The World View
WorldCom CTO connecting to an Internet society
from the March 19, 2001 issue of Broadband Week
WorldCom Inc.'s world is definitely changing. With broadband's promise still strong in a not-so-steady telecommunications market, the giant company has changed course to steer further clear of the consumer phone business in favor of becoming a worldwide broadband enterprise services provider. Broadband Week senior editor Karen Brown talked recently to chief technology officer Fred Briggs about what the changes have in store for WorldCom's networks and its business.
BBW: WorldCom has revised its corporate battle plan to focus on enterprise hosting and communications services. What effect has that had on the company's technology upgrade goals?
Briggs: I think there was some addition - I think if you look at the pieces. It's one of those things that you have to break it into chunks to say what changed or what didn't. You start at the basic pieces on the transmission side - we still see network growth of anywhere from 400 to 800 percent per year and doing things like enterprise hosting just is one of the things that continues to add to the network growth. On the transmission side what you saw is we announced the Terabit System, where we can do 1.6 terabits over a fiber pair at 116 channels of wave division multiplexing. So all of that continues as sort of the underlying support to provide services.
The next piece on the switching side also starts to change. In addition to rolling out the soft switch, which handles the bulk of our dialup Internet traffic today instead of the traditional narrowband, we've also announced the multiservices switch, which is a great big broadband switch that can handle IP frame, ATM, video and narrowband - all on one platform. It's a very, very efficient platform. We have announced those and we will deploy them in the second quarter and between that and the soft switch becomes the big broadband switching platforms that we need.
Then as you start to go up the value chain, clearly with enterprise hosting and our partnership with Digex is we can provide all of the managed hosting capability. That was one of the key things I think that Digex brings to the table.
We'll do voice portals so that you can surf the Web using natural language. Both of those will be available in the second quarter. We'll do IP communications, where an enterprise can take their voice traffic and put it over the data networks, and in addition to that we will roll out SIP servers, which we've announced and demonstrated, which will allow customers to not only put their voice over the Internet, but also using SIP servers we can provide equivalent PBX, Centrex-like functionality along with dynamic registration, universal messaging - just a whole new way to do it.
In a real quick nutshell, we've gone from very high speed transmission to broadband switching infrastructure to managed hosting capabilities as well as enhanced services on top of that. So I think we have added quite a bit to our portfolio. That wasn't something that we got up on the first of January and said 'Oh, wouldn't it be real cool if we went and did this?' Things like the multiservices switch have been in development for years and is the culmination of an awful lot of work, as is the Terabit switching, as well as things like Web centers and voice portals, which we started well over a year ago to develop. So what you are seeing again is the culmination of a lot of work to establish a direction. Obviously we have tweaked it along the way, but all coming together to provide a whole new portfolio of services.
BBW: WorldCom has some ambitious upgrades scheduled. But with the continued economic downturn, will we see a slowing of the company's upgrade schedule as we have with other network operators?
Briggs: I'll give you one perspective of that. Our projections are we have spent about $8 billion a year on the network. Our projections are we will continue to spend $8 billion a year on the network. Now, clearly that investment shifts some - we don't invest much in narrowband voice anymore and are going to broadband switches, and the systems now associated with narrowband are going now to Web centers and voice portals and that kind of thing.
But we are still going to continue to spend about $8 billion. The other thing that I think will play in our favor in this infrastructure that as the economy takes a downturn - there's no question it is taking a downturn and the question now is how far - but any time you see a downturn, one of the things you see in enterprises is obviously looking for ways to cut costs, add functionality and improve their productivity. And I think things like our managed hosting solutions, the way that we can now provide customer service over the Internet, the way that we can provide IP communications or put their voice over their internal data network, not only cut the cost, but also I think improve productivity. So that as customers look to improve productivity and look to cut costs I think we have solutions that play right into that. So as the economy takes a downturn I think we will still do pretty well.
BBW: So it would be an opportunity for you to drum up business?
Briggs: I think so, because one of the things is whether the economy takes a downturn or not, one of the great opportunities going forward - I think you are going to see companies really start to integrate their IP networks and the Internet into the way that they do business. Everybody today has got a Web site, and everybody probably sells something along that Web site and it is a great interface into the enterprise.
But I think the next step is when they truly start to integrate that into the Web centers - how they manage their manufacturing, how they manage their engineering. Really manage the enterprise and start to take cost and add productivity into that - I think there are only a handful of companies that have started to take steps in that direction, and I think as companies do that whether we take a downturn or not, I think it is a tremendous opportunity for us, because we will provide the underlying infrastructure to do that.
