|The Dave Burstein Newsletter of 10/20/05, Uncut: |
From: Dave Burstein <email@example.com>
Subject: DSL Prime VDSL Gear Drops to $66 for 100 Meg
Date: Thu 10/20/05 08:16 PM
* $66 for VDSL DSLAM + Modem, 50-100 meg
* 234,000 lines to Taiwan at an ADSL2+ killing price
* SBC 528,000 Added Subscribers $15 promotion pays off big
* Spectrum Auctions: More than 15 Years A Bad Mistake
* Jim Granelli, LA Times on $300M PUC Giveaway
* VDSL2 When? - 2005, 2006, 2007-2008
* OVUM/DSL Forum Q2 Figures
* Briefs: Russell Southwood on Africa, Digitimes, Dale
Lehman, Stijn Vander Plaetse, Ikanos. Merrill Lynch
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?Each iPod download took a bit over 20 minutes using an average DSL connection.? Walt Mossberg, WSJ Anyone really doubt your customers want more speed?
1.8 million more Chinese signed up for DSL at China Telecom in the last three months, bringing the total to 19.17 million
Bob Metcalfe, the inventor of Ethernet, stunned the LR crowd with lavish praise for Verizon?s fiber build. His comments about behemoth telcos are typically livid, and often very funny. Metcalfe cares about results more than rhetoric; three million Verizon homes by the end of 2006 can choose 30 meg FIOS, and three million more are confirmed for 2006. An additional twelve million are scheduled for 100 meg GPON by the end of the decade. I called Larry Babbio a hero last year for this kind of service, and will praise him again when they do my building.
The smart folks on Wall Street are headed to Columbia University?s CITI event Friday, where Marilyn O'Connell of Verizon is one of the presenters on IPTV. O'Connell is a pro who won't give away anything she doesn't intend to, but is sure to have plenty of solid information. Dan Reingold, who I once called "The Prince of Wall Street" but is currently on the sidelines, has Robert Schiffman of CSFB and Tom Aust of JP Morgan on his panel. Wish Dan luck on his forthcoming book, Confessions of a Wall Street Analyst.
Then off to Las Vegas for USTA. Half the FCC will be there, paying the obligatory obeisance. Let me hope the same officials come to Peripheral Visionaries on November 10. Mark Spencer, David Isenberg, and Om Malik are a lot less boring than propaganda you have heard twenty times before.
Say hello to the round fellow with a beard. And do come to the Marconi Gordon Moore Dinner and Symposium November 4. A good chance to meet a few engineering geniuses.
" TI's AR7 DSL Gateway Family. Flexible. Integrated. Interoperable.
Ideally suited for your Data, Wireless, Voice and Video Needs.
$66 for VDSL DSLAM + Modem, 50-100 meg
234,000 lines to Taiwan at an ADSL2+ killing price
ZyXEL?s amazing bid at Chunghwa brings closer the time for VDSL2 to replace ADSL2+ in many networks. Digitimes reported Chunghwa had budgeted 40% more and was happily surprised when the bids came in. $90-100 is the lowest previously reported price VDSL DSLAM and modem. The 100 meg down, 50 meg up speeds are specified for 400 meters, enough to reach most of Jennie?s 20-story building or my fifth floor apartment. Verizon - can you blow some fiber through your conduit for us, please?
Conexant is believed to be supplying the chips, and presumably priced to make a statement that VDSL DMT is no longer a one-company market. Infineon has promised me some very strong test results. Broadcom has also promised chips ready to test and is upgrading the UK engineering operation that grew from the old Alcatel Micro/E-14 team. The chips are DMT, 6 band, accurately and carefully specified by ZyXEL as VDSL, not VDSL2. While the chipmakers are all claiming their chips are ?VDSL2?, there are no interoperability results and it is highly likely that most of the actual shipping chips fall short of the (very complex) full standard. Chunghwa expects volume deliveries starting in December.
