Skip to content

Do telcos have a future?

I had an interesting discussion with a friend recently. We were talking about the fact that there really is almost no need for telecom companies any more.

Originally, telephones had to go through a large, centralized switch to connect one phone to another and to connect to long distance trunk lines that tied different cities together. Hence, there once was a requirement for a telecom company, both for local telephone service and for “long distance” service. Already, the need for any distinction between long distance and local has gone away. After all, my phone service now makes no distinction between calling someone in the same city, or someone in 60 countries worldwide.

But now, it is technologically reasonable to replace the centralized switches of our telecom system with “mesh nets”, where calls are forwarded through other nearby phones.

Likewise, there is absolutely no need for the internet to have a “backbone”. In fact, having centralized points for routing internet traffic creates points of failure, and is what makes it easy to spy on us. It is also the only reason why we have arguments about “net neutrality” — the backbone gives power to internet telecoms that makes it possible for them to discriminate against internet traffic.

What would be preferable to having a centralized backbone is to have lots and lots of local connections between ISPs. That would be far more robust, more secure, and harder to game for profit.

A side point is that maybe we should not be fighting for net neutrality rules. After all, if the telcos are able to freely destroy net neutrality and completely screw up the internet, maybe that will give incentive to people to create a new, better, decentralized internet that is not dependent on the telcos.

I am of two minds about this, but it is interesting to think about. Comments? Opinions?



  1. David Freeman wrote:

    Thanks. I never thought about the parallels between the net and the power grid before. I’ll tip a pint to a decentralized internet AND decentralized power with solar panels on roofs.

    Saturday, June 7, 2014 at 7:11 am | Permalink
  2. Nate Barfield wrote:

    It is an interesting thought. But, looking at polls, Republicans and Libertarians are both vehemently anti-net neutrality. So leaving it up to a market where the consumers don’t necessarily prefer the service that way (probably because they just don’t know what it is) most likely won’t lead to that adjustment in the market.

    Saturday, June 7, 2014 at 8:02 am | Permalink
  3. Iron Knee wrote:

    David, there are lots of analogies. For example, initially airlines used a “hub and spoke” topology, so to get somewhere you would fly from your city to a centralized “hub” city, change planes, then fly to your destination. Now more airlines are initiating direct point-to-point flights, so you don’t have to change planes. This is not only faster, but it gives you lots of alternative ways to get somewhere. So it is more robust — if a storm is disrupting flights in one area, you might be able to route around it.

    Another analogy is our street network. Streets are connected to other streets in multiple places, so there are always lots of different ways to get from one place to another. You can pick a route to avoid traffic, and if an accident closes one route, you can easily pick another.

    The internet has the advantage that electronic signals are very fast and can be routed easily, so there is little penalty to having lots of connections. Our current centralized system is an anachronism.

    Still another analogy is the music industry. For a long time, there was need for a gate keeper to build recording studios, press physical records (LPs and CDs), and control distribution channels. There is really no need for any of those now and so the recording industry is (slowly) dying.

    Likewise, cable TV companies acted as the gatekeeper for video entertainment. With the internet, they too will become dinosaurs.

    Maybe the reason why companies like Verizon and Comcast are fighting net neutrality so hard is that they realize that their days are numbered and they want to milk it for all its worth while they can. The argument made during my discussion the other day is that regulations (including net neutrality) that keep the market from abusing their customers will prolong the life of the telcos and cable TV companies by keeping them from totally driving their customers away.

    Saturday, June 7, 2014 at 9:21 am | Permalink
  4. Benjamin Cline wrote:

    Not be deliberately insulting, but I get the impression you don’t really know how the modern Internet works. There hasn’t been a “Backbone” since the NSFnet backbone was shutdown in 1995.

