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Internet Giants Prepare for WorldCom 'Storm'
swight1701 writes: "MSNBC has an article about how E-bay and others are enacting contingency plans in case WorldCom goes under and no one steps in to run UUNet right away. Also talks extensively about how this is happening already in Europe with KPNQwest, who is telling their customers, 'During this week you can already expect outages to happen that we cannot solve any more. At the end of this week we expect that larger parts of the network will be down.' Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?"
I can't think of a better example why every business needs redundant networks than this.
Rule #1 -- Politics always trumps technology.
Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?
So, I provide a service - demand for that service is increasing daily ...
Looks like I'll go bankrupt then!
Go figure
It seems to me the internet is fairly resistant. If it wasn't in the news I would not know about KPNQwests problems, I have yet to see problems with my traffic. Not to say those do not exist, but I don't think they are too big.
The other network providers have enough capacity to take the additional traffic, since they all built huge lines (and thus have financial issues) and are operating nowhere near 100%.
Ash nazg durbatulûk, ash nazg gimbatul
ash nazg thrakatulûk, agh burzum-ishi krimpatul.
"Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?"
Wow, didn't realize my desire for a faster internet connection threw Woldcom in the crapper! Damn my need for lower pings! Here and I thought it was a socially irresponsible management and a poor decision to use "Creative Accounting" choices to make the immediate stockholders happy.
They have themselves to blame for a lot of this, considering the amount of advertising the telecom giants have been doing to get people to hop on the cable/DSL/whatever band(width)wagon. So you have all the costs incurred with the advertising, the support structure, etc. and considering some of the price wars they have been having, it's not overly surprising that when one of the big ones should declare bankruptcy (okay, they haven't done that yet, but it's damn near a certainty come Monday), everybody else starts getting nervous...
Take a look at various telecom stocks and see if you don't see a lot of lack of trust in those stocks....
Kierthos
Mr. Hu is not a ninja.
We have a T1 from Qwest at work, and they are also being investigated. My agent at bandwidth.com keeps sending me unsolicited reassuring emails, but that makes me more nervous than anything else.
Any Qwest insiders care to comment as AC?
I've had enough abrasive sigs. Kittens are cute and fuzzy.
Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?
Sure they can. They didn't go bankrupt because they experienced strong demand for a product in short supply. All of them built up huge capacities of connectivity, literally burying billions of dollars in the ground with huge fibre networks noone wants to use now. They probably thought the dotcom boom would go on forever. No doubt some day people will request and pay for all that dark fibre, but until then they will be broke.
Same for new mobile phone standards like UMTS in Germany: The telcos shelled out billions of EUR for UMTS licenses of doubtful value, now there is no product, no demand and soon several telcos fewer.
Telecom companies don't fund installation broadband capacity, telecom investors do. Apparently, cheap bandwidth costs more that we consumers have been paying. We all owe a big "thanks" to the investors getting hammered (hey, that inclueds me) for throwing money into the hat and then walking away from ivestment empty handed, so that the public can keep getting unlimited spam for free ...
At one time AOL access was via UUNET POPs. AOL didn't actually have a network itself. Is this still the case, or did AOL actually build a network and/or diversify carriers?
The problem is the myth of cheap bandwidth. Although _local_ bandwidth is getting increasingly fast, the nonlocal bandwidth to support that just isn't there - it costs a lot of money to manage interstate lines.
Internet access is great, but it's not worth more than cable. When your internet bills outweigh your cable bills, you start losing customers. Therefore, companies that try to provide access for everyone find they have to have a very low price to have any volume. The large carriers, then, aren't getting a lot of money out of the deal either - they didn't think about how little money there would be in the game. They have to sell the bandwidth or else their investment is totally lost. However, so many people made these large bandwidth infrastructure purchases that there is a lot of competition, therefore the prices have to be low (and they have to be low to enable enough users on the system). Thus, the telecom providers are stuck in a situation where it is hardly able to pay its bills.
Anyway, this is mostly a guess, but I'd bet that it's pretty close to the truth.
Engineering and the Ultimate
The question is: Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?
Most certainly, if executives can be satisfied with a couple of hundred tousand dollars a year each instead of tens and hundreds of millions of dollars a year each, and if stock holders can be satisfied with modest but steady returns on their investment. Greed ends up killing all it touches.
At the end of swight1701's post, they state "Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?". This is incorrect. WorldCom is not going under because of the decreasing price of bandwidth. WorldCom is going under because of bad management.
Take Sprint for example, they also carry a large percentage of Internet traffic and yes, they posted a loss. But not from the "large pipe" business, from the long distance business! This is also what hit Worldcom. All companies that are relying on long distance billing to be their bread-and-butter are going to be taking a hit. In WorldCom's case, they use some "creative accounting" to avoid this impact.
The only exception to this may be Qwest. Which in my mind is a simple case of too much dark capacity (over construction).
According to a friend of mine, about 40% of the internet traffic in Austraria goes through WorldCom's subsidiary ISP. All the small service companies that work for ISP want cash up front before work begins because the credit is no good anymore. Of course the WorldCom's money is in limbo now so they can't cut a check out to them. As a result routine maintenance or repair work doesn't get done. The infrastructure situation is a complete fubar over there because of the WorldCom mess.
Opps. I spelled Australia wrong. I guess that's what happens when you pull an all nighter and brain is low on caffein.
worldcom isn't going to turn off the lights... if/when they file for chapter 11 bankrupsy protection, it reduces their debt, and they will probably do another layoff, or sell chunks of the company. chances are worldcom will survive, abit their reputation will be extreemly tainted.
the internet is NOT going to be turned off...