Chunghwa will use Alcatel Ethernet gear to 16 and 24 port ZyXEL DSLAMs in apartment basements. Half the modems are four port, the other half have a wireless access point. Chunghwa with fiber to the basement/VDSL is following the model of Korea Telecom, BellSouth (fiber to the curb within 500 feet, 1 million of their 10 million+ homes), and now Deutsche Telekom. Verizon, UTOPIA, and NTT are doing the more expensive fiber all the way home, although Mark Wegleitner at Verizon has told me they?ll do VDSL in selected buildings where running fiber is impractical.
** The mPhase TV+ System is built around an innovative cluster architecture and offers key advantages to phone companies, including:
* improved maintenance environment, with links to industry-standard operations support systems, including element management of IP traffic
* high degree of reliability with "failover capability" that transfers traffic without interruption from a failing system to a back-up
* unprecedented scalability, capable of growing to hundreds of thousands of users (ad)
Spectrum Auctions: More than 15 Years a Bad Mistake
Auctioning spectrum is inevitable in D.C., but it?s not too late to limit the monopoly grant of the spectrum to only 10 or 15 years. Technology changes almost as predictable as Moore?s Law make that the right decision, whether Republican or Democratic. Cognitive radio is making it possible to more effectively share spectrum, and WiFi has demonstrated the incredible innovation enabled by shared spectrum. I?ll have more details when I write up conversations with economist Simon Wilkie and economist Bob Metcalfe. The returned broadcast spectrum will attract only a relative pittance in bids, but could tie up crucial spectrum in monopolies indefinitely. The companies bidding invariably have a short time horizon, calculating their bids on the return over 3-7 years. Private companies planning bids discount to almost nothing returns ten or fifteen years out, much less the thirty year or longer terms under consideration. Conclusion: offering ten or fifteen years will raise almost as much money, while making the spectrum available for public use (including security) or re-auction in a reasonable length of time. It?s just stupid to mortgage our children?s future with longer terms for a fraction of what the spectrum will be worth in a few years.
*** Gordon Moore, Claude Berrou and some of the world's best engineers will be at the Marconi Foundation November 4. Come to the daytime symposium at Columbia and the gala Dinner at the Waldorf Astoria. If Robert Galvin, Federico Faggin, Bob Kahn, Vint Cerf, Jack Goldman, Leonard Kleinrock, Bob Lucky, Harry Sello, Gottfried Ungerboeck, Herwig Kogelnik, Whitfield Diffie, James Massey, Bob Metcalfe, and David Forney are people you'd like to meet and listen to, please come.
marconisociety.com (psa) These are the people who created the Internet and some of the most respected engineers alive, at a modest sized event. See you there. The cost is reasonable, but if that's a burden email me, especially if you work for a nonprofit or government. db
SBC 528,000 Added Subscribers
$15 promotion pays off big
?SBC's significant DSL net add beat (528K vs. 432K expected) supports what investors have long believed, namely that price does matter,? Jeff Halpern notes. Evidence around the world overwhelmingly supports Halpern?s conclusion. This result suggests BellSouth?s Keith Cowan comment, "It's clear our customers are looking for more than speed and price," is overstated. (To Ken Belson, NY Times) Cowan was discussing the Yahoo deal, which takes a couple of dollars off the top for services subscribers could mostly get for free anyway. Yahoo has advantages, but that same couple of bucks would pay for enough bandwidth to give everyone in BellSouth ?up to 24 meg? rather than 1.5 meg when the ADSL2+ gear is installed. (Real speeds will of course be closer to 10-15 meg for most customers.) I doubt many people would rather have a few premium Yahoo features rather than a ten times faster service. SBC + Yahoo had a dismal Q2; SBC + Yahoo had a great Q3. The difference was price.
