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Genachowski: FCC Will Investigate AT&T, Verizon Price Increases
Wednesday, 13 March 2013 22:32

BlumenthalVerizon hikes ~20%, 55% higher than 2007. Pressed into a corner by Connecticut Senator Blumenthal, Jules promised to work with the Senator on these non-competitive rate increases. JG may be offering just a “politician’s promise,” of course, but Blumenthal as Connecticut Attorney General proved he can make things happen.

   Karl Bode at DSL Reports broke the story of a $5 Verizon increase on existing DSL customers. http://bit.ly/Z0NbB9, most of whom were paying $20-35. That’s 15% to 25%. New customers at Verizon are in even worse shape. After the introductory period, Verizon now wants ~$50 + local taxes for one meg, adding a requirement you take a phone package. It’s at least $60/month for anything faster than one meg. For FiOS, the cheapest service they offer is an amazing $84.95 - and in some FiOS areas they won't sell DSL any more. Bode also reports AT&T increases that appear to be 10-15% but details vary. http://bit.ly/ZB8sSR Neither Cecilia Kang at WashPo nor any other DC reporter has yet picked up the AT&T story, so DSLR was almost certainly the inspiration for the question.

  Here in New York, minimum broadband costs $50 to $85 from Verizon and $55 from Cablevision, although Time Warner does have a 1 meg data service for $30 in some areas. There are some great deals for the first 12 months, but after that the $130-160/month triple play is the main offering. That compares to $37 for 5-15 megabit down + a phone line at Sky in the UK or less than $50 for triple play at any of the five largest French carriers.

  The Senator challenged JG. “AT&T announced a rate hike on their DSL service. This comes just a week after Verizon announced an almost identical rate hike. Both of them trouble me. We ought to pay closer attention.” JG tried to change the subject, saying “We’ve seen much better trends in mobile competition over the last couple of years than we’ve seen before.” With the Senator glaring, he added “I’m troubled by rate increases that aren’t based on competitive factors.” Then Jules said he’d work with Blumenthal investigating prices.

   Julius claims his greatest achievement is “broadband, broadband, broadband.” Deployment has almost stopped on his watch, adding only one percentage point. When Obama took over at the beginning of 2009 telco coverage was 84% and cable 96%, by FCC figures. http://fcc.us/ZBfd7h The latest figures are 85% and 97%, despite $billions in broadband stimulus and major merger promises by several carriers. http://bit.ly/WIHJsz Prices have gone up 10-20% on the cable side, even more on the telco side.


Last Updated on Friday, 15 March 2013 14:01
Geddes: Your Network May be Worse Than You Think
Friday, 22 February 2013 13:07

Network skeptics get a hearing. Martin Geddes is making waves with the contentions that many networks have unidentified problems. Most of us assume that networks with consistent speed and reasonable latency are fine but that's not always true. "Bufferbloat" can occur when buffered packets get out of sync with TCP-IP acknowledgement and flow control. http://bit.ly/XQW4No There's related work by John Day at http://rina.tssg.org/docs/JohnDay-LostLayer120306.pdf

Broadband networks in my experience tend to be excellent with congestion problems few on major networks. Martin sees occasional exceptions and suggests a better way to manage networks is to measure and report congestion problems and delays. He writes about "quality attenuation" and sent me this description of the issue.

"There are two ways of thinking about networks, depending on which side of the mirror you stand. The dominant framing is that networks do something positive: they deliver packets. The more packets they deliver, the better. What you need in order to do this is to have lots of 'bandwidth'.

The alternative (and paradoxical) framing is to see them as machines that do something negative: they cause loss and delay to data in transmission. In this model, the job of a network is to supply 'fresh information' between computation processes, and ensure that each flow of information is not delivered with more mouldy delay and rotten loss than the process can tolerate.

This 'freshness' is about quality rather than bandwidth. What networks do is to impair flows, i.e. to create and allocate quality attenuation. It turns out that this model is far more congruent with the reality of networks than the bandwidth model.

Last Updated on Friday, 22 February 2013 15:08
Big Vector Deployments Delayed Until 2014
Thursday, 14 February 2013 03:16
Early vector resultsThe vendors were optimistic about when the key problems would be solved. Belgacom was the first to say they are slowing down with little beyond trials until 2014. The Swisscom announcement speaks of q$ 2013 but will probably start slowly. Deutsche Telekom’s Philipp Blank emails “We would like to start the deployment of vectoring already this year,” but their regulatory filing suggests the volume deployment begins 2014.

Belgium intends to add vectoring piecemeal while leaving many older lines in place. The vectoring standard was designed to make that possible but effective management tools need to be developed. Belgacom was the first to receive regulator permission to vector because they didn’t have to resolve the problems of unbundling. There are very few unbundled lines in the country. They intend to spend 2013 continuing trials and making sure everything will run smoothly for 2014.

