Month: January 2022

Our culture is replete with references to the importance of the path that money and value follow in commercial exchanges. “Follow the money” and “Show me the money” are two examples. As I pointed out last week in a blog, there are really two payment models in the world of Internet and tech today—the direct payment approach where consumers of a product or service pay for it, and the indirect approach where third-party players with a desire to gain access to consumers pay for consumer products/services in order to influence consumer behavior in their favor. I also suggested that the indirect model, which we see most often in the form of ad sponsorship, was under pressure.

Numbers for anything are difficult to come by these days, but sources of advertising spending put the 2021 numbers at somewhere between $580 and $680 billion. Growth numbers also vary, but my own data has shown that the critical number, which is ad spend as a portion of GDP, has stayed very close to constant for a decade, and has decreased in some years. The key point is that the rate of ad spending growth (if any) isn’t sufficient to fund our entire online experience. In fact, it’s not enough to continue to fund everything we’re used to having “free with ads”.

In network TV, we now have about 18 minutes of commercials per hour, which means that almost a third of a broadcast show is dedicated to commercials, something research shows is an all-time high. Nobody expects it to go lower, and the reason is that online advertising has taken a larger share of ad budgets, which as I’ve noted are largely static over time. The reason is that online advertising is more easily targeted, which advertisers like because they can spend less to reach their real prospects. Networks have to compensate for the shift by offering more minutes for the same dollars.

What we can see in content, meaning video, is a shift from a purely ad-sponsored model to a subscription model. Amazon Prime Video, Netflix, Hulu, YouTube TV, and other services are treated like cable TV because the content producers (like the networks) charge for their material and the streaming providers have to pay. Even the networks are under profit pressure, so they’re moving toward offering their content via streaming services. Over time, many on the network side expect that every network will have their own streaming offering, and will gradually put more pressure on “aggregator” services like Hulu and YouTube TV. Many of the streaming players are already becoming content producers to compensate for this pressure.

The point here is that we’re shifting from an indirect-pay model to a pay model for more and more things, and the reason is that there’s not enough indirect payment available to cover both all the stuff we want and profit growth for the current recipients of the payments. This will continue to impact content services, and eventually impact social media and perhaps even the Internet itself.

Remember the “follow the money” adage? Well, wherever the trail leads, one truth emerges, which is that the more players who expect to touch the money/value flow, the less money there is per player. Right now, “networks” or content creators are partnering with aggregators because they have to, because the public wants to “watch TV” and not have to deal with between ten and fifty separate content sources to do it. However, people are getting used to direct relationships with content sources, and as they do, the value proposition for aggregators gets thinner.

The biggest factor in weaning people away from the “watching TV” approach is the erosion in “live” viewing. Other than sports and news, people are generally accepting of on-demand content, because social forces have made scheduled viewing inconvenient, and limited creation of new shows has forced viewers to seek other material to watch. New players to the content game, like Amazon, have tended to release an entire season for streaming at one time, while networks have cited costs and COVID as reasons for reducing their number of shows. Less live TV means more people learning to do without it.

We could be heading for a combination of content subscription fees (the Netflix model and the goal of networks like Disney/ABC, Comcast/NBCU and Peacock, Viacom’s Paramount, and CBS’ streaming offerings) and pay per view. We already have “sports networks” (the ESPN series) and “news networks”, but individual networks bid on sports and offer local news and weather. Aggregators like Hulu and YouTube TV may end up being the source of “live” news and weather at the local level, and some sports, particularly high-school and college sports. More and more of the other stuff may flee to network-specific streaming services.

Social media offers the ultimate in ad targeting, so we can expect it to retain value for advertisers even in the long term. More and more ad dollars fleeing to social media will in fact drive the shift away from ad dependence in other services, like video content. However, social-media companies will still need to think about revenue and profit growth, and these companies will either have to start creating unique content or start selling products. We can already see a bit of both today.

The metaverse may be the biggest beneficiary of a shift by OTT giants to a direct pay model. It’s not difficult to see how the metaverse could create many avenues for direct revenue generation, including the obvious move to charge for “membership”. To shift a platform that’s currently ad-sponsored to a direct-pay model would surely arouse user wrath, but a new concept like the metaverse could easily become a pay-for. I expect that Meta itself is leaning toward this approach.

