Last weekend, Bruce Nelson, chief Scientific officer of US $ 8.5 billion Cisco Systems, spoke on "The Impact of the IP Dialtone and the Internet Economy" at a conference in Phuket, Thailand. The conference was organised by the company for its customers and press in the South Asia region. Nelson began his career in the Xerox Palo Alto research centre, which has to its credit the graphic-user interface used by Windows, the mouse and the Ethernet. Nelson himself invented the remote procedure call (RPC) which is at the heart of client server systems. He spoke to Vidya Viswanathan about the trends in the Internet economy.
Q: What do you mean when you say IP (Internet protocol) dialtone is more important than the voice dialtone?
A: Simple. Today I don't care if my telephone does not work for half an hour. I would mind if my Internet connection was down for I can't get e-mail. Take another example. I wanted to find flights from San Francisco to Europe. I call Lufthansa and I'm told I'm the seventh person waiting in queue. I get on to the Internet and before anyone from Lufthansa even answers I have found my flights and booked my tickets and changed my screen.
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The person who eventually answered the phone would have transferred my call to another person who would have to invoke a screen and look for details.
Let us look at Cisco itself. We have a large business-to-business e-commerce application. About 65 per cent of Cisco's orders, totalling about $ 5.6 billion, comes from the website. Let us take only our customer care and support application.
We handle 70 per cent of calls through Internet which is about 1.2 million logins a month. We could never have handled so many calls on the phone and just this application has saved us about $ 365 million a month. We have saved over half a billion dollars.
Q: What does this mean for economies?
A: Look at the trends. Traditional voice transactions are growing at about 2 to 3 per cent while data communication is growing exponentially. International data traffic from Australia, Scandinavia and Japan, to US already exceed voice traffic.
This means two things. Countries have to build high bandwidth data networks and voice will be free on these lines. They also have to bring down artificial international telecom tariffs. Why did Intel and Dell set up manufacturing plants in Penang ? Because it was a free trade zone. Countries now have to build Internet free trade zones or they lose business.
This means that if I, Bruce Nelson, want to lay (optic) fibre into India, I should be able to do so provided I comply with all environment clearances. Reliable bandwidth availability at reasonable cost is going to become a critical factor for global companies to decide where they should be located.
Q: Does that mean that companies will build dedicated networks for data?
A: Yes. This is already happening in the US. Companies like Qwest and Level-3 offer these services in 13 metropolitan cities. The back bone is fibre and the technology is voice-over IP. These are data networks on which voice can also travel and the customer will not know the difference. The switches and routers used to connect these networks are one-fifth the cost of that used in traditional voice networks. As the volume of these switches increases, the prices would go down further. It could save millions of dollars in initial cost.
Countries like India, if they want to remain in the race, should stop licensing for services and get rid of monopoly carriers. Carriers should be able to choose their customers. A carrier with just corporate customers would be better off with an IP network. A carrier could choose to do video over IP. This could enable newer applications like distance learning and video-on-demand. Stanford University is already doing its masters course in computer science on the Internet.