Alcatel had production equipment for the field in early 2012. The early trials at Swisscom, Belgacom and in the labs at nearly all the major telcos were very encouraging. By September 2012, the DSL Tsunami was apparent http://bit.ly/U79yWR. Deutsche Telecom and many others were convinced vectored DSL was the way to go because it was so much cheaper than fiber.

The delay may have been inevitable but is very disappointing.

Kinnucan of Broadband Research Jailed Four Years for Insider Trading
Wednesday, 16 January 2013 22:22

KinnucanThreatening the prosecutor didn’t help. John Kinnucan would pay employees at companies like Flextronics and F5 Networks $25,000 for inside information on sales and earnings and promptly pass the information to hedge fund clients. His basic defense was “everybody’s doing it so why are you picking on me.” That’s partly true, of course. The hedge fund business would be very small without inside information, because (almost) no one can consistently beat 2 and 20 without it.

Kinnucan made it tough on himself when he refused to wear a wire and implicate his clients, especially when his refusal made it to the WSJ. Then he ”made nearly 25 threatening telephone calls to prosecutors and agents responsible for the investigation of his unlawful activities. In these telephone calls, Kinnucan made repeated references to genocide, sexual and other forms of violence, and threatened physical harm to one of the prosecutors handling this matter.” His chances in court were dim because he couldn’t afford a private lawyer. He couldn’t even make bail, so he’s been held in jail. Good reporting by Chad Bray and Susan Pulliam http://on.wsj.com/V4A7vR

    A lot of Wall Street have made me their pet geek so I’ve seen a lot. The successful on the street almost all are very smart and hardworking. Most also do “whatever is necessary” to keep their position.

DT: At Least 14M, Possibly 35M, Vectored Lines
Friday, 28 December 2012 20:40

DT price plans Innovative DSL + LTE box could take peak speeds to 200 megabits. DT confirmed they will upgrade 12M German homes to vectored VDSL for speeds of "up to 100 meg" down and "up to 40 meg" up. Field experience from vectoring suggests most but not all of these homes will get 60-100 meg down. Most of this build will be in 2014-2016, although a 2015 date for finishing the 12M is also discussed. Almost all of these homes are also covered by cable offering twice the speed at the same price. Kabel Deutschland has taken about 1M customers.

    An additional 12M homes, already served by VDSL without vectoring, may be upgraded to vectored. DT statements on this are contradictory.  The total investment is placed at 6B euro, something like $350-500/home. They offset that with a substantial (1B+) reduction due to capex they would otherwise have to spend on these lines. 

    DT has also suggested they would offer vectored service to about half of the remaining 16M German homes if the government gives them a subsidy. Many of these homes would cost the same or less to serve than the homes already planned.  Homes without cable are mostly accidents of history and many are not far from telco facilities. Because DT has less competition here, the lines will be significantly more profitable than others they are upgrading without subsidy. DT is politically very powerful so they may get the money anyway. 

   Beyond the 20-30M they probably will upgrade in Germany, DT owns networks in Greece, Hungary, Romania, Albania, Croatia and other Eastern countries with an annual turnover of 10B euro. Claudia Nemat's investor day presentation pointed to "Increasing CAPEX for further rollout of Growth Areas (e.g. Broadband with LTE, FTTx)" without giving specifics. I'm estimating at least 2M vectored lines will be included, and additional are certainly possible. 

   Vectored VDSL is so inexpensive DT projects they can do all this while maintaining capex at the 2010 level of 9-10B euro. (2011 capex fell.) They also are extending LTE to 98% of Britain, 85% of Germany and 65% of the U.S. within that budget. Depreciation is above 10B, which means some would say DT is continuing to "disinvest." The practical demonstrations of vectoring reaching  "up to 100 meg" at modest cost have totally changed the regulatory discussion. DT's analysis, which would apply to may other developed countries, is that 50-100 megabits can be delivered to most homes without raising capex or requiring a subsidy. All but the last 5-15% can be offered high speed without high spending.

   DT is projecting they will be able to raise prices 90% on reselling vectored lines, from 11-12 euro to 20 euro. Jochen Homann of BNetzA needs to look very closely at the figures behind that price increase. DT recently cut the dividend from 70 to 50 cents/year and clearly has financial problems. Loss of landlines is part of the explanation, but broadband from DT remains a very profitable service. Homann has to decide whether to raise the German broadband price to bail out DT shareholders; nearly a third of DT is still government owned.  DT has lost billions on expansion into Greece, just wrote off eight billion from T-Mobile USA, and has huge losses, easily five billion and probably more, expanding into computer services (T-Systems).

   DT is demanding an end to unbundling, claiming it's technically impossible to vector if some lines are unbundled. While non-vectored lines do restrict performance, some argue the effect is small. The extent of the problem will be unproven until the companies involved do field testing. In addition, numerous schemes allow two companies to cooperate on vectoring while serving their own customers. Telecom Italia and FastWeb are doing that, which will be an existence proof of a possible solution. 