What about the impact on the Internet and telecom? Focus on content delivery means caching in metro locations, which tends to focus traffic from the metro outward to the user. Core transport is less important without settlement, because without a revenue source associated with peering there’s no incentive to build out the core. The telcos and cable companies are cast increasingly into a pure access role because they’re not particularly interested in deploying caching or metro hosting.

There are regulatory barriers to QoS-specific Internet services, which means that to the extent that the Internet is the dialtone of the 21^st Century, operators have little chance of gaining revenue by selling premium handling. In theory, they could sell QoS for business services, but both operators and businesses tell me that’s going to be a heavy lift, for two reasons.

The first reason is that the focus of business IT has been cloud-enhanced user interfaces to support web access to customer and partner portals. This mission explicitly involves the Internet, not business data services, and in my most recent surveys of both operators and enterprises, its priority is broadly (almost universally) acknowledged.

The second reason is that first mission’s impact on business networking. Companies are learning that employee access to applications can be provided through the same facilities as are being enhanced to support customer/partner access. Combine this with the growing use of SD-WAN to support thin sites and the virus lockdowns and WFH, and you get what some operators and enterprises are already seeing as a flight from more expensive VPN services toward SD-WAN and the Internet. Given that, premium QoS on VPNs is hardly likely to be a good option.

Direct pay will not open an opportunity for Internet QoS, and in fact is likely to focus the market more on metro caching than on networking. The Internet, at the access level, will get better without premium handling because the market for content depends on reasonable delivery quality. Thus, the only real driver of premium handling would be edge computing and its association with latency-sensitive applications, meaning IoT. As I’ve pointed out earlier this week, the operators may have booted their opportunity at the edge through a combination of carrier cloud hesitancy and a potential onrush in community network interest, epitomized in Amazon’s Sidewalk enhancements.

There is still, in theory, time for operators to get their act together and take a position in the services that could lift them above the commodity access morass. Not much time, though, and I don’t think operators themselves are capable of the transformation. Vendors, or at least a vendor, will have to step up and be sensible. That may be a vain hope too, based on past behavior, and we may see 2022 as the Year the Operators Became Plastic-Pipe Plumbers.

If you need evidence that operators’ reluctance to deploy carrier cloud has far-reaching consequences, you only need to look at Amazon’s Sidewalk evolution for a proof point. Sidewalk, in its original form, was a strategy for sharing WiFi between homeowners and businesses to allow for better connection and control of IoT elements. Now, Amazon is going to launch a business-and-government addition to Sidewalk, the Sidewalk Bridge Pro, that puts the service squarely in the commercial IoT space.

Sidewalk is Amazon’s mesh-network IoT strategy. It uses some 900 MHz spectrum to provide a link between IoT elements to supplement WiFi, and Sidewalk “members” allow their WiFi and IoT connectivity to be shared by neighbors. This enables IoT to work in situations where WiFi couldn’t reach a device, and it’s a good example of the benefit of federation.

Sidewalk has always used LoRa to create its network within a neighborhood, but whether a given location can even use Sidewalk effectively would depend on the number of neighbors who had compatible Amazon/Nest devices to act as a bridge, and were willing to join the Sidewalk community. The range of current Sidewalk bridges is short, which means that in some cases even having Bridge-happy neighbors might not be enough for commercial applications. Sidewalk Bridge Pro is supposed to offer a range of up to five miles.

Keep in mind that Sidewalk is an IoT network and not a generalized Internet service. The idea is to create a “community network” that lets users of smart devices share network technology so that their devices are accessible outside their own home networks. Sidewalk Bridge Pro makes this community network larger, to the point where it could be used to create not only smart buildings but also smart cities. The effect of this announcement is potentially significant, for Amazon, the operators, and IoT overall.

First, this establishes the notion of federated communications for IoT. Rather than creating a dedicated IoT network (presumably from operator 5G services), buildings and cities (as well as parks and other governmental and public areas) could create IoT networks through the creation of a cooperative instead. A smart building could be created by linking the networks of its tenants, and since Sidewalk assures privacy and security (at least Amazon claims it does) the result wouldn’t compromise security. The use of Sidewalk Bridge Pros could ensure that no tenant’s network failure could take down the collective’s network.

