DSL Prime: Quality, not Price

Whether you're buying out a competitor or just the latest CPE, buy on quality, not price. Also, start paying for real customer support. If you're not offering quality, your brand is worth zero.

by Dave Burstein of DSL Prime and Future of TV [June 3, 2005]

VDSL2 Low Profile, a better ADSL2+
Don't just buy on price
Bjarne Stroustrop, explaining how he designed C++, said the first criterion was to make "a better C." The Bell Labs team had learned a great deal, and while object-oriented programming was the inspiration for C++, he also improved the language with the lessons learned. The low profile VDSL2 is likewise "a better ADSL2." One chipmaker puts it bluntly: "We fixed a lot of the problems in ADSL2."

The committee decided to make mandatory support of trellis coding and 15 bit constellations, improved initialization (including a channel discovery phase), tightened the definition of a loop diagnostics mode, and added support for a MIB controlled PSD mask mechanism for in-band spectral shaping. There are a slew of sophisticated methods around interleaving, Reed-Solomon forward error correction, and dramatically improved impulse noise protection. Much of the performance improvement comes from careful adjustment of power, delicately balancing performance improvements against interference caused.

The resulting 221 page specification is so complex that all the chip makers claiming they currently have "standard compliant" chips are engaging in puffery. It will require world-class engineering by large, well-organized teams to finish the job; one chipmaker tells me they have 50 engineers at work in one group, with assistance from other parts of the company. I'll be delighted to report progress, but very careful testing will be necessary to make a decision. For early adopters, price will need to be the last factor, not the first.

One key question is how to design a line-powered remote terminal, suitable for wide deployment by BellSouth or KT.

That said, Conexant/Globespan officially announced Acuity, with a price of $15 per CO port and $17 for the CPE. They support bandwidths for VDSL up to 17.6 MHz, not the 30 MHz required for the 100/100 megabit speeds. Aware also announced their digital design was ready, with Infineon and ADI key licensees.

$2500/Line for B2 and Cybercity
Telenor ups the ante for broadband alternatives
"Forget DSL," Peter Ekelund, then CEO of Bredbandsbolaget wrote me soon after I began DSL Prime in 1999. "Fiber and Ethernet is the way to go." With backing from the Wallenbergs (who are Sweden's richest family), Intel, and the Carlyle Group, he built an enormous Cisco network with 10 Mbps symmetric Ethernet connected to fiber in the basement or neighborhood. They were ahead of their time. The customers came more slowly than expected, expenses were high, and management turned over. Russian oil and aluminium billionaire Len Blavatnik became the largest investor.

Telenor, Norway's government-controlled telco, now is buying the company at a price that sets a new standard, more than twice the enterprise value of Covad, Iliad/Free, or Bulldog. With Wallenberg, Carlyle, and Blavatnik as holders, B2 was in no hurry to sell. Telenor's bid needed to be very rich, especially for a company still losing money. B2 was EBIDTA 223 million Swedish Krona EBITDA positive in 2004, but that covered less than half the capital spending, and was less than depreciation.

Cybercity, which has unbundled access to more than 70 percent of Denmark and an 8 percent market share, commanded a similar price.Taking a large hunk of the Swedish market will be especially gratifying to the Norwegians, whose planned merger with Telia fell apart in 1999. What was to have been a "merger" fell apart when it became clear the Swedes considered it a takeover; the final straw was a demand management move to Stockholm if they wanted to keep their jobs.

"Welcome to high tech, Mr. Dickens"
Bell Canada call centers ready to rebel
sp00n lost his sick leave, vacation chances, opportunity for promotion, and any satisfaction he might get from his job at an Onex ClientLogic call center for Bell Canada. Service to customers had become so poor he was embarrassed to work there. When he said as much at BroadbandReports.com, and suggested they might need a union, half a dozen of his colleagues signed on in agreement. Several were promptly fired, prompting the Globe and Mail headline above. Let's hope Bell, owner of the G&M, doesn't fire writer Jack Kapica, one of the best in North America.

[Ed note: they didn't fire him—they just had him post their side of the story, which is that the people who coincidentally wanted to form a union were fired for not meeting targets or for hanging up on customers.]

Decency to your workers is out of style, although in practice it rarely costs more. Training new employees is expensive, especially the resulting loss of angry customers. From BBR, "Out of 20 employees, 13 told me they were looking for a new job, 3 of them told me they would start looking if things did not improve, the other 4 felt that all call centers treat people this way, and it's not worth the hassle of switching jobs. To me, these are scary numbers."

These figures should also be "scary" to a CEO assuring Wall Street he'll beat the competition because of his strong customer relations. Good support can come in-house or out, from Brooklyn, New Brunswick, or Manila. But it won't come if top management just shrugs their shoulders saying, as one U.S. Bell tells me, "20 percent of our customers are going to hate us anyway." ClientLogic's web page claims, "an end to poor customer experiences." Bell's customers deserve as much.

Copyright 2005 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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