1. Discussing the State of Telecom Research Today Bob Lucky

2. 2 Once Upon a Time …

3. 3 Role of the Pre-divestiture Bell Labs  Standards (both official and ad hoc)  End-to-end network design  Basic research  Industry and research leadership  Seeding alumni throughout industry and academia

4. 4 The Economics of Telecom  Bits are becoming a commodity  Overcapacity in the long haul plant  Pricing tends to incremental cost, which is nearly zero  High up front costs  Fast depreciation

5. 5 Telco Revenue per Minute and per Call 1980-2002

6. 6 US Telecom Capital Spending Source: Sanford Bernstein Dollars In Millions $39,488 $45,235 $58,186 $67,146 $89,676 $119,925 $102,502 $58,923 $53,483 Year-over-Year Growth Rate 14.6%28.6%15.4%33.6%33.7%-14.5%-42.5%-9.2%

7. 7 “Telecom is headed the way of DRAMs – pricing is set by the most idiotic competitor. It’s a race to the bottom.” Roxane Googan, Industry analyst

8. 8 Is There any Bottom to the Price?

9. 9 Yes, maybe there is a bottom Free?

10. 10 Free WiFi

11. 11 Is it Possible?

12. 12 Telecom’s Paradox  Telecom industry is in crisis in the midst of technological progress and strong user demand  Annual traffic growth: 100%  Annual growth of Internet users: 40%  Strong growth in wireless penetration  Usage of broadband, data, wireless, long distance all rising

13. 13 Problems in Telecom Research  Reduction in research spending  Change in the nature of research -> short term and applied  Globalization of the industry  Horizontal restructuring of the industry  Shortcomings of university research  Lack of national vision  Lack of end-to-end responsibility

14. 14 Where is Innovation Coming From Today?  Service providers have abandoned research almost completely  Equipment vendors do the only research in the traditional industry – and they have cut back significantly  New players – Microsoft, Qualcomm, and Cisco – have emerged to do varying amounts of research  The venture market, while still active, is not as robust  The academic community remains strong

15. 15 Where is Telecom Research Done? – Percent of IEEE Papers Authored by Industry and Academia

16. 16 Issues  Is Telecom research endangered?  Are there significant economic consequences?  What can be done –By government? –By industry? –By academia?

17. 17 The Panel  Jeff Jaffe, Lucent  Fred Chang, UT Austin  Niel Ransom, Alcatel