The second impact is that Sidewalk facilitates the use and reuse of traditional (meaning current residential) IoT technology. Whatever works with the Amazon Ring system will work with Sidewalk, providing that there’s a suitable bridge included. Most Ring hubs are bridges, so that’s not a major challenge. Many businesses have adopted IoT based on the same devices used in homes, including Amazon’s Ring devices, so this lowers the smart-building bar by allowing smart buildings to be created from smart businesses (or apartment tenants, or both).

The third impact is related to that buildings-from-tenants story; Sidewalk presumes that there would be “local” or “tenant” events and activities, and that there would also be building-level (and ultimately community-level) events and activities as well. What gets “exported” from one level to another would be under control of the Sidewalk developers who build the software.

Impact number four is that Sidewalk elevates the whole IoT story, from down in the device-and-network dirt where potential is delivered but not functionality, to the tenant, building, and community domains where software intelligence will focus. This intelligence, of course, is almost surely going to be largely hosted in Amazon’s cloud. We’ve needed an IoT story that focuses not on the Internet or on Things, but on things that people and companies value. Now we’re certain to get one.

The final impact is competition. Sidewalk has been treated up to now as a kind of extension of basic Alexa and Ring, a way of finding a pet in a neighbor’s yard or triggering a light from a sensor just out of reach of your home WiFi. Not exactly a dramatic market opportunity, in other words. The Bridge Pro expands the collective concept way beyond that, to the point where other cloud providers can’t ignore it. In fact, IoT vendors in general are going to have to start thinking about Sidewalk.

Right now, we have two “flavors” of IoT. One flavor is based on WiFi and designed for consumer low-tech installation and adoption. The other is based on one of a number of IoT protocols, ranging from the proprietary Insteon stuff to established commercial/residential IoT device connection standards like Z-Wave or Zigbee, and onward to the commercially targeted LoRaWAN. Amazon’s Alexa/Ring and Google Home have already induced vendors in our middle group to add Amazon/Google integration to their hubs. Wouldn’t it be likely that Sidewalk would induce that group to create Sidewalk bridges and Sidewalk-like federations?

I’ve not dug through the programming details of the current Amazon/Google bridges in smart Z-Wave or Zigbee hubs, nor have I looked at the details of Sidewalk development, but it seems from what I can find in casual research that you could already bridge between my middle commercial/residential technology group and Sidewalk. If a Z-Wave/Zigbee hub can talk to Alexa/Ring, then that pathway currently allows commands to pass. If Alexa/Ring is federated with Sidewalk, it would seem that would then extend Sidewalk to work with Z-Wave and Zigbee, and that could be huge.

Serious IoT for homes and businesses relies on those two protocols and the enormous inventory of devices they support. Bring these into the Sidewalk community, or any federation similar to Sidewalk launched by a competitor, and you suddenly have all the makings of an entire IoT ecosystem. No monthly charges for connection, no new devices, no need to learn new technology. A thriving set of developers and integrators too.

The obvious question is when we could expect this utopian IoT future, and that’s hard to say. Amazon hasn’t gotten regulatory approval for its Sidewalk Bridge Pro, nor has it released a price or availability date. However, the launch of Sidewalk Bridge Pro is such an obvious gauntlet thrown down to competitors that it’s hard to believe Amazon wouldn’t be pretty close to general availability.

I’ve always been excited by Sidewalk because a community network could focus the industry more on the IoT applications than on sensor/controller connectivity. In particular, I’d like to see Amazon and Sidewalk developers address the questions I’ve raised in marrying IoT with metaverse, my “metaverse-of-things” suggestion. Perhaps we’ll get some innovative strategies in that space now, and that could be critical in accelerating the pace of IoT, the metaverse, and edge computing.

New Year’s Resolutions are popular, perhaps in part because we know that we don’t usually keep them. Still, we feel better making them, so every year I look for some inspiration for my own. This year, I got it from, of all places, our legal system.

Everyone will likely have their own take on the Elizabeth Holmes verdict, but the theme we’re hearing in the media is focused on the question of whether Theranos is just the tip of some vast Silicon Valley iceberg of fraud. Is the Valley a problem in and of itself? Is tech one vast “spin-till-you-win” cesspool? Yes and no, but it’s a harder question to answer because there’s a lot of blame to go around.

Back in the dot-com bubble, in the late 1990s, I was bombarded by companies who wanted me to help them tell their story. Some were startups, and some were giants like WorldCom and Enron, but two-thirds of them were complete nonsense. My policy is, and has always been, that I will not work with or in any way promote something I believe has no real value proposition. I actually considered retiring or leaving the field because I was totally disgusted with the way things were going, despite having 20 years of independent consulting and way more than that of network experience.

