Fast Net News, DSL Prime, DOCSIS Report

The phony price in this Verizon ad can be called a "headline price" or more directly "bait and switch." The ad said $74, the price turned out to be $102 - or more. Everyone hates to discover that the price you pay is very different than the price you saw in the ad, but this deception is approved by the top of AT&T and Verizon. Randall Stephenson, now AT&T CEO, told wall street "don't look at our headline price. That's just to draw them in. Look at the average revenue per user (ARPU)."

Verizon DSL and FIOS sales have been much too low, so cutting prices is under consideration. They probably won't do it, but Ivan explained to me a while back "We have to get cable out of the house." FIOS is better than anything the cable guys have, including DOCSIS 3.0, but it's proving hard to get people to switch. Outside of FIOS territory, cable is clobbering them.  

Seven years ago, Bob Crandall predicted broadband would produce $500B/year in savings, including perhaps $40B by growth induced in telemedicine. We can now test his assumptions against several years experience. Does evidence confirm the predicted explosion? U.S. broadband availability has been at over 90% for several years, not quite universal service. Telemedicine growth has been relatively limited in those seven years.

The editor of The Journal of Telemedicine and Telecare, Richard Wooten, writes “Sorry to sound like a damp squib. I would rather doubt that investing in broadband services will lead automatically to more telemedicine. That would mean that telemedicine is presently stifled simply because of lack of bandwidth, whereas most people feel that the barriers are more complicated than that, and are mainly due to organizational/people factors, and not due to a lack of technology.

With China Mobile threatening with Fiber to the Basement, China Telecom added 2.1M DSL subscribers between October and December. That is slightly above their typical quarterly pace, and a remarkable achievement as the Chinese economy starts to slow. They are advancing IP TV and will soon be bundling DSL + Wireless.

China Mobile is beginning FTTB in Jiangsu through its newly acquired China Tietong subsidiary. Lynn Hutcheson of Ovum reports estimates of 13M to 19M new fiber subscribers in 2009, adding to the 6M end of 2008.

"Verizon has begun to phase out the term 'DSL' in its marketing, aware that many consumers now associate it with slower Web speeds. Even internally, employees are encouraged to use the term "HSI," or high-speed Internet, instead." writes Amol Sharma in the WSJ. Verizon and AT&T have been clobbered by cable the last few months, after making the race close the last few years. DSL can go 100 meg symmetrical if you bring it close, which Verizon will be doing in apartment buildings, perhaps mine one day. Verizon all but stopped stopped investing in DSL in 2002, killing numerous extensions and upgrades. The result is the majority of Verizon DSL lines can't do more than 3 meg down, and none more than 6 meg, the speed they opened with in 1999. Nearly all U.S. cable modems can do at least 6 meg, and most are at 10 and 15 meg today. Verizon chose to invest in FIOS instead, and are now paying the price for chopping DSL.

Whether cable knocks out wireline telcos is a crucial question without a clear answer. Q3, Comcast alone added more data customers than all the telcos in the U.S.. Q2 was perhaps worse. One quarter could have been an anomaly, two look like a trend, three would be time to panic. Currently, only about a third of the lines at Verizon and AT&T can get FIOS or U-Verse, with no attractive TV offering for the majority of their homes served.

Philippe Keryer becomes one of the most important executives in broadband, where Alcatel has been the leader from the beginning. He's the new head of the carrier business group, which includes DSL and fiber. He comes from mobile, so I don't know him yet. His predecessor, Michel Rahier, moves to President of Operations and remains on the executive committee. Rahier, a Ph.D engineer and very sharp, was one of the first in the west to recognize that Huawei was the biggest threat, rather than Lucent, Siemens, or Ericsson. He's held off a ferocious assault by Huawei on the DSLAM market, where the two now contend for almost every major contract.

For almost two decades, Tom Starr has led the DSL standards effort in the U.S., as Ameritech became part of SBC which became AT&T. That's now been honored with the AT&T Science and Technology Medal  "For vision and leadership in developing and standardizing VDSL technology." (Tom's the second from the left.)

Tom, along with Gavin Young, John Cioffi, and several others still active in the industry defined DSL standards in the early 1990's that remain effective today. Before the equipment was available, they created models of interference and power spectral densities. They had to work only by theory in the early days. I remember predictions by senior engineers that by now we'd have unsolvable interference problems, Today, hundreds of millions of connections prove that the work of T1E1.4 was on target.

Other winners involved with AT&T's U-verse effort included:

Alicia Abella - For technical innovation and leadership in dialog engineering and analysis. One of her projects is IPTV Service Applications: Build a community system around entertainment by connecting television, movies, music and radio shows to instant messaging and audio/video chat. Enables friends and family to virtually congregate while watching television or listening to music.

Dr. Ahmad Ansari - For technical contributions during the specification and testing of the U-verse STB

Frank Jiang - For technical leadership and innovation in establishing
data collection framework for access/home network.

Outside of U-Verse territory, AT&T lost at least 27,000 DSL customers. AT&T added 8 or 9M U-Verse avails in 2008, but announced Wednesday they will reduce that to less than 4M/year, dragging their stage 2 deployment out through 2011. They reduced their U-Verse plans from 13M in 2009-2010, or 6-7M/year. For the year 2008, net broadband adds, 1/3rd wireless, dropped 42% from 2,632M to 1,520M. The cost for U-Verse is now less than $300/home passed, with the cost to connect each home dropping.

Randall explained the cut was not due to the impracticality of meeting their plan, announced in the 2007 annual report. Instead “We had a build plan that was requiring a rapid ramp in force, and then you'd have to come down in force as you got to certain points in the build plan.

Martin blogs "I've spent most of my career as a hands-on 'doing' person, which very much contrasts with the 'thinking' and 'advising' role many people have seen me in at Telco 2.0.

"We are not happy," Peter Bauer said frankly, but went on to say "We will survive." However, led by remarkable sales of chips for the iPhone, the Infineon division that produces DSL chips revenues of Euro 389 million, up 24 percent compared to the prior quarter and up 22 percent year-over-year. Results in the broadband business decreased slightly, driven by the weakening market environment and corresponding to other chipmaker results. Fortunately, the company is not planning major cutbacks in staffing. They will be cutting back payroll expenses in other ways, perhaps emulating Cisco with mandatory use of vacation days over the holidays, etc. Infineon will also be cutting workers' hours, especially at the large chip plants.