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Summary:

[qi:051] Mark Cuban, the histrionics-prone billionaire and owner of the Dallas Mavericks, caused a major ruckus over the weekend when he wrote a stinging essay entitled “The Internet is Dead and Boring.” The essay lit a fire under the bloggers, who turned into NBA officials for […]

[qi:051] Mark Cuban, the histrionics-prone billionaire and owner of the Dallas Mavericks, caused a major ruckus over the weekend when he wrote a stinging essay entitled The Internet is Dead and Boring.”

Matt Cuban by JD LasicaThe essay lit a fire under the bloggers, who turned into NBA officials for the day, declaring – loudly — that Cuban was in the wrong. But his arguments — while laced with impatience and full of disregard for the financial realities faced by incumbent carriers — when viewed through an infrastructure lens are in fact quite sound.

…. if you index the expected growth in bandwidth consumption by applications that are heavy LAST MILE bandwidth users (as opposed to the Internet backbone where there is plenty of bandwidth but consumers cant get to it) vs the actual increase in LAST MILE bandwidth available to the home, our net effective throughput to the home could decline over the next few years.

Here Cuban is spot on: Even as the connections to our home are becoming faster, the carrier networks (including the last-mile connections) are getting filled at an even faster rate. The reasons for that are manifold, with video being the most obvious candidate.

But the bigger question Cuban is asking is whether the Internet’s infrastructure is sufficient to keep the innovation cycle moving forward. And the answer is no.

I have often argued that just as gigahertz drove the WinTel ecosystem, bandwidth (both up-and downstream) drives innovation in the broadband world. Of course, it would be too simplistic to correlate last-mile bandwidth with innovation, for the network architecture is inherently complex, and is getting more complex by the day.

It was during a recent conversation with Rohit Sharma that it all came together. Sharma in his past life started ONI Systems (an optical systems company that was acquired by Ciena Systems (CIEN)) and is now a partner at Mohr Davidow Ventures. Over cups of steaming espressos, we reminisced about the optical bubble.

We couldn’t help but compare our tallies of ex-telecom executives that are involved in either media- or video-related companies instead of next-generation infrastructure. It quickly became clear to both of us that front end was getting all of the attention while the back end was being all but ignored.

Is today’s infrastructure adequate? Given that there will be more than 2 billion phones and a billion PCs connecting to the “network” in 2008, the back-end infrastructure is going to need a rethink. We’ve been going on the same set of core technologies that made their debut in the late 1990s. Cuban isn’t the only one arguing for a rethinking of the Internet as we know it. From the members of the networking consortium known as Internet2 to the Japanese Communications Minister Yoshihide Saga, there is a burgeoning conversation taking place about developing a new and improved version of the Internet.

I asked Akamai (AKAM) CTO Mike Afregan about Cuban’s assertion and the infrastructure challenges that loom ahead. “Look, we have had the same transport protocols and routing protocols, and they are not going to change,” he said. “But I think it is clear that the nature of the Internet is changing, and there is so much work that needs to be done — from rethinking chips to better storage systems to disks to systems.”

John Roese, chief technology officer of Nortel (NT), is of the same school of thought. “If you look at the progress made from 300-baud modems to 10-Gigabit Ethernet,” said Roese, “the cost per bit has declined by a factor of 22 million to one. But that isn’t reflected in the consumer Internet experience.”

The fault is in the asymmetric nature of the Internet. The downstream speeds are getting higher, but upstream speeds are still being controlled in a miserly fashion by ISPs, thus acting as a break for truly interactive applications.

An asymmetric Internet is good for disseminating information – after all pulling down information (or YouTube videos) moves packets in one direction. This is perhaps the point Cuban is trying to make when he says that the Internet is like a utility and therefore boring. Electricity, after-all, also works as a one-way service — it comes into our house and we use it for everything from stereos and air conditioners. Today’s Web and Internet applications are doing precisely the same on our desktops.

The future, however, is in two-way, symmetrical Internet, where applications such as Kyte.TV and Sling Media can actually be put to use. “The Internet needs to become interactive, bidirectional, and be contextually aware,” argued Roese.

Roese agreed that Internet in its current manifestation is a lot less exciting, though he was more measured than the bombastic Cuban. “What makes me nervous is the lack of startup activity around the next-generation Internet,” he said.