When WorldCom and Enron were in their heyday, I told every reporter who asked me that their numbers and business models simply didn’t make sense, and wrote my own features and blogs to say the same. Well, their claims weren’t real. Not only did my comments at the time have little impact on the stories I was interviewed for, after everything came crashing down, nobody in the media or government called me and asked the simple question “How did you know?” Punishing egregious violations was enough; there was no reason to ask why the problems weren’t recognized from the first, and no reason to try to change things to prevent them in the future.

How did we get to that state, and are we still in it? Who is responsible? Let of offer my own tale, and you can decide whether you agree.

Our problem started not in the Valley but in the tech media and how it’s paid for. I started enterprise networking surveys in 1982, and between 1982 and 1990 technology publications were ranked as a strategic influence second only to the experience of a trusted peer. If I called on a CTO or CIO, I’d almost certainly see a copy of Business Communications Review and Network Magazine on their desks. I wrote regularly for both publications, and some articles were almost three thousand words. Some of these publications were subscription-based, but most were controlled circulation, meaning ad sponsored. Advertisers paid to reach those with budget influence.

If you put bacteria in a growth medium, they grow. A new money-making strategy begats money-makers. If advertisers would pay for more eyeballs, then eyeball farming might be a good business to be in. In 1989, in the US, my surveys and modeling said there were roughly 14,000 points of organized network procurement, and that number roughly matched the circulation of those publications. Five years later, the number of people who filled out reader service cards to claim receipt of the publications had grown to over 55,000 and the number of points of procurement had grown only to 15,600. The eyeball factory was stamping out ad-attracting eyeballs.

By 1996, the sum of the budgets claimed in reader service cards threatened to exceeded the global gross domestic product. All of the key publications of a decade earlier were going or gone. Soon, the remainder went online, and search engine optimization (SEO) ruled the world. To get found in a search is to get clicked, and the higher up you rank in the results, the more clicks you get.

The impact of this on the media is obvious. In the ad-sponsored model, the publication or website is paid for ad eyeball impressions. People, including the people running the publications/sites do what they get paid to do. If you’re paid when somebody clicks on a link and is served an ad, you focus on getting them to click. Once they do, you’ve gotten as much from them as you can expect to get. Search engines stamped out egregious misuse, like having an “article” consisting entirely of keywords for SEO, so people got creative with content. Forget three-kiloword articles, enter sensationalism.

The eyeball focus hits the content being posted, because what gets a click is what’s novel, interesting, rather than being true or useful. A story about Steven Speielberg claimed that he was asked by a reporter what his best advice was as a young director. He thought a moment and replied “When you talk to the press…lie.” The reason is obvious; if sensationalism rules, then you have to be sensational to win. Ideally, being sensational and being truthful aren’t orthogonal, and my own consulting work makes that assumption. I talk to clients about a “marketing fable”, which is a way of presenting your product or service that magnifies media interest without stepping over into falsehood. It’s a fine line, and it’s hardly surprising that many don’t bother trying to walk it when the rewards of sensationalism are so clear, and the risks seem to apply only if you step so far out of line as to be guilty of a crime.

I’m not saying that Silicon Valley and what it represents isn’t in trouble. I’m saying that the forums carrying criticism of the Valley today are the ones who got it into trouble, and the people reading the articles are the ones who continue to demonstrate that sensationalism wins over truth. If we want “free” things, we’re really getting things somebody else is paying for, and accepting the practices of the system that does the paying. We have to promote 5G as transformational to the average user, because average users are the mass eyeball source. It’s a world of extremes; every risk is a catastrophe in the making, every benefit a changer of Life as We Know It. And guess what? It works. Because we click on the sensational links. We can name the practice “click bait”, but we can’t seem to wean off it.

The question is whether that excuses stepping over the line between positioning and outright falsehood. Everyone who writes for or talks to an audience has a responsibility for what they say. I have a responsibility, and so did Holmes. Nobody can say that they’re always right, nobody can possibly know all about everything. Everybody can, or should, say that they communicate the truth as they know it, and seek to know as much of it was they can. The jury decided that Holmes failed to do that, and I agree, but I think that a part of the crime was getting caught up in the hype wave, and she didn’t start that, nor will it end with her and the verdict.

