DSL Prime News: The Inside Source

All around the world, DSL deployment continues. Prices are lower and speeds are faster outside the U.S. One ISP, Speakeasy, does, however, manage to provide real customer service.

by Dave Burstein DSL Prime [February 21, 2003]

"We must bring the benefits of the Digital Age to all Americans, from the business districts to the barrios; from those with every advantage to those with disabilities; from the young to the old; from suburban enclaves to the rural heartland." —Bill Kennard

All respect to those taking courageous positions in D.C. and around the world.

DSL is exploding, with 1,000,000 new users every 16 days. Consumer benefits include a dramatic price drop for telephone services in Asia. NTT in Japan announced 6¢ (¥8) three minute phone calls across Japan, in response to the million Japanese who have switched to VOIP at Yahoo BB. Calls between NTT VOIP subscribers will be free. In Korea, unlimited "long distance" is available with local service for about an extra $3 per month.

Masa Son is streaming 15 channels of TV, and if NTT doesn't drive Yahoo BB into bankruptcy will soon add HD TV and video on demand.

Japan proves what true competition can accomplish. 6 million DSL subscribers pay between $25 and $40 for service that is often 7 Mbps to 12 Mbps. They sign up as many DSL subscribers in a month as the U.S. does in a quarter, despite a 60 percent smaller population. Another half million signed up in January. Most of Japan has four choices for service, with vigorous ISPs like Nifty offering further options.

VOIP is, finally, ready to change everything. That's why it's crucial not to strangle Voice on the Net with unnecessary regulation. Jeff Pulver, with whom I'm working on FNF, contributes a guest editorial below on proposals coming up this weekend at NARUC.

After the showdown in D.C. today, it will be time to think again about building the networks you need.

36 million Users, up 5.7 million Q4
Tim Johnson guesses 60 million yearend 2003
Western Europe grew 28.5 percent, with Germany at 3.1 million yearend and Telefonica of Spain approaching 1 million. Belgium's efficient operation passed 500,000 subscribers in a country of only 10 million. Chunghwa of Taiwan grew 24 percent to almost 2 million users. Point-Topic's latest here.

SBC drops to $35, Verizon $35 to $40
Still some gotchas
Verizon's commercials are now emphasizing the $39.95 price, reduced to $35 if you buy LD and even a modest local package. SBC found even $40 wasn't attractive enough, and now is aggressively advertising $35 for twelve months. Yahoo has been telling reporters and Wall Street how successful their SBC marketing has been, but actually even dropping the price from $50 to $40 only got them back to the net adds of three years ago. SBC only 4 months ago thought they'd find a market for a low-speed tier at $43, but instead have found it more sensible to offer 1.5 Mbps nominal downloads at a lower price.

SBC's website says your rate after 12 months will go up, which has provoked incredible outrage from existing customers when they hit that bump, and expensive churn despite the disruption of making a change. SBC is responding quietly, at least in some districts, by extending the $40 price to anyone who complains loudly.

"NTL Limits Cause Mass Outrage"
Calling users after 15 or 20 GB per month
I put quotes around this headline because it's direct from DSL Reports—Justin's headline has it right. NTL's policy is relatively benign—it only cuts when a gig a day is regularly exceeded, and talk to the customer instead of charging or shutting anyone down. In New Zealand, complaints are all over the media because of extraordinary charges for bandwidth. Bell Canada's $8 per GB is outrageous. In discussing this with a Canadian reporter, I wrote, "there is nothing wrong or immoral in charging for high bandwidth use, but a 500 percent markup is a clear and obvious attempt to erect a tollbooth on the Internet. The Internet has thrived because of the end-to-end principle, with the carriers not determining what innovative uses people will make of the network. It blocks streaming media, and hence is a restriction on free speech. It's a violation of NAFTA if Bell Canada offers its selection of content (heavy with Hollywood movies) at a lower price than other content providers can achieve."

Calculating from public sources like Band-X, with not-for-attribution confirmation from several of the largest carriers, I get $2 or less cost per GB today. In the volumes of a Bell, that should be significantly lower. In addition, this is dropping rapidly. The fiber is already in the ground most places, a sunk, relatively small cost. The gear to light it is following Moore's law with a vengeance: ask Nortel, Cisco, or Huawei how soon they see equipment prices dropping 70 percent or more, and the answer is 3 to 5 years.

Conclusion: For telcos, bandwidth costs are already just a small fraction of marketing costs and continuing to drop dramatically. Japanese and Korean providers selling 7 to 16 Mbps unlimited DSL for $25 to $40 per month are pumping two to five times as many bits as the West, but with an overall lower operation cost.

Providers can be different
Speakeasy's a pleasure—and fast
Twice the speed and tech support that answered in a minute and solved my problem in three. Mike Apgar said, "just try us" and I plugged in the gear he sent in about 15 minutes. I spent five minutes configuring Windows, couldn't make it work, and called tech support. Nicole, the tech, answered the phone almost instantly, had me check a few settings and discovered the one I had typed in wrong within two minutes. In less than half an hour, I was downloading at 1.3 Mbps, twice as fast as a typical Verizon connection, and uploading at over 500 Kbps, two or four times as fast. Speakeasy gets connections from Worldcom, using the old Rhythms DSLAMs, but does not limit the upstream rates. That was darn handy, when Jennie needed some audio files for a class in New Jersey and 20 MB went over in minutes.

Copyright 2003 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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