Is Telecom Back?

1. Is Telecom Back? Dr. Farid Farahmand Updated: 9/6/2007

2. Telecom Bubble (1997-2000) • Astronomical growth • High investments and huge profits • Inflated market caused by the hype between venture capitals and companies • Corrupted CEOs overstating their profits • Overestimating the market and its demands and absurd projections • Internet traffic doubling every 3 months! • Level 3 digging the earth 16 miles per day to install new fiber pipes! • Limitless expectations • Overestimating users interests and what they actually pay! • Irrational investment for unusable infrastructure!

3. The Bubble Bursts (1999-2001) • Over 655 networking and telecom companies filed bankruptcy • Loss of $750 billion! • Inflated stock market tumbles • The telecom market declined by 96 percent! • Overall, the market lost $2 trillion just in a few years • The giants fall one after another • WinStar goes bankrupt suing Lucent for $10 billion (2001) • WorldCom files the largest bankruptcy ever! • Level 3’s shares falls from $130 in 2000 to $1.98 in 2001! • Market oversupply • Cisco reported 2 billion Dollars of unsold routers • Half of the internet transmission (switches and routers) capacity was unused • Only about 20 percent of fiber pipes were led (today it is 30%)

4. Today’s Telecom Status • Emergence of new applications • Video on demand • New Web-based applications • Music / Video downloading (MySpace, YouTube, iPods) • High appetite for broadband • 50% of adults in U.S. use broadband • 52% of 8-18 year-olds have used MySpace! • More and more people get their news from the Internet and watch less TV! • Socio-economic impact of the Internet • Providing greater economic opportunities (E-commerce) • Stimulating economic growth and productivity (Telecommuting) • Study shows that telecom investment plays vital role in stimulating economic growth and productivity • More so than roads , electricity, or even education [1] Note: In 2000 there was no such thing as web-video!

5. Today’s Telecom Status – Market Share • $900 Billion Industry • Between 2003-2007 the Internet traffic has increased by 70% • Supporting many new applications that did not exist in 2000 • Shifting to web-based applications (1/3 of the Internet traffic is Web traffic!) • Supporting new Wireless-based applications • YouTube, MySpace. Internet Phone, Watching online videos and music • VideoEgg receives $12 million from Starbucks (2006)! • More than 10% of Level 3 traffic is from Web-video • Yahoo is revamping its video cite by adding music, videos, Movie trailers, television shows and sports, photo and video sharing – “Video everywhere there is Internet” Bandwidth Comparison: Sound = x Mbps; Video = 1000x Mbps; HD Video = 10Kx Mbps

6. Major Service Providers • New accusations has monopolized the telecom once again • Sprint bought Nextel Communications ($35 billion) • SBC and AT&T were merged ($16 billions) • At&t acquired Cingular • Verizon struck a deal to acquire MCI, the former WorldCom ($8.4 billion) • Alcatel bought Lucent (Communication equipment makers) • Nokia (Finish-based) and Siemens (Munich-Based) merge

7. Major Service Providers • Many of traditional large carries are loosing their compatibility • Loosing revenues on landlines • Stealing customers from each other! • Supporting new applications and wireless technology • No longer only providing dumb pipes • Next generation phone – web based; VoIP • New services and better networks

8. Major Service Providers • Verizon Example: • Employees over 1000 developers! • Offers personalized services and video channels • FiOS TV service • Fiber-optic based technology (FTTH – Fiber to the home) • Provides broadband Internet access • Coupling Internet access, video on demand, online video gaming, and more • Offering BW of 30Mbps (download) /5Mbps (up load) www.digital-digest.com

9. Telecom Industry Today • In spite of its modest growth, still no positive cash flow • It is growing but still on the watch list! • Extremely competitive • The industry employs only about 1.1 million workers ($900 Billion industry) • Offering 19% higher employment compare to 2000 (still down by 30% compared to its peak time) • New acquisitions continue to occur

10. New Apps. More BW Faster Equip. Better Infrus. More Invest. New Apps. Wireless Technology • Wireless technology has played a major role in saving the telecom industry • The total number of mobile phone subscribers in the world = 2.14 billion • By 2009, half of the world will use cell phones • Africa has the largest growth rate of cellular subscribers in the world • In India every month six million new cell phones are added • Wireless applications require complete set of new solutions, networks, and devices • Supporting Internet access (Wireless LAN) • Supporting Web-applications on Cell Phones • Tremendous new opportunities for new applications and technologies) • Think and Talk devices • GPS-based maps • Automatic traffic-aware devices • iHook … using cell phones to meet! • iPhone … playing music, accessing the Internet, oh yeah talking on the phone! • Integrating Wired and Wireless networks is the ultimate goal • New networks and wireless/sensor technologies for various applications • Bluetooth (high bandwidth low distance – voice) • Zigbee (low bandwidth long distance - monitoring) • WiMax (High bandwidth long distance - Internet)

