Update 4/7 Ivan at CFR says no merger likely. He usually tells truth. Prev: Ivan Seidenberg has tens of millions of reasons to sell Verizon to Vodafone before he retires in a year or two. Vittorio Calao also wants to strike a deal in the next few months. Needing to keep short term numbers high to raise the deal price explains Verizon recent moves: firing 8,000 more people than originally intended, canceling 5M planned lines of FiOS and reaching an entente with cable to both raise prices.

    Calao is an ex-Morgan banker who will drive a tough bargain. Craig Moffett notes that Verizon has a problem the current dividend, which in 2009 was substantially higher than earnings. He thinks Voda has a trump card in Verizon's need to pull cash out of the 45% Vodafone owned Verizon Wireless if they don't want to cut the dividend, although cutting capex could put that off several years. 

     Mike McCormack of JP Morgan sees it differently. "

Jeff Green's DSL line dropped and he tweeted "Booted twice -- and progress lost -- on my single-player C&C4 game because my DSL connection blinked. DRM fail. ...Well. I've tried to be open-minded. But my 'net connection is finicky -- and the constant disruption of my C&C4 SP game makes this unplayable. The story is fun, the gameplay is interesting and different at least -- but if you suffer from shaky/unreliable DSL -- you've been warned."

     Jeff, editor-in-chief of Electronic Arts, added "We need new solutions." DSL reliability, please. (via Neoseeker and slashdot)

Goldman Sachs and Morgan Stanley sucessfully brought Calix public on Wednesday for $13/share and ended the day at $15. After the offering they will have over $100M in cash, far more than their total debt. Their primary product is a multi-service access box supporting both DSL and fiber, along with associated software and customer equipment. CenturyLink is their primary customer (38% in 2009) and 90% of total sales are in North America. They have a very strong position in the U.S. Tier 2 market with 2009 sales of $233M

And some analysts said that even if the spectrum ultimately became available, it might create wireless access but fail to create competition for the much higher-speed Net access. Wireless access is roughly one-twentieth of the speed of the envisioned 100-megabit lines, said Dave Burstein, editor of DSL Prime, an industry newsletter.

“They talk, talk, talk about affordability, but when you look at the plan, most peoples’ prices are going to go up,” Mr. Burstein said. It typically costs $100 a month for Net access at speeds of 50 megabits to 100 megabits.

Mr. Burstein said those prices were double the cost in places like France and England and yet the plan, he added, does little to bring those down.

He also asserted that the goal of getting high-speed access to 100 million homes was already within reach. About 50 million homes have access to broadband service of 50 to 100 megabits, and the cable industry says 100 million homes will have such access within five years.

F.C.C. Calls New Broadband Plan Vital

Federal regulators on Tuesday made public the details of their ambitious policy to encourage the spread of high-speed Internet access. But their 376-page proposal, the National Broadband Plan, was met with a chorus of questions, even from the staunchest advocates of its goals.

Telecommunications companies praised the intent but worried that new regulations might impede rather than encourage their progress in expanding Internet access. Iindustry analysts said the plan was both too ambitious and not detailed enough, and consumer advocates doubted it alone would lead to more affordable broadband service at adequate speeds.

Customers hate bandwidth caps, Verizon's market research shows, so "No Bandwidth Caps. Period!" is the highlight of their latest DSL ad campaign. There's no technical or cost reason a cap is needed on any large, wireline network; it's a way to block competitive video and efficiently raise prices.

Internet transit is down to $2/megabit at major peering points and costs of deploying broadband continue to drop steadily. Bandwidth growth continues, which Bill Smith of AT&T tells an FCC workshop has slightly raised his cost per customer. That's important information for DSL Prime readers whose job is to manage network costs, but I'd estimate any increase in the last year is less than 1% of the price of the service. The usual industry figure is the total bandwidth cost is about $1/month, 2-4% of the price charged.

Congressman Eric Massa became a hero to voters by fighting a Time Warner bandwidth cap. Fighting caps – and unreasonable prices – is a natural move for politicians and regulators worldwide who want public support. There's nothing immoral or even fattening about a cap that's reasonably related to costs. Iheard from my consumer-favoring friends for writing about a reasonable one, http://fastnetnews.com/docsisreport/163-c/53-comcasts-fair-250-gig-bandwidth-cap . But it turns out so few people are affected by the Comcast cap it saves very little money.

Randall Stephenson will put 10M AT&T femtocells across the U.S., I reported in 2008. He told Wall Street that a half-billion dollar investment in femtos would save him the equivalent of $3B in spectrum. They've now officially launched, but at a high price ($100-150) to limit early demand. Cisco is selling femtos to AT&T for about $50 (very large quantities). They save bandwidth (think reducing iPhone problems) and make customers happy, so T's logical strategy is to include a femto in most  bundles. 2Wire, part owned by AT&T, discussed a gateway with a femto included three years ago.

    Checking with parts suppliers I'm finding that including a femto will only add $20-30 to the cost in the near future, and be a natural to include with every U-Verse order. T has invested in their chip supplier, picoChip, rapidly introducing integrated chips that bring down the cost. Randall has a powerful incentive to move quickly after they resolve the last few bugs; wall street is downgrading for reputation issues due to iPhone problems,

     4-10 devices can connect via each femto. Think several phones, the meter for the smartgrid service, electric appliances to switch on or off for automatic energy savings, and others not yet dreamed of. No one is doing it yet,

"Right now our capacity is all taken up, and we don't have enough," Jiang Shangzhou of SMIC tells Reuters. Ulrich Schumacher at Grace Semi  has been operating at 100 percent capacity since September. Mark Lapedus  in EE Times writes "Not long ago, chip makers could not buy an order amid the terrible downturn. Now, amid the upturn, there are widespread reports of component shortages in the supply chain." Memory chip prices are actually going up, with Samsung doing particularly well.

      My checks across the industry suggest things are not nearly that intense. Don't panic. Everyone has to carefully plan, but it's rare that an order that ordinarily would be filled in 30 days is delayed. Demand for DSL chips is good but not enough to seriously strain supply. Chip demand is ultimately driven by sales of the product that include chips; the world economy simply hasn't expanded that much. It's far more likely the industry situation was caused by companies in previous quarters conserving cash by keeping inventories low and now catching up. John Pitzer of Credit Suisse is strongly optimistic about semiconductor stocks, but also notes "there is double ordering in the current environment." Digitimes reports wafer prices are up, but we're talking perhaps a dime a chip, not huge price increases that need to be hedged.

      Several times I've watched forecasts of chip shortages become self-fulfilling prophecies. Companies double and triple order "just to be safe." The splash of orders creates a real bottleneck and then chaos when things catch up. I call it the "Johnny Carson" problem. The TV host made a joke about toilet paper shortages on the east coast of the U.S. The next day, everybody bought all they could and there (temporarily) was a real shortage.