Jay Wilson, Adtran - Keynote speech - day two at Broadband World Forum 2014

Good morning. Hopefully everybody has dried out a little bit from the wet weather and is ready for a day of engagement and learning. We've got some of the best and brightest in our industry here this week again, and so far so good on the show from my perspective. I'd like to thank Anders and Ericsson as well as Mike from Telstra for challenging us, for providing a vision for us, for talking about this machine that we're creating. What I'm going to do today is talk a little bit about how we as humans typically process content and how we might use that to apply our knowledge and to ultimately solve the problems that we have facing us today. I'll talk about some of the biggest challenges that we're facing in the industry today, and I'm going to talk about where those might take us towards a user-defined experience.

One of the things that I reflected upon earlier this week was IBM made an announcement with their quarterly earnings, and the challenge that they had pointed to affecting their results was an unprecedented pace of change. So this is one of the challenges that I had planned to identify. It was spoken about just in the prior discussion with Telstra and with Ericsson, and I think is no surprise to us that that's going on. This survey that was published earlier this week as well from Broadband Trends, a notable broadband publication, identified gigabit services. Believe it or not, it wasn't too terribly long ago that we were in an event like this talking about how in the world could we justify 100 megabits for a consumer. Now the bar has been raised to an order of magnitude higher with gigabit services. It's hard to imagine. So what I want to talk about is digress a bit and talk systems thinking. Take a systems thinking approach, which is ultimately in my terms, we make sure we don't just see the trees but we see the forest, if you know what I mean.

So on a curve or on a chart that talks about the increase in correctness as we deepen our understanding, the content in the human mind can be categorized a couple different ways. The first is data. Data is simply a statement of fact. An example that a system theorist uses that I'll quote in a moment is that it is raining. That's a fact, that's the data. As we start to understand relations between data points or facts, it turns into information. And ultimately as we start to apply and understand the patterns among information, then it becomes knowledge. The key ingredient about these three states of mind or content categories is that they're effectively in the past or present. So these are not things that people are scratching their head trying to determine what they're going to do next. While knowledge starts to apply some predictability, it's effectively in the past and present. If we move towards applying principles, things that we realize happen for a reason, and we start to apply the knowledge in a way that we start to understand how the future may come about, then it's called wisdom. So as I mentioned, the theorist Russell Ackoff talks about people can create the future rather than just living in the past of the present. I think this is important.

We talked about all the change that's going on, the network society that Anders spoke about. How do we tackle the problems that we're faced with? And what are those problems? The pace of change is accelerating at a faster clip than what we've ever experienced in our lifetime, perhaps even in civilization as we know it. There's no such thing as infinite demand, I realize, but I do believe that we're virtually dealing with an infinite demand for bandwidth at this point. And I'm going to give some personal reflection just to get on the other side of the table as a consumer, not as a comms industry supplier, but as a consumer. I'll give an example of what I mean by user-defined experience and how that affects us. So a couple data points to reflect on these challenges. From the Cisco forecast that are widely used here, you can see global internet traffic continues to grow at an exponential pace. I've identified here on the curve that inflection point again that Anders referred to. I call it a synergistic reaction. A synergistic reaction only means that effectively you have a compounding effect. When this continues to grow at this pace, it affects and strains our networks for sure. It affects and strains our business cases because the values you can create by delivering additional bandwidth through services is hard to get the return on investment. Of course, it probably also strains our nerves from time to time as industry players in the comms.

This is an interesting data point. Wall Street Journal, in this case, many have done this before. Adoption is defined as where a technology, and in this case I've highlighted specifically technologies or innovations that have come through and affected the way that we communicate as humans. We communicate and ultimately access to information over time has changed by the adoption of these technologies. Just to give a couple of examples, the telephone took 35 years to reach 25% of the US population. It took about a hundred years later until we had a mobile phone, a cell phone, and about a third of the time, 13 years, it was adopted by 25% of the population. I can contend there's no doubt that access to that device, affordability of that device, and even probably awareness of the device was a factor. But you look at what the technology and innovations that have come through our industry and it's transformed things. Internet, probably in anybody's top ten list if not top three list of innovations that have ever come across in our civilization, took seven years for adoption to be at 25%. And lastly, then we have one company with one product that was introduced. Not the 2007 iPhone, which was a little bit longer time, but when the iPad came out, it took two years to reach the adoption rate of 25%. So the pace of change and the pace of adoption or the consumption of technology is increasing at an unprecedented level.

