Callback and Kallback are registered trademarks of Seattle-based International Telcom Ltd. (ITL), but, like band-aid and kleenex, tend to be used in a generic way by people overseas. The callback concept is based on the fact that it’s much cheaper to call Japan from the U.S. than it is to call the U.S. from Japan. Subscribers to a callback service are given a phone number in the U.S. When they want to make a call, they dial that number, wait for it to ring once, and then hang up so they won’t be charged for the call. In the jargon of the callback world, this is the trigger call. A system in the U.S. then calls them back, giving them a cheap international line, and once that is accomplished, it’s an easy matter to shunt the call elsewhere: to a number in the States or in any other country in the world.
Any phone call made between two countries is subject to a so-called settlement charge, which is assessed on a per-minute basis. The amount of the settlement charged is fixed by an agreement between the two countries’ PTTs and generally provides a barometer of their relative size and power. So, for example, when working out the deal with Denmark, Pakistan might say, “Hey, Danes are rich, and we don’t really care whether they call us or not, and they have no particular leverage over us—so POW!” and insist on a high settlement charge—say $4 per minute. But when negotiating against AT&T, Pakistan might agree to a lower settlement charge—say $1 per minute.
Settlement charges have long been a major source of foreign exchange for developing countries’ PTTs and hence for their governments and any crooked officials who may be dipping into the money stream. In some underdeveloped nations, they have been the major—verging on the only—source of such income. But not for long.
Nowadays, a Dane who makes lot of international calls will subscribe to a service such as ITL’s Kallback. He makes a trigger call to Kallback’s computer in Seattle, which, since it is an incomplete call, costs him nothing. The computer phones him back within a few seconds. He then punches in the number he wants to call in Pakistan, and the computer in Seattle places the call for him and makes the connection. Since Pakistan’s PTT has no way to know that the call originates in Denmark, it assesses the lower AT&T settlement charge. The total settlement charge ends up being much less than what the Dane would have paid if he’d dialed Pakistan directly. In other words, two calls from the U.S., one to point A and one to point B, are cheaper than one direct call from point A to point B.
KDD, like many other PTTs around the world, has tried to crack down on callback services by compiling lists of the callback numbers and blocking calls to those numbers. When I talked to Eric Doescher, ITL’s director of marketing, I expected him to be outraged about such attacks. But it soon became evident that if he ever felt that way, he long ago got over it and now views all such efforts with jaded amusement. “In Uganda,” he said, “the PTT blocked all calls to the 206 area code. So we issued numbers from different area codes. In Saudi Arabia, they disabled touch-tones upon connection so our users were unable to place calls when the callback arrived—so we instituted a sophisticated voice recognition system—customer service reps who listened to our customers speaking the number and keyed it into the system.” In Canada, a bizarre situation developed in which calls from the Yukon and Northwest Territories to the big southeastern cities like Ottawa and Toronto were actually cheaper—by a factor of three—when routed through Seattle than when dialed directly. In response to the flood of Kallback traffic, Canada’s Northern Telecom had human operators monitor phone calls, listening for the distinctive pattern of a trigger call: one ring followed by a hang-up. They then blocked calls to those numbers. So ITL substituted a busy signal for the ringing sound. Northern Telecom, unwilling to block calls to every phone in the U.S. that was ever busy, was checkmated.
In most countries, callback services inhabit a gray area. Saudi Arabia and Kenya occasionally run ads reminding their people that callback is illegal, but they don’t try to enforce the law. China has better luck with enforcement because of its system of informants, but it doesn’t bother Western businesspeople, who are the primary users. Singapore has legalized them on the condition that they don’t advertise. In Italy, the market is so open that ITL is about to market a debit card that enables people to use the service from any pay phone.
So settlement charges have backfired on the telcos of many countries. Originally created to coddle these local monopolies, they’ve now become a hazard to their existence.
