DSL Prime, DOCSIS Report, Fiber News, A Wireless Cloud

Mr. Kevin Schneider went to DC to let them know major increases in DSL speed are really cheap (DSM,) doubling is inexpensive (bonding, < $100,) and further increases, beyond 300 meg on 2 pair (short distance, fully vectored DSM) are likely in the next few years. He also took sensible projections of demand for bandwidth in 4-8 years and translated that into what each home would need. From that data, Schneider believes download averages will range from 50 kilobits/second/home in 2007 to 150K in 2012. Working from there, he concludes WiMAX/LTE won't work as a primary home network in a few years because it's shared. If many families want video over the net, wireless will choke. The current cable deployments of 155/35 shared will also have problems by 2015 or so because of video demand, but I think cable will upgrade well before that in most places. The Adtran papers and presentation for the FCC are among the best descriptions of today's broadband I've seen for those comfortable with geek talk. http://bit.ly/PavUW

In 2006, 99% of the 176,000 customers of Madison River, a rural carrier, could receive broadband. 30% were already subscribers. It apparently only cost a couple of hundred per home for the broadband. To see whether they had particularly unusual circumstances, I reviewed their IPO filing.

Madison River's territory is no harder to serve than the typical rural carrier. Hinesville, Georgia is typical, where revenues were effected when the 3rd Infantry Division stationed at Fort Stewart and Hunter Army Airfield. Their DSL deployment was not particularly expensive, probably only a couple of hundred dollars per line. I infer the cost because their total capital spending was less than $100/line each year, which included an edge-out expansion, a fiber network, and all the usual costs of running a phone company.

The cost of this actual rural broadband deployment is so low that the numbers cited in the FCC rural broadband report need to be re-examined.

Vogels' Solution: the Post Office and Federal Express. Amazon S3 with AWS Import/Export is the fancy name for long distance sneakernet. Werner blogs “no ecommerce site can function anymore without mining massive amounts of data to optimize recommendations to their customers. Also in the systems management domain, data sets are growing faster and faster, consequently backup and disaster recovery has to deal with increasingly large sets.”

Speed thrills. “The Third Internet is fast enough to watch.”

Glen Post of CenturyTel says the time has now come. “Bonding is really working now, it’s being perfected. We have very little of it on our network. You can double your broadband speeds with bonding. It’s a real opportunity for us in the months ahead.” He's talking some IPTV and a faster offering against cable. (via Ed Gubbins)

A second DSLAM port costs $25-75 and the chips for the dual port modem perhaps $15, not too terrible. Nearly all phone networks now have massive amounts of unused copper. BellSouth had ?37% unused five years ago, and with line loss that's probably over 50% today. So if bonding works, it's a natural part of the tool set.

AT&T unfortunately won't benefit because they are using VDSL2 rather than ADSL. Based on promises from chip and modem makers, AT&T expected to deploy bonded VDSL2 widely in 2007 but is just getting into trials now. In 2003 when they designed U-Verse, they expected to need bonding for fewer than 10% of homes. The VDSL2 performance was projected at a solid 25 megabits 3,000-5,000 feet, but hasn't come close. Michael Coe, speaking for AT&T, tells me they estimate bonding will be required on about 25% of lines. The current hope is later this year.

Telco share is up from 46% in 1Q08, a remarkable turnaround. In one recent quarter, Comcast added more data customers than all telcos put together. My guess is that the recession drove more customers to DSL at $15-30 rather than cable at $30-50. Cable's response to the recession has been to quietly promote their less expensive offerings, but mostly they are looking for $40-55.

Perhaps trying to get in before the new FCC chair takes over, AT&T raised DSL prices 10.5% in the quarter, Seitz calculates. AT&T's low end DSL price went up by 33% from $15-$20. Verizon raised FIOS prices 3% to 7%, but the effect of promotions brought DSL down 8.6%.

Seitz also sees telco TV adds at 565K while cable drops 384K. I believe this the predictable result of telcos as new entrants in the TV market, where 10-20% of customers will likely shift because they hate their current provider.

Jules Genachowski takes over after the worst six months for broadband coverage since 1998 when things began.  The big four companies that control 75% of the market report added virtually no new coverage. AT&T won't even give me a figure for their deployment, which currently is about 5 points lower than their CEO suggested on Wall Street years ago. The U.S. and Canada have by far the worst DSL availability in the developed world, even when just rural or urban areas are compared. Obama talks about broadband for all, but his first six months have been all talk.

By the best available data, fewer new homes became servable since the election than in the prior six months. Almost everyone halted their existing plans, hoping to do the same thing a year later with massive subsidies. Since few expect deployment to start up before the end of 2009, we almost certainly will have the worst year in a decade. AT&T, Comcast, Verizon, Cablevision, Cox and most others are spending their budget on upgrades to existing areas.  Almost all of the companies in this industry are spending substantially less on capex than depreciation. DOCSIS 3.0 and FiOS are great, but they aren't getting to everyone.

I am not objective about this administration. I've written Obama will be the best president of my lifetime, and readers need to know my bias. I know many of the appointees; they are the best and brightest in the industry.

James Cowie of Renesys has provided remarkable insight into what Iran is actually doing with their Internet connectivity. Renesys found that Iran was always connected, contrary to many news stories. “Except for a brief period of outage over the weekend, the routes into Iran from the rest of the world have been basically intact, if a bit congested and unstable. Most of that congestion and instability is probably the result of six billion people who are freshly interested in Iranian politics, all reading (and in some cases, yes, attacking) Iranian websites.”