All things being equal, if there is a demand, someone will meet the supply. That is simple economics. There is no mystery about it and high demand and low supply usually mean higher prices.
As for businesses being affected by one company's problem -- if you don't have redundancy for every critical piece of your business model, then you deserve to go bankrupt. Don't think you can afford that extra T1 from another Telco? Bet you don't think that after being down for 2 weeks straight cutting your revenue stream in the process.
It really isn't rocket science. If your downtime costs you more than redundancy, the choice should be clear.
.... alternative communication technology like.... carrier pigeons and smoke signals - they are wireless so they MUST be good....
if you invest now you get FREE management monkeys and emu auditors
- HeXa
The big investments in infrastructure (roads, bridges, cross channel tunnels, whatever) never pay back fast enough for the original owners to survive.
So they go bust, the banks sell off the assets minus debts to new operators, who do fine (after all, an operating profit was available, just not enough to service the debt).
The bill is picked up by the banks, private investors and/or government, depending on your local system.
The typical exit strategy for a bankruptcy like this, chapter 11, is a debt for equity swap.
Where the bond holders and banks become the new stockholders.
And existing stockholders get the short end of the stick !!
The only questions which remain are.....
Will the emerging DEBT FREE comm giant, OUT COMPETE, the remaining DEBT LADEN survivors?
Trigging a cascade of bankruptcies? AT&T, Sprint, etc. who is next?
Will the same thing happen to airline industry?
Kinda like musical chairs, the first company to bankruptcy court wins?
Vanity of vanities, all is vanity... (Solomon)
Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
1) High demand for your product.
2)
3) Go bankrupt!
"However beautiful the strategy, you should occasionally look at the results" - Winston Churchill
WorldCom was principally responsibly for the myth that Internet demand was doubling every 100 days when in fact it was doubling every 12 months, from the period 1998-2001.
Capacity, OTOH, doubled about every 100 days thanks to lots of new cable, and much more efficient use of existing cable (up to 100 times gain).
As a result, there is massive overcapacity. The result? Lowering prices at a time of incredible debt thanks to stupid 'investments' in things like 3G.
When companies like WorldCom go bust, the capacity stays in place. Without the burden of servicing their debt (cause they generally go into chapter 11 or somesuch), the 'bankrupt' capacity gets sold at new low prices, forcing the rest of the market down, and so on and on.
Conclusion a: we can expect a new era of really low prices, as the survivors of this period (probably the Baby Bells in the US, and the old monopoly telcos in Europe) get control of huge amounts of cheap capacity. I predict this will fuel the next boom.
Conclusion b: whatever the next boom is, do not expect it to come from the telcos. They have failed to predict a single one of the successes (demand for fixed net links, text messaging, etc.) of the past. I predict the next boom will be based on commercialised P2P with links to portable phones for roaming control. E.g. I can rent a game or movie or TV programme during the day, pay with my mobile phone, then my PC will download the stuff through P2P.
Conclusion c: this is going to be the biggest test of the Internet's strength in tough times. Many of our customers host their e-commerce apps at UUnet. What happens next week if UUnet shuts down? How fast can we get their servers onto another ISP? All interesting questions that will set the tone for the architectures of tomorrow.
My blog
'Welcome to WorldCom - the pre-eminent global communications company for the digital generation.'
sign me up.
"Can telecommunications giants realistically keep up with the public's need for ever- growing bandwidth without going bankrupt?"
I love that question from an economics standpoint. How can over-demand for a product cause a company to go bankrupt? You don't think we're over regulating the telecom industry or anything, huh?
Actually all the major telcom companies have been engaged in massive purchase financing, effectively buying customers. The customers go bankrupt leaving the supplier/lender in the lurch.
"Obtuse Anger is that which is greater than Right Anger" - Lewis Carroll
No doubt some day people will request and pay for all that dark fibre, but until then they will be broke.
*sniffs* 1999 *sniffs*
Seriously, do your really think the demand is there for the available capacity? In five years? Ten?
What applications will drive this demand? What providers are ensuring sufficient access to make all of this capacity worthwhile?
When we signed up for a T1, Worldcom/UUnet was also pitching all kinds of value-added services (managed VPN, website hosting, etc.) I'm generally paranoid about outsourcing, especially outsourced telecomm. services. As a result, we bought only raw bandwidth from them, just in case we had to switch carriers again. At the time, I was concerned about UUnet's attitude toward spam and the possibility of a massive blacklisting operation against them -- as you see against the Chinese ISPs today.
Well, here we are. I feel stupid about choosing Worldcom, but I feel like a genius when I kept the corporate website and corporate VPN "in house".
At this point, why would anyone buy "value-added" services from their ISP? For a long time, Worldcom/UUnet was really hyping this stuff, as if VPNs and website hosting was some kind of rocket science that only a big ISP can do properly. They have single-handedly destroyed the entire "ISP value added" service industry. Who would be crazy enough to depend on ISP-managed services now?
The way my company avoids bankruptcy is simple - we have a proper business model, one based one making a profit on everything we do, rather than burying ourselves under a mountain of debt in the hope that one day we might escape by having a IPO or writing off debt as equity, or fiddling the books, or anything else. Just price your goods/services to make a profit and the rest should work.
Repeat after me - *have* *a* *business* *model*
... and panic.
FCC regulations (authorized by the Communications Act of 1934) require that company provide 60 days notice before terminating telecommunications services. This has been interpreted more recently to mean notice before cutting off voice or data services, and means that even in the case of a chapter 7 bankruptcy, the bankruptcy trustee isn't allowed to just sell all of the assets and leave customers hanging high and dry.