KDD carries all the baggage of an old monopoly: it works in conjunction with a notoriously gray and moribund government agency, it still has the bad customer-service attitude that is typical of monopolies, and it has the whole range of monopoly PR troubles too. Any competitive actions that it takes tend to be construed as part of a sinister world domination plot. So KDD has managed to get the worst of both worlds: it is viewed both as a big sinister monopoly and as a cringing sidekick to the even bigger and more sinister AT&T.
Michio Kuroda is a KDD executive who negotiates deals relating to submarine cables. He tells of a friend of his, a KDD employee who went to the United States two decades ago to study at a university and went around proudly announcing to his new American acquaintances that he worked for a monopoly. Finally, some kind soul took him aside and gently broke the news to him that, in America, monopoly was an ugly word.
Now, 20 years later, Kuroda claims that KDD has come around; it agrees now that monopoly is an ugly word. KDD’s detractors will say that this is self-serving, but it rings true to this reporter. It seems clear that a decision has been made at the highest levels of KDD that it’s time to stop looking backward and start to compete. As KDD is demonstrating, fat payrolls can be trimmed. Capital can be raised. Customer service can be improved, prices cut, bad PR mended. The biggest challenge that KDD faces now may stem from a mistake that it made several years ago: it decided not to land FLAG.
35˚ 11.535' N, 139˚ 36.995' E IDC Cable Landing Station, Miura, Japan
The Miura station of IDC, or International Digital Communications Inc., looks a good deal like KDD’s Ninomiya station on the inside, except that its equipment is made by Fujitsu instead of KDD-SCS. At first approximation, you might think of IDC as being the MCI of Japan. Originally it specialized in data transmission, but now that deregulation has arrived it is also a long-distance carrier. This, by the way, is a common pattern in Asian countries where deregulation is looming: new companies will try to kick out a niche for themselves in data or cellular markets and hold on by their toenails until the vast long-distance market opens up to them. Anyone in Japan can dial an international call over IDC’s network by dialing the prefix 0061 instead of 001 for KDD. The numerical prefixes of various competing long-distance companies are slapped up all over Tokyo on signs and across rear windows of taxicabs in a desperate attempt to get a tiny edge in mindshare.
Miura’s outer surroundings are quite different from Ninomiya’s. Ninomiya is on a bluff in the middle of a town, and the beach below it is a narrow strip of sand chockablock with giant concrete tetrapods, looking like vastly magnified skeletons of plankton and intended to keep waves from washing up onto the busy coastal highway that runs between the beach and the station. Miura, by contrast, is a resort area with a wide beach lined with seasonal restaurants. When we were there we even saw a few surfers, hunting for puny waves under a relentless rain, looking miserable in black wetsuits. The beach gives way to intensively cultivated farmland.
Miura is the Japan end of NPC, the Northern Pacific Cable, which links it directly to Pacific City, Oregon, with 8,380 kilometers of second-generation optical fiber (it carries three fiber pairs, each of which handles 420 Mbps). Miura also lands APC, the Asia-Pacific Cable, which links it to Hong Kong and Singapore, and by means of a short cable under Tokyo Bay it is connected to KDD’s Chikura station, which is a major nexus for transpacific and East Asian cables.
When FLAG first approached KDD with its wild scheme to build a privately financed cable from England to Japan, there were plenty of reasons for KDD to turn it down.
The U.S. Commerce Department was pressuring KDD to accept FLAG, but AT&T was against it. KDD was now caught between two sumo wrestlers trying to push it opposite ways. Also in the crowded ring was Japan’s telecommunications ministry, which maintained that plenty of bandwidth already existed and that FLAG would somehow create a glut on the market. Again, this attitude is probably difficult for the hacker tourist or any other Net user to comprehend, but it seems to be ubiquitous among telecrats.
Finally, KDD saw advantages in the old business model in which cables are backed, and owned, by carriers—it likes the idea of owning a cable and reaping profits from it rather than allowing a bunch of outside investors to make all the money.
For whatever reasons, KDD declined FLAG’s invitation, so FLAG made overtures to IDC, which readily agreed to land the cable at its Miura station, where it could be cross-connected with NPC.