Cowie describes the current situation: “Perhaps the strangest thing of all, given how diverse and active and vocal the proxy server farmers have been, is that by and large, it isn't working. (Map on left from Renesys)The rate with which new proxies are being created has slumped over the last few days. It's getting harder and harder to propagate new proxies to the people who need them, as the government consolidates its hold on the filtering mechanisms. Any new proxy addresses that are posted to Twitter, or emailed, will be blocked very quickly.

People we talk to inside Iran say that almost no proxies are usable any more. F

Significant error in this story: BT's terms of service explicitly say that streaming video will be throttled to 896K on Option 1 (about 1,000 words in) I was therefore wrong to say this was a change that would allow breaking contracts. I relied on another reporters' comments rather than reading the actual BT posting. Thanks to Simon Dux of BT for the facts that showed my error.

London: British Telecom's John Petter tells FT they throttle “8 megabits per second customers down to 896 kilobits per second between 5pm and midnight.” That's far below standard TV quality and half the speed of the typical U.S. network's Internet feed. (ABC was 1.9 megabits and AT&T 2.1 megabits last I checked.)

They claim that video traffic growth is driving up BT's costs so much they must charge extra, but Cisco has just done a major report that finds a slight decrease in the rate of Internet traffic growth. France Telecom, Verizon, and AT&T are doing just fine, with very high DSL margins.

While hard to handle video demand is possible in theory, I reported in September from the CEO of BT Wholesale

Davis' network is ready for video

BT does not need to charge extra for access for the iPlayer. Sally Davis, CEO BT Wholesale, confirms she was misquoted in the British papers about the problems. They've solved any congestion problems. ... A respected newspaper had reported Davis saying they had a problem, but the text of the speech confirmed the reporter got it wrong. We all do. http://bit.ly/ssfBi

I was also delighted to report from BT their rates – and actual costs – for bandwidth are dropping.

BT Cutting High Volume Backhaul Rates in Half

The new BT backhaul is "approximately 50 per cent cheaper,"

Dramatic cost savings from Iliad's all-IP network enable profitably offering a 30 euro triple play, the best deal in the Western world. 4M customers have switched to Iliad/Free, so it's no surprise France Telecom has chosen to also go all-IP. The surprise is the choice of the Alcatel 7750, originally marketed as an edge router with high reliability, rather than the usual "big iron" from Cisco or Juniper.  Alcatel is France's national champion and guaranteed a close look at FT, but Alcatel routers are also gaining share around the world.  Similarly, Ericsson is pushing their Redback gear many places that would have called for a "core router." Both are due for upgrades soon, which means they will match the "big iron" of Cisco's recent past.

France Telecom has some of the best technical people in the world and a reputation for innovation. They are about to stream the French Open tennis tournament in 3D, one of the first live 3D events.  They've planned a conversion to full IP for years, and now the budget was found. The network upgrades should allow FT to handle just about any likely level of traffic without congestion problems, so they will not require throttling.

The Alcatel router was originally built by Basil Alwan's company, TiMetra, which is proving to be the finest acquisition Alcatel has made.

Ahmed Zeddam of France Telecom Labs has now written a paper on how similar techniques can apply in-home as well. HD TV around the house stretches the state of the art of wireless transmission, with MIMO, cognition and other techniques becoming crucial. Here's the abstract.

Electromagnetic environment and telecommunications: towards a cognitive electromagnetic compatibility

This article deals with the electromagnetic environment management problem within the context of high speed digital transmissions deployed in wired telecommunication networks. Traditionally, Electromagnetic Compatibility (EMC) is assured by filtering for better electromagnetic immunity, and by cable shielding for emission limitation. However, like cognitive radio, we can also, for high speed wired transmissions, treat the EMC as an intelligent and autonomous system capable of perceiving its environment, interpreting it, making suited decisions, and reacting according to the constraints related to the electromagnetic environment.

Virginia including the D.C. suburbs was 65%; West Virginia 74%, and New York State 76% (Latest FCC data, 12/07.) Subtracting out New York City and suburbs, D.C. suburbs, and a few larger cities, most of the Verizon area in thes states has less than 50% availability. That's not because of population density or terrain. North Dakota was 88% and Iowa 85%, while rural and mountainous areas in Britain were over 95%.

Verizon put about 10M lines up for sale in 2002, and virtually ended DSL upgrades for any of them. I have strong but unconfirmed rumors many AT&T areas are for sale. Qwest, Frontier, and other regionals are also seeking buyers.

It's ignorant to say that “the only reason areas are unserved is the prohibitively high cost of reaching rural homes,” and therefore large subsidies are almost always required. About half of the 4-7% “unserved” can be upgraded to cable modems for a total cost of less than $500, mostly at 50 meg. A significant fraction of the last 2-4% can reach 5 meg over DSL for a similar price.

U-Verse is up 284K on top of a 12 month $30-30-30 triple play promotion and many free “whole home” DVRs. Lindner notes a remarkable 60% are coming from competitors, primarily cable. We are still in the early stage of U-Verse, when the 10% of customers who hate their cable company come over.

The U-Verse results are despite a nearly 1/3rd decline in capital spending, including a reduction in the number of homes passed by U-Verse to less than 1M.