Telcos back on top
Summary
Topics
In the early 1990s, people with IP-based e-mail waited expectantly for a wave of Internet fever to sweep away the telcos, who were all hopelessly out of touch. At the time, there were two main groups putting together pan-European IP networks. Through the Internet "boom," both lasted to the present day, but both were part of the KPNQwest network and so both, it seems, will shortly cease to exist.
EUnet began life as a network for communications between Europe's Unix User Groups. Devotees of the operating system exchanged e-mails and Usenet news, over the UUCP protocol. In 1988, EUnet moved over to the Internet's TCP/IP protocols, and became part of the Internet.
Later on, the idea of handling traffic commercially developed. In 1992, Ebone set up peering arrangements between the local service providers that were appearing, to create a commercial IP backbone for Europe.
Before about 1990, most people were unaware of the possibilities of the Internet, and those that wanted worldwide links were very often suckered by the empty promises of the big telcos, who offered clumsy formal standards called OSI, but seemed in practice to do nothing to foster data communications. From 1990, however, the success of EUnet and other Internet operations showed people what Internet connectivity could offer them, and it became clear that there were great things (like e-mail, newsgroups, and hypertext) that telcos would never do properly, even if they did think of trying them. BT, bless it, had its Telecom Gold e-mail service, and its Prestel teletext service, but both failed because it could never "get" the idea of offering global, open services.
As the 1990s got started, the Net-heads got even more ambitious. They realized that even the things the telcos were doing, such as voice traffic, could be done (it looked to us) better by IP. Whenever you linked between two points, the telcos wanted to set up a switched link between them and charge you per minute. The Net-heads knew you could get away with a local link onto a shared backbone, and do it all for a flat rate. Why not set up huge IP networks, get all the telco traffic onto them through toll-bypass, and watch the old Bell-heads, without leased line revenue and with falling voice income, shrivel and die? Net-heads could liberate the users that had been exploited for so long by the old greedy monopolies.
Around 1994, there were dark warnings that if the Net-heads really wanted to do stuff like that, things were going to get more commercial. Some people wanted the Internet to be free, and others wanted to make sure the whole world had basic Net connections before the privileged nations started wasting bandwidth with stuff like graphics and voice.
But people running services like Ebone and EUnet knew that the free model was about to die. It was based on a small clique of clued-up users piggy-backing on networks set up with government grants for places like CERN and academic networks like JANET. The World Wide Web was round the corner, and the traffic it needed would a) swamp the old-style networks and b) generate enough revenue to pay for new ones. Therefore--bring on the new networks.
We then entered an era of frenzied investment in new IP networks (many of which were, under the covers, based on older protocols that didn't sound quite so exciting on Wall Street). The idealistic networks, like Ebone and EUnet, got bought by the new commercial players.It all got pumped up too high. Then it burst. The hypesters changed the message, and Net-head businesses became big-business businesses, hyping and believing their own hype. The new networks have all bitten the dust, more or less--and in the case of KPNQwest, they have taken the remains of the old idealists with them.
And who exactly does this leave? You guessed it. The old-style telcos. They've done just enough to keep their toes in the new IP world. They've set up ISP divisions, or bought them, when market conditions made them cheap enough. They've moved some or all of their backbone traffic onto IP networks, which turns out to give them savings on things like voice traffic, which they are then at liberty to pass on to users when they feel like it.
I recently spoke to one of the founders of Ebone, a Dane called Christian Moeller. "It's very sad how Ebone ended up," he said. "The Ebone business was EBITDA positive throughout its period owned by GTS. The industry will have to move on."
And what direction is it moving? From the sound of it, the same direction as Moeller himself, who is now European director of Sprint, a 100-year old US telecoms company. "In 2002 users will shift towards quality and redundancy, and look closely at the financial stability of their suppliers," he said.
In other words, in network provision, the telco-heads learned just enough to win out after all.
Or have they?
Among my acquaintance, the kind of people who were most interested in Internet-versus-telco ideology ten years ago (or would have been if they were out of school then) are now much more interested in using 802.11 wireless LANs than to cut them out altogether.
So there may still be hope.
Do you agree that the telcos will prevail? TalkBack below or e-mail us with your thoughts.
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