We started it, all of us who fall for click bait or push the truth to get better coverage. We wanted the Next Steve Jobs, and so we invented one. Free entertainment, just like the TV of old, sponsored by commercials. To quote a sifi writer of old, TANSTAAFL, meaning “There ain’t no such thing as a free lunch.” If we want goodness and truth, we have to stop rewarding the alternative.

I’ve seen a lot of bad companies succeed, a lot of bad stories rewarded. I’ve seen a lot of good companies fail, technologies that were essentially to the optimal evolution of networking get discarded…at least for a while. The market rights itself eventually, because false sensationalism is parasitic and a parasite that kills its host isn’t survivable. Since I’m quoting things here, read Emerson’s essay on compensation: “Every secret is told, every crime punished, every virtue rewarded, every wrong redressed, in silence and certainty.”

Ad sponsorship is a zero-sum game. Despite the growth in online advertising and dollars-for-eyeballs thinking, ad spending as a percentage of global GDP is actually down a bit. We now end up paying for a lot of video, through cable TV and streaming providers. The question then is whether people who have to pay for tech information will be satisfied with tech entertainment instead. We may find out.

What we need now is innovation, not hype. We had three major waves of tech innovation in the last century, waves that drove tech spending up almost twice as fast as GDP. We’ve had none in the 21^st century, and I think the reason is that tech is complicated, and the mass market can’t absorb its details, only consume its results. If we’re focused on promoting what we already have, or pretending we have something we don’t, to get eyeballs, our best and brightest aren’t weaving all the complexity of the tech world into something truly revolutionary. Wildebeest during the migration are easy prey, till they move on. Easy isn’t always smart, and we need smart promotion of innovative ideas and not hype, however easy hype seems today.

My resolution for 2022 is to try harder to promote the innovative truths of our industry. How about you?

My notion of a metaverse of things (MoT) is grounded in the assumption that all applications of this type are a form of digital twinning. There’s a real-world framework that is, at least in part, reflected into the virtual world. For applications like industrial IoT, there’s a structure that’s being mirrored, and that structure has specific components that represent pieces of the industrial process. For MoT, or any digital twinning approach, to work, we need to be able to represent the structure and its rules in the virtual world.

For applications like social media, the things that are reflected into the real world are freely moving elements—people. There may still be a structure, representing the static environment of the metaverse’s virtual reality (like a game), but the structure is really, literally, in the eye of the beholder because how it looks and behaves is related to the behavior of the free-will people who are roving about in it.

If MoT is to be implemented, the implementation would have to include the modeling of the virtual world and the linkage between it and the real world. It would be helpful if a single approach could model all kinds of MoT applications, because then the same software could decode any model of a digital twin and visualize it as needed. The question of how to model this sort of thing isn’t a new one, though. Some of my LinkedIn friends have encouraged me to talk specifically about the process of modeling a metaverse, and as it happens I looked at the problem at the same time as I started my work on modeling network services.

When I started to look at network services as composable elements fifteen years ago or so, I had the same challenge of how to model the composition, and ExperiaSphere was the result. I started with a Java-defined model that essentially programmed a service from objects (Java classes) but in the second phase transitioned to the notion of a model. However, ExperiaSphere never intended to model the network or resources, just the functions included in a service. The presumption was that lower-level tools would deploy functional elements as virtual pieces committed to the cloud.

The ExperiaSphere project had a spin-off into social media, though. There was a set of elements that represented a social framework and the interactions, and that opened the question of how you’d model social systems (for those interested, this was called “SocioPATH”). The result of thinking on this was another activity I called “Dopple”, the name representing the German word “doppleganger” which can mean a kind of virtual double. That’s a reasonable name for a digital twin, I think, and in fact a Dopple object was designed to be a representation of something like a person. Broadly speaking, a Dopple was something that represented either a real-world thing or a thing that was intended to act, in the virtual world, as though it was real.

A person’s Dopple would be, in modern terms, an avatar. So would the Dopple of a “non-player character” in the terminology of Dungeons and Dragons. Dopples would have APIs that linked them to the visualization framework, to software elements that controlled how they looked and moved, and so forth. You could also represent fully static things like rooms and buildings and mountains as Dopples, but of course as something in the virtual world became more static than dynamic, there’d likely be a value to simply representing it as a CAD-like model.