11. Wireless LAN Technology [6] • In 2001 over 21,000 hot spots were reported • Today (as of 2004) there are 53,000 public Wi-Fi hot spots in 93 countries around the world • Intel invested $300 millions on its Centrino computer chip, equipped with Wi-Fi • Dell, Toshiba, and TiVo are building Wi-Fi into computers and digital recording devices. • Many cities are going wireless • IBM is developing Wi-Fi systems to monitor minute-by-minute operations of remote machineries • Aircraft industry (Boeing) is interested in Wi-Fi (allowing customers to have Internet access from 35,000 feet in the air! WLAN deployments can add up to as much as $16,000 per user over wired alternatives – 3Com white Paper [5]

12. Wireless Technology • Providing the infrastructure for the next generation phones and services • The key is melding communications and computing technologies together • Smaller and faster micro processors / memory devices • More efficient communications technologies • Supporting 3G and 4G technology • Providing Internet access on the cell phones (slower than WiFi better that 2G)

13. Mobile Broadband Technologies • New broadband-based technologies for cell phones • At&t HSDPA • High-speed Download Packet Access for mobile data transmission • 3.5G based – Equivalent to ADSL • Similar as Wide – CDMA • Allows multicasting • Motorola RIZR – Z8 and some FUJITSU notebooks support it • Verizon EVDO (Vee-Dee-O) • Evolution Data Only / Evolution Data Optimized • Don’t confuse with Enhanced video directory! • Part of CDMA2000 standard • Developed by QualCom • Has different revisions The goal is to provide video streaming to mobile devices! www.wikipedia.com ; www.wisegeek.com

14. Who is Who in the Wireless World • Big players • Nokia and Siemens – Owning the world’s largest cell phone market; selling 13 cell phones per second! [3] • At&t (and Cingular) • Verizon Wireless • T-Mobile • Sprint • Ericson • Samsung Electronic Co. • Motorola • ….Microsoft wants a piece of the pie too!

15. Wireless Applications • No more providing just voice communications! • Supporting Satellite navigation, High resolution camera, Internet access, email and video streaming, TV and recorder, etc. • Value-added services: banking, financial trading, e-commerce, monitoring, etc. • It is growing to be the primary means of data communications • Controlling, monitoring, sensing, decision making, etc. • U.S. postal service uses wireless scanners to track drivers (moving 200 Billion pieces of mail each year) • Grocery stores (automatic checkouts – RFID technology) • Traffic monitoring (Sensor Networks/Cell Phones) • Medical applications (monitoring human organs) Wireless Technology is turning into the fabric of our society!

16. Appendix • Level 3 Communications • Founded in 1985, it is one of the largest communications and Internet backbones in the world. Through the networks different cities are connected to on another via one or more OC-192 or 10 Gb/s Ethernet links. The company offers E911, services to VoIP. • VideoEgg Inc. • Found in 2005 by three Yale students. It is a video-based publishing service that allows users to capture video content from any device and publish it on the web. It can provide video services for sites without having to have the video distribution infrastructure (Business week Sep 17, 2006). • Winstar Communications • Broadband network and metro service provider serving 30,000 business customers. In 2001 the company defaulted on a $75 million debt ad filed chapter 11 • What is TiVO? • TiVo can be connected to your TV almost like a VCR, and it's always on. All the TV you watch is through the TiVo (it talks to your cable box or satelite receiver to change channels, etc). More..

17. References (click on the link) • Telecom: Back From The Dead, BusinessWeeks, Jun 25, 2007, http://www.businessweek.com/magazine/content/07_26/b4040001.htm?campaign_id=rss_tech • A world of connections, Apr 26th 2007 - From The Economist print edition (http://www.economist.com/specialreports/displayStory.cfm?story_id=9032088) • Financial Post August 9, 2007, “MTS in Black on strong wireless, Internet growth” • Financial Post August 9, 2007, “Nokia widens its cellular lead on sales surge” • “Deploying 802.11Wireless LANs” – 3Com white paper 2000, http://www.3com.com/other/pdfs/products/en_US/wireless_lans_wp.pdf • Wireless Crash Course, by Paul Bedell

18. Questions • World Internet Usage Statistics: • Which country has the most users? • What is the most popular application of the Internet? • How many people in the world are using it? • What are new cell phone technologies for video and audio streaming? Who offers them? • What is Satellite phone (satphone) • what is its status compared to cell phones? • What are their major advantages of satphones? • Who is offering it? How much is it? • Read the description of Patent 6690918 (use Google patent). • What is it about? What does it do? • What applications can you think of for this technology? www.internetworldstats.com; /top20;