DSL Prime: Cable's Gigabit Modems

If cable continues to increase speeds while phone companies fail to change, the cable gigabit modem will prove to be a DSL killer.

by Dave Burstein of DSL Prime and Future of TV [March 10, 2005]

"1 Gigabit per second (Gbps) per fiber node for downstream use, 100 Megabits per second (Mbps) per fiber node of upstream capacity by 2010."
—Cisco's John Chapman (CDN)

Gigabit (shared) cable modems. which Cisco is demonstrating in Korea, are the most important story this year for DSL providers. The technology will soon work well and inexpensively, with Arris and other vendors likely to follow Cisco's lead. BroadLogic is the likely chip vendor, with Time Warner, Cisco, and Intel key investors. If Time Warner offered the service in Manhattan, I'd switch immediately, despite editing DSL Prime.

The gig cable modem story will break widely in April at NCTA, where CableLabs will show an early version, running perhaps at 80 meg (which Arris demonstrated) or more likely 200 down, 100 upstream. The design easily scales to over a gig, as Cisco is proving. Japan and Korea are ready to buy, with U.S. cablecos losing share to Verizon fiber or SBC Lightspeed likely soon behind. France will soon be upgraded by John Malone's UPC cable, and they and the German cable nets may jump right to the high speed digital. This could change everything; I'm opening Fast Net Futures Monday morning by looking at the technology and the effect on strategy.

That's only one reason to drop everything and get to Fast Net and VON this week, although you probably won't and find yourself far behind. Some other revelations:

• Users will download video like they do music, Andrew Odlyzko predicts. If he's right (we're not sure), most telco video plans and other streaming models will fail.
• 100,000 programs ready to download inexpensively is the goal of Tom Hammer of Akimbo, who is already offering on demand National Geographic, anime, Turkish TV, and movies from Africa. Hammer tells me the cost will soon go under $50 to encode a show and put it on a net server; at that price, every show in the world can be encoded and offered by somebody.
• The only "incentive" that's really effective getting a large company to change rapidly and invest more, Pip Coburn has argued, is often competitive pain so intense they have no choice. That makes mincemeat of policy of "incenting" telcos by letting them kill off competitors. Deutsche Telecom has shamefully ask for a price increase on unbundled loops, despite the weakest competition and highest DSL prices of any major country.
• Verizon's current 19 Mbps BPON needs to be five times as fast. Paul Morris of UTOPIA, Americas second largest fiber build, will discuss his true 100 Meg system. UTOPIA is going live, and will soon offer complete video packages from several different companies. Bust down the walled gardens.
• SBC will offer a state of the art 250 gig set top, an HD DVR that plays your music, organizes your pictures, connects to the net, and that's just what is public knowledge. Manufacturer Brian Hinman, of 2Wire, will only be able to show us a fraction of its features, but SBC's plan is to strike back with remarkable features.

Meanwhile, the U.S. has lost the role as the center of the advanced internet. Japan is adding fiber at 2 million lines (not homes passed) per year, 400,000 take video over IP at PCCW Hong Kong, and PCCW's new partner, China Netcom, predicts 40 million broadband customers in four years. Add China Telecom, and expect the People's Republic to pass 100 million broadband users very soon.

Turkey: 470,000 2004, 2 million goal in 2005
Islamic government with ambitious economic goals
Turkey, with a $6,700 per capita GDP, 86 percent literacy, 18 million fixed phone lines, and a population approaching 70 million, has been one of the largest untapped broadband markets. A national telco has abandoned several tenders when the government changed, although IMF-demanded privatization is again on track. (Editor's rhetorical question—why the heck is the IMF allowed to make such a demand on a sovereign country.)

Prime Minister Recep Tayyip Erdogan's economically oriented Islamic regime has now been in power for two years, and Haber Merkezi of turk.internet.com reports the telco is now ready to expand DSL rapidly. They project "920,000 in March, 1,370,000 in June, 1,820,000 in September and 2,270,000 in December." That's an ambitious goal for a country with only 20 million landlines. TV is already in the works (see TT's Project is 2.2 M ADSL Users & 45 Gbps in 2005).

Copyright 2005 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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