   This is the largest network build planned in the Western world.

Last Updated on Saturday, 29 December 2012 16:11
Adtran: Vectored VDSL Is Ready, $200-375/home
Thursday, 20 December 2012 04:42

Adtran Ready to support multiple competitors sharing bundle. Jochen Homann, German regulator, is looking for vectoring “procedures to use vectoring even without an exclusive right to the control box.” With 12-20M lines planned at Deutsche Telekom, Adtran’s positioning their product as compatible with a multi-provider system. Multi-DSLAM “can work if the same vendor provides both DSLAMs”, Ryan McCowen of Adtran notes.There’s “no technical reason why you can’t do that,” he adds. “We and other vendors are looking at it.”

    Adtran is successor to NokiaSiemens, hence a contender for the German contract. Huawei is hopeful as well, already committed to supplying 3.5M vectored lines to FastWeb that will cooperate with Telecom Italia’s network. Alcatel and Deutsche Telkom initially claimed that multi-DSLAM was impossible; DT’s “Highlander” network would have to be exclusive. Homann is actively looking for alternatives.

    Adtran is also facing off against Alcatel for some of the 3.5M additional lines of AT&T’s Project U-Verse. AT&T is challenged because the remaining U-Verse lines are fill-ins and AT&T wants compatibility with what’s already installed. So Adtran’s “system-level” vectoring becomes attractive.

Last Updated on Friday, 28 December 2012 00:26
VDSL Matching Cable in Germany, Huge Expansion Coming
Sunday, 18 November 2012 18:53

Deutsche Telekom adds 83K VDSL, drops 74K ADSL
Deutsche Telekom confirms what’s been clear in the data from AT&T, Telus, and British Telekom: VDSL field cabinets compete well with cable, because very few customers care about whether their speed is 16 megabits or 50 megabits. Kabel Deutscheland has a policy of “twice the speed at the same price” and is adding customers. A KB exec asked me, “Don’t you think customers will l choose us because of the greater speed?” Actually, I replied, I think most customers will choose the offering with the easier to use TV programming guide. With even HD video down to 3 megabits, whether you have 15 or 50 doesn’t seem to matter much. (Of course that could change.)

    At the December 6th Analyst Day, look for a proposal for over ten million new VDSL lines. They want to have VDSL to almost all the areas they compete with cable, about 2/3rds of Germany.
   From CFO Tim Höttges:
“Speed matters, and therefore we are lobbying heavily for our very, very good program which we will outline to you in December, with vectoring and VDSL and vectoring to get customers up to 100 megabit.”

    DT as always will ask for concessions from the government, either subsidies or crippling the competition. Johann Homann is unlikely to give them much because he knows they have to upgrade those areas to meet cable. The big question - how does Germany keep competitors - remains unanswered. DT will claim unbundling vectored lines is impractical, others will disagree.

   I’d call the network they are planning 70-100 megabits because many of the homes in the first deployments of vectoring aren’t making it quite to 100. 100 megabits is a magic number because that’s the EU goal, but DT thinks “up to 100” will be good enough for government work.

Last Updated on Friday, 28 December 2012 20:30
Conexant Flops Into Chapter 11
Tuesday, 12 March 2013 03:27

From $2.1 billion sales in 2000 to just $135 million in 2012 Once a great power in voice and DSL modems, Conexant “is fighting for survival.” (Junko Yoshida) In 2003, Conexant bought Globespan for $860M and aspired to dominate the DSL chip market. Late products, a massive royalty suit won by Texas Instruments, and generally declining prices for DSL chips led to a near immediate sales shortfall of $100M and Dwight Decker took over from Armando Geday as CEO. The remains of their DSL business were sold to Ikanos for $54M in 2009 and continues.

George Soros’ Quantum Fund has put up $15M in DIP financing to give the company a chance at recovery. Quantum was the sole secured creditor and took a writeoff on part of their $197M credit facility. Andy Rappaport of August Capital and John Knoll of Golden Gate bought Conexant for $200M less than two years ago. They now signed the bankruptcy filling http://bit.ly/WjERzN alongside CEO Sailesh Chittipeddi Kodak and Silterra took losses over $1M. Details of the prepackaged bankruptcy weren’t disclosed but presumably Quantum owns nearly all the surviving equity.

Small chipmakers across the world are struggling as the cost of developing a chip has risen well into the tens of millions. Delayed entry or failing to find a market becomes incredibly costly. Venture and Private Equity for chip companies in the U.S. has virtually dried up.