Furthermore, in WorldCon^Hm's case, they will almost certainly be filing for a chapter 11, which means they are trying to reorganize debts, and not shutdown the business. In a chapter 11, the advantage is that Worldcom will paradoxically be more able to get financing after they file for bankruptcy, since lenders know that they won't be screwed by past debts.
(Bankruptcy essentially creates a two legal companies from the perspective of debt --- before the bankruptcy and after the bankruptcy. It means that equity shareholders will be completely screwed, and that debt holders will be partially screwed, but hopefully the company will emerge from bankruptcy able to pay its bills. That means that creditors that lend a company money after the bankruptcy have more of a chance to get paid --- which means that suppliers will more likely be willing to give WorldCom credit, and banks will be more likely to give WorldCom short-term loans, etc.)
Personally, I think they're hollering Fire! FIRE!! when there's only a whiff of smoke in the air. After all, the internet was DESIGNED to withstand having large chunks of it taken out (it was originally a DARPA project to build a resilient computer network that would survive a nuclear war), and while there's not nearly so much unused capacity as a year ago, there's still excess capacity. If UUNET were to go dark, it would be similar to yet another bad Microsoft virus (CodeRed, SirCam, Klez) clogging the net -- a slowdown, and some systems offline, but in a few days most things would be fully functional again. Either someone else would buy UUNET and fill the need, or some other company (Level 3?) would eagerly pick up the load.
See, you cant run a business if you're pretending everything is a-okay. If you're losing money and covering it up then you cant properly set prices.
IT'S A FEEDBACK PROBLEM.
Part of the solution is to stop spending millions on excutive salary. But even more of the solution lies in mking sure that you sell the bandwidth for an appropriate price so you can pay the bills.
So you know who to blame when you can't get to slashdot anymore...
The Right Reverend K. Reid Wightman,
What applications will drive this demand? What providers are ensuring sufficient access to make all of this capacity worthwhile?
.NET anyone?
But seriously, The demand would be there if three criteria were met: Pricing, Vision and Diversity. If companies were to expand to multiple locations with minimal obstacles, this would fill the need for a large telecommunications market.
Common taxation and corporate laws throughout the states would allow ALL businesses to expand (Read: Allow, not ensure) and the IT sector would be sitting there ready to wire it all up!
You think that I'm crazy, you should see this guy!
I'm sure this is obvious if you think about it -- Worldcom fell apart because of a crisis of investor confidence, not bankruptcy.
I just signed up on ebay to sell a couple of things. I had no idea the difficulty they gave me just to sign up! They charge fees wherever little bit they can, and you can DAMN WELL expect that they will start charging our ISP's more, so we will get hit. Then again, worldcomm never would hire me... sure did fire a lot of my real life friends with that 800 person layoff. Boy, has that made my job search easier. =(
Our business uses the UUNET lines for settling offline retailers to our host (Tandem System). If MCI Worldcom would pull the plug on UUNET, not only would Internet Access be cut off, but businesses like ours would have to scramble to find ways for our customers to connect. We are working on this just in case, but it is complicated by the fact that we deal with many retailer chains in different states.
We will survive the collapse if it occurs -- but it will be a royal pain in the ass.
Beware of Sleestak
If the execs didn't didn't snarf every dollar as soon as it came in, and instead took $.99 of each buck and paid
guys like us to actually do the work, then they would have a viable business, we'd be swimming in Negroponte-style
bandwidth and eventually, management would still be making a considerable pile of cash.
But no. They had to immediatly run off with all of the working capital and even that wasn't enough.
Once they got a taste of $10Mil a year, they wanted to see what $100Mil felt like. Life begins at half a billion.
Filtered down from the top, the exec VP's want a proportional cut, the junior VP's, and so on.
Now there's no money to run and grow the network. Engineers, wire pullers, suppliers, all the way down the line,
are out of a job so there's nobody with enough cash to buy services. Thus the perception of over-capacity.
Oh well, instead of making a living wage, we C programmers and network engineers can be grounds keepers
and security for the elite for eight bucks an hour. The elite, including our government, think that things worked out quite well.
Thanks dubya, good job. There is hope however. Many of us will be able to enlist in the national guard so we can
police the homeless tent cities that will be springing up next year when the banks start failing. Good work if you can
get past the brutality you'll be showing to your fellow "citizens".
Seriously, do your really think the demand is there for the available capacity? In five years? Ten?
Someday there hopefully will be... more people on the Internet, some new applications (but see below)... apparently the demand for bandwidth is still growing, but by far not as fast as anticipated.
What applications will drive this demand?
That is the question of questions. I think there has been no really compelling reason to get broadband Internet access apart from stuff a lot of people do not want to be there (at least not officially), like P2P, downloading warez and pron etc. or getting your daily Linux distro, which is also something most people don't give a damn about. I know a lot of people who could get affordable broadband Internet access (ADSL has become quite attractive in Germany in the last 1-2 years) but just stay with their old ISDN or even analogue lines because they don't know what to do with the bandwidth. The same problem with the new mobile standards like UMTS: Noone really has a useful idea what to offer via the additional bandwidth people really will want to use and pay good money for.
So everyone is waiting for the saviour: A new, compelling and veeery bandwidth-hungry killer app.
In the article, they mention another 28% layoff coming. I've managed to survive 4 of these now - how much longer can I last? Has anyone seen more concrete information on this layoff?
"He who would learn astronomy, and other recondite arts, let him go elsewhere. " -- John Calvin, commenting on Genesis 1
What an amazing way to promote sales. My hat's off to the spin doctor who came up with this one. :)
Patrick
p.s. Gotta love that 'Act of God' mention in the article too. "It wasn't due to any human error -- it was all a supernatural manifestation!!"
