DSL Prime: $10 VDSL Chips

The technology to deliver television over DSL is here—as is the technology to block competing VoIP and video feeds.

by Dave Burstein of DSL Prime and Future of TV [June 2, 2005]

"My number one priority is broadband"
—FCC Chair Kevin Martin

Kevin Martin could double U.S. broadband net adds with two fifteen minute meetings. Just look Ed Whitacre and Ivan Seidenberg in the face. Repeat "My number #1 priority is broadband," as you just told Drew Clark. "The President has promised 'affordable broadband for all Americans by 2007,' and I need to deliver that for him. Big Ed, in 1999 you agreed with Bill Kennard you'd provide 100 percent broadband coverage by around 2004. You told a reporter you have that today simply by installing an inexpensive repeater. You're promoting $19.95 service, and you'd do an even better job saving voice revenues if you went to $14.95. Ivan, you have the same capability. How can we make this happen?"

With $30 billion tied up in the AT&T and MCI mergers, they can't say no. Especially because Whitacre is right—the cost of the repeaters, backed up by satellite service purchased in bulk for those truly hard to reach, would be a rounding error. Does Kevin dare?

SBC's Lightspeed is slipping 3 to 6 months behind schedule, because equipment isn't ready and software untested. I report that below as NBN "not big news" to emphasize to Wall Street readers that SBC's prospects are little changed by this predictable delay.

The $100 million Korea Telecom fine may not be enough to prevent the scourge of rate-fixing as the country declines to two broadband carriers. Ironically, if KT is telling the truth, the Korean Information Ministry is a co-conspirator. To keep competition alive, they instructed Korea Telecom to fix rates high enough Hanaro could survive. The Fair Trade Commission acknowledged some government role in reducing the fine by a third from the original proposal.

Here in the U.S., antitrust is so weak cable CEOs publicly say telcos should raise prices, signaling how both sides make more money if they find an effective way to conspire. Fortunately for America, Ivan Seidenberg has decided to compete by building the most advanced large network in the western world. I hope Larry Babbio is right, that they'll be so successful with a full fiber build others choose to follow.

Infineon < $10 low profile, < $20 100 Mbps
Infineon celebrated by dropping a bombshell: a price under $10 for the 30 Mbps low-profile chips, and under $20 for the 100 Mbps symmetrical (200 meter) high profile version, sampling imminently and volumes promised for fall. Pricing under $10 is aimed at soon replacing ADSL2+ with VDSL2. Two Bells beyond SBC tell me they will switch when the VDSL2 chips are proven, given a similar price point. BT, FT, Tiscali, DT in France, and a dozen others are deploying new networks over the next 12 months, currently planning ADSL2+. One issue, high VDSL2 pricing not expected to come down before late 2006 or 2007, will be solved if others follow Infineon's price lead. If chipmakers prove they've solved the other set of problems, reliability and interoperability, the market could explode.

Infineon's forward pricing is probably necessary if they are to overtake market leader Ikanos. Dean Grumlose of Ikanos agrees, "VDSL2 will not be a niche technology," and "will be only slightly above ADSL2 pricing over time." He believes the 6 million VDSL DMT ports Ikanos has shipped will assure the carriers of reliability, and expects to win most of the coming orders. "We've had to solve many problems getting the performance needed in the field, especially at 30 megahertz. Ikanos has encountered unexpected interference and network effects. Those just now coming to market will face some non-trivial problems before carriers are satisfied." Ikanos, still a small, VC funded company, is enjoying being the 800 pound gorilla.

Correction: Not 3 billion paid minutes at Skype
Some miscalculated, some purchased but not yet delivered
A reader well acquainted with the international traffic in minutes writes "I have to take issue with the Skype traffic estimates. I doubt "Skype could have gone from relatively few minutes early this year to 3 billion paid minutes a few months later. It would be a huge, almost inconceivable leap." My figure came from "a trusted source," who on reflection believes either he misheard or his Skype source mis-spoke. For whatever reason, the estimate I printed was too high. In addition, Skype's sales of minutes to customers are ahead of their actual utilization, leading to higher "minutes sold" than "minutes used," especially during the current fast growth. That makes sense—if you go to the Skype web site, it encourages you to buy ten euros at a time, good for up to 180 days. At 1.7 euro cents per minute, you could make 20 five minute calls the first month and still use less than 20 percent of what you purchased. Kelly Larrabee of Skype (the force behind Skype's extraordinarily effective pr) gave me some guidance for this correction, but they hold most of these figures close.

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

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