Junko Yoshida’s report on the history and prospects of the company is worth a click. http://bit.ly/YoVwPk. One comment there is

“Conexant had the best engineers, advanced products, and strong financial lineup. Dwight Decker,Dan Artusi, Scott Mercer, Christian Scherp, Sailesh Chittipeddi and its cronies effectively wiped out everything with their financial expertise. Chapter 11 is the best solution for Conexant and put it out of misery. CNXT shareholders and its employees (ex and current) are the only victims, gone with their saving, trust, and retirement. RIP”

Huawei's Big Vector Win at Swisscom
Thursday, 14 February 2013 19:02

Fem Switzerland HetaliaNot just Alcatel’s game anymore. 80% of Swiss homes will be offered 80 megabits and up from fiber to their homes or street cabinets by 2020. The street cabinets will come from Huawei, the first big announced win for Huawei in vectoring. Huawei, still #2 to Alcatel in DSL, has put major R & D into vectored DSL and scored a number of firsts in lab tests. This is the first confirmed customer for the equipment.
     Swisscom is already working with several cities and/or power companies to deliver fiber to the home. It’s a nearly unique deployment, with four strands going to each apartment for possible future competition. Outside those cities, they’ve now chosen to run fiber within 200 meters and then DSL. That’s closer to homes than the similar builds in Germany and Britain. While I think of DT’s build as 70+ megabits to most, Swisscom’s shorter distances will deliver 100 megabits to many more. They are calling it FTTS, fiber to the street, instead of FTTC, fiber to the curb or cabinet, because they are deploying deeper. Swisscom is in trials in Charrat (Valais), Grandfontaine (Jura) and Flerden (Grisons) but the major rollout is not scheduled until late 2013 or possibly 2014.
     Swisscom’s results have been among the best among European telcos, holding profits and dividends comparatively stable. They’ve actually been winning customers from UPC cable. Prices are somewhat high - in the 30’s - but the Swisscom service has been excellent and customers have responded. They are increasing investment for higher speeds to keep customers happy.
    They’ve had to take a billion writeoff on the investment in Italy’s Fastweb but they are now upgrading Fastweb as well. They’ll be doing 3.5M lines of fiber/DSL very rapidly, inspiring Italy to propose 7M lines vectored as well. Huawei has the inside track for that contract, especially because Fastweb and Telecom Italia are committed to working together to minimize interference.
    Alcatel continues to maintain such competitive deployments are impossible, echoing the desires of their hoped for client Deutsche Telekom to knock out competition. Huawei instead is working to overcome technical obstacles through “node-scale” vectoring and that presumably was a major advantage winning this contract.
    Swisscom promises some homes will see DSL speeds up to 400 megabits in future years and are actively involved in testing G.Fast.

Last Updated on Friday, 22 February 2013 05:04
France Telecom and Deutsche Telecom are Being Paid by Google
Saturday, 09 February 2013 14:17

Stephané RichardFree.fr creates crisis by blocking Google ads. Stéphane Richard, CEO of France Telecom, broke the story "There are financial flows between Google and Orange, as well as other operators, in particular Deutsche Telekom. ... there is an overall balance of power. There are areas where Google can not do without us, for example in Africa" (Quotes from Les Echoes in Google translation.) Numerama previously reported that FT and Google had a deal without naming a source.

Presumably, Google’s position was “we don’t pay for termination but let’s see what we can work out.” Google needs fiber throughout the world and France Telecom owns a cable to Africa. Google needs space and facilities in peering points controlled by both Deutsche Telekom and France Telecom. Deutsche Telekom is moving heavily into server hosting.

This is "sender pays," a termination charge, that was opposed strongly by the U.S. and Europe at WCIT as deeply destructive of the Internet. It's a clear violation of net neutrality as defined by those who created the concept. The French government is unsure of how to handle this. On one hand, net neutrality is government policy. On the other hand, they support French telcos who are fighting to collect from mostly foreign content companies such as Google. The issue are fought publicly on policy principles. Behind the scenes, the discussion is "content" is American and "carriers" are European. The Europeans are happy to collect from America, usually ignoring the fact most of the money would go to a few giant telcos.

It’s likely that Google and FT made a deal with Google paying FT for something other than transit. FT got money, Google didn’t set a precedent, and people are happy for now.

Free, trying to get some, went nuclear. Xavi blocked Google (and other) Ads An immediate rebellion by websites afraid of going broke without Google ads got the government involved. Free.fr has been trying to collect from video sites such as Google and Dailymotion for years. Not long ago, he refused ordinary peering with Google. He demanded to be paid. As YouTube traffic predictably grew, congestion grew. As much as half the time, Free’s users couldn’t get their videos.

This was Google’s “nuclear option,” effectively cutting service to Free’s customers if Xavi didn’t give in. It was starting to hurt, especially after consumer publication Que Choisir did a survey that made clear the problem was extreme and asked the government to do something about it. Prominent Internet analyst Taylor Reynolds tweeted he was moving his broadband away from Free.

