Communications

Mobile subscriber growth forecasts are always wrong

I've been following forecasts of mobile phone adoption since the mid-1990s and there is one thing that's completely consistent – future subscriber growth is always underestimated.  This is true across every analyst, every firm and every agency I've encountered. 

Usually the underestimation takes 2-3 years to become obvious, but here's a graph from Wireless Intelligence (a joint venture of Ovum and the GSMA) which appears in a report Deloitte did for the GSMA entitled SIM Activation Tax and Mobile Telecommunications in Pakistan, which I got from Babar Bhatti (Thank you Babar!).

When I saw this I was immediately suspicious.  Why does the green dotted line slack off.  If anything the rate of mobile adoption in Pakistan has been accelerating.  So I took a quick check of the "Telecom Indicators" on the Pakistan Telecommunication Authority website.  The figures from Wireless Intelligence and from the PTA agree up through June 2006, but at that point Wireless Intelligence begins under estimating.

The Wireless Intelligence estimate for 2Q07 appears to be 32 or 33.  The actual figures for 2Q07 were 39.94.  The Wireless Intelligence estimate for 4Q07 is 37 or 38, but the actual figures for August 31, 2007 were already 42.65.

Why the consistent under estimates?

I don't have a answer but I have an idea, based on 4 or 5 discussions spread over the past decade.  Most people (including noted industry analysts) haven't really grokked Moore's law outside of PC speeds.  Or more generally, they don't get the power of new ideas and new methods to improve price/performance across the board.

In the specific case of Pakistan, I've heard at least two people (not from Wireless Intelligence) say that mobile phone adoption will slow down as, even with today's low rates, the poorest people will never be able to afford mobile phones.  What this misses is, every year the low end mobile phone costs less, and every year the cost per subscriber for new mobile infrastructure goes down.  Pakistan is a highly competitive mobile market.  When costs go down, subscribers see the benefit fairly rapidly.

Moore's law is rather specific.  The economist Paul Romer describes the more general concept:

Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. Possibilities do not add up. They multiply.

Globally, it took 20 years to sign up the first billion mobile accounts, less than four years for the second billion and only two years for the third billion.  Yes, these are SIM cards not necessarily unique people but, on the other side of the coin, the world's poorest start by sharing a mobile phone.  That gets them on the bandwagon, helps them economically while improving their standard of living.  So there is another side to the coin as well, mobile phone driven economic growth also helps increase the number of people who can afford the ever less expensive mobile phones.

More on fat tails in stock prices

While it's a bit remote from communications, I've touched on mathematical models for financial markets several times (here, here & here), primarily as an outgrowth of my interest in long tails.  So I was very happy when Paul Kedrosky pointed to this an excellent survey by Dan diBartolomeo of Northfield Information Services.  The last eight slides are full of references – more than I'm likely to track down in a year...

There's a PDF version here.

New Zealand Joins UK in Operational Separation

New Zealand has ordered the country's dominant phone company Telecom, to split into three operating units.  Like British Telecom in the UK, this is functional or operational separation, not structural separation.

Structural separation is what happened to the Bell System in 1983-84.  It resulted in separate companies who went their own ways.  Note that they regulated monopolies never did compete and eventually remerged, but the less regulated entity (AT&T) did pursue a truly separate path for at least two decades and we did get real competition in long distance services as a result.

When BT (voluntarily) split their operations, there was quite a bit of discussion which confused structural and functional separation even among people who know better, or should know better.  Unlike the BT split, New Zealand's Telecom has fought the split, so it will be doubly interesting to see if it actually works out.

In both of the current cases, separation leaves the access group responsible for the physical ducts, the raw fiber or copper, and the electronics necessary to make it work.  I worry about the latter.  There doesn't appear to be an option for anyone else to get access to the ducts to put in their own fiber, for example a co-op or condominium or a municipality.  Instead, the separation relies on the now-separated access business as the sole entity to upgrade the access network.

Perhaps I've misunderstood, but I wonder what the 10-15 year impact of this approach will be – better and better DSL when we really wanted fiber?

Time will tell.

More articles on the productivity benefits of telecom investment

Over the past two years, I written on the Large Productivity Benefit of Telecom Investment, the Strong positive impact of telecom on economic growth in developing countries and Large Productivity Benefit of Telecom Investment in Emerging Markets.  Those articles and posts were the result of my finding papers by economists who'd done the hard work of finding data, building models and trying to understand what's happening.  Today, I came by another set of interesting papers, thanks to a pointer from Babar Bhatti who blogs at State of Telecom Industry in Pakistan.

The pointer came in a paper by Deloitte done for, and available from, the GSM Association here.  What's interesting is this on page 25-26:

Whilst not considered in this report, a further positive impact of the mobile industry is the additional value add created by the mobile communications industry across the economy. This is, where measured, captured by multiplier that captures expenditure in subsequent rounds. The following figure shows the values of multipliers that have been calculated in other studies.

