DSL Prime: Trouble in Paradise

Whether it's Verizon fiber or Korean broadband, those living in paradise don't have trouble-free lives. And Broadband Reports continues to deliver the goods.

by Dave Burstein of DSL Prime and Future of TV [April 19, 2005]

Rebellion in Korean Paradise
259,730 vote no to bandwidth pricing
"Though flat broadband rates have contributed to our Internet development, the time is ripe to adopt the usage-based broadband rates," KT Chief Executive Lee Yong-kyung believes. His customers disagree; at Bcpark.net, 375 accepted his suggestion in a poll, while 730 said no. Yonhap News reports the "move has sparked massive customer outrage and criticism."

Originally, KT and Hanaro, now a virtual duopoly, believed they had the approval of Chin Daeje, Korea's minister of information for the price rise. But Stanford PhD and Samsung veteran Chin knows KT's costs of bandwidth have been dropping almost as fast as usage rises, and he may delay the price increase under popular pressure.

Korea is racing ahead in other areas. Nearly nationwide mobile WiBro connections are likely before others roll out WiMax, mobile TV to your car and cellphone is deploying, and video calls just dropped in price by 70 percent.

Gripe Number One: Ditch the Caps!
Karl Bode at DSL Reports echoes for North America the hatred of caps, writing "Your speed promises mean nothing if your service is capped, throttled, or otherwise restricted. You proudly proclaim that faster speeds make you the ISP we should choose, then you bury provisions in your TOS that effectively take that bandwidth away from us. ... The future of the Internet isn't jpg files and text messages. It's massive file-swapping, huge video files, and oceans of data. You're in the business of providing bandwidth, which we pay handsomely for. Provide it, and get out of the way!"

As editor of DSL Prime, I won't go as far as Google and proclaim "Bandwidth is Free." But the cost has gone down to the point that 20 or 40 gigs a month cost many carriers less than their marketing budgets. Alfred Noyes' "The Highwayman" should be BT's new slogan for a charge of almost two pounds per additional gig. If they believe the cost is more than twenty pence a gig, they should be firing their Internet transit buyers, network architects and especially the cost accountants.

China below expectations?
"Only" 6.6 million at CT Q4
Only at China Telecom are 6.6 million new customers called "softer broadband net adds." Merrill reports 1.3 million in Q4, vs. 1.67 million in Q3. China Tietong/Railway reached a million subs. ARPU was about $13, higher than the $10 China Netcom has dropped to.

Japan also is going slower, with only 20,000 net adds at Yahoo BB in March. Masayoshi Son has gone beyond broadband to television, apparently winning control of Fuji TV in a bitter takeover battle with Livedoor, which should have a side benefit of providing programming for Yahoo BB's lagging TV over DSL offering.

Clarification: 50 Mbps FIOS and fast cable modems are easy to engineer. Deploying them is another issue.
DSL Reports flattered me by picking up my comment that 20 to 100 Mbps is "easy", with 200 to 500 Mbps "possible", but I wanted to clarify. The engineering and technology is ready, at costs affordable to the companies involved. For example, it's less than $100 per home to put a 70-30 VDSL modem at the end of a fiber connection.

Getting something like that deployed to millions takes years, and either competitive fears or a government push. Verizon, who along with NTT has the world's strongest commitment to fiber, is doing 2 million homes passed this year, out of 33 million or so in their territory. A massive effort, requiring tens of thousands of people. Even if they increase the rollout to 3 million or 4 million in future years, it's 2009 or 2010 before it gets to even half their customers.

Cable upgrades will need far less construction, mostly new modems and line cards. Cisco and others are just bringing the gear out of the labs, but they (and I) believe it will work reliably in 2006. One large U.S. cableco is already planning a 2006 trial, wanting to make sure everything is ready if they need the speeds to fight back against Verizon. So you could see a large number of systems upgraded in 2007-2009. Again, deploying to tens of millions, much less the 80 million cable homes, takes time.

The technology doesn't always rule, however. These are all companies who would rather not spend the money to upgrade, and would be perfectly happy to make a nice profit on the 1 to 6 Mbps gear they have in place. I want the speeds in the U.S. to keep up with Japan and Korea, and believe most of you do too. But I'm not sure the hands off government, the weak plans of most of the U.S. telcos outside Verizon, or the "digital transition" NGNA needs of the cable guys are enough to deliver what the engineers are ready with. So I'm pushing hard in D.C., and hope you will too.

Brooklyn Bridge buyer: Telkom South Africa
"Telkom Claims ADSL Success" writes Damian Clarkson from IT Web Johannesburg. "88 percent of ADSL users are satisfied with their service," the company asserted. Reality is Telkom has some of the highest rates in the world, a ridiculous 3 gig cap, and a nation full of unhappy Internet users. They should face reality and fix problems.

My e-mail has long made it clear South Africa users are very dissatisfied, as would a 90 second search on Google. Councilor Mamodupi Mohlala of ICASA reports 446 submissions complaining about the service and is conducting four days of government hearings. "Telkom ADSL 'Ripping Us Off,'" is Clarkson's next headline, quoting Rudolph Muller the MyADSL forum. "We also surveyed people on whether they thought the pricing model was acceptable, to which over 90 percent of respondents said no.

Telkom is now free of SBC control, and is a main owner of the Africa 1 fiber. They have some world class engineers, and no technical reason not to offer service comparable to Europe. Better yet would be to serve their country's need for development, and do the kind of wide, inexpensive rollout so successful in Korea, China, and now Brazil. They will lose some monopoly profits from control of the fiber links and local wires, but serve their country better. (BBB is a feature of DSL Prime I will discontinue as soon as companies stop making policy claims that are clearly nonsense.)

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

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