way we can add value," he said.

Kriens said carriers can also offer e-mail filtering as a value-add. "Instead of reading 10 e-mails I don't want to get, I can read the one e-mail I do want," he said.

But John Coons, an analyst at Gartner, scoffed at the "overhyped" value-add proposition.

"The carriers could have been offering value-added services seven years ago," he said. The problem with offering different classes of services is that the data transverses so many different networks and there is a lack of financial arrangements between each company, he said.