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may not be considered carrier grade by North American carriers, they are excellent examples of Christensen s definition of disruptive technology in that they are cheaper, simpler, smaller, and more convenient to use than the Class 4 switches they replace. The chief reason teledensities of emerging markets lag behind that of the developed world is that the economies of Class 4 and Class 5 switches are too expensive for those developing nations. It is difficult to build an economic model for these countries that would support switches that cost tens of millions of dollars each. If softswitch technologies costing 30 percent of the cost of a Class 4 or 5 switch were to be substituted for the Class 4 or 5 switch, it is much easier to develop economic models that will support an expanded telecommunications infrastructure (especially converged voice and data). Vendors of softswitch-related technologies who have found their North American markets to be depressed at the time of this writing would be well advised to seek out emerging markets.
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In their April 2001 white paper, The $500 Billion Opportunity: The Potential Economic Benefit of Widespread Diffusion of Broadband Internet Access, Robert Crandall and Charles Jackson point to an economic benefit of $500 billion per year for the American economy if broadband Internet access were to be as ubiquitous as landline phones. Any new product or product improvement creates benefits for both consumers and producers. Consumers gain because they are able to purchase a new or improved product that was previously unavailable. They consume it up to the point at which the marginal value of the product is equal to its price. In the case of typical broadband services, consumers either subscribe to the service or they do not. As the uses of broadband multiply, the value to subscribers rises far above the monthly subscription price. This is the consumer surplus from the innovation. Producers of new services that rely on broadband, of products used in conjunction with broadband service, and even of the broadband service itself also gain from the greater diffusion of broadband. They bid resources away from other sectors of the economy and earn returns over and above those available elsewhere until the marginal value of each type of resource is equalized across all alternatives. The producer surplus that is generated by inframarginal sales is a real benefit to producers and therefore to the economy.
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In this section, we attempt to provide a rough estimate of the likely longterm gains to the economy: the sum of consumer and producer surplus generated by the widespread diffusion of broadband access. By long term, we mean a time period sufficient for broadband to become virtually ubiquitous, given the appropriate policy environment, a time period that could stretch out to 25 years or even more.
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What is the big deal behind softswitch if it doesn t have some enduring impact on society As a key network element in the converging/converged network, softswitch will improve the lives of the subscribers it serves. Ubiquitous broadband in the United States could bring a $500 billion annual benefit to the American economy. Similar benefits could be realized in other nations. Incorporating voice and voice features on that broadband network is absolutely essential in building a converged network. Soon the demand for broadband will reflect not only the growing potential uses of the Internet, but also the prospect for using these broadband connections to obtain voice telephone services currently provided over a narrowband connection. The use of broadband access to carry voice (ordinary telephone calls) as well as data will deliver substantial savings to consumers that are not captured in current demand estimates. A variety of options for VoIP are available in the residence or small business. An IP handset connects directly to the IP network via an Ethernet connection. Media gateways for the residence or small business range from one to eight ports that connect analog handsets to the IP network via a standard RJ-11 telephone jack. The PC, loaded with the appropriate software, can also be used with the speakers and microphone resident on the sound card in the PC. For those who find using a PC to be an anthropological challenge, an analog handset can be attached to the PC with the feel of a conventional telephone. A broadband connection can support several voice connections; the exact number depends on the speed of the connection and the degree of compression of the voice signal. The current structure with two networks in the home (a voice and an IP network) and two connections to the outside world (a narrowband analog connection and a high-speed digital connection) is inefficient. However, the transition to Internet telephony will take a few years. The existing inside wiring, designed for voice systems, will probably be replaced by wireless fidelity (Wi-Fi) applications. The analog telephones must be replaced or connected to digital adapters, and difficult issues of
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