In the real world, everyone has a personal view, so it has to be the same in a metaverse. Just as there are billions of people and trillions of discrete objects in the real world, the same might be true for a metaverse. However, in both cases the personal view of an individual acts as a filter on that enormous universe of stuff, and that means that the Dopple concept has to be personal-centered and thus able to understand what’s inside each “personal view”.

My assumption was that, like ExperiaSphere’s “Experiams”, Dopple objects would form a hierarchy. The top level of ExperiaSphere’s model is a “Service Experiam” representing the entire service. The top level of Dopple, in my conception, was a locale. A locale is (as the name suggests) a place that contains things. The scope of a locale is determined by focus or the “visibility” of the individual whose personal view is the center of the metaverse, so to speak. If the metaverse isn’t modeling a social system but an industrial process, the locale would represent a place where the process elements were concentrated in the real world. In IoT, a locale could represent an assembly line, and in a social metaverse it could represent the surroundings of a digitally twinned human, an avatar.

As software objects, a Dopple is a collection of properties and APIs. I assumed that there would be four “dimensions” of APIs associated with a Dopple, and the metaverse would be a collection of Dopples.

The first dimension is the “Behavior” dimension, and this is the set of APIs that represent the linkage of this particular Dopple object to the real world. Generally, it would represent the pathway through which the Dopple-as-an-avatar would be synchronized with the real-world element it represents.

The second dimension is the “GUI” dimension, and here we’d find the APIs that project the representation of the Dopple to the sum of senses that the metaverse supports. Note that this representation is limited to the Dopple itself, not its surroundings. However, the same dimension of APIs would govern what aspects of the metaverse are “visible” to the Dopple.

Dimension number three is the “Binding” dimension, which represents how the Dopple is linked in the hierarchy of Dopples that make up the metaverse. In a social metaverse, the binding links the Dopple to superior elements, like a “locale Dopple” and subordinate elements such as the representation of what an avatar is “carrying” or “wearing”.

The final dimension is the “Process” dimension, and this is a link to the processes that make up the Dopple’s behaviors. My thought was that like ExperiaSphere’s Experiams, each Dopple had a state/event table that defined what “events” it recognized, what “state” it was in, and what processed a given event in this particular state.

In my approach, a “Behavior Dopple”, meaning one directly coupled to the real world, had a hosting point, a place where the Dopple object was stored and where its associated processes were run. “Behavior Dopples” could represent people, industrial elements, NPCs (in gaming/D&D terms), or real places.

Every Behavior Dopple has (in theory, one or more) an associated locale, meaning there is a superior Dopple bound to it that represents the viewpoint of what the Dopple represents. If multiple Behavior Dopples are in a common locale, they have a common superior Dopple and their point of views are a composite of that superior Dopple’s bound subordinates. If you wave in a metaverse, your wave is visible within any bound locale superior Dopples.

To illustrate this (complex but important) point, suppose your avatar is in a virtual room, attending a virtual conference. Your Behavior Dopple waves, and the wave is visible to those in the same virtual room and also to those attending the virtual conference. A virtual conference, in my original Dopple model, was a “Window Dopple” that was bound to the locales of each of the attendees. These Dopples “filtered” the view according to the nature of the conference, so that if your camera was off then your personal/Behavior Dopple wouldn’t be “seen” but would be heard. I assumed that Window Dopples would present a “field of view” that represented a camera, and things outside that field of view would not be seen by the conference. A null field of view is equivalent to the “camera-off” state.

The “Window Dopple” illustrates that a link between two locales (meaning their Dopples) can be another Dopple, which further illustrates that a metaverse is a structure built on Dopples. The same concept can be applied to IoT. We might have a Factory Locale and a Warehouse Locale, each represented by a Dopple and each containing stuff. The product of the Factory Locale (created by the manufacturing process) is a Dopple, which is then transported to the warehouse (as represented by a Window Dopple linking factory and warehouse).

The reason for all these dimensions of APIs and Dopple objects was to create a framework that could be adapted to any relationship between the real and virtual worlds, and to any means we might find convenient for representing the virtual world to its inhabitants. Like most software architects, I always like the idea of a generalized approach rather than a one-off, and which of the two we end up with is probably the biggest question in the world of metaverse and MoT. If we create “silo metaverses”, we multiply the difficulties in creating a generalized hosting framework and the cost of metaverse software overall. At some point, cost and difficulties could tip the balance of viability for some potential applications.

