DSL Prime News: The Inside Source

DSL Prime responds to Michael Powell, comments on ILEC DSL deployment failures, examines the latest DSL equipment news, and produces the DSL Prime News Briefs.

by Dave Burstein DSL Prime [May 3, 2002]

"Deployment of affordable information access devices holds breathtaking promise" —Mike Powell, FCC Chair, April 30, 2002

Ivan Seidenberg is endangering Powell's primary goals, again refusing to lower Verizon's $50 DSL price, even though Japan, Germany, Canada and now England are cheaper. Verizon is also far behind their planned 90 percent 2002 deployment. Powell deserves to be judged objectively, but can he be elected President if his FCC term is a failure? A key indicator is the price and deployment of consumer services. So far, his term has produced an 11 percent increase in basic phone rates in New York, the 25 percent DSL/cable rate increase, and a 10 percent increase in typical Internet fees.

U.S. readers of DSL Prime should stop work for 15 minutes, and express your opinions to the FCC on broadband. Easy instructions later.

Q1 Japan 800K, US < 500K
Yahoo BB in the lead
The $22 price from Yahoo BB is proving irresistible, driving enormous demand in Japan (4x the U.S. rate). NTT is the only major telco in the world not leading in DSL lines, despite having lowered their rates to about $30 and matching Yahoo's speeds up to 7 megabits. eAccess, the third important player, is taking charge of the network built by Japan Telephone/Vodaphone, giving them national coverage.

US Down from Q1 last year
SBC's 183K adds (to 1.5M) was less than what they reported in Q1 last year. Verizon dropped to 150K for the quarter (1.35M total), so they are bringing back their $29.95 for three months promotion. BellSouth did 108K (729K total). Qwest did 36K or less, a dismal result. (484K total, including some out-of-region Covad resale. In district growth may have been as little as 20K. Time to bring back Saul Trujillo and Joe Zell.) CenturyTel at 6,900 and Broadwing at 5,000 represent some of the smaller companies with results still to come.

BellSouth is down from 157K Q4, and Verizon 225K. That's partly the effect of promotions, and probably shows a slight drag after the Xmas season. (BellSouth and Verizon believe DSL subs get a small spike yearend, as they do in September for back to school )

Bell Canada: 109K in a much smaller territory
They're beating cable yet again, as BellSouth does in most territories. DSL is beating cable consistently around the world, obscured by the failures of SBC and Verizon in U.S. media centers. The combobox (TIVO-like hard drive settop and home network) is looking good for a (small) rollout later this year. Monty took the fall for the $6B (U.S.) loss on Teleglobe, and the stock rose 20 percent. Maybe firing the boss is a good idea; Worldcom jumped 5 percent when they got rid of Ebbers.

Korea: KT at 4.1M and profitable
"KT has begun reaping profits on broadband, " Yang Jong-in, of Dongwon Securities told Reuters, as KT's quarter beat profit estimates. The majority of Koreans already have broadband—they'd virtually have to wire the homeless shelters to find more subscribers.

Elsewhere
Germany didn't maintain their blistering pace, raising prices slightly and dropping free modem promotions. Belgium is doing well, France and Italy starting, and BT is turning away customers because the price drops inspired more demand than they were ready for. DSL Prime predicts China will be the world growth driver the next few years, but I don't see signs of acceleration just yet. (Those with knowledge of the China market, please write me in confidence. I'm anxious to hear more from folks in Asia, of whom several thousand subscribe but few send me e-mail.)

Brazil at 300K, ready to double
Manuel Andrade sees Latin America passing 1M in the next year
Brazil entered 2002 with 220K, likely to approach half a million by the end of the year. Andrade reports Telefonica expects 300K and Brasil Telecom another 100K. Pricing is about $40+ modem rental. Brazil has tripled wired phone lines from 15 million to almost 50 million in the last six years, and the companies are looking to DSL for future growth. Most of the network is modern equipment installed in the last few years, and loop lengths are generally short.

Argentina entered 2002 at about 60K, split about evenly between Telefonica and Telecom. Devaluation brought the local price down, but few can currently take advantage. Mexico has been moving slowly, but Carlos Slim owned Prodigy and is on the board of SBC; he knows the potential.

In Latin America, the cost of a backbone connection to the Internet is still high, and CAPEX is expensive in developing countries. Most of these barriers have finally come down and ADSL has finally started to flourish. Andrade, who recently spoke with the key telcos, expect year end totals of 700K to 800K, but sees potential for much more if Telmex is aggressive or Argentina gets back on track.

Many DSL Prime readers know Andrade from his work at Westell when they were growing rapidly; he's now consulting, especially in the Latin market, and wrote an article for the DSL Prime website.

Copyright 2002 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

"The power of the printing press belongs solely to those who own the presses"
—A.J. Leibling

The Internet is the cheapest printing press ever invented.