DSL Prime News: The Inside Source  
October 2, 2001

Dave Burstein
DSL Prime

DSL Prime finds Intel fighting Tauzin-Dingell, examines SBC good and bad, uncovers more cheap equipment, and provides the DSL Prime News Briefs.

The telcos should drop DSL prices to the competitive world level of $25-30, DSL Prime urged last issue, as their contribution to the recovery. GM and Ford have just made a similar move to spur demand with zero percent financing.

I've confirmed the reduced prices will be profitable if customers respond in the likely numbers. Costs are dramatically falling, with modems easier to self-install, support systems in place, and efficient back office systems finally starting to work.

Hardware prices may be even lower than we reported on September 21, with a top tier vendor e-mailing us that DSLAM ports have sold for $60 in telco quantities. Every cost falls dramatically with volume, and the operations people tell me they are ready. It's smart business for the telcos to grow the market, especially now that the phone line counts are falling.


30,000 feet at the right price
Charles Industries: "give us the volume, we'll give you the price"
Any telco that explains "we can't offer you DSL, because 25,000 feet is technically impossible" is providing out of date information. Half a dozen manufacturers now are offering repeaters that can double or more the 15-18,000 foot nominal distance. 2Wire brought wire spools of 30,000 feet to SUPERCOMM so they could prove that on the show floor.

The technology works; the price is the problem. A DSLAM and modem cost well under $200—the repeaters raise that dramatically.

Avi Vaidya, CTO of Charles, whose unit has already been tested by over 70 different telcos, explained to us his dilemma. "In small volumes, we need a high price to cover not only our development cost, we also have to allow for premium on components. In particular, we believe it will cost less to use repeaters and sign up more customers than what many companies are spending to acquire customers through marketing. You make more money by not turning away customers."

Son/Softbank buying DSLAMs from UTStarcom
$100M contract to 45 percent owned company; SMS from Issanni
While Medialincs of Korea won the first contract, and Paradyne's Reach DSL has an important share, Yahoo Japan will also look to Son-chaired UTStarcom for DSLAMs.

Starcom's Hong Liang Lu, like Son a graduate of Berkeley, has built over $300M of business in China, primarily for the PAS wireless phone system, which has over 1.6M active subscribers.

An engineering team led by Bell Labs veterans has adapted their voice-oriented DLC into a new product, the AN 2000 IB, which they will deploy widely in Japan in 2002.

UTStarcom, in turn, is purchasing subscriber management units from Issanni, a quiet New Jersey company whose CEO Allan Chu believes they offer Redback level functionality for a fraction of the cost. They have investments from UT Starcom and Larscom. They've primarily been a research shop, but now intend to develop advanced products with traffic shaping and firewall capability.

We are journalists, not investment advisers; invest at your own risk and do further research.

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

1. DSL Prime News
2. Cheap Equipment
3. Intel vs. Tauzin-Dingell
4. SBC Good and Bad
5. DSL Prime News Briefs