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Verizon-Vodafone: Who Buys Whom
Wednesday, 08 September 2010 00:44
Vodafone sold its holding in China Mobile for $6B. Press are speculating ivanthey might use the money to buy Verizon out of Verizon Wireless or Vivendi out of SFR, France's #2 mobile. Vodafone today has a $128B market cap and about $60B debt; Verizon $85B with $40B debt and $40B+ in deferred taxes, etc; Vivendi $23B with $15B debt.
    The raw numbers point to Vodafone as the surviving entity. Both Verizon and Vivendi assert if any deals go down they are buyers, not sellers. But both are struggling to cover their dividend with earnings. Verizon just cut wireline capex 24%. Vodafone is rumored to be searching for a new Chairman.
     In March, I wrote (below) that Ivan is getting closer to retirement every day. With a standard employment contract he would probably be tens of millions richer if he sold the company before he leaves. A few days after I reported that, Ivan said no way was he selling.
    Verizon is holding back on almost everything major except the LTE build while they decide who will succeed Ivan. Lowell McAdam from wireless is the outsiders pick, with CFO John Killian also in the game.
Last Updated on Wednesday, 08 September 2010 01:22
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Verizon Turns on ADSL2+ to 1/3
Monday, 30 August 2010 17:14
Adtran_5000Verizon has been installing ADSL2+ in most new equipment for years but not offering speeds above 6 megabits because only a small fraction of their 30M lines were covered. They now are offering 10-15 megabit down to about 4M customers for about $55 to about $70/month. Given that the majority of customers are beyond the 7,000 foot cutoffs for the 10-15 meg service, that means they have ADSL2+ to about a third of the network. Most of the rest are behind remote terminals or connected to DSLAMS 5-12 years old, neither of which are scheduled for volume upgrades.
      Experience from Britain, France and the UK has been that almost no one gets the 20 & 24 megabits possible with ADSL2+ and only a minority can even get 10 megabits down. DSM has improved things some, especially for the lines that were marginal for any given speed, and minor improvements in the chips keep improving performance. Current state of the art is that 15-25 megabits down is typical about half a mile from the DSLAM, less than 10 megabits from around a mile and a half. These are realistic averages, but there's an enormous difference from home to home and office to office. Your speed may well be different than the suggested averages. For example, I heard today of a customer at 5400 feet getting 21 megabits.
     Rob Pegoraro at the Washington Post tested the addresses of 13 friends and co-workers across the District and Alexandria at Verizon's site, and none came up as eligible for its fastest DSL. Six could get only the second-slowest tier of DSL, with downloads of 1.5 to 3 Mbps. Another six qualified for Verizon's 4- to 7-Mbps DSL. One could get FiOS, but none could get the new 10-15 megabit tiers. That may be a glitch, but overall fewer than 1 in 6 lines can get the higher speeds.
Last Updated on Tuesday, 31 August 2010 01:49
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Laughing Loudly at Lawyer & Lobbyist Lies
Friday, 13 August 2010 17:57
Lfalstaff_welles_posterying if it helps your client is expected of U.S. lawyers, codes of ethics be damned. The best in D.C. collect $2M/year because they can convince smart people that 2+2=5. That works exceptionally well in Washington, where today's enemy is tomorrow's ally. There's a code "never make it personal" that prevents plain speaking about obvious lies from another lobbyist. The spirit reminds me of frat boys who help each other getting coeds drunk and uninhibited. Meeting for drinks afterwards, they high-5 each other.
     Duplicity is on all sides of the D.C. debate. Prepping an advocate of neutrality on technology for an FCC hearing, I told him to take an error out of his statement. A few hours later, the word came back "our people tell me that's what will persuade the commissioners so I should leave it in." 
    Karl Bode at DSLR found the latest example. Rick Whitt of Google is no better and no worse than his longtime comrade in arms, Jim Cicconi.
Last Updated on Saturday, 14 August 2010 21:16
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Dado Chops 20% as ADSL Falters at Ikanos
Wednesday, 04 August 2010 15:41
ikanos_velocity_chipsetIkanos wrote down $12.9M of ADSL chips. Sales Q3 will be down 22% or more from $55.6M in Q2. 20% of employees are on the way out. Dado Banatao, legendary chip entrepreneur now in control of the company, has brought in new management from SiRF, another Tallwood VC portfolio company.
    Dado is now a VC looking for a way out of a troubled investment. He pointed out on the call that "VDSL is a growth segment." He sees the future of the company as highly differentiated next generation products. He expects revenue from bonded DSL in 2011, with both the U.S. and Asia interested. Dado claimed "Our vectoring is beautiful compared to our competition," but like then-CEO Mike Gulett he did not provide enough details to confirm that. Dado doesn't expect vectoring out of the lab until 2012.  
   New CFO Dennis Bencala is blunt."ADSL is a declining market. We have decided not to participate in RFPs that do not meet our requirement for margins." That's possibly true on the CO side, but most of the 5.8M new broadband customers in China needed ADSL modems.
Last Updated on Sunday, 08 August 2010 21:27
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Blocking Video: AT&T Tries, Deutsche Wants
Friday, 30 July 2010 20:14