We probably won’t establish a single model for the metaverse in 2022, and we may never do so. What we can expect for this year is a sign of progress toward that single, general, approach. If we don’t see it, we can expect that metaverse and MoT won’t fully realize their near-term potential, and perhaps never realize their full potential at all.

Well, Happy New Year everyone. There are obviously positive and negative omens in play for the world, economic and otherwise. Still, I’m a network/cloud strategist and not a doctor or economist. I’m not going to attempt to address broader issues and events, other than to point out what a negative versus positive shift could mean for networking. I blogged at the end of 2021 on the three technology factors that were likely to influence networking in 2022, and now I want to bring all the points together, not by reprising the early blogs but by summing the impacts and presenting an overall view of what to expect.

Network services are at the heart of everything. The Internet is the new dialtone of the world, and the mechanism whereby we shop, sell, support customers and link with partners, entertain ourselves and even learn. The Internet is functionally an over-the-top community, but network services are what make the Internet possible. Those same services are the foundation of business networks, calling and texting, and everything that connects us. The profits of services fund service provider capex, and the nature of the services determine the network plans of enterprises and the personal behavior of consumers. For all these reasons, it’s a good idea to start our discussion with network services.

The problem we have with network services is that return on the investment needed to sustain, much less expand and improve, them is in a squeeze. Virtually every business wants to use network services, and certainly most consumers, but nobody wants to pay for them, or at least pay in proportion to usage. The Internet is the first network service the world has ever known that didn’t settle among participating network operators. While consumers have driven traffic growth, and their unwillingness to pay for usage has cemented in the neutrality rules, as the cost of Internet capacity drops and bandwidth and QoS improve, the Internet looks increasingly attractive as an alternative to traditional business networking, like VPNs. We only have to look at the growth in SD-WAN to see that.

The fact that network operator profit per bit on basic connectivity has shrunk dangerously close to the point where ROI isn’t satisfactory is clear. Many operators have started to move out of their traditional service markets to other geographies or other service areas. The good news is that we’re not going to see network operators exiting network connectivity services. The bad news is that we are likely to see a curtailment of investment there, but fortunately not in 2022.

The original value proposition for networking, the value proposition that drove everything up to the point where public Internet got popular, was connectivity. A connectivity service is valuable to the extent that it can connect a lot of stuff, and that tends to value a broad network. Consumer Internet and broadband changed things because the goal was to connect to OTT resources, experiences, that became increasingly cached and local. The natural evolution of content services results in a metro-cache focus, even if we ignore other trends that drive metro change. Operators don’t seem to see this, and the likely reason is that they don’t want to see a future dominated by metro-centric services. They’re connection people and they want to stay that way.

What’s keeping operators committed to connectivity services isn’t public-spirited thinking, it’s more like tradition or inertia. Operators have over a hundred years of both invested, and they’re no more likely to jump up and become over-the-top players than a farmer would be likely to decide to become a miner. In fact, what we’re seeing now is that operators are doing what farmers would typically do if somebody discovered mineral wealth on their land—they outsource the new opportunity. 5G has created the closest thing operators have seen in decades to a “new service opportunity”, but they don’t see the real opportunity, which is edge computing or “carrier cloud”, as one they can run with. So, they’re doing deals with the cloud providers for the edge and hoping for both “thing-connect” revenue and some sort of QoS windfall on connection services.

The cloud providers aren’t all that interested in the kinds of “new service opportunities” that operators think 5G could create. They understand that “thing-connect” charges would do nothing other than invalidate the whole IoT service space, and that nobody wants to pay for QoS when demonstrably the Internet and much of cloud computing don’t require it. Cloud providers do see reality here, and want to seize the higher (in revenue and profit margin terms) ground. They are interested in the 5G hosting opportunities operators are presenting, in edge computing partnerships, and other relationships that involve operators paying for cloud hosting. They don’t want operators to build carrier cloud, any more than operators want it.

What this likely means is that operators’ investment in carrier cloud in 2022 will be negligible, and that “new services” offered in 2022 will likely be simply face-lifts on connection services. That includes 5G, and Verizon’s decision to defer 5G Standalone, meaning 5G Core and the slicing features, until “2022” likely means that they don’t really know when or if they’ll push full 5G. Whatever we see in new network services, including edge computing and IoT, is more likely to come from cloud providers than from operators.