Not all are easily available on the web, but here are the links for the first four studies:

http://www.o2.com/media_files/news_100504.pdf
http://www.dirsi.net/english/files/Ovum%20Bangladesh%20Main%20report1f.pdf
http://www.afom.fr/v4/TEMPLATES/homepage.php
http://www.ofcom.org.uk/research/radiocomms/reports/economic_spectrum_use/

The Spread of FTTH; Parallels with Electrification

Fiberevolution has a cute video from EPB, formerly the Electric Power Board, of Chattanooga Tennessee, i.e. the publicly owned electric company.  Check out the first 45 seconds where they graphically make the case for municipal fiber.  Too bad they are just at the beginning of what promises to be a long legal battle.

As with many other such entities, EPB started in the 1930s when local residents felt they weren't getting electric service as rapidly as they wanted, and were prepared to commit public funds to benefit their local community – the same argument for local electric projects then and local fiber projects today.

A non-profit agency of the City of Chattanooga, EPB was established in 1935 for the sole purpose of providing electric power to the people of the greater Chattanooga area.

EPB got into the telecom business in 2000 and started building to business premises in 2002.  Now, they have a plan for FTTH, to be supported by triple play services.  It's been approved by their board and is due for a City Council vote today.

In a replay of electrification politics of the 1930s, there are strong protests and lawsuits from local and regional Cable TV interests.  There's already legislation in place to at least partially block such efforts.  As Stacey Briggs, executive director of the Tennessee Cable Telecommunications Association, puts it:

In 1999, my organization, the Tennessee Cable Telecommunications Association, worked with Tennessee’s municipal electric distributors, including EPB, to craft the laws pertaining to municipal entry into the cable and Internet business. The laws that resulted are intended to protect the public and to ensure that public assets are not misused.

I.e. the incumbents got state laws enacted that slow down local FTTH, at a minimum, by providing grounds for lawsuits.

Some time ago, Susan Crawford pointed to parallels with electrification in the US in the 1930s, which led me to read other bits of that history.  Much as I hate to admit it, the electrification experience only partly supports my position, i.e. that local municipalities should be given free reign to do what they like.  In fact, what worked for rural electrification in the US was not just permission, but active Federal support in the form of the Rural Electrification Administration (REA) which loaned money to local cooperatives, provided advice and gave them cover w.r.t. lawsuits by investor-owned-utilities.

Today, in the US, we have state and national laws and regulations that slow municipal and/or cooperative bodies wanting to provide services or even access the right of way.  If electrification is any indicator, we're in need of major policy changes at every level...

KDKA, not quite the first commercial radio station

Here's another piece of engineering history I stumbled on during my longer than normal return from Europe, i.e., Paris - Dublin - Boston.  A long time ago, I was general manager of the MIT college radio station (now WMBR, then WTBS but that's another story).  The history of broadcast radio as I understood it then (and up until last week) was that Westinghouse started broadcasting in Pittsburgh in 1920 under the call sign KDKA.

But a history article in the June issue of the Proceedings of the IEEE points out that Westinghouse only started after they noticed the success their employee, Frank Conrad, was having broadcasting music using recordings loaned to him by a local merchant on the condition that the store be mentioned during the broadcasts.

So now that I'm back online, I've looked at the history of KDKA and find, not only did Frank Conrad's private efforts predate KDKA, but a Canadian station (initially XWA, then CFCF and CIQC) actually started in 1919 and went to a regular schedule six months before KDKA.  There's a more complete history of Frank Conrad & KDKA on the KDKA site here.  The Canadians are quiet, as their successor station "940 Montreal" doesn't even list their call letters on their website, let alone their history.

In short, as with most human endeavors, there were multiple similar efforts happening, in parallel.

Full cycle – Fodder for horses; Fodder for tractors

Among my "toys" is a Ford 9N tractor, originally manufactured in March 1940 and still in service today.

So when I saw a review of Harold Brock's account of his years working for Henry Ford Sr., including his work on the Ford 9N tractor, I had to buy the book.

On an unrelated note, I've been discussing methanol and biodiesel with Wendell Bishop, one of the original co-founders of NMS, now involved in other forms of high tech, including methanol fuel cycles for transportation.  So this paragraph in Brock's book was interesting:

Mr. Ford said that to be successful and cost effective to farmers, the tractor should not cost more than the combined cost of a team of horses or mules, a set of harness, and the ten acres of land required to grow food for the animals.  If the project was successful, this would eliminate the toilsome caring for animals after a hard day's work.  Likewise, farmers could raise foodstuff from the ten acres of land rather than raising fodder for animals.  If we could meet this objective, Mr. Ford was convinced he finally could accomplish for farmers what he did with the Model T car in providing a real value.

I read this aloud to my wife and she replied, "And now we raising fodder for the tractors?"  She was referring to the biodiesel discussion, so I did some rough calculations...

While extremely advanced when it was introduced in 1939, the 9N tractor is only 22 hp and even under load consumes only 1-2 gallons per hour.  During harvest and other peak times, a tractor might be in use 12-15 hours per day, but in off seasons it might not be used at all some days.  Let's say six hours (perhaps 10 gallons) per day and 250 days per year, or roughly 2500 gallons per year.