Last Updated on Friday, 22 February 2013 13:06
Dunn of Nortel Beats The Rap
Wednesday, 16 January 2013 12:31

Nortel logo“The Mounties don’t always get their man.” Judge Frank Marrocco refused to convict ex-Nortel CEO and team. “I am not satisfied beyond a reasonable doubt that Frank A. Dunn, Douglas C. Beatty and Michael J. Gollogly deliberately misrepresented the financial results of Nortel Networks Corporation,”

   It’s very difficult for me to believe that the CEO and CFO of Nortel were unaware of billions of dollars of fraud going on. As Martyn Warwick notes, Nortel’s market cap at the boom was $400B. A few years later, they went bankrupt. Dunn had good lawyers for the six month trial, and there is no evidence the Judge was improperly influenced.

   Dunn still faces enough civil suits to bankrupt him if he loses. (Quote from Martyn Warwick, http://bit.ly/WdShdW)

Last Updated on Wednesday, 16 January 2013 22:19
France Telecom, Free to Google YouTube: You're Blocked Unless you Pay
Thursday, 27 December 2012 21:04

UFC-Que ChoisirGovernment backs “Sender Pays” termination charge. Clarification: Existing connectivity is protected by the ruling. What's being blocked, without payment, is additional connections required because of the predictable growth in net usage. Original. Millions of French netizens discover their YouTube streams sputter and die or never begin in the first place. Other video services, including TF1, are also struggling. The effect varies, sometimes randomly and sometimes by time of day. Respected consumer organization UFC-Que Choisir found between 20% and 50% of users surveyed online had problems.

     Again, the existing connection remains and much of the traffic gets through. But Net traffic always grows and without regularly adding additional capacity many - not all - streams are blocked. French networks, with France Telecom in the lead, are refusing to accept growing traffic from Cogent, a major backbone carrier that services Google. They demand payment to accept all the streams their customers request. The independent French competition authority (Autorité de la concurrence) on September 20 approved the charging plan, leaving no doubt this is neutrality dispute. 

“The decision issued today by the Autorité de la concurrence regarding the dispute between the US operator Cogent and France Télécom is the first decision to be issued by a competition authority anywhere in the world in relation to an issue that is currently a focus for discussion in the context of the Internet neutrality debate: are network operators entitled to charge for opening additional capacity?” (emphasis in the original, which placed this statement in a prominent black box.) (Ruling below)

     Free’s customers are the hardest hit, presumably because they are growing the fastest. Xavier Niel confirms the problems "pipes between Google and we are full at certain times, and each pushes the responsibility to add pipes. This is a classic problem happens everywhere, but more often with Google." (PC World). If Google continues to refuse to pay, the problem will get much worse as traffic grows. Free is already losing customers. I discovered this story after Taylor Reynolds tweeted “Cancelled my 2 free.fr subs today b/c tired slow network and YouTube peering problem.” Actually, I believe Free’s network is neither tired nor slow, but appears that way because of the artificial problem at the connection edge.

    The five French networks (FT, Free, Bouygues, SFR, Numericable) are holding firm, providing a collective front against the mostly foreign content companies. Google is counting on public protest to force them to stand down. ARCEP, the regulator, and several legislators are jumping in. Free is adding the most customers and hence has higher traffic growth and the most problems. Press reports emphasize the Free-Google conflict, but apparently all the other ISPs as well as other video providers are affected.

    Ironically, France stood strong with the United States opposition to “Sender Pays” at WCIT (the ETNO proposal.) U.S. Ambassador Kramer believes sender pays “would have a chilling effect on the whole Internet base.” Kramer promised to refuse to sign the treaty if necessary (http://bit.ly/VkEvs5) and in the event the U.S. didn’t sign. The Africans are furious because they want to make up for the lost revenue from international long distance. America will lose a great deal of credibility if after refusing Africa’s demand - where the money is needed - the U.S. allows France to impose a similar termination charge.

Last Updated on Monday, 31 December 2012 15:10
Lisa Di Feliciantonio: FastWeb Quickly Deploying 3.5M Vectored Lines
Saturday, 01 December 2012 11:25

Working closely with Telecom Italia. “Telecom Italia insisted installing our own cabinets would be impossible but our engineers disagreed. So we announced we would move ahead. With the regulator watching, Italia agreed to a Memorandum of Understanding. We are going to deploy.” Lisa stopped cold the ECTA session on DSL with that comment. Others had just said such a deployment was very difficult or even impossible.

     They intend to finish the 3.5M lines by the end of 2014 and leapfrog Telecom Italia. Italia for almost five years has been promising to begin millions of lines of fiber but has stalled out while seeking government funds. Italia is due to announce some form of structural separation very soon.

     FastWeb made their reputation with what is probably still the largest fiber build in Europe. Led by the brilliant Silvio Scaglia and with money from the power company, they quickly became the second largest landline company in Italy. Swisscom bought the company in 2007 and has been selling fiber and unbundled DSL connections.

