DSL Prime: Commissioner or Dogcatcher?

DSL Prime revises its nominations to the FCC, examines real CPE costs, and shows how other countries are plotting a path to nationwide broadband availability.

by Dave Burstein of DSL Prime and Future of TV [November 17, 2004]

"G-d is in the house."
—Fats Waller, from the piano, when the great Art Tatum came into his club.

I rushed to finish this issue before I go to Nashville, where I'm going to tell regulators that delivering DSL to almost everyone is practical, affordable, and good politics went.

George Bush promised 100 percent in 2007, and Ed Whitacre of SBC talks as though he's already achieved it. But delivering to America the 99.6 percent the U.K. is getting will require overcoming many lobbyists' myths, so the battle is tough. NARUC/NECA took a major step in that direction recently, bringing to D.C. experts including one of the real fathers of the Internet, Dave Clark of MIT. He's not G-d, of course, but is a genuine hero. Anyone looking to understand the net owes Clark the same respect Waller paid Tatum.

Dave Clark co-wrote with Dave Reed of the original paper on the End-to-End Principle, which built the net. His work continues two decades later, along with a quiet influence on policy. When I visited British Telecom, they told me how influential his suggestions have been. His keynote made the NARUC/NECA Broadband event a highlight of the year in D.C, and he was joined by Eli Noam of Columbia, John Hodulik of UBS, Stagg Newman of McKinsey, Bill Smith of BellSouth, and this writer, who was honored but somewhat intimidated to be on the same program. These are the expert's experts from whom I learn. The difference is enormous between knowledgeable people like these and the typical Washington operatives at the same event, like Peter Pitsch, Walt McCormick, and Robert Sachs. Policy and our industry would be very different if the lobbyists and their allies played a much smaller role.

Apologies for so much at one time. This second issue allows me to mention a possible story just in. An employee of one of the largest U.S. DSL chipmakers wrote me at 5:30 AM Monday of a major layoff at his firm, which already is designing many of their DSL chips in India. I'm holding back the name until I confirm this one; I hope it's untrue, but my source is inside the company and presumably knows.

Ethics and expertise are important in policy, which is why I wrote the item below recommending Dick Notebaert of Qwest over any of the names circulating. Of course my beliefs are different from a Bell CEO, but George Bush won the election and it's his choice. I urge him to look for people who share his beliefs and have earned respect from their peers. That includes Bell stalwarts like Notebaert, Bill Smith, or a dozen of their peers.

Unfortunately, the frontrunner is Becky Klein, with a strong recommendation by Tom Tauke of Verizon. Although those who worked with her in Texas respect her, her nomination would send a terrible signal that the FCC is for sale. Telcos and others just poured tens of thousands into her political campaign because the White House gave a signal she would get a federal post like the FCC if she lost, as expected. Someone who took $10,000 from SBC and thousands more from others with business before the FCC should not be the nominee.

I've no illusion DSL Prime has the power of Verizon in D.C., or that my editorial "Becky Klein for Dogcatcher" will slow her momentum. Even a full-court press of public interest opposition and tough Senate questions probably won't make a difference. I might have to work harder the next four years if this column costs me access, but selling an FCC position is at least as ugly as Bill Clinton's regular offer of a White House bedroom in return for a contribution.

ST's 10 Euro modem
Don't just buy on price, however
"The unit price of an ADSL modem is currently only US$20," Peter Kempf of Conexant explained to Digitimes, suggesting that ST Micro's claim their new chip prices enable 10 euro modems are reasonable. It's USB only, so has minimal need for power circuitry, and today's integrated chips have eliminated most of the rest of the cost as well. Prices like that are for 100,000 units or more, typically—you aren't likely to find things that low in a retail store.

This is the first crack I've detected in the chorus "ADSL2+" will cost no more. Earlier this year, chipmakers believed they wouldn't be able to charge a premium for the new chips. I suspect those with stock on hand or manufacturing capacity dedicated are dropping prices on the older chips even more than expected.

Many carriers are sensibly paying more than these rock bottom prices for modems, however. Testing, ease of use, software features, extra warning lights, and reliable design all save on operator support costs and customer frustration. DSL customers expect their carrier to take care of everything, and dealing with a failure is far more expensive than the modem itself. I don't have any data on reliability of different modems, unfortunately. But I've no reason to believe the difference isn't as great as in DVD players. Consumer Reports notes Panasonic and Sony had only half as many failures as the brand I use, Apex. So absolutely don't buy just on price. On the other hand, research in a paper I just read about industry futures needs immediate correction. They used an estimate of CPE of $168, and drew the erroneous conclusion cable modems are much cheaper than DSL.

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

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