BBW: You have talked about the transition to a global distributed switch architecture. What advantage will this provide, and how fast will this occur?
Briggs: Let's take it to the extreme for a second, because one of the things that I am really very excited about is distributed computing - peer-to-peer computing or edge computing. I think if you look at the example I used, because most people kind of look at you blankly when you talk about that - have you seen SETI, the Search for Extraterrestrial Intelligence? They actually have got two and a half million PCs signed up, and have gotten 526,000 computing years, if I remember my statistics, by networking the PCs.
In the typical enterprise today and probably the most straightforward solution uses about 25 percent of its processing power and 25 percent of its storage. If you could offer companies a shared storage, distributed processing where essentially you are only paying for the storage and processing that you need and we'll distribute that around the globe to maximize the productivity - imagine the efficiencies that we could get. To me that is just one simple example. If you start sharing files, images et cetera, I think there are a lot of other applications that we are just beginning to understand. And I think it will be a natural extension of CDNs - much more capable set of applications than CDNs. So I'm really excited about that. I think what you are going to see is that as becoming more significant probably next year. I think we will probably spend the bulk of this year sorting out what that is, what sells in the market, what the products look like, and see more commercial offerings probably in 2002.
That's one to watch - that's a real up-and-comer.
BBW: Indeed, we have seen the rise of distributed computing. Is this the next step in network processing architecture or is it just a passing fad? How much attention will WorldCom pay to this technology?
Briggs: Again, I think it's a little too soon to say that it is the next thing. However, we are beginning to focus some what I would call some real resources on that - I can't quantify that - but in terms of defining it, what it is, how we do it, the architecture around that, how we dovetail that with our hosting and our other services, what the market opportunity is. Again, when you look at the numbers in terms of the efficiencies that enterprises typically run, theoretically what you could do given the SETI example - it gets very exciting. Now, when you look at the flip side of it, gee whiz, sharing files among that many PCs, maintaining the security, maintaining the performance across a widely distributed global network - so you can keep the latency and performance in check - monitoring what is doing what and then bringing that back to any one point anywhere, if anyone wants to look at it there's probably a couple of real technical challenges there.
BBW: Is that going to require a different switch architecture?
Briggs: I don't think necessarily a different switch architecture. I think what you are going to need clearly is a large broadband architecture with the transmission and the switching, and I think that basic architecture can handle virtually any volumes. I think it is the control mechanisms - the software that are going to manage the distribution of the data - manage the cycles, make sure the security aspects are taken care of, can then aggregate the pieces any one individual wants to look at and make sure they get that information in the right order. I think it is managing that inside the network is not only the great opportunity for us, it is obviously one of the great challenges.
BBW: With WorldCom's focus on digital, is digital video delivery on the radar? Is WorldCom planning to get into any video on demand service in any form?
Briggs: We actually have had some of those services for a while and do that. I think we serve some customers - I wouldn't say it is huge. I think we like others have looked at distributing movies to theaters, advertising - that type of thing. While we see some demand and we offer some services in that arena, we haven't seen it take off as a huge product yet. I think one of the things that tends to gate any type of video distribution is the last mile. Let's face it - for most people at home the best we can do is a 56 kilobit dialup modem, unless you are lucky enough to have a cable modem or DSL. If you add up all of the broadband access with cable and DSL for the average consumer it is still a very small percentage of the overall. I think that's one of the key things for the industry - an issue we've got to crack to provide ubiquitous broadband, because as you can provide ubiquitous broadband then things like video on demand become very real.
That's the really key element, and I think that will happen over the next couple of years with things like DSL, but it will take time.
BBW: Does WorldCom have any plans for solving that last-mile problem at all?
Briggs: Where we are focused right now is one, with MMDS. That's the old analog wireless cable. We have acquired spectrum in 28 markets. We'll probably be commercial with that - we are in trials in about a half a dozen markets today. It will probably be commercial in roughly this summer, and starting in those markets.
And that's good up to about T-1 speeds - I'm not sure it will do video, but T-1 speed is not bad if you don't have anything else. The other one that we are really focused on is DSL - not only our own deployment but our partnership with Rhythms. I think DSL will ultimately be one of the big broadband pipes. Clearly I am the first to admit there are a number of issues with rolling out DSL, but if you go back to the simple days of equal access, it took a long time to get to equal access, too.
