DSL Prime: Count Real Speed, Not Angels on Pinheads

While nations such as Chile and India report progress, the RBOCs resort to rewriting the dictionary with the aid of their pet legislators.

by Dave Burstein DSL Prime [July 19, 2004]

"In China, we've reached a level of maturity comparable to Germany, where they've been developing mobile phones for more than a decade. The products we've developed here are for the global market. Our phones have the German quality standard."—Siemens' Wolfgang Klebsch in Beijing (WSJ)

The New York Times believes my city is declining, in a country without a place in the world, declaring instead "The Chinese Century." The Wall Street Journal cover story today suggests Siemens and Germany, too, will struggle against Asian dominance. Rather than being fearful, I delight in my regular contact, over the net, with Pakistan, Taiwan, Japan and others around the world.

100 Mbps DSL is developed in India, Israel, and California—we all will benefit. Patriotic reporting will rage against government and monopoly created waste that weakens our own countries, not stand against the tide. But of course reality is more complicated. Consider one emerging industry leader.

Hong Lu walked SUPERCOMM softly and greeted everyone graciously, without the entourage typical of the CEO of a multi-billion dollar company. He's recently won contracts from Europe (Tiscali, a multi-national ISP putting in DSLAMs) to Chile, with a major breakthrough at BSNL, India's national carrier, on the way. His company, UTStarcom, is formally based in Oakland, but has been forged in the hyper-competition and growth of China, where a network the size of a Verizon is built anew every year.

Taiwanese born Lu went to graduate school at Berkeley, where he met Masayoshi Son, a Japanese of Korean ancestry. Son later funded the company and provided vision. Most of their $2 billion plus in sales is Xiao Ling Tong, the low cost mobile phone for China, but they have hundreds of engineers developing 3G CDMA equipment, video servers, voice-mail that just won a Vonage contract, and IP DSLAMs.

In China, corporate survival requires offering more value for money. That in turn requires effective volume manufacture and design that understands the costs of manufacturing. Huawei, ZTE, and UTStarcom are the survivors, now bringing that cost discipline to world markets. The Lucents, Siemens, and Alcatels of the world are adapting slowly. Each is making a terrible mistake, cutting investment in their R&D future, propping up quarters for wall street but risking far more.

From Germany to Washington, governments officially worry about competitiveness but focus policy on a well-financed corporate agenda. The latest D.C. Comcast and Bell propaganda is attacking the end-to-end principle that has built the Internet and changed the world. Beneath obfuscations like 'Layers' Policy Model', the attack on Net Neutrality, is a well-financed D.C. lobby trying to design a system where Verizon or Comcast will choose what you can watch on the high-speed net. That's basically an attack freedom of speech—a higher American value than the pursuit of profits.

"They just aren't very good economists," one of the last of the great Chicago School said of their unwanted disciples in D.C. She wrote the seminal 1962 paper that remains the most cogent attack on regulation, based on strong empirical data of the price differences in states with and without regulators. It's a pleasure to have lunch with a colleague of Milton Friedman, Gary Becker and that crowd, who aspired to an intellectual rigor that puts their second rate followers to shame.

I've just read with pleasure George Stigler's "Memoirs of an Unregulated Economist," where he always looks at hard data, not ideology, to back his beliefs. If only the usual suspects in D.C. had some of his depth.

Copyright 2004 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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—A.J. Leibling

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