     Swisscom has budgeted 400M euro, just over 100€/home. That figure may be particularly low because of the existing FastWeb fiber, very low prices from their expected supplier Huawei, or an under-estimate. What is becoming clear is that veciored VDSL in urban and most suburban areas is coming in incredibly cheaply. The Deutsche Telekom figure is 300-400, AT&T estimates similar.

    Fiber plans are being abandoned across Europe in favor of vectored VDSL.

    Here are announcements from the company.

Last Updated on Friday, 28 December 2012 00:23
U.S. Cable Fine, Telcos Morose
Wednesday, 14 November 2012 10:45


 44K net adds at CenturyLink almost match -42K AT&T and Verizon -8K

T & VZ have been too busy raising prices to add new subscribers, but Century-Qwest proves that telcos don't need to give up. Comcast benefits from a growing program of $10 for the poor.  Here's the data.

Last Updated on Wednesday, 14 November 2012 12:02
Another ISP Hits the Dust: Telefónica Dumps 500,000 Customers at O2 Britain
Friday, 01 March 2013 20:36

Engulf & Devour

~$700 as Britain falls to 3 1/2 broadband players 4 companies - BT with 6+M Sky, Talktalk & Virgin with 4+M - control 20M of Britain’s 22M broadband lines as smaller ISPs can’t compete and get taken over. Telefónica found that even 500,000 customers were not enough to support the necessary national backhaul market to survive. Sky outbid BT, offering £200M for an operation that on its own was losing money. Except for the EE (700K), no one else has even 100,000 subscribers. AOL, Tiscali, Be Broadband, Pipex, Demon and others are gone. 

   Prices have been going up as companies disappear. Previously, Britain saw prices fall by perhaps a third. Structural separation of BT inspired nearly a dozen companies aggressively to chase retail customers. British fees are still reasonable. Sky charges $37 for 5-15 megabit down + a phone line, compared to $60-80 at AT&T U-Verse or Verizon FiOS.

   France has seen a similar decline. FT, Free, SFR, Bouygues are four intense telco players, but Deutsche Telecom, Telecom Italia Alice and local companies like Nine and Kaptech are gone. The 36 euro triple play is still a great bargain, but it was 30 euro not long ago. Germany and Holland are headed in the same direction.

Neelie Kroes’ EU plan to reduce regulation is very badly timed.

Last Updated on Friday, 01 March 2013 20:54
Report: Unpaid Leave at Alcatel-Shanghai Bell
Thursday, 14 February 2013 17:00

ASB_eventsAlcatel “continued low activity in China.” Chinese publication OFWeek reports that ASB employees returning from the Spring Festival will be required to take between 2 and 5 days of “unpaid leave” each month for the next six months. This is unconfirmed, with an Alcatel spokesman telling me they had no news like this to report. With the Chinese holiday, they couldn’t check further.

Cutbacks at Shanghai Bell are consistent with this comment from Alcatel last week:

From a geographic standpoint, also adjusted for constant currency and compared to the year ago period, North America posted a 10% growth rate. Mixed trends in Asia Pacific resulted in a low double-digit decline, traction in Japan being offset by continued low activity in China. Cautious spending persisted in Europe, which also declined at a low double-digit rate. Rest of world was resilient, driven by continuous traction in Brazil and by Middle East and Africa, which returned back to growth after several quarters of decline.

ASB is majority owned by Alcatel but with a major stake held by local government. It traditionally competes effectively with Huawei and ZTE for Chinese contracts. The big Chinese telcos have been holding capex flat as landlines decline. They continue to demand, and receive, the best prices in the world for their equipment. Fiber home gear in China goes for less than $100/home. Margins in China are so limited that ZTE reported a major loss.

   ASB makes much of the gear Alcatel sells worldwide and sources from China many other items that ship with an Alcatel label. They do a very large share of the Alcatel engineering. AT&T U-Verse staffers were surprised how much of their support was coming from engineers in Chengdu. Alcatel has shifted so much to China they can no longer claim that Huawei is beating them because of lower Chinese labor costs.

   There’s no public disclosure I can find of ASB’s finances. While top management is French, it operates very independently. A Communist party official plays a major role in management. The profitability of ASB is heavily determined by the transfer pricing to Alcatel Paris. The relation of Paris to China has long been difficult to research; apparently Paris doesn’t want investors to look into the finances.

Sources: The “unpaid leave” story comes from http://fiber.ofweek.com/2013-02/ART-210007-8120-28666967.html , who in turn credits Sina Tech but I couldn’t find the original. (Google Translate keeps getting better but it’s still a little awkward to read the Chinese press.) I generally would not pick up a story like this with confirmation, but OFWeek has enough details it feels like more than a rumor.