So the company goes under because of what it does, and we get punished because we *gasp* use a service.
Love how this all works...
SecondPageMedia - Wha
Worldcom isn't going bankrupt because it was trying to keep up with the demand from users. It's going bankrupt because it was poorly managed, just like ENRON. They used edceptive accounting to hide the fact that they were losing a lot of money.
if(!cool) exit(-1);
Our co-location provider, AboveNet was bought by MetroMedia and then when Chapter 11. The sales office stoped responding to calls, we never received any communication from MetroMedia of what would happen to our service. To protect ourselves, we had to build a mirror of all of our critical services with another ISP. We plan to leave AboveNet as soon as our contract runs out. Their service sucked even before they went under. Bad service and attitudes top to bottom. I cant count how many times their network went offline. Between our two mirror sites, we are now able to survive shutdown of either datacenter with no impact on users.
It's time, I think, that radially managed services (like DNS) should be replaced with more P2P-like services where everyone talks to their network neighbors and where there is no "root" server nor critical list of top-tier servers.
Every node should be capable of participating in the same ways; searching, routing, serving...
Okay, so it may not be as "set in stone" as the URLs we've grown used to... but does anyone reading this remember when URLs didn't appear in SuperBowl ads? It wasn't so bad, y'know.
-Rick
The New Economy was all hot air. Their is no demand.
just to stop a little file trading. Don't pop the cork just yet though Hilary, Dey'll be bok!
Creative accounting merely hides losses by basically listing a bunch of income that isn't really there. The actual money loss comes from somewhere else, such as selling bandwidth for too cheap.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
The fraud was to hide financial problems -- they hid losses and overstated profits to make it look like they were making money when they were actually losing it. So this can't be the cause of their problems; it merely hid them so everyone else didn't think they had problems (thus inflating their stock price). If they had been more carefully accounted, they'd still be losing money, we just would've known about it as it was happening, instead of finding out years later.
As for whether they've been losing money because of over-regulation or because of some other reason, I don't know.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Act of God!? It's Act of Management.
I certainly hope that some of the affected companies go directly to the WorldCom managers and their accountants to recoup their loss. Hold them personally accountable and maybe other execs will start running companies for long-term results.
The only thing better would be if those of us who lost jobs, retirement, 401k and/or stock options would get to redistribute the money the execs stole from the company amongst themselves!
"Glory is fleeting, but obscurity is forever." --Napoleon Bonaparte
Like all the other telecomm companies - they were laying fiber which they expected to light in a few years, but still a large percentage of it is dark, and will not be lit anytime soon. Why? Because they all thought that demand for bandwidth would be increasing so fast that noone could keep up, but the rapid increase in demand never came. Sure, the p2p explosion created a small bump, but most of the serious p2p traffic was already there, just using different applications, like IRC. I wouldn't expect great financial things from anyone in the telecomm industry, unless they held thier breath while everyone else was gambling on laying fiber.
Spring is here. Don't believe me, look outside!
But the one of the original poster just does not compute. Price your bandwidth suitably. What problem is there? If there's a problem, then those people shouldn't have been allowed to run a company in the first place?
My girlfriend is a senior analyst at WCOM...(I'll wait for the peals of derisive laughter to die down, and then continue...)
She sez: Overproduction of data infrastructure (fibre, etc.) may be. It's arguable whether forecasts during the dotcom explosion warranted the type of capital spending WCOM engaged in or not. NEVERTHELESS, this overcapacity has NOTHING to do with WCOM's current situation. The current situation is purely a credit crisis.
WCOM may go bankrupt NOT because of inability to make money...but because its creditors are calling in their debt ($2.65B of it) all at once. That is all there is to it. And they're doing in response to an accounting fraud.
The fraud was simply the misbooking of expenses as capital. Period. WCOM did not have a cash flow problem before, they don't have one now. The fraud was NOT perpetuated to make the company more money...this has never been an issue. It was simply an effort to keep stock price artificially ballooned---AND, what's most infuriating to WCOMers, is that IT FAILED to achieve its intended devious purpose. Stock price tanked anyway, along with the whole tech sector. It was a crime that never paid at any point.
Why did worldcom go down? Because of bad management and siphoning off money and cooking the book. They need to go to jail for a very long time.
WHO will bail worldcom (and the others out)?
As the SMUDGEreport.com says.... Harmless nut John Walker Lindh in jail for 20 years, Enron (and worldcom) execs who collapsed US economy walking around free.
Worldcom and KPNQwest. That's a big load of fiber. Who's going to own it? Gimme E, gimme C, gimme H, gimme E, ...
If "demand" is the amount of money people are willing to pay per bit, then demand is increasing at an amazing pace.
.sig
But if "demand" is the total amount of money that people are willing to spend on internet access,
then demand is only increasing moderately.
Consider dialup vs. ADSL.
Dialup is about $20 a month. ADSL is about $45.
Last year, some people switched from Dialup to ADSL. But most did not.
And if you look at the ones that did switch, you find that most of them had a second phone line,
(about $15 a month) which they terminated when they got ADSL.
IOW, the demand in terms of money spent increased less than 20%.
My prediction for the future is that demand will continue to be inflexible,
(i.e. people aren't going to pay more than $20-$30 a month for connectivity)
and the cost of supply will continue to decrease at about the same rate it does now.
End result: every year, the total dollars spent will be approximately the same, but the amount of bandwidth we get for those dollars will increase. A larger percentage of the internet will be carried by a smaller number of providers. Worldcom is just the first in a long series of companies that will go under as the market shifts to more and more efficient providers.
-- this is not a
e.g. the $400M loan to WorldCom's outgoing leader would have never been doable if the true state of the books had been known.
