DSL Prime News: The Inside Source  November 26, 2001

Dave Burstein
DSL Prime

Dateline London: European DSL is expanding rapidly, and we've met some extraordinary folk. Germany leading the way with over a million installs in the last ten months. The U.S. has lost the lead—Korea will not be alone in rapid broadband growth.

Back in the U.S., Verizon's Seidenberg made a gutsy and smart move, looking to regain momentum lost last year. He declared the war is over, that D.C. battles are now a waste. Most of the competition is dead, and Seidenberg is betting that Mike Powell will be delighted to eliminate the unnecessary rules that remain. Now, Verizon is looking to double DSL installs this quarter, and has major video plans rebirthing at Verizon Avenue.

Billy Tauzin is continuing to push his legislation in the house, obligated to give the telcos some return on their $10M investment. The black ninja lobbyists hope to bring it through the Senate, but they haven't gotten to Hollings as far as anyone knows. Funny counting on Fritz Hollings to save American consumers a few $B a year in overcharges.

Editorial note: DSL Prime cannot overemphasize that if you care about video-speed broadband, the speed of the connection must be guaranteed, which is easy and relatively inexpensive. (Intel, Microsoft, Sony, Yahoo—are you listening?) If you care about competition, the reliability of the service to competitors is crucial as well. Below for details.

SBC, unfortunately, again had material inaccuracies in their financial call. In particular, Whitacre announced that Pronto would now be postponed due to regulatory problems. The truth is that SBC postponed Pronto seven months before, when they had every expectation of getting the regulatory changes they want from Washington. Extremely few of the 13,000 remaining remote terminals were installed after March.

Presumably, SBC is prettying their financials by cutting investment, necessary as the stock lost $13B with the latest earnings disappointment. Whitacre now is facing dissension on his board, but that's a future story. 11/18 Events have overtaken our analysis—the board has now ratified bringing an outsider on-board to replace the CEO in time.

Jennie did the impossible on the trip, holding to her diet, while we're both finding stories faster than we can write them. When we come back, final design check on the book and then Jennie will have some time to take on Web design and writing assignments.

Learning from Europe
The Europeans still speak of looking to the U.S. for leadership, but in fact now are moving ahead, and I learned some valuable lessons:

• Germany has done 1.2M installs in ten months, and is on track to double that rate. The regulator has just confirmed their $30 price ($15, wholesale) is reasonable in relation to costs.
  
• Telecom Italia is proving design can create a sense of excitement for DSL. Great graphics with a sense of motion, carried throughout their advertising, packaging, and literature identified the company with the fast Internet.
  
• British Telecom has reduced line quality failures to fewer than 2 percent of installs with careful testing (Teradyne equipment). Failed installs can be dramatically reduced, and more customers served from existing equipment. Verizon has a similar need, and just placed a large order with Hekimian.
  
• Belgacom will offer DSL service from every office by the end of 2001, maximizing marketing dollars and speeding growth.
  
• Versatel is starting to roll voice over DSL, virtually every European CLEC will soon be offering voice for business customers.
  
• Five days is the current standard for installs in Britain, and they are meeting it 90 percent of the time. They intend to reduce that time, because cable is getting down to a day or two. That confirms the reasonableness of the Illinois and other state standards of three days, unless the line has a problem.

Copyright 2001 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

1. DSL Prime News
2. DSL Prime News: Europe
3. DSL Prime: SBC Examined
4. DSL Prime: Video On Demand
5. DSL Prime: News Briefs