A similar scenario played out in Korea, by the way, where Korea Telecom, traditionally a loyal member of the AT&T family, turned FLAG down at first. FLAG approached a competitor named Dacom, and, faced with that threat, Korea Telecom changed its mind and decided to break with AT&T and land FLAG after all. But in Japan, KDD, perhaps displaying more loyalty than was good for it, held the line. Miura became FLAG’s Japanese landing station by default—a huge coup for IDC, which could now route calls to virtually anywhere in the world directly from its station.
All of this happened prior to a major FLAG meeting in Singapore in 1992, which those familiar with the project regard as having been a turning point. At this meeting it became clear that FLAG was a serious endeavor, that it really was going to happen. Not long afterward, AT&T decided to adopt an “if you can’t beat ’em, join ’em” strategy toward FLAG, which eventually led to it and KDD Submarine Cable Systems getting the contract to build FLAG’s cable and repeaters. (AT&T-SSI is supplying 64 percent of the cable and 59 percent of the repeaters, and KDD-SCS is supplying the rest.) This was a big piece of good news for KDD-SCS, the competitive-minded manufacturer, but it put KDD the poky long-distance company in the awkward, perhaps even absurd situation of supplying the hardware for a project that it had originally opposed and that would end up being a cash cow for its toughest competitor.
So KDD changed its mind and began trying to get in on FLAG. Since FLAG was already coming ashore at a station owned by IDC, this meant creating a second landing in Japan, at Ninomiya. In no other country would FLAG have two landings controlled by two different companies. For arcane contractual reasons, this meant that all of the other 50-odd carriers involved in FLAG would have to give unanimous consent to the arrangement, which meant in practice that IDC had veto power. At a ceremony opening a new KDD-SCS factory on Ky¯ush¯u executives from KDD and IDC met to discuss the idea. IDC agreed to let KDD in, in exchange for what people on both sides agree were surprisingly reasonable conditions.
At first blush it might seem as though IDC was guilty of valuing harmony and cooperation over the preservation of shareholder value—a common charge leveled against Japanese corporations by grasping and peevish American investors. Perhaps there was some element of this, but the fact is that IDC did have good reasons for wanting FLAG connected to KDD’s network. KDD’s Ninomiya station is scheduled to be the landing site for TPC–5, a megaproject of the same order of magnitude as FLAG: 25,000 kilometers of third-generation optical fiber cable swinging in a vast loop around the Pacific, connecting Japan with the West Coast of the U.S. With both FLAG and TPC–5 literally coming into the same room at Ninomiya, it would be possible to build a cross-connect between the two, effectively extending FLAG’s reach across the Pacific. This would add a great deal of value to FLAG and hence would be good for IDC.
In any case, the deal fell through because of a strong anti-FLAG faction within KDD that could not tolerate the notion of giving any concessions whatever to IDC. There it stalemated until FLAG managed to cut a deal with China Telecom to run a full-bore 10.6 Gbps spur straight into Shanghai. While China has other undersea cable connections, they are tiny compared with FLAG, which is now set to be the first big cable, as well as the first modern Internet connection, into China.
At this point it became obvious that KDD absolutely had to get in on the FLAG action no matter what the cost, and so it returned to the bargaining table—but this time, IDC, sensing that it had an overpoweringly strong hand, wanted much tougher conditions. Eventually, though, the deal was made, and now jumpsuited workers are preparing rooms at both Ninomiya and Miura to receive the new equipment racks, much like expectant parents wallpapering the nursery. At Ninomiya, an immense cross-connect will be built between FLAG and TPC–5, and Miura will house a cross-connect between FLAG and the smaller NPC cable.
The two companies will end up on an equal footing as far as FLAG is concerned, but the crucial strategic misstep has already been made by KDD: by letting IDC be the first to land FLAG, it has given its rival a chance to acquire a great deal of experience in the business. It is not unlike the situation that now exists between AT&T, which used to be the only company big and experienced enough to put together a major international cable, and Nynex, which has now managed to get its foot in that particular door and is rapidly gaining the experience and contacts needed to compete with AT&T in the future.