IBM is an example of a company that managed such a turnaround.
The lies and deception did more than just cover up a problem, they justified even more bad decisions and then cratered the public's faith in the company and it's leadership such that the company is now doomed to oblivion.
Free Software: Like love, it grows best when given away.
Reuters: "WorldCom is expected to file for bankruptcy on Sunday after a $3.85 billion accounting debacle forced it into the nation's largest insolvency, the sources said. It would eclipse the Chapter 11 filing by collapsed energy trader Enron Corp. as the largest bankruptcy in U.S. history."
Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?
That depends.. can profitable telecommunications companies (MCI) resist being acquired by bullshit corporations (Worldcom) who just want to leech money and discard them like last night's whore?
Will Freenet be affected by Worldcom going under, or will Freenet's intelligent routing/caching be able to compensate for such a large failure?
KPNQuest is old news.
There's a strong motivation to spread a blanket of FUD so we all heave a great sigh of relief when Microsoft plays "white knight" and buys UUNET.
I may be off on some wacko train of thought, but here is my economics lession for today for slashdot.
1. Capacity doubles every 100 days
2. Demand doubles every 356 days (estimate based on msnbc quote a couple nights ago)
3. "Customer" cost stays the same, helping to keep demand growing at a pace well below capacity growth. (Have you priced T1's recently? In my area, they are $1500/month)
Supply = way up
Demand = about the same
You do the math. An "supplier implosion point" is bound to be reached following that supply/demand/price curve.
-Pete
Soccer Goal Plans
If the underlying network is controlled by a handful of large corporations, and they can't keep up with the bandwidth demands without losing money, what's the alternative? They can charge more as the requirements increase, but that will effect the consumer side of it in the end. Corporations and companies that use large amounts of bandwidth will have to pay more, and those costs will have to be passed on down the line, until Joe User is paying through the nose. Not to mention the effects on home users who could see their subscription prices skyrocket as the costs are passed on to them to connect.
/. falls under that category) will complain and demand their cheap, uncapped access.
There's only so much the consumer will bear before either switching methods (back to dial-up, less usage) or switching off. Problem is the power users out there (and I think most of
So, if large corporations are vulnerable to bankruptcy and the network suffers because of this, there are only two options that I can see to provide a more stable situation. The first is government control of the networks. I know there's a collective cringe when that's suggested, but as the Internet grows, so does the need for support. Roads, public transit, electricity, hydro, sewage, etc, are all subsidised or controlled by government agencies and paid for through taxes. So does an Internet tax get added to all connections? There's a gas tax and a car tax that goes towards road maintenance after all. I know this is practically taboo to talk about, but in the end, the upkeep of the Internet's infrastructure is an enormous cost that has to be covered to maintain a quality of service.
The other option is of course the polar opposite to government control - community networks. Be it shared broadband, wireless networks, or some other situation, this too would be viable except for a small problem or two. I know how to set up a wireless access point, you know how to, and if we don't, we know where to find the HOW-TO and how to read it. We're the minority though. My 83 year-old neighbour who loves his computer and is always breaking it for the "upgrades" he tries to install would have no idea how get a wireless NIC installed let alone set up access to the neighbourhood. Are there enough geeks out there to make this viable in large urban centres? Outside of small pockets, I doubt it. On top of this there's no control over the points beyond the individual who has been gracious enough to permit access. If I decide to move and take my antenna with me, anyone who relies on that access is now without, and I don't care because I'm not about to leave a few hundred dollars worth of equipment lying around and then reinvest to set up again somewhere else. Add to this the fact that not everyone is gracious with access and there are a large number of leeches and script-kiddies out there who would abuse this sort of system, throwing the user-provider balance way out of whack. It's a nice thought, but still years, if not decades, away from being feasible.
It comes down to money in the end. Why should a corporation set up a redundant network in case another company goes kaput? Why should a company increase its capacity beyond what is absolutely necessary? This all costs far more than they're willing to spend, and they sure as hell aren't going to do it for the good of the public. In the end, SOMEBODY has to control and maintain the backbones and connections that we all take for granted.
- In hell, treason is the work of angels.
In some countries, government would act in the interest of the people and the crooks would get punished. Watch what happens here. Yep the people will get punished - it's payback for electing Bush.
I wouldn't exactly say that high executive pay levels are the problem. Tying bonus payments to short-term share performance is a factor which makes dishonesty profitable for crooked management.
We need some honest network statistics. Slashdot readers are likely to have access to good data. Where can we get real Internet traffic stats?
Is Worldcom going bankrupt from providing bandwidth?
:)
Nope. They make lots o' money from that.
They are going bankrupt because they got greedy. As did Enron, Haliburton, and all the others to come.
Remember, the mantra for the last ten years is to maximize shareholder value. To do so, firing your workers en masse is acceptable. Buying up synergystic businesses at silly prices is okay, too, because no matter what the true value of the company is (read: earnings per share), the perception of the stock market has become the ONLY ruler to measure performance.
So, to keep stock values high, they cooked the books, constantly, and eventually were caught.
The people who ran Worldcom made themselves millionaires. They will never see a real jail. They know this, they knew this.
Alan Greenspan himself, an #1 acolyte of Ayn Rand, has finally grown up and wrote the epitaph for unbridled corporate greed:
"An infectious greed seemed to grip much of our business community" as stock prices ballooned in the late 1990s, Greenspan said. "It's not that humans have become any more greedy than in generations past. It is that the avenues to express greed had grown so enormously."
If Greenspan can see it, then the end of this madness may be at hand. Sadly, my portfolio agrees as well.