obermann_and_smiling_merkelAT&T insisted that Apple throttle or cut off YouTube on the iPhone. AT&T's Kris Rinne demanded Apple "restrict its YouTube app to run only over Wi-Fi. Maybe the iPhone could feature a smaller, lower-resolution videostream or cut off YouTube videos after one minute," In Germany, René Obermann of DT is demanding that Google and Apple pay extra to get ordinary decent service on his network.

Rinne_at_Georgia_Tech

     All the folks who thought this was never going to happen now have to face the facts. The technology to slow done some video in order to force a payment is now starting to work.

   It may or may not be right for government to enforce neutrality; governments often create more problems than they solve. But let's all be honest. Telcos want to make money; if they can get away with demanding it, they will. Deutsche Telekom has 12M subscribers, 47% of the enormous German market. Very few video companies could resist paying them if the alternative were having their streams partially blocked.

     9 million people streaming Netflix every month, often in HD, have little or no trouble on most major networks. They now stream up to 3.4 megabits and most shows look fine on Jennie's 50 inch plasma. That's dramatic evidence that most U.S. networks are effectively neutral. CTO level executives from Verizon, Comcast, AT&T, BT Wholesale, and Free,fr have confirmed it to me.

Last Updated on Sunday, 01 August 2010 19:57
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Attackers: U.S. Beating China, Russia Beating Both
Tuesday, 27 July 2010 19:57
sibiu_Romania_faster_than_most_of_the_USAlthough China has 30M more broadband subscribers, the U.S. is leading in one statistic: attack traffic. According to Akamai's new State of the Internet, the U.S. originates 10% of attacks and China 9%. Russia ahead of everyone at 12%, while Taiwan, Brazil and Italy rank high. 74% are coming on Port 445.
   Carriers can generally reduce malware by monitoring outgoing traffic for obviously compromised machines and working with their users to fix things. The high U.S. rate suggests that some carriers are being lazy and therefore increasing Internet problems. Some of the 20,000 jobs being eliminated at AT&T and Verizon were probably staffers who kept malware down. These are "non-revenue positions" and therefore more likely cut.
Last Updated on Tuesday, 27 July 2010 21:26
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Chunghwa: Double Speed, Same Price To Find Subscribers
Friday, 16 July 2010 07:25
Broadband Taiwan USTaiwan's achieved 80% household penetration - higher than the U.S. - by keeping prices down. The market is so close to saturation that modest problems led to Chunghwa actually losing broadband customers in 2009. To counter that, and with government encouragement, they've doubled speeds at the low end. ~$8/month DSL will go from 256K to 512K down. The ~$22/month offering goes from 1M/64K to 2M/128K. That's after an 8% price drop last year. Low income customers get 50% off the line rate and disabled customers also get discounts.
     Much of the island can get 100 megabit VDSL and IPTV. Any building promising to sign up 20 apartments will get 100 megabits within a few months. They've just ordered 200K IPTV set tops for $90 each in an open tender. The suppliers - DinYen and HwaCom - surely would love to bring their low priced units to other markets.
     Chunghwa often pays less for equipment than giant companies such as Telstra and AT&T because open tenders work.
Last Updated on Friday, 16 July 2010 17:05
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Verizon: 24% Capex Decline
Tuesday, 07 September 2010 20:07
At Verizon "Capex declined 36% and capex/sales remained at record-low levels," a Merrill Lynch report read, but after adjusting for the Frontier spinoff I come to a 24% figure is more appropriate for this article. The $2B cut in Verizon wireline capex - and another $2B at AT&T - are a painful blow to those who want better networks.