Biofuel yields per acre are all over the place:  70 gallons per acre for soybeans, 127 g/a for rapeseed, 230 g/a for corn and 600 g/a reported for Brazil's sugarcane.  So depending upon your location and what you use for fodder for your tractor, it appears you need between 4 acres and 35 acres of land for "fodder" – 11 acres if you are using corn.

Of course it's still less work caring for a tractor than caring for a team of horses after a hard day's work...

Vladimir Kotelnikov – Father of Sampling Theory

Actually one of several "fathers."  Caution: the following is for the DSP engineers among you.  :-)

When I learned communications theory it was attributed to Claude Shannon (his 1948 paper) and sampling theory to Nyquist.  I do remember my father once telling me that E. T. Whittaker had published the relevant mathematics long before Shannon, but I never looked up the history.  And I never asked my father to elaborate as he was pushing his copy of Whittaker and Watson at the time, together with the idea I should be a mathematician or a physicist – not an engineer!

But on the plane back from Paris I read the June issue of Communications Engineer from The Institution of Engineering and Technology which included an interesting article on V. A. Kotelnikov by Professor Chris Bissell. 

... in the late 1940s <Shannon> wrote that the sampling theorem was “common knowledge in the communication art, but in spite of its evident importance it seems not to have appeared explicitly in the literature of communication theory.”  But Shannon was only partly correct. Ideas about sampling were indeed common knowledge in the late 1940s, and the theorem in various forms had appeared in the mathematical literature. But the theorem had also been published in the ‘literature of communication theory’ as early as 1933. Trouble was, it was published in the proceedings of a conference in Stalinist Russia – and in Russian.

The article goes on to give Kotelnikov credit for putting the problem of sampling a continuous, band-limited signal into an engineering context. Now that I'm back home and on-line again, I've been able to track down more of the story and access an English translation of Kotelnikov's seminal 1933 paper, On the capacity of the 'ether' and cables in electrical communication.  Not surprisingly, Wikipedia has an even more complete historical background on sampling theory in communications.

Suffice it to say, "Whittaker-Kotelnikov-Raabe-Shannon-Someya sampling theorem" would be a better name, as many people reached similar conclusions with varying degrees of parallelism.  Kotelnikov suffered from writing in Russian under Stalin and before the west started tracking Russian science.

Even with the English translation of Kotelnikov now available, Shannon's 1948 paper remains the best and most complete source for me.  I think it's only available in hardcopy forms, but other URLs of possible interest are here.

Performance per watt – Intel talks the talk

One thing that struck me at last week's AdvancedTCA Summit in Paris was Intel's Keate Despain's focus on performance per watt during his keynote address.  What a change from just a few years ago!  And it's not just Keate Despain, or the AdvancedTCA audience.  CPU performance per watt has finally become a significant competitive issue.  A quick Google search on "performance per watt" returns more than 2 million results including two paid ads, one by Intel and one by AMD.

Also at the Euro-ATCA Summit I had lunch with Stefan Ludwig who was promoting P.A. Semi's PWRficient processors, i.e. power optimized processors based on the PowerPC architecture.

I love it.  For years, I've pushed our engineers to focus on performance per watt and to this day I have a running argument with Texas Instruments over their C6x series DSPs (which are optimized for performance rather than performance per watt). 

This has nothing to do with being "green."   Every system and subsystem has to fit within some power budget.  At one time, a plug-in board for an IBM PC was risky if it dissipated more than 15 watts.  Until recently, carrier hotels (for example) had cooling for 50-150 watts per square foot.  3000 watts per rack was a big deal.  Try putting an IBM blade server in that!  You'd be hard pressed to support ten CPUs in an entire rack.  [Interesting discussion here (free but registration required).]

In my experience, if system architects focus on performance per watt, you end up with designs that are also competitive on density and cost, but it seldom works the other way around.

Benoît FELTEN – Mr. Fiberevolution

Well, I'm still without a working computer of my own, but I've borrowed an office at our Paris facility that has a PC with a French keyboard layout, so let's see if I can type anything...

It's been a fascinating week with a some interesting meetings and a few new learnings from the AdvancedTCA Summit Europe, but best for my personal interests was a meeting with Benoît Felten who's blog, Fiberevolution, I've followed avidly since I discovered it last spring.

I hadn't realized Benoît is a telecoms consultant whose work has ranged over a wide variety of telecom topics.  Indeed, it appears his avocation, i.e. broadband access, is one of the few telecom areas not part of his day job.  So we had wide ranging discussion across all of telecom – really fun!

I also got a much better sense of what going on with FTTH in France.  I'd read individual blog posts (e.g. this, this, this, this), but I didn't grasp the extent to which the French have enacted laws and regulations that ensure local authorities are allowed to build telecom networks.  Boy, would the folks in Lafayette Louisiana have loved that.  But of course I've written on this subject before.

The only curious thing was we chatted in a French bistro in the plaza by the Arch at La Defense, but the house red wine was from Chile – that's a first in my book.  :)