Have these companies created mighty servers and bandwidth for all this trouble? Let's just say I'v spent 10 minutes trying to search for Greenspan's speech online, and I've given up because even on a cable modem, it's too slow, especially on a beautiful sunny day with lots to do outside.
AOL made billions, and should have been a rock-solid stock based on just being rich. But they blew it on acquisitions. Why? To make themselves even richer. To boost stock prices.
Greed, stupid dumbass greed, is causing the collapse of the world economy at the moment. Greed combined with an infectious contempt for the common welfare of all people as well, for greed was GOOD for the businessmen who profited. WE are going to pay for all this mess. We are going to see higher taxes to cover the shortfalls, to pay for the interest on all that lovely new debt incurred by tax cuts for rich people. Our standard of living is going to plumment for the benefit of a couple million rich connected people, one of whom was crowned President by his dad's judges.
Time to get a commune and set up to ride this era out. Peace out, baby
Congratulations to the CPO's (Chief Plundering Officers) of America. The terrorists now kneel and worship pictures of you that they proudly display on the walls of their caves.
A very interesting read to augment your argument is a book by Thomas Frank called "One Market Under God". It works hard to undermine and expose the myth of the free markets, and how we have been used as consumers and fed lies as to how the markets are the great liberator. As such, what does it matter how all of our jobs have been shipped overseas when we have the gift of the markets.
I watched Thatcher state that on a PBS documentry about Thatcher/Reagan and the great market liberation of the modern world.
I picked up this book right afterwards.
Remeber VA Linux anyone?
Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?
Basic economics will tell you that this is not true. If the public had a need for growing bandwidth, the public would find a way to pay for it. I think part of the problem is that there isn't a need for growing bandwidth, which means that those companies that are financially structured such that they need growth are basically screwed.
Think about it, how does a little company like Worldcom buy a giant like MCI? By borrowing a shitload of money, that's how. How does get a loan that big? By borrowing against future revenues. Revenue which needs to be much larger than current revenue. Personally, I was amazed that Worldcom was able to buy MCI. I was amazed the regulators, bankers, etc. allowed it to happen.
I think Worldcom was doomed from the minute they bought MCI. It was a stupid deal which never should have been allowed to happen. The accounting frauds were only delaying the inevitable. The debt load on the combined Worldcom-MCI was so high that only in a perfect world where nothing went wrong and every financial projection was met would the company have survived. Meanwhile, in the real world where economic downturns happen, debt-laden companies like Worldcom are going to go down the tubes. Qwest will probably go down too for the same reasons, and I wouldn't be suprised to see AOL-TimeWarner go also. A lot of the big mergers and buyouts we saw in the last five years resulted in fragile, debt-laden corporations which aren't likely to last.
the problem is address space.
/21 of usable address space. (Yes folks thats 2048 addresses), you are forced to get your address space from an upstream provider.
/21 (2048 addresses) to get a /20 (4096 addressess).
/21.
/22 /23 /21, and hopefully get a /20. It helps if you show that you are growing.
/22 but i'm opening another withing 6 months /23 but i'm opening another withing 6 months
/23 or you may get filtered by other ISPs.
. html
If you have a web site that has less than a
The rules on arin: http://www.arin.net/policy/ipv4.html#multihomed
say that you need to show that you have used the equivalent of a
With these 4096 addresses you can then have "portable addresses".
This means that you do not need to get your address space from an upstream provider.
So lets imagine these scenarios:
1: Single homed (1 connection) company.
Potential problems:
If upstream goes out of business, then you have nowhere to route to.
To migrate you have to get a BRAND new set of IPs for your company.
You better hope that your DNS TTL is low, and that all the places out there that cache it honor it and dont set it to something astronomically high. (this does occur).
2: Multi homed (N connection (n>1) company. (running BGP).
Potential Problems:
If upstream goes out of business, then you are still routing the address space of your out of business provider out your alternate provider. (good).
You are now at arin's mercy depending on what they do with the upstreams IP space. You can bet that they will not give you a small chunk to stay as who you are.
Other large providers may get crazy ideas and start filtering. Ie: Worldcom has not paid me so I filter their netblock as protest. (see PSI).
The best help in this scenario is your own problem, the small IP range you have. Since you have a small range, you then have a "more specific" route to your network. That will override most things as null routes etc. (it will not override ACLs though).
Pretty much this scenario will keep you on the net for longer, but, should the ISP you have your space from go down and stay down, you will need to migrate address space, dns ttl etc.
3: Multi homed (N connection (n>1) company at multiple datacenters.
Potential problems:
Hopefully you have different providers at each datacenter, or at least the address space is given to you by different providers.
In this case, the worst you lose is 1 datacenter. hopefully your site can maintain full traffic out of the remainder of your datacenters.
The biggest problem here is again DNS, but if you are doing multiple datacenters, you can probably remove 1 out of the picture realyl quick.
--- This does not end the list of possible scenarios, there are many others you can do. (for example: you could have address space from 2 carriers at the same datacenter, and multihome/map addresses from each carrier onto them. ) etc.
Now as to the likelyhood, when Exodus went bankrupt for a few months last year, they did not lose all their advertisments, and for the most part they did stay up. I'd guess this would be the same thing as uunet.
Also UUnet has much more traffic than exodus. that hopefully means that most ISPs will not kill their peering with uunet.
That being said, if the rats leave the ship called uunet, uunets peering will fall to low levels, and then ISPs will be able to contractually cancel with uunet. Possible, but not likely.