    I've called Verizon's Larry Babbio a "hero" for building FiOS. Verizon's LTE network promises to be among the best in the world. But the sharp drop in Verizon and AT&T's capital spending is a huge issue for D.C. policy. It also puts the lie to the frequent D.C. claim that neutrality is likely to have a large effect on investment. The carriers won a major court victory on neutrality (the Comcast decision) and nonetheless have more than decimated investment.
   Verizon took $2.3B in pretax charges to get rid of 11,000 employees last quarter. $1.9B of that was charged to the wireline operating companies, suggesting nearly all the cutbacks were on the wireline side. AT&T not long ago eliminated an entire layer of management and essentially put the wireless side in charge. Verizon's likely goal is to have a single company that runs both wireless and the remaining wireline.
Last Updated on Monday, 20 September 2010 04:18
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Lantiq's Latest: 16 Channel VDSL, HD-speed 802.11, 2 Gigabit NP
Monday, 23 August 2010 02:25
lantiq_laptop_demoImran Hajimusa of Lantiq demo'd four TV streams going wirelessly across a large room to four HDTV's several months ago. They are now shipping the WAVE 300 in volume. Ulrich Huewels is confident it can support HD video. Lantiq tells me a large U.S. carrier will soon surprise by moving to wireless home networks. They've also doubled the density of their Vinax VDSL linecard chips and are sampling the two gigabit GRX gateway processor.

     Replacing wires has long been the grail for in-home networking. Vendors have been making promises for years, but field tests were not up to carrier grade. Carriers can't accept networks that only work for 95% of homes because the truck rolls to the other homes can be brutally expensive. They need close to 100% real world performance. I'm going to be skeptical until carriers prove the promises in the field, but the buzz for the new beam-forming chips is good.

samsung_TVs

  The new VINAX V3 supports 16 channels for the 50 meg VDSL2 Profile 17a and 8 channels for the 100/100 meg 30a. Power is 0.9W per channel. Bonding is supported and VINAX "is ready to support full System Vectoring, a VDSL2 enhancement that will reduce crosstalk."

Last Updated on Wednesday, 25 August 2010 19:16
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Bouygues Quadplay Sweeping France
Wednesday, 11 August 2010 12:01

25-35% of French broadband net adds are going to Bouygues/Ideo, ahead of stalwarts Free.fr and France Telecom. Last year Bouygues launched a Martin_bouygues45 euro ($60) Quadplay and it's become the hottest product in Europe. Bouygues, France's third wireless carrier, has come from nowhere to among the landline leaders with an offer of about a 25% discount. The land of the 30 euro triple play has become the land of the 40-60 euro quadplay, as SFR and France Telecom have now had to offer quad. 45 euro at Bouygues gets unlimited landline calls to 100 countries, "up to 20 meg" ADSL, 90 (not so popular) TV channels and 120 minutes of mobile calls.

     Frederic Jeanmaire of Merrill Lynch has put a buy on Bouygues. He acknowledges that mobile prices will be driven down by the entry of Xavier Niel and Free.fr in 2012, perhaps 10-25% more.

Last Updated on Tuesday, 17 August 2010 20:40
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China Q2: 5.81M, Not 5.5M
Tuesday, 03 August 2010 12:06
The 5.5M estimate in the last DSL Prime was based on April and May. Lee Ratliff of iSuppli writes the June numbers are in and a strong month raised the actual Chinese total to 5.81M.
     Lee raised his 2014 estimate to 223M because "2009 and the first half of 2010 have been white hot. There's a new trajectory on the curve." He remains concerned about the potential of a melt-down in China’s economy, but notes that kind of thing is almost impossible to forecast.
      Both he and I would very much appreciate data about the rapidly expanding cable industry in China. It's moving to digital, starting to add modems, and I expect it will be a powerful incentive for all companies to invest more and grow.
 