But I think DSL will become one of the big broadband pipes around the world. We're seeing the U.S. beginning to open up with the line sharing decisions that we've gotten and the self-loading software. Europe is just beginning to open up and even in Asia we're just beginning to see some success. When you look at DSL and compare that to cable modems, the thing I like about DSL is it will serve most of the business and the consumer markets, whereas cable is only consumer. And if you look at the size of the business-to-business e-commerce going out to 2005, that's a $7 trillion market. Seven trillion dollars is huge - that's not our market share, but that's the total value of goods and services sold. So when you have something like DSL, I think that's going to be one of the primary vehicles to service that business-to-business market for the broadband looking out in just a couple of years.
BBW: In relation to that, there are many competing technologies offering business customers a broadband connection, including ISDN, T-1, DSL or cable modem. Is WorldCom focusing on any one of these as the best overall connection strategy? If so, why?
Briggs: What I would say is we are very agnostic when it comes to technology. Our key is we just want a big broadband pipe. Whether we get that with MMDS, obviously some with ISDN - though I think DSL and cable is going to eclipse ISDN - but we use some ISDN. We obviously use some direct fiber into buildings, and we have about 50,000 buildings lit world wide and will continue to do that. Even satellite - satellite will play a role but mostly in the developing countries. We use that for instance in Brazil - it's a great technology in a developing country. It doesn't have enough bandwidth for something like the U.S. or Europe.
In the other niche businesses we use some of the lasers - the free-standing lasers building to building. It tends to be something of a niche market, but we use some of that. There is also Metricom, which will do 128 kilobits wireless. It doesn't have nearly the footprint that we'd like to see yet, but it continues to grow. That uses wireless unlicensed spectrum.
So really in our view any way that we can get reasonably effective broadband access to a customer, that's find.
BBW: But you also say DSL is one of your bigger planks for doing that.
Briggs: I say that only because when you look at the numbers, there are something like 800 million copper lines in the world today. There's probably 100 to 200 million perhaps cable users if you look all round the world. So if you look at DSL, the ubiquity of that copper around the world with the market you are developing in - it would appear to have much larger potential. The other thing I show you with DSL - DSL is dedicated to the user. You don't share it with anybody. And we're working in the lab today with 50 megabits at 3,000 feet. And if you think about say, 25 to 50 megabits being commercial in a couple of years in copper line to your home, that's a pretty capable offering. I really think that when we resolve all of the regulatory issues and there are some technical issues, when you can see that kind of capability and you can imagine what you can do with 25 or 50 megabits to the home - that's truly video on demand and virtually anything else that we could probably think of today - that opens up a new set of possibilities for us.
So while I may be higher on one, again, we are very pragmatic. If something came up that looked better, boy, away we would go.
BBW: The Internet itself has traveled far from its roots as an information exchange between universities. Where do you see the Internet's evolutionary path headed?
Briggs: It's interesting - can I go really futuristic on you? If you go down the road many years from now and kind of look at the Internet beyond its technology, I really think it is going to fundamentally reshape society. Society today is still very much defined by national boundaries. We are still defined by, you know - I'm a U.S. citizen living in Virginia. It's pretty much how we define ourselves. I think the Internet is going to redefine how we look at ourselves, what groups we interact with, what organizations we work with. So that it will completely redefine how society interacts, how we govern ourselves. I think that's maybe at least as far as I can see the ultimate change that the Internet will bring, not as a technology but as a fundamental change to our society.
If you start to look at it now, whether it is chat rooms or information, you are not limited by geographic boundaries at all. You are interfacing with people that have common interest - maybe different views - to discuss common subjects, it could be any place in the world. I think those are going to be the kinds of groupings you will see, and how society is going to start to structure ourselves - perhaps even someday govern ourselves.
I understand that is a little bit far-fetched, but you think about it. I have three boys in college. That is really the way they live. I watch them and for them, that's more along the lines - that's the community they work in. That's how they live, that's how the purchase, that's how they share information, and I think about the next generation - the three and four and five-year olds that grow up with the computer that wouldn't know anything else.
BBW: Okay. Well, the last question is, where do you think broadband is headed in the future?
Briggs: What I would focus on is, I think the breakthrough for the broadband industry comes when we can provide a truly ubiquitous, cost-effective broadband access to the business and the consumer, whether that is 25 to 50 megabits with DSL or anything else that we can think of. If you can do that, I think you are going to see a step function in the types of applications and services that we provide as an industry. If we can make that leap, you are going to see things neither one of us even envisioned.
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