DSL Prime News: The Inside Source

CEOs of the computer industry unite under the TechNet banner to urge the telecommunications monopolies to support 100 Mbps technologies, but even as the VDSL standard is being hashed out, the telcos are cutting expenses and short circuiting future growth.

by Dave Burstein DSL Prime [August 26, 2002]

"An affordable 100-megabits per second broadband connection available to 100 million American homes by 2010"
—The goal of 100 top CEOs in TechNet.

100 Mbps is the right goal, and John Cioffi has demonstrated VDSL can deliver it. Now the T1E1.4 Committee begins the hard job of choosing a VDSL standard.

TechNet versus the RBOCs
Incumbents elsewhere sell DSL for a fraction of its U.S. price
Japan and Korea are ready to move forward, while in the U.S., Technet has Washington considering a subsidy of $3 billion to $5 billion per year. Chambers, Gates, and the rest know a 600 Kbps Internet will not sell their products; today's typical DSL network is as obsolete as a 486 PC.

As Washington chases its tail, Asia is rushing into the lead in Internet technology. Not one of the top six DSLAM vendors last quarter was from the U.S., and Taiwan is producing 57 percent of the modems. Huawei and especially Samsung are contending for major European contracts, growing beyond their home base while financial engineers have taken the lead at Lucent, Nortel, ADC, and other once-innovative North American companies.

Since SBC's Ed Whitacre announced last June he would bring the 1.5 Mbps/384 Kbps DSL service back down to $40, I've been waiting for him to deliver. SBC promised new "competitive" pricing in the fall. The new lower speeds will be presumably priced considerably less than $40.

Currently, with dismal DSL sales, SBC is doing a promotion of six months at $29.95, then a jump to $49.95. That's 25 to 70 percent more than most countries charge for basic DSL—let's hope Mike Powell (or Cisco/Intel/Microsoft/Dell) have the courage to make America competitive.

The actual cost of bandwidth is so low, these "tiered" services are exploitive. I'll have numbers next issue, but the cost difference between providing 200 Kbps and service ten times that fast is between $2 and $4 per month.

Analog Devices has laid off some DSL engineers. I hope the company gives me specific details for next issue.

Fortunately, there are some jobs open in the field: Infineon needs a product marketing manager, and (one very large company) has not filled all the positions for analog design talent. I'd like to think the job listings are a trend, but expect it's just coincidence. So move fast if you're looking.

Amusing to watch the newspapers and analysts fumbling the Qwest directories sale. Online journalist Scott Moritz at thestreet.com had the best coverage, pointing out that Qwest is obligated to return much of the proceeds to telephone customers, not just pay off debt. Colorado has already staked a claim. The Denver Post and DSL Prime reported this previously, but most of the major papers picked up Qwest's half truths.

Notebeart at Qwest is taking a major risk in his public statements, when he suggests that most of the money can be used as he chooses. The public claim is pretty clear, and misleading investors is the last thing Qwest needs to do. The sale probably costs Qwest $600 million per year in cash, more if the buyer's projections are accurate.

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

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