SBC?s profit numbers were good, explained as ?EBITDA substantially beat our forecast on SG&A cost containment.? Translated into English, that meant profits were up because they fired a lot of people. SBC is actively moving jobs to India and China; much of the Lightspeed engineering is being done by Alcatel under contract in Chengdu, where $400 a month is a good wage. Depreciation Q3 was $1.8B, capex $1.4B; that disinvestment covered most of the $500M share buyback that is propping up the stock prices and management options. I believe an even bigger factor is improved wireless results. The two mergers the FCC allowed have raised wireless profits by several billion a quarter, which is flowing to the Bell bottom lines massively. SBC?s stock has fallen 60%, despite continued high earnings, which suggests Blake Bath?s well-timed buy recommendation may be right.
*** Does Wireless Policy Matter to You? Come to Congress Tuesday, October 25, 2005 to hear Andrew Viterbi, Simon Wilkie, Robert Pepper, and fifteen other guests.
WIRELESS BROADBAND: IS THE U.S. LAGGING?
Markets, Technologies, and Public Policy in a 21st Century Wireless World
Sponsored by USC.
Rayburn House Office Building, Gold Room. (psa)
For security reasons, you must register (213) 740-3841 or email firstname.lastname@example.org
VDSL2 When? 2005?, 2006?, 2007-2008
Some today, some delayed
2005 - Fiber to the basement. Ikanos just had a $25M quarter - with a $3M GAAP profit - so clearly some VDSL sales are improving in 2005. Rajesh Vashist expects another 10% sales gain this quarter, almost exclusively going to Asian fiber to the basement rollouts. XyZEL has sold 2M ports for that application, even before the Chunghwa deal, probably the largest VDSL total to date. This is a controlled rollout, easy for the carrier to avoid compatibility and interference problems. Only Belgacom is speaking publicly about currently deploying VDSL from the neighborhood node, perhaps than 3,000 feet away. VDSL in 2005 is less than 5% of the new DSL ports, and very few outside Asia.
2006 Korea and Japan have ambitious plans despite capex issues, with weakness at Hanaro possibly allowing KT to slow down. SBC and Deutsche Telecom between them plan 30 million ports of VDSL, but may go slowly in 2006.
Will fiber to the node/VDSL reach any volume? That is the SBC strategy, using existing boxes at 3,000 to 6,000 feet and looking for 25 meg down for video. Randall at Goldman officially confirmed what I have previously reported, that only very limited work will proceed until May or June at the earliest. He added that a house at 2,500 feet achieved 40 megabits down, and one at 4,000 feet reached 25 megabits. If Chris Rice at USTA takes questions, I?ll ask what field results they can share and whether those speeds will be likely when multiple lines in the binder are running at high speed. Vashist expects substantial U.S, VDSL in the second half, but he built Ikanos by being a true believer and enthusiastic salesman. Anton Wahlman, whose sources are usually impeccable, doubts any volume from Lightspeed before 2007. Vashist confirms my report Swisscom will move forward in Q1 with a similar build, probably with shorter average loops. The cable guys are hurting them badly.
Deutsche Telekom, on the other hand, intends a short loop build for speeds of 50 meg or more. That?s because unbundlers are clobbering them because Matthias Kurth had the courage to protect competition. I?ll shake his hand happily when he comes to Columbia this week. BellSouth has a million lines of fiber to the curb in place, which they intend to bring to 50 meg and might begin in 2006. The old Marconi equipment, now serviced by AFC/Tellabs, can be upgraded as soon as the CFO agrees to spend the money. Perhaps Wegleitner in Vegas can give me some insight on the timing, and Vashist will be surprised how soon Verizon takes Manhattan.
Expect a minimum of five million lines, but if big carriers decide to move the total could be triple that. The ?integration problems? Randall bemoaned with Microsoft TV could slow things down; it?s becoming clear SBC?s choosing such a proprietary system puts them in a bind.