Photo Credit: JD Lasica via Flickr

  1. om, give me a call and I can discuss some of the first 150 feet issues with you. We’ve been around the block on this issue for years now.

    thanks

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  2. mark cuban news = filler

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  3. i agree with mark cuban 100% – daily i scour venture/tech blogs looking for something to get me excited, and lately it has been blah mediocre. frustrated, i keep adding new RSS feeds in the hopes that i’ll find a new wave of leadership in online innovation. i’ve become so let down that i started watching television again after one year of no TV.

    i need more bandwidth, more interactivity among people (that doesn’t mean today’s social networks), more interactivity among apps, more virtual world innovation, more innovations for the developing world…and less incremental web 2.0 stuff.

    thanks for the reality check mark.

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  4. Vijay

    thanks for the comment. what email are you using these days.

    best

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  5. Patrick,

    Care to expand on your comment.

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  6. Om,

    I think your points are as valid as Mark Cuban’s. In my past life, I worked in the gaming industry as a senior executive for the former high flying Sega. One of the many things that I learned is that most find a certain “sexiness” in working with high demand content, of which video clearly falls. Given this observation, I too have noticed an over obsession with the “last mile” being driven by the sexiness of video. Hence I not only agree with you and Mark Cuban, but I’d add that unless many in the venture community invest in the bricks of the internet (backbone), expect the movie theater to come crashing down.

    I think Mark Cuban implies that the bricks MUST be sexy in order to drive innovation forward inside the theater.

    My two cents – I hope that the analogy is clear.

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  7. Yes Curtis, thank you for stating my points even more coherently.

    I think there is too much obsession with the front end and the industry needs to start thinking about what comes next. sure it may/maynot be sexy, but it will be necessary.

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  8. Cuban’s comments are mostly about perception, with his comment about bandwidth mostly an uninformed throwaway. Yeah, this is less exciting than a decade ago (hence, Cuban says “dying”) while still growing. I’ll let the pundits discuss that, but I want to clarify the bandwidth issues.

    You’re right on target saying the 200K- 1 meg upstream is inadequate, and in fact cable upstream is often overloaded today. So upgrading the local loop – FIOS, DOCSIS 3.0, VDSL from the basement – are important. Tokyo is at 100 meg symmetric, Paris is getting there, Berlin 10 up and 50 down, and 80% of the U.S. will be at a tenth those speeds for a decade unless we do something.

    But when I look closely at everything except local connection I don’t find any major bottlenecks likely. Sure video is driving traffic growth, but real data show the growth as moderate and about at the same rate as the last five years. Meanwhile, the equipment to carry that data is coming down in price with Moore’s Law.

    Conclusion: About 5% of the $20-50 people pay for broadband goes for the bandwidth (on and off net.) That number has been going down, not up, at least through 2005-2006. It would take a remarkable and highly unlikely shift of video to the web to change that significantly – 30% or 40% of TV watching would have to leave cable, satellite, etc.

    Ergo – Backbone needs new gear on a regular basis, and loads of improvements are possible. But there’s nothing to fear there. Really.

    Cisco and the like may see a nice sales boost (10-15% growth rather than 5-10% growth), and the industry will need to constantly adjust as it has for a decade. The actual cost per customer of DSL or cable service will continue going down from the current $5-15 dollars per month per customer, because other costs, such as cheaper modems, are almost certainly coming down more than any plausible increase in video bandwidth costs.

    This would be a polite discussion of vague futures except that the telcos are spending literally millions to spread the falsehood that the “Internet will collapse” unless … They then use that as a argument for whatever policy they happen to want that week, typically blocking competitors. They are just doing what ordinary businesses do, shading the truth while lobbying.

    The burden for keeping the facts paramount belongs to those who serve the public interest, starting with the Chairman of the FCC, and adding academics and reporters. Let’s get this right.

    Your close reader
    Dave Burstein

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  9. Jeez, can we stop declaring the end of explosive ideas on the internet until the next explosive idea comes along? I think I’ve been hearing this from Joe “I made a fortune in Web 1.0 and now I’m an expert at everything now” every year since 2000.

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  10. Dave

    Thanks for your comment. Just to clarify, my piece is not talking about Internet is collapsing. That infact is not what i am talking about here.

    What we are taking about is the fact that while so much attention is being put on the front end, we need to think about the infrastructure too. I am sure you have noticed that there isn’t that much going on in the way of infrastructure start-ups.

    As you say, there is nothing to fear here, except apathy.

    Secondly, you give good examples of some cities that are looking at addressing the issue of increasing upstream bandwidth, but that is not the case, generally speaking.

    I think Roese is making good points about symmetric networks. In fact, if I remember correctly, you were one of the early champions of symmetric broadband and its broader implications.

    In your court, dear sir.

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