DSL Prime: Headlines for a Happy Company

As SBC prepares to risk it all on unproven technology, some companies around the world are rolling out real broadband, as shown in the happy headlines.

by Dave Burstein of DSL Prime and Future of TV [November 16, 2004]

"10 million broadband users in September. One million up on the month."
—Ashley Highfield, whose BBC looks to "100 percent broadband Britain"

SBC is counting on a near-miracle in Project Lightspeed, planning to deploy millions of line two years from now using DSL, network, and video compression that is still in the labs. SBC's slides talk of 20 to 25 Mbps for 5,000 feet, while ADSL2+ is more like 15 meg at 3,000 feet. VDSL2, which SBC will actually deploy, is still without a standard, much less working silicon. It will do better, but one key engineer isn't sure 20 Mb/s at 3,000 feet will prove reliable, much less 5,000. A second thinks speeds can greatly increase, but that will require changes in chips and networks nearly impossible to do so quickly.

An optimist is "confident that SBC can start delivering HDTV simultaneously with multiple SDTV streams in 2005. To reach 6,000 feet with 20 to 25 Mb/s we can bond two pairs of wire. We expect to use only one pair of wires to serve all but a very small fraction of customers. Using VDSL2 we can deliver all the service that customers will need, and have what is needed to be very competitive low infrastructure cost, rapid deployment, rich features."

A pessimist believes even if they hit that mark they will be far behind cable in 2007. If cable advances technology as Brian Roberts of Comcast and top analysts like Glen Campbell, John Hodulik, and Anton Wahlman have suggested, SBC may struggle. For example, SBC's planned bandwidth is not enough to offer a TIVO service that lets you watch one program while recording another. DVRs like that will be standard elsewhere.

Is Randall being irrationally exuberant? SBC has world-class engineers, but the latest 10,000 layoffs will hurt. The compression ratios required, and the rock solid quality of service needed, are far beyond 2004 state of the art.

Everyone thinking about telecom in North America faces two years of agony and uncertainty. No one knows for sure whether QOS, DSL, and video compression will advance as fast as needed. There's no certainty, either, about whether Verizon's fiber or Comcast's advanced cable will really pull in customers. Bill Smith at BellSouth and Eugene Roman at Bell Canada are also hoping upgraded DSL will be enough. I believe Seidenberg has it right, but many I respect see it the other way. Of course, if Verizon abandons my town, New York, to New Jersey or Virginia, I might change my mind. The New Jersey papers are spreading the rumor that Verizon might take over AT&T's old headquarters.

Friday, Verizon's market cap remained an amazing $26B more than SBC, remarkable because the companies are so similar. Smart money thinks fiber is the way to go, taking a long view. If they still had a monopoly, SBC's plans would be more profitable for at least the first four to six years. But if cable moves ahead, SBC will require billions more to catch up.

Say hello if you're in Nashville for the regulators' meeting, Orlando for TelcoTV, or Austin Thursday, where I'll bring this debate to IEEE ComSoc Thursday night. I hope someone from SBC Labs joins the discussion, or catches me privately the next morning. See you there.

BT 3.3 million, up 607,000
Some headlines for a happy company

• Broadband fattens BT profits * The Times
• Broadband drives BT growth * Guardian Unlimited
• Broadband—BT's new wave saviour * The Register
• A new ADSL subscriber every 15 seconds *UK Broadband Usergroup

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

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