If operators want connection services, though, they do have the avenue of SD-WAN and SASE to think about. SD-WAN is a virtual-network overlay on IP and the Internet, targeted initially at sites where MPLS VPNs were either too expensive or unavailable. When the Internet, at least at the consumer level, was a dial-up phenomena, a separate business network framework made sense. Today, with the Internet charged with video delivery and delivering much better QoS, that’s probably not the case. I think operators in 2022, fleeing OTT-level “new services” like edge computing, will push an integration of SD-WAN, NaaS, and SASE. They’ll leave the rest to the cloud providers.

If the operators aren’t likely to be offering services that compete with cloud providers’ services, the opposite is not true. By the end of 2022, I think all the public cloud providers will be offering things that will effectively compete with operator services. The starting point will be intra-cloud networking designed to encourage enterprises to create a global front-end in a single cloud, linked to multiple data centers within the cloud itself.

What’s interesting about the intra-cloud network is that it will have a lot in common with the network needed to make metaverse a reality. Building a metaverse demands edge computing in metro centers, and meshing of metro centers with low-latency pathways. Such a network is fiber-intensive because rather than feeding traffic to a core network, each metro center directly feeds fiber to other centers. The core of the network, if that’s an appropriate term, is much more optical than traditional IP.

Even though “carrier cloud” isn’t likely to drive edge hosting in 2022, and it’s not likely that the metaverse will by itself stimulate the metro-mesh future that I think will sweep networking, we will likely see more pedestrian forces of competition among cloud providers lay the groundwork for radical changes. The cloud providers see what operators can’t or won’t see, which is that connectivity is just a service on-ramp whose only useful attribute is cheapness. There’s no money in offering that sort of thing.

What “metaverse” as a concept does is focus the most aggressive competitors on the metro, and on the fact that service value ends up in the metro, however you define “service” and whoever the “service provider” really is. Metaverse also focuses on the fact that what makes metro different in the future is the integration with edge computing. If the network operators do in fact cede the hosting to the cloud providers, they’ll self-disintermediate on the most important future trend. Hosting wins, so cloud providers win.

The industry as a whole may be starting to see the light on this. Juniper posted a podcast that reflects the view that the public cloud providers will end up providing edge hosting, even out to the cell sites. Operators would then have to try to make QoS valuable, but that presupposes that the cloud providers would even consider buying connection services for edge and metaverse from operators. If you can afford to invest in a cloud or edge data center, you can probably absorb the cost of linking it via fiber to some or all of your other centers. Particularly if you can sell “cloud networking” to enterprises to replace their VPNs.

Cloud-provider-dominated edge computing would lead to cloud-provider-dominated metro, and that IMHO would mean that the cloud providers would likely mesh edge enclaves, regional centers, and other hosting points with fiber. That would essentially displace the packet core, moving most routing capacity to the metro areas, and making metro the focus of electrical networking capacity overall. It would also create resources whereby the cloud providers could expand intra-cloud networking that they’re already starting to offer, and offering a variety of cloud-and-edge-related VPN services.

Now, in closing, let’s look at the question of health and economics. It seems clear that Omicron doesn’t cause as many serious cases as Delta, and it’s also clear that vaccination has reduced the risk of serious problems even further. We’re coming to terms with a form of COVID that is more like the flu, and that means we’re accepting a level of infection risk as the price for minimal social and economic disruption. It’s those socioeconomic factors that created lockdowns and business issues, and so it appears that 2022 doesn’t have another wave of impacts in store for us, just another wave of virus. Barring another variant with greater impact, we should see 2022 as a year we shift more toward “normal” behavior. The forces that shape networking in 2022, then, are already visible and operating on the markets.

Can the cloud providers do networking, leaving operators with little or nothing beyond the access networks, which are the lowest-margin and therefore least-competitive pieces? If they do, then it may mean that some form of public/private partnership will be necessary to maintain investment in broadband access. The form may vary, with some countries perhaps opting for something like Australia’s NBN and others creating broader subsidies, but the end result would be the same. Value may be tapped off the pure OTT players, but it will come to rest in the public cloud and not carrier cloud. This year, 2022, is likely the last chance for operators to empower themselves at the service level. The most important question of the year is whether they’ll see that, and do it.