5 nightmares that keep telecom executives up at night
What are some of the most nerve-wracking industry issues that telcos and wireline service providers face? Perhaps the scariest communications story of them all took place Monday and Tuesday as Superstorm Sandy caused major outages among data centers and knocked telcos like Verizon (NYSE: VZ) offline in New York and caused outages at MSOs like Cablevision (NYSE: CVC) in various areas. But there are a few other scenarios that also keep telecom executives awake at night. Here are five top nail-biters:
If the recent increase in lawsuits filed against companies by "non-practicing entities" is any indication, patent trolling is an incredibly profitable industry. A study commissioned by the GAO (General Accountability Office) found that 40 percent of all patent lawsuits filed today are filed by non-practicing entities (NPEs), almost double the percentage filed five years ago.
But that amount may be even higher. The study also speculated that "lawsuits are only the tip of the iceberg," as many claims of patent infringement are settled before ever going to court, with companies paying requested fees with little resistance.
How does this happen? It's pretty simple—NPEs exploit loopholes in patent law that enable them to purchase (or in some cases, file their own) patents, whether they intend to use them or not. They then inform companies using products or processes similar to their patent that they're infringing.
Most recently, ZTE's UK subsidiary was smacked with a lawsuit by intellectual property (IP) firm Vringo, which says the Chinese equipment manufacturer is infringing on three European patents that Vringo acquired from Nokia in August.
So, how can companies escape the clutches of patent trolls? A 2010 presentation (PDF) by Gene C. Shaerr and Jacob R. Loshin of Winston & Strawn LLP outlined several steps to take when threatened with legal action. Defendants that decide to fight can request a change of venue (districts like Connecticut tend to rule against patent trolls), get a declaratory judgment in a more favorable venue, or ask for a summary judgment; they can try to deconstruct the claim based on the patent itself (especially if it's not well-written); they can look for prior art that hasn't been cited; and they can ask for a reexamination of the patent by the U.S. Patent and Trademark Office.
Special access rules for CLECs
The fight to re-regulate special access rules, which allow incumbent telecoms to charge competitive providers a fee to access their voice and data networks, has companies and advocates taking surprisingly different sides. On one side are the CLECs, which argue that the fees to connect dedicated lines to incumbent networks are stifling innovation and slowing the buildout of faster broadband networks.
On the other side are incumbents, which aren't keen on the idea of giving away their legacy bandwidth, and some broadband advocates, who feel that making it cheaper to use legacy networks will slow the buildout of faster broadband networks.
"These companies [enterprises using multiple T1 lines], and the competitive carriers who serve them, insist that they will need to continue to use those slow links for years to come. In fact, they are asking the FCC—in its special access proceeding--to help perpetuate their use by re-regulating them," wrote Anna-Marie Kovacs, Visiting Senior Policy Scholar at Georgetown University's Center for Business and Public Policy. "As the FCC moves forward with the special access proceeding, it must first and foremost ask why America's largest corporations are using connections far too slow for household use."
One proposed solution to this conundrum? Do nothing. Broadband advocates say that the special access segment doesn't need to be micromanaged by the FCC, and an AT&T (NYSE: T) spokesperson said that that carrier doesn't want to spend millions of dollars in litigation over pricing in various markets. Besides, say advocates, these dedicated pipes will be replaced over time with Ethernet loops, fiber or cable networks, making the whole issue moot.
ITU regulation of the Internet
Who will control the Internet in 2013, and what does it mean for individual privacy and free speech?
In December, a special meeting of the International Telecommunications Union (ITU) in Dubai will consider the question of who controls the Internet. Currently, ICANN (Internet Corporation for Assigned Names and Numbers) coordinates the Domain Name System (DNS), Internet Protocol (IP) and related functions.
While ICANN is an international organization, it essentially took over control functions from U.S. government contractor IANA (Internet Assigned Numbers Authority) and other entities. Some countries, including China and Russia, feel that Internet functions should managed directly by the United Nations—in this case, the ITU.
