DSL

DSL Prime: Provisional Subscriber Numbers

DSL Prime analyzes intial deployment results in the United States and around the world. DSL Prime continues to ask why the rest of the world is able to do it better, and why smaller companies can make a profit in rural deployments where the Bells have failed.

by Dave Burstein DSL Prime [February 5, 2002]

Initial Q4 subscriber numbers
Japan ADSL passes cable
1.5M customers, almost all in the last year, and the majority installed after September, when YahooBB launched the $22 per month service. Justin Beech writes he just came back from visiting, and ads for DSL were ubiquitious, and demand is exploding.

U.S. adds over 600K to over 4.4M
Bell Canada added 132K, reaching 757K, by far the highest penetration in North America. They are third in the world, after Korea and Taiwan. Availability is well over 70 percent of the Canadian population, with plans to reach 90 percent soon. Subscriptions would be even higher if management hadn't cut back on marketing for much of Q2 and Q3. Add Telus (200,000) and MTT, and the Canadian DSL subs are over a million. If the U.S. telcos deployed at that rate, the U.S. DSL sub count would be 8-10M, passing cable and ending all the noise about broadband demand.

SBC, serving three or four times the population, only added 146K new subs, despite increasing promotion by AOL and Earthlink. They intended to connect 350K per quarter a year ago, while DT and NTT with similar numbers of lines are prepping for 500-750K per quarter. "We are falling behind in broadband," Cisco CEO John Chambers worries, adding "For our nation's competitiveness and the future of our economic development, we must not fail."

For Q4, U.S. net adds should be 625K to 650K, with the largest already announced:

Verizon 225K, 1.21M total, driven by $29.95 three month offer

BellSouth 157K, 620K total, with widest CO and DLC deployment by far.

SBC 146K, 1.33M total SBC has fallen from #1 to #4 worldwide

Bell Canada 137K, 762K total

Qwest 43K, 448K total

Covad flat

Sprint, Telus, mPower, Focal, Alltel, etc. are still to come.

The U.S. year end, therefore, will be just under 4.5M, while Canada has recently passed the million mark. Germany, Sweden, and Belgium have already passed the U.S. penetration rate, and Japan will do so within the next month or two. All are accelerating faster than the U.S. The difference is the price.

Small telcos have big deployments
Ed Pinkham of the Pinkham Group points out how much of the problem is unresponsive big telcos. "We just finished a survey of DSL deployment by the hundreds of independent LECs and found that they have been extremely aggressive in rolling out DSL services. Today the independents currently serve over 4.5 million homes with DSL (verses the RBOCs' 72M), they have deployed DSLAMs in over 2,000 COs (verses the RBOCs' 4,600). The independent telcos now service over half their customer base with DSL."

"While the RBOCs maintain that DSL deployment is not viable in low density coverage areas, the independent telcos haven't noticed. In fact the independents have deployed DSL in COs serving only hundreds of homes. The average density of Independent DSL deployment is only 2,300 homes/CO...which compares very favorably to the RBOC average of 16,000 homes/CO. The average RBOCs undeployed COs is even larger than the average CO deployed by the independents. If the RBOCs were run like the independents nearly all of their COs would be DSL deployed today."

These 15,000 smaller COs cover 20 to 30 percent of the unserved Americans, and Verizon & SBC can profitably serve them today. BellSouth is already doing so, having reached 116 out of 120 in North Carolina and 83 out of 119 in South Carolina—with 21 more scheduled in 2002. In Q4, BellSouth equipped 230 new COs (total of 1025). SBC did 165, to reach 1350, and Qwest just 2, to 346. SBC and Qwest have been maintaining their 2001 spending cuts "will not affect our key growth driver, data including DSL." The numbers just don't add up

Paradyne, Alcatel Micro collaborating on long reach chips
Will it become a standard?
Providers have learned the hard way that insufficient reach of DSL is very costly, forcing them to turn away customers attracted by expesnive advertising. Every chipmaker in the world has been working to improve reach, but Paradyne's low frequency ReachDSL is the one approach with a proven record in the field of better performance (at 15,000 feet and more). As loop length increases, low frequencies are attenuated less than high frequencies. Thus, at the receiver, low frequency signals are received at a much higher power level than high frequency signals. Paradyne's tests, reported in the Forum's DSL Everywhere white paper, show performance of over 300K at 20,000 feet and more.

Alcatel Microelectronics is the largest producer of DSL chips in the world, supplying both Alcatel itself (30+ share of the DSLAM market) and numerous others, including many of the independent modem manufacturers. This deal makes ReachDSL a key contender for widespread deployment, if it becomes an open standard. Alcatel's Kevin Kohleriter writes "this agreement is a first step toward helping in this standardization activity." To become a standard, Paradyne must agree to license the technology on "reasonable and non-discriminatory terms." The payoff is not royalties (although they could add up), but leadership in future products. DSL Prime believes Paradyne's Sean Belanger has the diplomatic skills to build an industry consensus, and that making Reach a standard will open doors for the company.

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

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