Last Updated on Thursday, 14 February 2013 17:20
Germany Confirms 24M Vectored Lines
Thursday, 07 February 2013 19:14

 ~ 5M for Swisscom + Fastweb, 7M for Telecom Italia, 2M Brazil.  Deutsche Telekom has 24M lines competing with cable, about half of which are ADSL and half earlier version of VDSL. Until now, DT has said contradictory things about whether they would upgrade all of these lines or just the older ADSL lines. In the submission below, DT is explicit they will use new technology - vectoring - for all 24M over the next four years. Separately, Swisscom http://bit.ly/XCzNmm and their subsidiary Fastweb http://bit.ly/WR6tug have announced they are moving forward quickly.

    Telecom Italia has also decided to abandon fiber home. Franco Bernabè told investors their fiber/DSL "will cover well above 30% of the household, reaching more than 125 cities. More than 7.5 million customers could be served at the end of 2015." TI's Brazilian subsidiary will also deploy 2M fiber/DSL lines. This is particularly surprising because TI Brazil has been an exclusively mobile network. They have found that fiber/DSL is so inexpensive to deploy in selected neighborhoods they are adding landlines.

    The announcement below is part of the elaborate performance art that Germany puts forth as part of the BNetzA decision process and should be considered "politician's truth." One probable error that matters is the claim below "However, in order to cancel noise, the operator must have control over all lines at the cable distribution box." Nearly every engineer reviewing the issue believes it possible for DSLAMs - including those from different operators - to communicate and both deliver vectoring. This is unproven in any field trials, however, and management techniques to allow multiple DSLAMs also are untested. Interoperability testing and standards testing would seem a high priority but vendors refuse to agree. 

    The 100+ pages of BNetzA submissions I've read on vectored DSL include so many unlikely comments they are almost funny, but that's another story. 


Here's the DT release confirming the 24M. 

Last Updated on Friday, 15 February 2013 01:05
Susan Crawford’s Captive Audience: “the most important volume in the last few years [about the] state of the U.S. telecommunications market.”
Friday, 11 January 2013 04:39

Captive AudienceTime Magazine raves. I met her first in a seminar loaded with MIT professors and Internet pioneers. Susan Crawford is so smart she stands out in a group of brilliant people. When she spoke she took over the room. She impressed colleagues on the first Obama transition team so much they persuaded her to stay in D.C. to be the President’s lead on telecom. She came to believe the U.S. would suffer without strong government action, as has proven true. During my recent trip to Brussels, I discovered U.S. policy is now held up as “what not to do.” Speaker after speaker pointed to our prices as “twice as high,” which is only a slight exaggeration.

No one has been more eloquent than Susan about how much better the U.S. Internet could be. Her book has been anxiously awaited. The book was just published this week and my review copy hasn’t come, but Sam Gustin’s in Time Magazine writes, “Crawford’s book is the most important volume to be released in the last few years that describes the sad — some might say embarrassing – state of the U.S. telecommunications market. Reasonable people can and do disagree about policy solutions, but the facts are not in dispute. Americans have fewer choices for broadband Internet service than millions of other people in developed countries, yet we pay more for that inferior service.”

“Truly high-speed wired Internet access is as basic to innovation, economic growth, social communication, and the country’s competitiveness as electricity was a century ago, but a limited number of Americans have access to it, many can’t afford it, and the country has handed control of it over to Comcast and a few other companies.” Gustin quotes Crawford. “Shareholders are doing well.The rest of the country, not so great.”

I’ve become skeptical about the consumer interest in getting the highest speeds, so I’m less certain than Susan that the 40% of the U.S. getting upgraded DSL (including AT&T U-Verse) will become further cable dominated. I’ll find other disagreements as well. But Susan is fighting the good fight and I’m glad to see the press is responding.

Now at Amazon for $18. http://amzn.to/139oNmS

Last Updated on Saturday, 12 January 2013 22:07
100,000 DSL Lines in Nepal
Saturday, 22 December 2012 20:18

Nepali Village16M wireless subscriptions, 5M wireless data subs. DSL subscriptions have doubled in two years in Nepal, the kind of feel good story in an unlikely place I’ve often included. But looking at the rest of the Nepalese figures reminded me how minor a role DSL - no matter how successful - is likely to play in most countries without wires already in place.

     3G mobile offered speeds of several hundred kilobits, as much as typical DSL plans in bandwidth starved countries. 3.5G is often in the megabits; LTE runs faster than 10 megabits in the U.S. and 50-75 in some other countries. Wireless now offers the performance of most DSL, although it still doesn’t have the capacity needed to watch most video. 

     Almost half of Nepal’s 26M people have mobile phones. As smartphones become cheaper, more and more will connect to the net. The capacity will be fine for Facebook, surfing, email and VOIP calls. Video will be limited and it will be years before most mobile networks have the capacity to support a video service like Netflix.

    In a few years, more people in Nepal will connect to the net than in Belgium, population 11M.