Newsbreak: AT&T Asked Apple to Block YouTube on iPhone
Friday, 30 July 2010 15:57
Kris Rinne of AT&T asked Apple to "restrict its YouTube app to run only over Wi-Fi. Maybe the iPhone could feature a smaller, lower-resolution videostream or cut off YouTube videos after one minute," Vogelstein, Wired, Great article), I checked with AT&T and they did not deny this was true. AT&T sells its own video packages, of course, and did not intend to limit those. That concrete evidence of AT&T's desire to throttle should be enough to put a monkey wrench in the works but TANJ.
Cicconi_laughingTaukeKyle_McSlarrow      This weekend, uber-lobbyists Cicconi (AT&T), Tauke (Verizon) and McSlarrow (Cable) are at the FCC to make a final deal on net neutrality, Arbogast and Kaut report. Ivan Seidenberg has put enormous pressure on the White House to intervene, and the rumor is that chief of staff Rahm Emanuel is telling agencies to go along. Seidenberg, who has been to the White House 16 times,made a major D.C. speech suggesting that the business community would throw their money and power against the Democrats in the campaign. NN was one of the specific points he demanded. 
       Under pressure like that, Julius has already agreed to almost everything Cicconi really wants, including loopholes wide enough to carry 350 TV channels. K & A say there is still some opposition so that nothing is final and that the public interest groups are ready to assail Julius. Meanwhile, Verizon and Google are discussing a separate peace that will make the FCC irrelevant.  
       This one is about power and money, not principle. The likely outcome is an agreement that will allow everyone to say noble things, will allow Julius to look himself in the mirror, and will essentially have no substance.
       I hope I'm wrong. 
note - big error. It's Verizon and Google talking a separate peace. I accidentally wrote Verizon and AT&T. 
 

 

 

Last Updated on Friday, 30 July 2010 19:00
 
$4B Cut in Verizon, AT&T Fiber+ DSL Spending
Friday, 23 July 2010 09:28
 Dave_Ivan_Seidenberg_Dick_WileyVerizon's wireline capital spending in the first six months of 2010 was 3.35B down nearly $1B from last year. For the full year that is nearly a $2B drop, which corresponds to their plan to cut the FiOS build in 2010 by 2/3rds. Since they've also cut the post 2010 FiOS build by 2-4M homes, this is probably a permanent drop. The numbers at AT&T are similar but not broken out. AT&T cut U-Verse by 1/3rd last year, one reason they went 92K negative on broadband this quarter.
     Spread over 4 years, the total cut in Verizon wireline/FiOS spending would be about $7B, about the same as the total government money spent on the broadband stimulus. It also corresponds to the Verizon's likely share of the broadband tax. (I am writing separately that the broadband tax will go mostly to the company's bottom line, not expanding broadband.)
    These multi-billion dollar cuts came after the U.S. enacted a stimulus program and now is talking about huge subsidies supposedly for broadband. Ivan is a smart guy who told investors that he thinks the government will pay up if he doesn't invest. The stimulus, as Tom Hazlett predicted, resulted in fewer new broadband connections as company after company reduced spending hoping the government will pay instead. Verizon is claiming 20-30% of their lines require a subsidy and asking for billions or they might discontinue voice service. Ironically, V & T just reassured wall street their wireline margins are staying up.
Last Updated on Saturday, 31 July 2010 17:11
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AT&T's Bonding for the Millions; No Speed Increase
Thursday, 15 July 2010 20:40
bonding"Why would anyone want more than 24 megabits?" AT&T now-CEO Randall Stephenson asked me years ago. The remarkable sales of 50 and 100 megabit DOCSIS 3.0 around the world have answered that question. Users want speed unless the price is ridiculous, with cablecos in Holland, France, and England dramatically increasing their growth rate. In Holland, Mike Fries of Liberty Global/UPC tells me DOCSIS 3 is actually outselling fiber where they compete head to head.
   T will only use bonding to extend the range of their IPTV from about 3,000 feet to close to the original specification of 5.000 feet. They will continue to hold speeds to 18-24 down, 3 up. 70% or so of U-Verse homes - including all of them now served - could get 50 meg down and 5 up, but overpriced cable competition in the U.S. leads T to believe they wouldn't find a market.
Last Updated on Thursday, 15 July 2010 22:02
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Dane Bringing High Speed, Low Price to California
Tuesday, 31 August 2010 12:18

