DSL Prime News: The Inside Source

Brian Roberts, CEO of Comcast, seems determined to build the telcos' worst nightmare: a network, built today, capable of serving future demand for personalized video on demand, including HDTV, through multiple 5 Mbps connections.

by Dave Burstein DSL Prime [May 28, 2003]

"We'll have to be better than DSL"
—Brian Roberts, CEO of Comcast

Brian Roberts is the telcos' worst nightmare: smart, 21 million customers wired, aiming directly at local phone service, and with a billion dollar partner named Bill Gates.

Responding to Verizon and SBC, he's ready to raise speeds on cable modems, initially to 3 Mbps. He'll allocate another channel, and triple that if necessary, as digital opens up capacity on the cable net. After that, he's planning to push to the limit a network designed for five or ten times as much traffic as the typical telco. For example, they use much faster GigE connections where a telco typically uses a DS3.

Mark Coblitz, his chief strategist, tells me Comcast is aiming for "multiple 5 Mbps connections to most homes," while a similar SBC planner recently asked, "who ever needs more than 2 Mbps." Roberts outlined the first use: personalized video on demand, including HDTV.

Comcast is ready to cut prices to match telcos when necessary, but makes more money upgrading service instead. Unless they want to drop prices much further, DSL providers have to find ways to be better than cable. Wi-Fi throughout would be a great tool, difficult for cable to match, but Verizon's recent speed improvements still leave upstream speeds much slower. After the next cable upgrade, DSL in the U.S. will again be behind.

Roberts asked me "Is your Vonage IP/DSL phone really working that well?"

"Yes," I could reply, "people on the other end of a call tell me its sounds the same as a regular call. The features are great—I get an e-mail with the caller ID when someone leaves a message, can check all my past calls to find a lost phone number, and they just added e911."

Roberts had just told hundreds of investors at the Banc of America conference, "We won't block Vonage, we'll just have to out-compete them" in reply to my question. That's good news for Jeff Citron, working the street to raise $100 million for Vonage based on 25,000 customers and a lead in time to market. Vonage works great, but Citron has to overcome some tough problems. He personally was assessed one of the largest fines ever on Wall Street, and Vonage has neither proprietary technology nor customer scale.

Several small companies already compete; major ones, including Japanese giants Softbank and KDDI, are scouting the U.S. market. Voice over the net now clearly works, with Pulver's VON conferences growing despite the tough year for telecom. It's too early to pick the winners.

SUPERCOMM next week will feature all the vendors demoing broadcast video, while the big customers hem and haw about whether they will ever buy it. Larry Babbio at Vortex just said the fiber build begins within the year, good news if that's more than a Potemkin effort to soothe regulators. I'm skipping Atlanta to catch up on writing, but say hello to me at VON London the next week.

Mark Floyd's Entrisphere is looking for a senior product marketer with strong major carrier experience. DQ is looking for an FAE with modem chip experience. Keep the jobs coming—good people are looking.

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

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