I'm going to start to break this down a little bit more to describe the behavior of our customer base. Internet traffic composition here in Europe, a fixed access connection today. This is a Sandvine data point from the first half of this year. It shows that an average fixed line connection is consuming about 17 gigs on a monthly basis. Of that, I want you to note the red part of the bar: 43% of that is real-time entertainment. If you slide over and look at what's going on in North America in the same time frame, it's actually 44 gigabits. I'm not sure why we're such gluttons in North America, but the fact is that the user behavior is different for whatever reason. And I won't say it's further ahead or anything, it's just different. 44 gigs a month, so it's quite a bit more consumption, but 64% real-time entertainment. Let's back up a little bit and look back in time. Back just as the iPhone was coming into fruition, 2008, it was less than five gigs, about four and a half gigs a month consumption over a fixed access connection in North America, and only 14% of that was real-time entertainment. The fact of the matter is, and I was trying to be one of those users, it wasn't a very good experience to try to enjoy real-time video over connections at that time. Today you see a 900% increase in consumption on a monthly basis, most of that being driven by real-time entertainment.

So if we look, and I can appreciate the vision shared by Ericsson about how we create this machine, and ultimately this is not a prescription probably for everybody. This is a suggestion that we've got a way to build a machine, build a network in a way that allows us to address the challenges that I've just described. Ultimately, the more fiber the better as it relates to the user experience. Multiple service points, cloud control, virtualizing network functions so that you can program the network. And probably the most important one as it relates to being able to satisfy that real-time entertainment demand is having highly automated networks, programmable networks. In order to do that, or by doing that, we can more likely satisfy the demands of consumers in a time frame and a service interval that will satisfy and reduce churn as we address the service demands for today. What are the implications? The implications are quite broad. There are many that we could describe. I've touched on only a few here, and particularly they're going to be defined by your own or your operator's business case, whatever makes the most sense for you. Let me stop for a moment because I'm going to talk about the final challenge. And it's changing, or has changed the way we communicate. It has changed dramatically. I've shared some stats. I'll give one example that's just my own personal example. I'm not sure if anybody is an American TV fan. There's a TV series that was called 24. Anybody ever heard of 24 by chance? Hopefully you have. I'm not so there's some people there that I won't be so ashamed that I stole this story. I'm not a huge TV watcher. I am a big live sports TV watcher, but 24 was one that I really enjoyed. It's a cliffhanger action thriller. What 24 meant was there was a season made up a day in the life of Jack Bauer. Jack Bauer was the counterterrorism unit specialist or head from Los Angeles, and he was fighting whatever was going on in terms of national security threats. It aired over Fox Networks for ten seasons. Unfortunately for me, there was a huge painful pause between the ninth and the tenth season. So it started I think in 2001, and somewhere around not until last year they produced the 10th season. So my story goes like this: I was traveling all the time, still do so a good bit, and I'm very big into time-shifted programming. So I like to watch it where I want to watch it, when I want to watch it, not have to sit through commercial interruptions and so forth. Most of you are probably in the same boat. I'd set it up with my DVR and got home prepared to watch, clicked it on, laid back, and realized that it wasn't on the menu to select from. So either bad storage management by myself or some tinkering by the DVR settings by my kids set me into a fairly exaggerated level of frustration pretty quickly. And thankfully, my wife realized what was going on, and she started to lob some real wisdom my way. And she said very simply, 'There must be an app for that.' And of course, that brought peace to me because it reminded me of how much that I love her and that she knows me and that she knew that I was going to a really bad place pretty quick. And so it made me realize that there was a way to solve this problem. Technology was going to allow me to enjoy my user-defined experience at that very moment in time on the TV that I wanted to watch. And I quickly downloaded the app of course from Fox, streamed over Apple TV, and was able to watch it on the TV I wanted to watch it with the pause and fast forward control in the chair that I wanted to watch it on and enjoy my last episode of 24.

So why does this all matter? It's just an own personal reflection of I wanted that communication service at that time, and I wanted it delivered in the way and in the place that I wanted to be. We're selfish that way, aren't we? And so it's not just about the lowest common denominator services, which I would contend the traditional voice service and maybe even high-speed data service, broadcast video. These are things that have become expected, maybe table stakes for us. But ultimately, having the mobility and having the user-defined experience where we can on demand and in real time increase our bandwidth, enjoy our real-time video stream, communicate with our family, interact with business associates, all these are changing what we're doing. Well, what that means is it changes the requirements on us as an industry. It changes how we go about trying to solve problems. So the vision has been laid out very nicely so far this week and probably will be over the next day and a half. How do we go about solving this? What we need to do is use all of the data, information, and knowledge that we can glean from the experiences that we have, start to understand the relations and the patterns, and ultimately applying the principles that we also understand to make a more deterministic solution to the problems that we face. The change is inevitable. There's going to continue to be challenges that I describe. There's going to be new challenges that emerge. And ultimately, we've got to be able to continue to respond the way we have as an industry. And ultimately, I would say the best way to predict the future is to invent it ourselves. And I challenge you with that. So thank you for your time this morning and have a good rest of the week.