Home > Articles > Networking

  • Print
  • + Share This
This chapter is from the book

The Confrontation

For 20 years, the Internet has been growing, refining its technology and improving itself through the creation of new applications and the addition of new users. Now, suddenly, the Internet appears poised to usurp the telephone business. After all, voice transport is just another application. If an application is constructed properly, shouldn't it be possible to provide telephone service over the Internet? Carriers around the world are staggered by this possibility. They imagine their base of revenues eroding overnight and the desertion of their customers to new upstart Internet entrepreneurs. No doubt this scenario invades the dreams of many CEOs and the large shareholders of the carriers.

The flip side of this is also of concern to the Internet entrepreneurs. That is, could the large telephone carriers rapidly deploy Internet technology and create an alternative that could be marketed to the carriers' existing customers? By bundling telephone service with Internet service, it might be possible for a large carrier to produce an attractive package and capture much of the Internet service market. But, because of the circuit nature of the telephone network, it is impossible for the carriers to provide Internet service without deploying a second network. And at present, regulation prevents this from being a serious threat except in a few limited cases. But these Internet CEOs probably have increasing concerns about their protected status because many large carriers are now evolving their present networks using Internet technology. This is being done in a way that the new network should be able to provide fully integrated services for voice, data, and video. If all that remains is the regulatory barrier, the entrepreneurs may find themselves with a flimsy shield from the carriers who, having the strength of Hercules, would be very formidable adversaries.

There are a good many of these evolution scenarios available to both parties in this confrontation. Chapter 7 will enumerate these and discuss the merits of each. As will be explained, neither side has a silver bullet for extinguishing the other side. The carriers' primary strengths lie in their customer base, their large scale, and their tremendous financial power. Their weaknesses are slow response, their regulatory constraints, and the key fact that their enormous network assets are poorly matched to the needs of the Internet. The Internet companies' strengths are in their ability to rapidly innovate, their deep technical understanding of the Internet and its technologies, and their freedom from regulation. Their weaknesses are their small size, their small financial power, and that their present network lacks the ability to consistently and reliably deliver speech packets.

In his book, The Innovator's Dilemma, Christensen examines the question of why corporations who are leaders in a market can fall prey and fail completely when faced with a major paradigm shift in their industry. He examines several industries, and comes to the conclusion that the very basis on which a company becomes successful is indeed the reason for its ultimate failure: it listens too closely to its customers. Customers invariably want stability in their product choice and prefer a well-understood purchase to a new, unknown approach. For these reasons, customers will usually tell a supplier that they are happy with things as they are and that they just wish the product was cheaper. Since the customer is already buying the product, he or she is probably reasonably happy, so this is no surprise. Likewise, customers always would like to see a cheaper product. As a result, successful companies holding the largest market share for any product focus very closely on incremental improvements that will reduce cost, thereby enabling either greater profits or lower prices. They will also seek improvements that will increase product performance with little or no increase in cost. As Christensen points out over and over, these same companies will be dabbling in new break-through technologies and are carefully watching such technologies that seem relevant to their business, but they are rarely in the forefront of the cutting edge.

According to Christensen, the demise of these companies is that they get blindsided by a new technology or industry that doesn't seem relevant when it first starts. The new technology will appear to them as a curious, interesting approach, but it will not appear to be an immediate threat or as something that could invade their marketplace. Besides, they reason, long before that could happen, they'll be on top of it. But usually, they never do get on top of it. The new technology incubates in a seemingly irrelevant or distant industry to that of the successful incumbent, and when it does invade, it is with swiftness and certainty. Customers who the incumbent thought could never use the new technology abandon in droves to adopt the new approach that has now been shown superior or cheaper than the established product. Time was on the side of the new technology, and it has been honed to a sufficiently fine edge to attack the incumbent's market. Too late, the incumbent tries to mount a response, but now there are too many variables to be mastered, and its credibility is based on the old approach, not the new one. The market leader sinks like a stone.

The telephone industry and the Internet industry are now engaged in just such a situation. For many years, while the Internet and its technologies were incubating, the world's telephone companies either ignored it or dabbled in it. The Internet used breakthrough technology; the telephone industry created incremental improvements. They are now entering a battle for their corporate lives. This is a very complex struggle between two powerful industries, and it is a struggle to the death, as depicted in Figure 1–1. It will not be over quickly either: many years will pass as the technology base and regulatory controls shift.

Figure 1-1FIGURE 1–1 The Confrontation.
("Wrestlers" by Janice Weaver. 2001. All rights reserved. Used with permission.)

It is a struggle over money, the $227 billion per year that is projected to be spent in the United States on local and long-distance services for telephony in 2002, shown in Figure 1–2. By comparison, Internet carriers captured just $32.5 billion in revenues during 2000, of which Internet telephony was estimated to be around $3 billion and growing. Obviously, Internet carriers would like to capture the telephony market, and the technology to enable this is being deployed today. Likewise, the incumbent carriers would like to retain their existing revenues and capture those of the Internet.

Figure 1-2FIGURE 1–2 U.S. Revenues

As both sides grapple with these issues, those of us who are trying to predict the outcome should heed Bob Dylan's words in his second stanza from the Preface. Namely that it is too soon to predict the outcome of this struggle for the wheel is still turning and there is no certainty as to the winners. This will be a lengthy battle with no quick conclusion.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020