Discussing the State of Telecom Research Today
Bob Lucky
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Once Upon a Time …
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Role of the Pre-divestiture Bell Labs
Standards (both official and ad hoc) End-to-end network design Basic research Industry and research leadership Seeding alumni throughout industry and academia
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The Economics of Telecom
Bits are becoming a commodity Overcapacity in the long haul plant Pricing tends to incremental cost, which is nearly zero High up front costs Fast depreciation
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Telco Revenue per Minute and per Call1980-2002
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US Telecom Capital Spending
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
1995 1996 1997 1998 1999 2000 2001 2002 2003E
Others
Wireless
Long-Haul Incumbents
Local Incumbents
Source: Sanford Bernstein
DollarsIn
Millions
$39,488$45,235
$58,186$67,146
$89,676
$119,925
$102,502
$58,923$53,483
Year-over-Year Growth Rate
14.6% 28.6% 15.4% 33.6% 33.7% -14.5% -42.5% -9.2%
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“Telecom is headed the way of DRAMs – pricing is setby the most idiotic competitor. It’s a race to the bottom.”
Roxane Googan, Industry analyst
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Is There any Bottom to the Price?
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Yes, maybe there is a bottom
Free?
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Free WiFi
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Is it Possible?
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Telecom’s Paradox
Telecom industry is in crisis in the midst of technological progress and strong user demand
Annual traffic growth: 100% Annual growth of Internet users: 40% Strong growth in wireless penetration Usage of broadband, data, wireless, long distance all rising
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Problems in Telecom Research
Reduction in research spending Change in the nature of research -> short term and applied Globalization of the industry Horizontal restructuring of the industry Shortcomings of university research Lack of national vision Lack of end-to-end responsibility
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Where is Innovation Coming From Today?
Service providers have abandoned research almost completely Equipment vendors do the only research in the traditional
industry – and they have cut back significantly New players – Microsoft, Qualcomm, and Cisco – have
emerged to do varying amounts of research The venture market, while still active, is not as robust The academic community remains strong
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Where is Telecom Research Done? – Percent of IEEE Papers Authored by Industry and Academia
0
20
40
60
80
100
1970 2003
% Academic
% Industrial
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Issues
Is Telecom research endangered? Are there significant economic consequences? What can be done
– By government?
– By industry?
– By academia?
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The Panel
Jeff Jaffe, Lucent Fred Chang, UT Austin Niel Ransom, Alcatel