Now, if you wanted to have multiple carriers, and be truly independent of any of them going away, you have to show effective usage of a
The good part of this is that you can split this into multiple sections:
ie: I have 2 datacenters, and each need a
ie: I have 4 datacenters, and each need a
you can seperate address space out to that, and show use of a
ie: I have 2 datacenters, and each need a
ie: I have 4 datacenters, and each need a
What you have to look out for is that you probably should not advertise anything more than a
for example take this recent nanog posting: http://www.merit.edu/mail.archives/nanog/msg01717
Too many specific routes (/24 and above) add more work to peoples bgp routers, as such limiting accepted routes helps performance of the router, and keeps things more stable.
In summary,
if you have 1 carrier, get 2.
if you do not have enough address space, be prepared to have to change it.
If you have multiple datacenters you should be good to go, but with some exposure as you have to re-ip.
if you have enough address space to be portable, you are good to go.
In some countries, government would act in the interest of the people While in other countries, as long as the people remain rich, the people can turn a blind eye to the government, and the government a blind eye to the people. Once the institutions that cause the wealth to be created begin to crumble, the public can do nothing but stare and the government still keep the blind eye turned, since in the end, they have all the money.
SecondPageMedia - Wha
"Can telecommunications giants realistically keep up with the public's need for ever-growing bandwidth without going bankrupt?"
They could if the stockholders and the board would get it through their heads that telling executives to raise the stock price as fast as possible is a bad idea. Companies need to make money to survive, and this is why companies like Verizon and AT&T are doing just fine.
For your info WorldCom did not go bankrupt because their customers demanded more bandwidth. This is the stupidest economic statement I have heard in a while. They went bankrupt because of sloppy management, corrupted accounting practices, and greed. Can't wait to see which one is next?!
What is this - Worldcom exec astroturfing? So it's the consumers' fault, you suggest. Supply side economics need not apply here. By extension then, Microsoft (General Motors, etc.) must be about to go nipples-up, because everyone I know complains about their products and demands cheap uncapped access to them.
It comes down to money in the end
Now there your are correct. But it is the sociopath CPO (Chief Plundering Officers) of Americas' singled-minded persuit of personal wealth at the expense of everyone else, horrendous management practices, outright lies and unchecked greed that are to blame here. It is not the consumer's fault!
I think you make an excellent point about the "next boom" being related to bandwidth.
I've been predicting for years that lots of high-speed connectivity between people will be the "key" to any future innovation related to computers and communications devices.
I think the "pioneers" of high speed Internet suffered because they were trying to lay down the infrastructure before the "killer apps" were out there that made the general public interested in buying.
I'm not saying this killed Worldcom. Obviously, they died due to fraudulent accounting practices and poor planning.
In general though, the demand for high speed Internet for the consumer is primarily fueled by things they can't really promote. (Porn video streams, software piracy, and music/video piracy.) People using the net mainly to read/write email and do some research or shopping on the web don't feel compelled to spend $50 a month for DSL or a cable modem, as a rule. These activities were created around the 56K (and slower) modem connection - and "high bandwidth versions" of these services generally mean "pointless additional graphics and sounds that make it harder to get to what you need".
The next generation of people picking up the pieces from the dead/dying pioneer companies have a real shot at getting the bandwidth out there to the masses. If/when they start doing this at prices equivalent or cheaper to using analog phone lines w/modems - people will switch "just because you get more for the same money". Only then will creative uses for all the bandwidth really start popping up.
PENSACOLA, Fla. (AP) -- Computer giant Gateway has been hit with a $3.6 million jury verdict for a wrong number that flooded another company's toll-free telephone line with calls from thousands of angry Gateway customers. The number belongs to Mo' Money, a Pensacola business that manufactures and distributes promotional items with company logos, including T-shirts, caps, gym bags and jackets. A federal jury awarded the damages to Mo' Money on Wednesday.
The url to the complete story is:
The part about the "thousands of angry customers" got my attention. What, given a perfectly good Gateway machine with Windows XP, and they can't get it to do what they want?
It's always the same in the pc vs public world.
(as usual, you'll have to fix the url to remove the space between the "w" and "a" in "gateway". IMHO this is a bug in the
Yes, the solutions are called honesty and integrity. Too bad this seems to be an alien idea these days in corporate America...
Any sufficiently advanced influence is indistinguishable from control.
Get out your modems, and install uucp on your boxes! I have a feeling that the collapse of the Internet backbones is going to be a wonderful thing.
less bandwidth means:
-less spam
-web designers won't use flash anymore
-companies will realize that the Internet is NOT a good place to do marketing
If tits were wings it'd be flying around.
.. which is a big hosting farm. We have all our servers [30+] hosted there. If Worldcom goes under, Digex might also, which would really suck.
I think it would be easier trying to buy our own servers on eBay than transitioning to another hosting vendor.
Live web cams
Easy buckaroo Sprint is not part of Worldcom. There not going chapter 11.
Why not gang a whole bunch of people together and just get a block from ARIN? Sure, we have to pay a fee every year, but at least we'll be in control of the block.
On a different note, does anyone know why we have to kowtow to ARIN? It hardly seems any more benevolent than the ICANN folks...
you might want to take a look at Keven Maney's recent columne y/2002-0 7-10-maney.htm
http://www.usatoday.com/money/columns/man
He details the relationships among Warren Buffett, Bill Gates, Level3's Crowe, and WorldCom's Sidgemore and Ebbers. He's a little off the track, but I think that he's got the right players. My take is that they've taken a page from the Enron playbook. They will bankrupt WorldCom and let Level3 buy the UUNET backbone. This will allow Level3 to function as a front for the RBOC's without the burden of FCC regulations, giving the Baby Bells access to the backbone at favorable rates and at the same time eliminating WorldCom from competition in the LD telephony market. This will also allow Level3 to function for the RBOC's the way that gas pipeline company functioned for Enron in Califorinia, allowing it to squeeze out competition while the RBOC's sit back and adjust their halos. Independants will be put out of business; but what is worse, the flow of information will also be controlled.