Xavier Niel's 30 euro unlimited triple play took 5M customersSonic_network from France Telecom, transformed the European Internet, and made him a billionaire. Dane Jasper's Sonic.net is (finally) bringing the same "low price, maximum speed, high volume" model to California. Sonic.net is offering 100's of thousands of Californians "up to 20 megabits" + unlimited national phone service for $56, about the same price as Verizon is charging for the 10-15 megabit DSL service alone. Verizon charges about $75 for similar and AT&T probably $84, about 50% more.

      Unless you live far from the exchange, Sonic.net offers a better deal than any large U.S. carrier. Dane has some interesting ideas about TV to implement as soon as practical, although I think he's going to be very busy just filling orders for a while.

     The word came first from Paris. Benoit Felten, Europe's most interesting fiber analyst, wrote I should read his interview with Dane. Now that I've reported from the states, look for reporters to check this out and create a storm. I told Dane - who's been asking me for years whether the Free.fr model would work in the U.S. - that the low price, high volume model has proven itself time and again. He hasn't quite brought U.S. prices down to French levels, but this is the biggest move in that direction since Mike Powell's rules killed the last big CLEC in 2003-4.

Last Updated on Monday, 06 September 2010 19:46
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Telco Cloud Computing Shadowed by Project Failures
Sunday, 22 August 2010 23:15

Peter Hall of Ovum just released a report touting AT&T, BT and other nasa_cloudstelcos as natural leaders in cloud computing. Repeated failures on telco projects leave me dubious about such ventures. British Telecom has lost $billions on then-CEO Ben Verwayen's move into "Global Services" and in particular massive overruns and failures in the IT project for the National Health Service.

    Amy Schatz (WSJ) reports AT&T also hasn't been able to deliver on a big government contract. "A $2.8 billion Treasury Department project to update the agency's computer network and telecommunications, which has resulted in 45 data centers that can't support newer Internet technologies" has been targeted by OMB. AT&T is in the center of this one. In 2007, they promised to deliver "a secure enterprise network that will facilitate the convergence of data, voice and video technologies into a single network infrastructure that supports the efficient operation of applications and services across the Treasury's entire operating environment." (Release below)  They failed.

Last Updated on Thursday, 26 August 2010 17:52
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Worst U.S. Broadband Quarter Ever ~350,000
Wednesday, 11 August 2010 09:18

The numbers are clear. AT&T actually went negative. They are getting killed by cable were they haven't done their DSL upgrades (U-Verse), The 1/3rd cut in U-Verse spending in January, 2009 by now leaves them 3M homes behind their earlier plans. Cable did somewhat better, but was significantly down. The numbers are from Leichtman and do not include the smaller carriers.