    ISPs do generally try to interconnect (“Peer”) whenever possible, but

    1)The world is a really big place, someone has to provide long-haul connectivity between population centers
    2)Most ISPs are happy to interconnect with anyone who will PAY them, free peering is when things start to get sticky (see item #3)
    3)ISPs typically expect there to be some sort of quid pro quo for peering, but the parties involved often disagree on what constitutes a fair exchange. Netflix may think they’re doing Comcast a favor by giving them content Comcast’s customers want, Comcast sees Netflix as trying to free transport for their content and wants to be reimbursed for providing this service
    4)With the growth of “Big content” it’s not really practical to distribute (cache) everything local to the user, the general industry trend looks to be a few large, centralized sites with content provider backbone networks to deliver the content to the end-user ISPs

    I also question your assertion that lots and lots of local connections would be more robust and more secure, more connections mean more complexity, and complexity is the enemy of both stability and security.

    The problem I see in regards to net neutrality is just the opposite, not the backbone but the “Last mile”, the connection between consumers and the backbones/content providers. Last mile connectivity tends to be a low margin/high capital business that has seen massive consolidation over the last 20 years, leaving consumer with few choices for service.

    I see some real opportunity for mesh wireless networking as a solution to the last mile problem, but challenges abound (RF engineering, spectrum availability, bandwidth limitations, etc.). Of course, one person’s tough problem is another person’s interesting challenge.

    If you’re anywhere in the greater Seattle area, I’d be happy to get together for a cup of coffee and some discussion on Internet engineering.

    Saturday, June 7, 2014 at 12:21 pm | Permalink
  5. westomoon wrote:

    IK, I’m glad you shared your thoughts on this — it’s definitely worth discussing.

    Maybe it’s my geezer status, or the fact that I live at the back end of beyond, but where you see two entities, I see at least three.

    First, landline telecoms: If you live where the infrastructure is at all rickety, you come to cherish that amazingly durable landline. And if you live remotely, chances are that landline gives you your internet access too. Since it seems likely to me that widespread infrastructure degeneration may be in all our futures, I see some value in hanging on to the landline network, which runs on regional monopolies anyway.

    Second, wireless networks: Here, the competition seems just stupid — networks overlay each other, towers proliferate needlessly, and the whole industry basically operates as a cartel anyway. Why should my choice of phones be different from yours, just because we have different providers? It all makes so little sense, seems clear that the providers are working hard to force the old model to fit what they provide.

    Third, ISPs: The original point of the internet was maximum resilience through minimum structure, and the farther we get from that, the worse off we are, IMO. The ISPs these days are reminding me of the banking industry — there are the mega-players, who are expensive and seem to regard abusing their customers as an amusing sport, and then there are the small local operations, which give you plain old-school service and actually want you to be happy with them. I don’t understand why anyone would go with the “too big” providers in either industry.

    And finally, a question: From what I’ve read, “net neutrality” is all about speed of connection. Is slowness such an unbearable hardship that it’s automatically a death sentence? Might it not also serve as a kind of stamp of authenticity, a sort of pirate flag? “This is something they don’t want me to look at” would be a powerful incentive for me. Though if it took 5 minutes to load, I might give up. But if an un-favored provider stripped out some of the less-necessary bells & whistles, bandwidth would have less impact. Just some random (and mildly befuddled) thoughts…

    Saturday, June 7, 2014 at 12:56 pm | Permalink
  6. Max wrote:

    I don’t think telcos are worried about mesh networks replacing them any more than CB radio.

    As Westsoon said, a lot of the competition that exists now is economically irrational. Wireless service would be a lot cheaper to provide if it were a monopoly, instead of 4 companies (3 if the Sprint/TMobile merger goes through) with redundant infrastructure. The future is less competition, not more.

    Sunday, June 8, 2014 at 5:07 am | Permalink
  7. ebdoug wrote:

    WestOmoon: You reflected my thoughts exactly. Being at the end of the lines, I don’t get the best service on my land line/internet but I pay only $55 a month. Since a land line is subject to critter damage where I’ve lost both phone/internet too many times, I have smart phone at $67 a month to back it up so I’m not without help in the boonies.

    IK, you scare me with my investment in Verizon stock. Perhaps I should diversify more?

    Monday, June 9, 2014 at 4:16 am | Permalink