DSL Prime: Buildouts Without Spin

In the U.S. different RBOCs have very different buildout plans. Don't listen to what they say; look at the capital expenditure plans in the SEC financial filings. This is also true of MCI.

by Dave Burstein DSL Prime [July 7, 2004]

"The net should be affordable to everyone"
—Dayanidhi Maran, India's new Communications Minister. Updates from readers in India much appreciated.

Xavier Niel is out of jail, good news for the 700,000 customers Iliad/Free has stolen from France Telecom. For 30 euros, they provide telephony, DSL (up to 5 meg) and 40+ channels of video.I'd buy it myself, if Niel, Masayoshi Son, or even David Dorman brought that style of service to New York. He writes "I'm out of jail without any caution, obligation or anything else," after accusations companies he invested in went beyond "extreme entertainment" to the sale of the services of women. Niel's mistake is his choice of venue. Stealing money from customers or committing perjury in policy testimony is far less likely to send you to jail.

Whitacre's SUPERCOMM keynote called installing some DSLAMs "fiber to the neighborhood." He spoke of "up to $4 to 6 billion" in "incremental investment," but neither SBC nor Wall Street has raised capex estimates. This ordinary puffery became a PR coup for SBC, however, as most reporters echoed the company line. Key questions remain "Are you really increasing investment, now that you've won in D.C.?" and "When will SBC get to the 100 percent coverage Whitacre committed to for 2004-2005, and George Bush set as a national policy?"

"DSL Olympics?" Absolutely. ZTE is supplying the Athens Games, connecting all Olympic facilities, including the main venues, international broadcasting centers, news centers and the press village. Just one more sign that Asian vendors are playing a worldwide role.

Stories not yet written include Bill Smith's 57 percent Solution (bonding two lines for speed), Delivering video "absolutely competitive with cable" for Keiko Harvey and Verizon, Tellion's pole-mount VDSL box, Lucent's VDSL for Korea, Alcatel's planned fast changeover to ADSL2+, Thomson's USB and ATA on your set top, Bluetooth on the Gateway, DT's request for 5 to 10 Mbps upstream, GigE backhaul for remote terminals, Ethernet in the First Mile—what it can do for Cisco/SBC and Yahoo Japan, ADSL2+ L3 power issues, 90 days free offer from BT in Ireland, McCain's call to save Adelstein's job, Powell's search for a legacy, and ... Two stories worth pickup by bigger media are Microsoft joining the MPEG 4 licensing cartel to collect a tax on nearly every TV program and the $1.4 billion in U.S. rural broadband being offered on remarkable terms.

Ikanos IPO
Ikanos' IPO has the momentum to be successful, as they are far ahead of any other DMT VDSL chipmaker in a market finally growing fast. That's a remarkable turnaround for an outfit whose last funding round was a challenge, and was almost sold for a fraction of what they will IPO at. (Centillium took a close look.) Everyone is presumably asking for "family and friends" stock, although that's not as easy as it was a few years ago. Citigroup, Lehman, UBS, and Wachovia are the bankers, although that list will presumably grow to include at least one other company leading in broadband coverage.

The S-1 revealed NEC and Sumitomo have been 75 percent of sales, with Dasan and Millinet of Korea taking 25 percent in Q1 2004. Belgacom is the only European provider ready to move ahead. The cost of revenue in 2003, $28 million, was nearly the same as net revenues of $29 million, Pauline Rigby notes. This confirms claims the chips remain expensive to produce, while competition with Metalink has caused Ikanos to sell virtually at foundry cost.

VDSL2 "Top Priority in Geneva"
"At the ITU, NTT asked for 100 Mbps symmetric at 200 meters, and most everyone else asked for rates in the 30 Mbps to 10 Mbps range on loops as long as possible. The Q4/15 group has agreed to include 100 Mbps capability in the development of the standard," writes an informed source. Ikanos and Metalink both in volume production of chips at 100/30 speeds, at modest prices. Field units close to customers add to the expense, of course, but Korea, Japan, and soon Belgium are leading the way. Canada is a possibility, and some in France and Italy think that the best way to meet the growing competition.

DSL Forum Going Home
New requirements for management, testing
The DSL Forum now provides tools to manage home networks, crucial for the Bells' effort to sell satellite video with a DSL return path. Satellite video is a strategic product, whether or not they also do video over DSL. A small committee from the telcos has been working hard, drawing on sources including Microsoft, choosing "what we know should work." Traditional OSS vendors didn't have products to offer, but 2Wire, Motive and others were able to contribute expertise. The new technical requirements papers are:

• TR-064 "LAN-Side DSL (CPE) Configuration Specification" [facilitates] consumer self-installation and a new level of service management.
• TR-068 "Base Requirements for an ADSL Modem with Routing" establishes a common set of capabilities.
• TR-069 "CPE WAN Management Protocol" introduces secure CPE auto-configuration practices and incorporates other CPE management functions into a common framework. This enables a variety of service offerings including image management, firewall, virus protection, anti-spam, and parental control associated with home network security.

Copyright 2004 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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