Ok. now all of you can accuse me of being a conspiracy nut. But remember, you heard it here first
Nice article!
Why is Worldcom in this mess? Because they have been encouraged to please their shareholders at the cost of their core business vision.
Who's watch did this happen under? Can you say "Are you better off now than you were 8 years ago"?
Who's going to clean it up? Probably not anyone in power right now. The Democrats are too busy looking for campaign mud to sling to actually do their job. The Republicans are too busy fending off the Democrats, attempting to fight a war, and watching out for their business buddies to do anything about it.
Ain't gonna get better soon....if Shakespeare had been born later he might have said "First thing we do, let's kill all the politicians".
dU
Trust me. This is an inactive account. Regardless of what the
(* Alan Greenspan himself, an #1 acolyte of Ayn Rand, has finally grown up and wrote the epitaph for unbridled corporate greed [msnbc.com]: "An infectious greed seemed to grip much of our business community" as stock prices ballooned in the late 1990s, Greenspan said. "It's not that humans have become any more greedy than in generations past. It is that the avenues to express greed had grown so enormously." *)
Perhaps it may be time to think about dumping the accounting steps. You judge a company simply by their dividends and product popularity. That way they don't have to provide statements about what is going on *internally* and have a bunch of complicated reporting rules which most investors can't make heads or tails of anyhow.
Table-ized A.I.
European telcos were hit by this, partly because they'd gotten away with charging huge amounts of money for small connections for years, and all of a sudden they could be out-competed, but they had another serious problem: They'd believed all the market hype about wireless and spent billions of euros on auctions for government licenses to allow them to run the next-generation wireless technology, when in fact the revenue just wasn't there, so they bankrupted themselves. Unfortunately, after the first auction collected a few billions for the lucky government running it, everybody else got into the act, and the wireless companies all believed that they *had* to pay up, because otherwise they wouldn't get their piece of the pie, and besides, everybody else had mortgaged their futures so *they* presumably knew what they were doing and knew that the marketing analysts were correct. Unlike the Internet market, where dogfood-on-line.com could fail and only bother the employees, stockholders, and venture capitalists plus a few suppliers and their loyal customer base, this was a much larger amount of money (I think I read that the totals were about $35B, more than all the Silicon Valley VC money during the boom) this upfront tax on vaporware trashed a lot of companies providing critical infrastructure for the continent, and dragged down most of the European economy's productivity by taking otherwise useful money that might have funded real business activities and pouring it down the drain.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Greenspan sits atop one of the highest apexes of unelected power in the world, a tool and author of vast economic policy. He's a hard core monetarist. Whatever lip service he pays to the free market, his main job is micromanaging the money supply at the official behest of the US government.
Is this sort of meddling in the market really what a n "acolyte of Rand" would do? I don't think so.
-l
p.s., none of this has to do with whether I agree with the meddling, just taking issue with your accusation.
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This mess has been in evolution since the late seventies, and kicked into high gear in the early ninties. Demos certainly are hardly distinguiushable in their support for big business. To survive in the right-wing era, they have forgone their classic pro-little guy stance in order to obtain financing, otherwise we really would be in a one-party system. They would have been removed from office one-by-one by infinite money.
But to compare Clinton to Reagan/Bush/Bush is silly to anyone who actually reads. Clinton could be regarded as the best Republican president since Lincoln; he balanced. The RBB axis does not balance, does not even pretend to balance. They wanted the neocon agenda, which meant removing regs on relationships between auditors and the audited, removing the rights of stockholders to sue larcenous directors (rein in those evil lawyers!), removing ownership restrictions of mass media, annihilation by underfunding of environment oversight, and worst of all, installing the foxes to guard the henhouses. The nitwit in charge of the SEC, Pitt, was the chief lobbist for the accounting industry! He actually wrote a paper instructing businesses to destroy documents on a regular basis to hamper investigations! Powell of the FCC is simply going limp. The EPA is dead.
Clinton balanced the budget by making hard choices. We now have the same liars we had in the '80's in charge again, and we have been robbed us of trillions, TRILLIONS.
I don't hear the Bush asking for Social Security to be privatized again. Can you imagine the trillions that would have been funneled off into the financial sector?? We are not at war. We are blowing up rocks to make ourselves feel better, and not incidentally to get a pipeline across Afghanistan.
Only Congress can declare war.
If we wanted war against the countries that spawned Bin Laden, we would be bombing Saudi Arabia right now. The terrorists were from there. But for some reason, we're blowing up another country that had nothing to do with 9/11.
War my tired fingers. This is an Orwellian power grab. We are at war, don't question anything, we're too busy... while somehow finding time to drape naughty statues, investigate whorehouses in New Orleans, fly around the country raising a billion dollar campaign fund... Politics is nothing but the process by which three or more people resolve their differences without killing each other. If you kill all the politicians, somehow, you mean you kill everyone with the human intelligence to iron out a working government. What do you propose, one man one rule? We nearly have that now. It's always very popular.
Did you ever think that the creation of anti-"political" sentiment is a political tactic of high sophistication? That you are being duped yourself by adopting nihilism? Not that it isn't the most popular U.S. position -- the citizens of the U.S. have always hated their own representatives. Which explains a lot of our history, including how the unelected Boy King was given his throne without outrage from the governed.
By adopting a hatred of politics, you have have been removed from the board, and those who encourage such nihilism gleefully continue playing.
Don't hate them -- become them!