2007 Will 2007 be the year VDSL substitutes for ADSL in most new installations? Bill Smith says BellSouth will switch ?when the price and reliability is right.? VDSL2 should really be called ADSL3, which would make the progression obvious, but industry politics created confusion. The chips are designed to do everything ADSL2+ does and more. If they had called it ADSL3, more people would realize the progression is inevitable. The $66 price is close to the $47 Chunghwa recently paid for ADSL2+, suggesting the price issue will be soon solved. VDSL2?s quality still is unproven, the key barrier to general deployment. Besides interoperability, many features such as the promised long reach haven?t been proven in any field deployment. While the price per chip is coming down, VDSL power and space requirements need improvement. Lucent?s launched their new gbox, to replace the Stinger next year, and the ADSL capacity is twice what what they offer with VDSL. No one has shown me a line-powered VDSL remote, a critical issue for units deployed outside. Line-powered remotes (powered by one of the telco cables already in place) were critical to the cost-effective spread of ADSL, because it often costs more to bring mains power to a field pedestal than to install the DSL gear.
VDSL chip volume will pass 60M ports a year, but the switchover date remains to be seen. TI, whose UDSL chip is making progress, reminds me that while VDSL is the exciting news, ADSL2 is currently selling very well.
*** Columbia October 21st
The State of Telecom: Taking Stock and Looking Ahead. Andrew
Odlyzko, Robert Lucky, Matthias Kurth, Robert Pepper, Jonathan Askin, Bob
Atkinson, Mark Cooper, Lawson Hunter, Heather Hudson, Dan Reingold, and a
dozen more. Columbia University Uris Hall, Room 141 New York, NY
9:30am-5:30pm October 21, 2005 (psa) See you there!
OVUM/DSL Forum Q2 Figures
Countries with wealth and/or large populations dominate the top of the first list, total broadband subscribers Q2. Korea remains the great exception, and Canada remains far head of the more affluent U.S.
South Korea 12,260,915
The ranking is different by percentage of population.
South Korea 26 per 100 people
Hong Kong 23
For DSL total subscribers, China is ahead and gaining.
Japan 14,168,000 (with a large fiber deployment)
South Korea 6,678,107
Percent of phones with DSL. The U.S. and China do not rank
South Korea 28.71%
*** Public Knowledge has been working day and night to protect your digital rights, and its court victory striking down the broadcast flag. Help us continue our fight. First, consider becoming a member of PK. Check out our membership page (with the cool premiums for joining) at members.publicknowledge.org. Alternatively, you can donate to PK, at publicknowledge.org. Both are quick and easy. (psa)
Jim Granelli, LA Times on $300M PUC Giveaway
Candidate for story of the year, but will they listen
?Phone Users May Get None of Merger Savings The Los Angeles Times reports that California regulators Wednesday tentatively blessed two giant telephone industry mergers, but customers won't see much of the billions of dollars the companies expect to save. SBC Communications Inc.'s $16-billion acquisition of AT&T Corp. and Verizon Communications Inc.'s $8.5-billion purchase of MCI Inc. could reduce their expenses in the state by a combined total of up to $2.7 billion, consumer advocates say. State law requires phone companies to split any such savings with customers, as SBC did when it bought Pacific Bell parent company Pacific Telesis Inc. in 1997. But draft decisions by Public Utilities Commission members Susan P. Kennedy and Michael R. Peevey would exempt the companies from that requirement, prompting outrage from consumer advocates.? The story continues with facts and opinions equally clear, forceful, and accurate.
Ed Whitacre, SBC CEO, recently estimated California and Michigan consumers pay $3 to $5 less per month for phone service than do BellSouth customers. SBC is profitable enough to pay a 5.8% dividend, one of the highest of any major company. Their ?excess cash? is enough to buy back a billion dollars of stock next quarter. Blake Bath of Lehman expects SBC free cash flow to double from $4.5B to $9.0B in the next three years. Verizon is even richer, with a higher market value. I?ll be reporting some air and spin in the telco numbers, including depreciation too low, but they remain enormously profitable.
?? Because the benefits of the merger will be passed through to California consumers through competition and market forces, there are no policy grounds for mandated sharing of those benefits," the two commissioners said in the SBC draft decision.? I have no explanation for this comment, obviously not true. Pac Bell is no longer a pure monopoly, and cable-telco competition is an important part of my reporting. This competition is significantly limited, however Anyone with high school economics knows that means some of the savings will go to SBC?s bottom line, not ?be passed through.? Randall Stephenson, SBC COO, has already promised that to Wall Street.