HAZARDS
Dr. Wildman Whitehouse and his 5-foot-long induction coils were the first hazard to destroy a submarine cable but hardly the last. It sometimes seems as though every force of nature, every flaw in the human character, and every biological organism on the planet is engaged in a competition to see which can sever the most cables. The Museum of Submarine Telegraphy in Porthcurno, England, has a display of wrecked cables bracketed to a slab of wood. Each is labeled with its cause of failure, some of which sound dramatic, some cryptic, some both: trawler maul, spewed core, intermittent disconnection, strained core, teredo worms, crab’s nest, perished core, fish bite, even “spliced by Italians.” The teredo worm is like a science fiction creature, a bivalve with a rasp-edged shell that it uses like a buzz saw to cut through wood—or through submarine cables. Cable companies learned the hard way, early on, that it likes to eat gutta-percha, and subsequent cables received a helical wrapping of copper tape to stop it.
A modern cable needn’t be severed to stop working. More frequently, a fault in the insulation will allow seawater to leak in and reach the copper conductor that carries power to the repeaters. The optical fibers are fine, but the repeater stops working because its power is leaking into the ocean. The interaction of electricity, seawater, and other chemical elements present in the cable can produce hydrogen gas that forces its way down the cable and chemically attacks the fiber or delicate components in the repeaters.
Cable failure can be caused by any number of errors in installation or route selection. Currents, such as those found before the mouths of rivers, are avoided. If the bottom is hard, currents will chafe the cable against it—and currents and hard bottoms frequently go together because currents tend to scour sediments away from the rock. If the cable is laid with insufficient slack, it may become suspended between two ridges, and as the suspended part rocks back and forth, the ridges eventually wear through the insulation. Sand waves move across the bottom of the ocean like dunes across the desert; these can surface a cable, where it may be bruised by passing ships. Anchors are a perennial problem that gets much worse during typhoons, because an anchor that has dropped well away from a cable may be dragged across it as the ship is pushed around by the wind.
In 1870, a new cable was laid between England and France, and Napoleon III used it to send a congratulatory message to Queen Victoria. Hours later, a French fisherman hauled the cable up into his boat, identified it as either the tail of a sea monster or a new species of gold-bearing seaweed, and cut off a chunk to take home. Thus was inaugurated an almost incredibly hostile relationship between the cable industry and fishermen. Almost anyone in the cable business will be glad, even eager, to tell you that since 1870 the intelligence and civic responsib
ility of fishermen have only degraded. Fishermen, for their part, tend to see everyone in the cable business as hard-hearted bluebloods out to screw the common man.
Most of the fishing-related damage is caused by trawlers, which tow big sacklike nets behind them. Trawlers seem designed for the purpose of damaging submarine cables. Various types of hardware are attached to the nets. In some cases, these are otter boards, which act something like rudders to push the net’s mouth open. When bottom fish such as halibut are the target, a massive bar is placed across the front of the net with heavy tickler chains dangling from it; these flail against the bottom, stirring up the fish so they will rise up into the maw of the net.
Mere impact can be enough to wreck a cable, if it puts a leak in the insulation. Frequently, though, a net or anchor will snag a cable. If the ship is small and the cable is big, the cable may survive the encounter. There is a type of cable, used up until the advent of optical fiber, called 21-quad, which consists of 21 four-bundle pairs of cable and a coaxial line. It is 15 centimeters in diameter, and a single meter of it weighs 46 kilograms. If a passing ship should happen to catch such a cable with its anchor, it will follow a very simple procedure: abandon it and go buy a new anchor.
But modern cables are much smaller and lighter—a mere 0.85 kg per meter for the unarmored, deep-sea portions of the FLAG cable—and the ships most apt to snag them, trawlers, are getting bigger and more powerful. Now that fishermen have massacred most of the fish in shallower water, they are moving out deeper. Formerly, cable was plowed into the bottom in water shallower than 1,000 meters, which kept it away from the trawlers. Because of recent changes in fishing practices, the figure has been boosted to 2,000 meters. But this means that the old cables are still vulnerable.
Some Remarks: Essays and Other Writing Page 18