Data from Nepal Telecommunications Authority NTA MIS -67 and http://www.ntc.net.np

Last Updated on Friday, 04 January 2013 02:18
Alcatel’s Spruyt: Multi-DSLAM is Technically Possible
Saturday, 01 December 2012 11:15

Could be very difficult, he believes. Deutsche Telekom claims it’s impossible for others to share their new vectored DSL network. No one wants to believe DT because competition is working so well and they are determined to protect it.. Nellie Kroes and speaker after speaker proudly noted European prices are half those in the U.S. because competition can work. Top analyst Yves Blondeel reminded the ECTA audience “They said number portability was impossible. Then we found a way. They said unbundling was impossible. It wasn’t. I’m sure we’ll find a way to solve this as well.”

The magic of vectoring is dependent on reducing noise, which is obviously more difficult when more parties are involved. John Cioffi of ASSIA contends that with proper management the problem can be minimized; DT and Alcatel are dubious. There are no results from the field, so everyone is extrapolating from models with different assumptions.

Paul Spruyt of Alcatel is a DSL pioneer with twenty years experience. Alcatel is the first to ship vectored DSLAMs and has high hopes of a DT contract in the hundreds of millions so has every reason to agree with them. Nonetheless, at the ECTA event he said that “multiDSLAM vectoring was technically possible.... In addition, cross-DSLAM vectoring requires very close operational alignment between the operators involved. Such conditions are certainly not trivial, and might be prohibitive in many markets.”

However, “It would be very difficult to impossible to accomplish for a long time across vendors. Nothing was happening nor planned in standards or testing. This implies that all co-located operators need to use equipment from the same vendor.”

Last Updated on Sunday, 30 December 2012 16:36
AT&T: Turning off Copper to More Than Half Territory, 99% POPs LTE in territory, 90% out, Fiber to Businesses
Monday, 12 November 2012 17:12

Project VIP, if approved, means more than half of the U.S. will lose landline phones when Verizon follows. No cutback like this has ever been proposed anywhere in the world since Elisha Gray and Alexander Graham Bell invented the telephone.

    1% of the population, about 20-30% of the area, would not have wireless and in danger of depending on satellite for every phone. Jim Cicconi writes me, however, ““no one we're unable to reach with broadband under this plan will lose their voice service.” 20-25% will lose landlines and have to depend on mobile. That’s probably half the land area, because the cuts will be the less dense areas. Fortunately, Voice over LTE is almost ready to take over and can have better call quality than the old phone system.
It’s vital that the FCC ensures prices are fair and service good. There’s an enormous potential saving if wired networks are cut (shutting off the PSTN.) Major changes are required to prevent negative consequences.

    That won’t be easy. AT&T’s cheapest wireless plans are now $70-100, far higher than landline charges. The capacity of today’s LTE means you can’t watch much video over the net; it could be many years before the greater capacity of LTE Advanced and beyond are deployed unless required.

    If consumers are protected, it’s right to go ahead.

Fiber to Half the Commercial Buildings in Territory
Businesses are willing to pay more than consumers, so retaining them as customers is worth the $1-3B additional that AT&T committed. Cable has been gobbling corporate customers for the last two years and offers 50-100 megabit service cheaply. This was not a market to give up.

    The additional fiber will also make it easier to add wireless small cells. Units well under $10,000 and soon closer to $1,000 can supplement the coverage of the big towers. John Donovan of AT&T has been talking small cells as the future for years and this year they are beginning to deploy rapidly. Landlords want the fiber to keep tenants happy. AT&T should be able to convince many of them to allow a small cell on their roof, perhaps without charging rent for the space.

No real increase in consumer broadband
First reports were mistaken. AT&T does not intend to “offer its U-verse TV, Internet and Voice over IP plans in 8.5 million additional customer locations” for a total of 33.5M. Don’t blame the reporters; the press release suggested that interpretation. AT&T again and again has said U-Verse had reached 30M homes. That includes in financial reports, where companies can be penalized for material inaccuracies. In addition, AT&T has always planned to go to ~33.5M in the near future. The current build contains many irregular, irrational holes like much of San Francisco and Indianapolis. They’d be stupid not to fill them in, and John Stankey isn’t stupid.

    AT&T found some way to characterize 6M homes they’ve been reporting as served as now unable to get service. One or the other figure is wrong. It may be that the new figure of 24M currently reached was achieved by subtracting 6M current homes they need to bond a second line (already in place) for best TV coverage. AT&T has said they are doing bonding since at least 2009 for those U-Verse homes, but I haven’t seen orders for that many bonded modems hit the supply chain. In either case, the pr is misleading. (Craig Moffett and Todd Spangler caught this last week.) Some (possibly very low) percentage may get vectored lines capable of “up to 75 megabits” rather than the current 25-40 megabits.

Last Updated on Wednesday, 14 November 2012 18:03
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