Last Updated on Saturday, 14 August 2010 21:11
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"It’s hard to believe that basic things like capacitors are in such short supply"
Monday, 02 August 2010 10:50
Ikanos_chips_colorful.joglantiq_chipIt's hard to imagine that in a very weak world economy there's real demand that blows out the whole system. But shortages are widespread. A manager of a very large network emailed "Our biggest problem at the moment is getting equipment from our key vendors.  It’s hard to believe that basic things like capacitors are in such short supply." 
       Shortages often comes from self-fulfilling prophecy. When you fear a shortage, you naturally stock up to protect yourself. U.S. TV host Johnny Carson once made a joke about a toilet paper shortage on the East Coast and by the following afternoon there was one. Shoppers had bought up everything in the stores.
       Lots of datapoints suggest the shortage clears rapidly but currently TSMC, the world's largest foundry, is running 100%.
Last Updated on Monday, 02 August 2010 12:28
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3 Million Going Naked at France Telecom
Thursday, 29 July 2010 01:39
david3,126,000 French homes are buying "naked DSL" from FT in France, 736K more than a year ago. They also unbundle 1,240,000 naked lines. 3M homes take IPTV and 7M VOIP from FT, one of the largest deployments in the world. DSL Q2 is up 46K to 8.942,000, and fiber from 37K to 42K. Fiber is now available to 605K homes, barely up from 582K homes a year ago despite many promises to the regulator. ARPUs are up 3-5%.
      The big news in France is that Bouygues' quadruple play (adding wireless) is doing extraordinarily well. Frederic Jeanmaire of Merrill Lynch calculates Bouygues'  ideo quadplay is now taking 25% of the fixed line adds. Their quad play is 15 euros cheaper than buying services individually and is selling remarkably well.
       FT in Poland is going nowhere in DSL, flat at 2,261K and slightly down from last year.
Last Updated on Thursday, 29 July 2010 02:47
 
AT&T & Verizon: Worst Broadband Quarter Ever
Thursday, 22 July 2010 10:25
AT&T lost 92K broadband customers, to 15,952,000, the first time T fell since the beginning of broadband. Verizon added 28K, with 196K FiOS adds and 168K DSL losses. Jessica Reif-Cohen of Merrill thinks cable has won and much of the street agrees. Cable is doing better in broadband but not particularly well this quarter. Rogers in Canada added only 7K and Comcast 118K, with the others still to report. While cable is pulling ahead, I believe telcos with $40B/year in free cash flow could fight if the FCC lights their fire. T has brought back $14.95 "introductory" pricing (DSLR) but the regular prices still begin at 1/3rd higher than they previously charged.  
     V &T are making more money because wireless data is expanding, they are getting away with price rises, and they are firing another 20,000 or so. Verizon took a $2B writeoff to peaceably get rid of 10,000 mostly union workers, far more generous severance than Randall at AT&T tries to pay. The stock went up enough in one day to cover the full writeoff. 
     Wireline margins went up, making D.C. look very foolish stuffing $billions a year in giveaways to V & T in the new USF bill. These are two of the most profitable companies in the world, with $20B cashflows. They don't need new subsidies with a fig leaf proclaiming the money is going to broadband deployment. Maybe some people will start reading the bill and discover it puts a $5-10B annual tax on broadband and mostly gives the money to the big telcos' shareholders. Less than 20%, and probably less than 10%, will actually go to expanding broadband.  
    As Ivan Seidenberg fades into the sunset, everyone at Verizon is focusing on the next quarter, not the longer term results. CFO John Killian is making his play with the capex cuts and other ways to improve cashflow. Lowell McAdam, presumed from the outside to be heir apparent, is riding phenomenal results at Verizon Wireless. Don't trust outside speculation on any of this. Ivan himself got the job at the last minute over the objections of former CEO Ray Smith, who preferred another candidate according to a reliable source.
Last Updated on Monday, 02 August 2010 12:36
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U.N. Broadband Chief's Opponent Dead
Wednesday, 14 July 2010 19:24

kagame_sarkozyRwanda President Paul Kagame co-chairs the U.N. ITU Broadband Commission. Under his regime, Rwanda has dramatically increased both international connectivity and local computer use. But is he the right choice if "Rwanda Opposition Figure Found Dead" is the newspaper headline? Josh Kron (NYT) reports  "the nearly beheaded body of party official Andre Kagwa Rwisereka, was found by the banks of a river." Reporters Without Borders called on the European Union to suspend their assistance to the Rwandan government "following a series of grave press freedom violations," including the murder and arrests of journalists. He has also been involved in the war in Congo, where millions have died.

      On the other hand, Kagame played an important role in ending the massacre of hundreds of thousands nearly two decades ago. He works hard and intelligently for his country's development. The issues here should be closely examined, which is why I'm writing this story.

     This tech reporter, 7,000 miles away in New York, is not the one to judge.

Last Updated on Thursday, 15 July 2010 01:26
 
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