The international communications landscape has evolved, thanks to technology advances like the Internet, say advocates of the change, and the ITU should take a more active role in regulating this landscape.
The United States government, not surprisingly, is opposed to the idea of the ITU stepping in.
"The ITRs (International Telecommunications Regulations) have served well as a foundation for growth in the international market," said Ambassador Terry Kramer in a statement released by the State Dept. in August. "We want to preserve the flexibility contained in the current ITRs, which has helped create the conditions for rapid evolution of telecommunications technologies and markets around the world."
More to the point, the U.S. is worried about censorship and privacy issues that could arise from heavier international regulations. "We will not support any effort to broaden the scope of the ITRs to facilitate any censorship of content or blocking the free flow of information and ideas," Ambassador Kramer said.
Bruce Mehlman of the Internet Innovation Alliance (IIA) put it more succinctly. "(I)nternational efforts to expand governmental regulation over the Internet put future investment, innovation and societal progress at risk," he wrote in a recent FierceTelecom column. Regulations could stymie that progress, he added. "Yes, consensus based decision-making is slower than government fiat. But it has spurred the Internet's unprecedented growth, providing businesses and consumers with today's buffet of information and services."
How will this nail-biter play out? Hold on until Dec. 3, when the review begins in Dubai.
The packet gremlin
What's the biggest threat to the growth of VoIP? Despite advances in technology, packet loss may be that culprit. It's a quality of service issue that providers take seriously.
Voice calls over IP utilize packets to send voice data from one end of the line to the other. These packets don't all arrive at the same time, or in the same order. And while that isn't the main problem, where and how those packets travel can lead to issues.
A congested network, link failure, Ethernet issues, and misrouted packets are some of the issues that cause packet loss. Users begin to experience jitter and latency that makes a voice call difficult if not impossible to participate in—basically, the call begins to break up.
The hybrid nature of the voice network is another significant issue in packet loss. When a voice call moves from an IP-based network to a legacy TDM, the shift can compromise those data packets. "Every time you convert a packet to circuit, you lose some integrity," said Jon Arnold, principal at J. Arnold and Associates. "If the network can't handle it, that is where you get dropped packets, compromised packets, that's when you get the crappy voice experience."
The solution, as it has been for quite awhile, is constant monitoring of the network to detect dropped and damaged packets, and constant work by providers to improve QoS on their end. Achieving a perfect IP voice call with no packet loss will continue to be an impossible dream—at least until, perhaps, legacy TDM networks go the way of the dinosaur.
Speaking of dinosaurs…
Death of the PSTN
For some providers, seeing the public switched telephone network (PSTN) die a slow death isn't really a horror show—they're looking onward to the dominance of next-generation technologies. But even the most die-hard technophiles may still experience a twinge of sadness when they walk past banks of phone booths bereft of payphones.
The legacy network that supported voice for so long is the network on which the Internet was built, with services progressing from dial-up to DSL seemingly overnight. And many rural areas are still reliant on that old copper line, as fiber is often too expensive or too difficult to run out to them.
Despite the expense and geographical challenges, however, providers are still determined to migrate customers away from legacy lines. Verizon told investors during its Q2 presentation that DSL customers experiencing problems with their connection would be shifted over to FiOS whenever possible.
AT&T in 2010 asked the FCC to kill the PSTN, to speed migration to all-IP services. And this year, AT&T is looking at ways to boost speeds to rural subscribers on new networks and move them off of dial-up and DSL.
Perhaps the biggest factor in the death of POTS, however, is wireless backhaul. As the demand for wireless and broadband wireless continues to grow exponentially, so too does the demand for better speed and reliability on networks that transport data from tower to tower.
Still, argues A. Michael Noll, POTS is far from on its way out. He feels that it's simply evolving.
"People still speak over a telephone--be it wireline, wireless, or the Internet's VoIP. The modality is still human speech, with all its intimacy and personality. People still listen to the radio--be it in their cars or at home over airwaves or the Internet. People still watch video--be it over the airwaves, coax, fiber, or the Internet. And telegraphy of the distant past is back in the form of today's e-mail and texting."