DSL Prime:
Cable vs. DSL, or Colluding?

Telcos and cablecos are promising the moon, but have yet to invest in 100 Mbps—or compete out of territory. Meanwhile traffic grows slowly and equipment makers report gloom.

by Dave Burstein of DSL Prime and Future of TV [February 28, 2008]

Comcast: Over 10 million homes passed with 50+ Mbps
50 percent 3.0 Coverage in 2009, fast upstream and down
Cable needs to upgrade to match Verizon FIOS, which will be running over 100 Mbps in both directions soon. The orders to CableLabs and the vendors were to get DOCSIS 3.0 into production, because has pulled away over a million customers. Roberts at Comcast promised 20 percent DOCSIS 3.0 in 2008, probably where they face off against FIOS. He now is adding 6 million more homes in 2009, covering his Verizon footprint and going after AT&T in some territories. Chicago is a natural battleground, where they have already gone all digital.

Hollywood is moving extremely rapidly to send video direct. Go to ABC.com and watch Lost to see how good it looks. Folks like me are already shutting down their cable TV. FIOS is heavily taking customers and Ivan's goal is to "get cable out of the home." U-Verse is now production quality. Roberts says he's not afraid. "If we can't compete, shame on us." They intend to be a leader when the dust settles.

The Bells divided the U.S. into separate fiefdoms and never go out of territory for retail lines. The cablecos have done the same. Both would prefer to cut a deal, divide the customers, and keep prices high. It's also possible they will fight hard by cutting prices. The decision hasn't been made.

That's part of what I consider the key question in U.S. broadband the next 5 to 10 years. DOCSIS 3.0 was developed to give cable a chance against Verizon FIOS. Will they bring it to AT&T territory? The new modems are between 2 and 4 times faster on the downstream, and 20 to 50 times faster on the upstream, while costing about the same to deliver. There are two parts to this question: whether they will install pretty quickly (2009-2011, which now is looking quite possible) and whether they will price low to win customers or high to grow margins and maintain peace with AT&T.

Will they invest and build? Maybe, especially if FIOS keeps winning customers. Will they keep the price high or low? No one is telling me, probably because they haven't decided. If they come in high, telcos have some breathing room. If they price aggressively, any carrier without fiber to the home could be decimated. Bell Canada is watching Videotron, British Telecom needs to fear Virgin. There may be a reprieve because the technology hits bugs. But from what I hear of the TI chip, they are very close.

For now, Time Warner is under so much pressure from Wall Street that they are afraid to spend on their network. Cox is a private company and isn't saying very much. We're all watching closely.

DOCSIS 3.0 With Upstream Likely Before Yearend
We've been disappointed before
DOCSIS 3.0 is designed to deliver 50 Mbps in both directions 95+ percent of the time, profoundly changing things. It was expected to ship widely in 2007, with Brian Roberts of Comcast telling me he'd deploy selected areas in 2007. Bob McIntyre of Scientific Atlanta thought that timing was realistic. Alas, the chips weren't ready. The current word on the street is we'll see downstream only in 2008, with upstream not supported until 2009.

Alan Lefkof at Motorola is optimistic things will go faster. His new SB6120 supports channel bonding of up to four downstream channels and four upstream channels, which allows an operator to offer its customers advanced multimedia services with downstream data throughput approximating 160 Mbps (shared) in DOCSIS mode and 195 Mbps in Euro-DOCSIS mode.. Motorola makes clear that their DOCSIS 3.0 CPE is also fully compliant with upstream channel bonding. DSL Prime believes that CableLabs will soon release new certification results for DOCSIS 3.0. Units, if certified soon, would probably ship in the second half of 2008. "

TI's chip inside the Motorola modem is looking good. They have the bonding at the physical layer working. There's plenty more software and firmware to complete, and all the practical problems of a new chip in a new product. Dennis Rasmussen, who once wrote a book on DSL, is the TI lead for cable modem chips.

2007 Traffic Growth Rate: Early Data Shows No Increase
Comcast right on trend, Plusnet flat, BskyB could change the U.K. market
Comcast's 2007 traffic per subscriber grew 40 percent, they report. This means there results are right on track with the last five years of data, as reported by Andrew Odlyzko's important MINTS database. It also matches Cisco's projection that "consumer Internet will grow at a rate of 42 percent." I have informal confirmation from another U.S. cableco that their traffic growth also is not far from past patterns.

Plusnet in the U.K. has shown virtually flat traffic for eight months. In June 2007 their average user required 6.40 GB, in July 6.54 GB. In December, the figure was 6.42 GB, and in January 2008, 6.74 GB. This is remarkable, because traffic at nearly every carrier typically grows rapidly. Even the release of the BBC iPlayer hasn't caused a major jump in this ISP's load. The likely explanation of the slow growth is the very low bandwidth caps typical in the U.K. Medium sized ISPs like Plusnet have little choice, because BT's charges for wholesale backhaul are very high. Ed Richards at OFCOM should do something about that, but probably won't.

Carphone Warehouse and BSkyB, Rupert Murdoch's satellite TV operation, have the potential to once again transform the U.K. market. They offered "free" and very low cost (£5 to 10) broadband connections to their TV customers and recently passed 2 million subscribers. BT and everyone else had no choice but to reduce prices. BSkyB is able to serve nearly 70 percent of the U.K. through unbundled local exchanges. David Goldie at the excellent Telco 2.0 conference mentioned to me he now has his own fiber for most of the network. That will allow him to increase bandwidth at very low costs. Most of the U.K. peers at LINX, the remarkable London Internet Exchange, keeping those costs low as well.

I believe the logical move for Goldie would be to eliminate bandwidth caps for most of his customers. Carriers in the U.S. and France have few or no bandwidth limitations, proving that's a practical model for larger telcos. Goldie's move would inspire most U.K. carriers to follow, and eliminate the dreaded caps from one more country. He just smiled when I suggested that, and didn't offer any comment.

One French carrier seems to be seeing a higher growth rate than 40 percent, but didn't have a firm number for me. I understand Japanese growth is also somewhat higher. I'll be on a D.C. panel Friday with Haruka Saito, Counselor for Telecom Policy, Embassy of Japan, and will try to get updated data.

Because costs of the equipment needed generally go down with Moore's Law at a similar rate, the cost of bandwidth to most carriers has been flat to down. Small and rural carriers can be hurt, as well as those in countries with high backbone or international costs (South Africa except for the incumbent.) We're watching closely, because video could cause an acceleration in the growth rate. So far, it simply isn't in the data.

ECI DSLAM Division for sale
ECI's DSL division is being shopped, I'm told, but so far no bid has been accepted. ECI high performance DSLAMs were key to their contracts with DT and FT, and the same unit can easily handle the throughput for fiber. ECI "will focus on expanding our access away from traditional DSL infrastructure ... to really promoting a next gen vision for access around the multiservice access node," CMO Laura Howard tells Rich Tehrani. The company is doing well in advanced optical products. The Jerusalem Post reports "Rafi Maor, CEO of Petah Tikva-based ECI, [said] expenses have gone up about $40m. and the company has been forced to fire some 250 employees." The devaluation of the dollar hit them hard. ECI is being challenged by labor group Histadrut on the rights of employees affected by outsourcing to Flextronics.

Even harsher news comes from Siemens, announcing another 7,000 layoffs.

Copyright 2008 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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