Nortel exec: Costs, technology holding back Net

Bandwidth on the Internet is increasing by leaps and bounds, but is still constrained by technological bottlenecks and high access charges, according to a Nortel Networks executive speaking here late last week.

"If I had been talking a couple of months ago, I would be talking about the potential for optical Internet to put 32 colours down a single fibre," said Lloyd Carney, Nortel Networks' president of enterprise data solutions. "Today I can talk about 160 colours down a single strand of fibre at 10Gbits each. Each colour in a strand of fibre-optic cable acts as a channel which can hold a separate stream of data.

"That is 1.6Tbits (1 trillion bits), or more bandwidth than AT&T needs for the whole United States," he said. Carney was speaking at Japan's sixth Network+Interop99 held here recently.

The speed of the Internet now exceeds the speed of most LANs (local area networks), Carney said. Consequently, the bottlenecks that constrain Internet access speed are most often found where the LAN meets the Internet.

Nortel's solution is to cut out the ATM (Asynchronous Transfer Mode) data packet transferring technology and the SONET (Synchronous Optical Network) transmission standard layers which slow down LAN-to-Internet connections, according to Carney. Through a platform called OPTesra LH, data can be aggregated directly into the backbone of the Internet, he added.

Carney also said high costs are still constraining the Internet's potential in many parts of the world. He specifically pointed to local dominant telecomms carrier Nippon Telegraph & Telephone's (NTT's) control over the "last mile" of Internet connections in Japan as a major inhibitor of online activity here.

Japan's Internet subscription rate languishes behind much of the rest of the industrialised world. At the end of 1998, just 11 per cent of Japanese were hooked up to the Internet, or 13.8 million people out of a national population of 127 million, according to market research company IDC Japan. The figures for Japan compare to around 35 per cent Net penetration in the US and 70 to 80 per cent in Scandinavian countries.

"Demand for network service is elastic. Wherever you go in the world, you see that lower costs lead to more demand," Carney said.

Aggressive telecommunications carriers and ISPs (Internet service providers) in the US have been responsible for the low rates consumers pay for online access, according to Carney.

Carney said that NTT's control of the cables that connect networks to homes, however, is keeping Internet access and telecommunications prices in Japan too high.

"The people who really drove (the price fall in the US) are the 'attack carriers', the people who show up and then totally change the cost paradigm. Crosswave Communications is an attack carrier. They are charging one half of what NTT is charging," Carney said.

Crosswave Communications is an network service provider established as a joint venture between Toyota Motor Corp and Sony. The company began providing network services to customers in late April.

Carney also identified cellular telephony as a means to lower Internet costs in Japan. Cellular devices, especially 3G (third-generation) cellular technology which promises transmission rates of up to 2Mbit/sec, could bypass NTT's cables on the ground.

"People like NTT who for so long have held attack carriers hostage, are worried about third-generation wireless technology," Carney said. "If 3G cellular technology is deployed, then the NTT monopoly will be broken."

Overall, though, he was optimistic about the future of Internet business in Japan.

"This is the best time to be in networks. The networks that will be deployed in the next year will be nothing like networks were even two years ago," Carney said.

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