Kennedy and Peevey need the courage and serve California consumers. So does their boss, Arnold.
*** November 14, 2005 The tenth DSL Forum ADSL2/2+ chipset interoperability plugfest will take place at the University of New Hampshire InterOperability Laboratory (UNH-IOL). Contact Matthew Langlois, email@example.com (psa) The Forum/UNH events deserve everyone?s support. db
Stories to come: Randall Stephenson on TV choice, bandwidth cost is now ten cents a gig/movie, Lucent's new gbox, Martin-izing the FCC, 25% Layoffs At Hanaro Korea, 7% of Japanese Can?t Get DSL, ADSL2+ with HomePlug built in, Bill and Steve Letter to the Telcos, $75,000 to FCC "consumer advisor", China IPTV, Rising prices of video programming, and ...
* Balancing Act?s Russell Southwood produces an excellent free newsletter covering telecom and the net across Africa. Subscribe by sending a message saying I want to subscribe to firstname.lastname@example.org.
* Digitimes, which broke the Chunghwa story I report above, has the admirable policy of putting corrections at the top of their reports. I probably won?t follow suit unless something is seriously misleading, but the frankness earns them respect.
* Dale Lehman of Alaska Pacific University is developing a new MBA in Information and Communications Technology designed to allow students to earn the degree with only twelve weeks of coursework. This is not a distance education program - it takes place in two-week sessions, studying with IT/Telecom professionals on three continents. He's adapting the current MBA in Telecom Management for a globalized industry, including study in China (with managers from the big Chinese telecom carriers) and Austria (with European telecom/IT managers) as well as Anchorage. Lehman's looking for ideas on the new curriculum, as well as inquiries from prospective students. website: polar.alaskapacific.edu/dlehman. email: email@example.com
* Stijn Vander Plaetse has moved from Belgacom to manage their ecommerce venture with the post office, Certipost. Stijn is part of the team at Belgacom that has been doing something right for years, holding their own and getting a high take rate despite cable competition. I believe they are the only telco in the world with excellent DSL sales despite high prices, which I?d like to attribute to exceptional service. They are now the first in Europe to jump to VDSL.
* Before today?s 34% jump in Ikanos? price (good earnings), I had drafted this correction. It?s no longer necessary, but I wanted to leave a reminder why not to read DSL Prime for stock picks. ?I wrote ?the imminent Ikanos IPO could be very hot.? I was wrong; Ikanos came to market at the top of its planned range but moved not at all. It?s since drifted down. Glad I put in the weasel word ?could? and spoke of the IPO price as ?fair,? but I wanted to remind readers of my mistake. VDSL is exploding, and although Ikanos isn?t winning all the contracts (they didn?t get Chunghwa), they are on the short list for every bid in the field.?
* At Merrill Lynch, ?all analysts have completed an aggressive writing training program to emphasize clarity, brevity and readability.? Great idea - I should enroll as well.
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Responsible for developing plans and strategies to maximize existing customer base and understanding overall market perception of Carrier Access products. Engages key customer accounts; assists sales engineers in presenting solutions; provide forecast information by customer and market; provide weekly written reports; and works closely with customer support and marketing. Must have in depth knowledge of data networking technologies, product, and markets. Five years experience in sales in the communications industry required. Sales Engineering background desired.
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Responsible for coordinating the development and implementation of the annual marketing plan through developing strategic relationships with business partners, creating marketing material, determining marketing strategy, monitoring competitive activity, working with OEM's on products, and establishing pricing strategies. Participates in trade shows by providing product demonstrations, expertise, and training. Provides product and technical information to internal and external customers for developing business relationships with partners. Knowledge of emerging voice and data technologies required with 4 to 5 years of related experience.
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Copyright 2005 Dave Burstein. Volume 6, #30 Issue date 10/20/05
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