DSL Prime: Good Technology News

For FreeDSL, Google is doing no evil. In other news, interference cancellation technology promises to extend the range of DSL.

by Dave Burstein of DSL Prime and Future of TV [February 1, 2006]

FreeDSL's Ryan and Chad get $112 million from Google
Google San Francisco matches their six-year-old plan
A million people joined the waiting lists for FreeDSL, Ryan and Chad Steelberg's FreeDSL, but only a handful actually got service before the money ran out. The economics of a network supported by ads and premium customers had no chance back then. So the brothers took their database and operations programming into a new business, efficiently selling radio ads. They did so well that Google just bought them out for $112 million down, with future payments that could go to a billion. Selling radio ads has been a high cost, inefficient business that Google's systems can profitably improve, so the deal has good prospects for all.

Winfire/FreeDSL had a nearly impossible business model. They expected most customers after trying "FreeDSL" would upgrade to a faster paid subscription or buy the movies and other services offered. Heroin dealers know to give a taste to create demand for the product, and then sell them the further fixes they demand. The cost of the giveaway service per paid customer acquired was not much higher than what Rhythms and NorthPoint were spending. Steelberg is a natural salesman of extraordinary charm, with a style that can build extraordinary confidence in potential investors. But the boom died, there was no more easy money for wild speculation, and Winfire became just another failed company.

Google's San Francisco wireless network has a business plan almost identical to FreeDSL, except that Google will not have to rent space on the old copper. Service will be free at a low speed (probably up to 300K), supported by advertising. That will drive economies of scale that and good margins on the higher speed services that will be sold. Steelberg in 2000 intended to add a turbo feature, allowing even low speed subscribers to buy movies at higher rates, etc. Google has ambitious plans for similar related profit opportunities. In 2000, the deal sounded like a charming con. In 2006, with low wireless costs, Google may just make it work.

The original FreeDSL plan to "lose money on every customer and make it up on the volume" is now being followed by Vonage. Vonage's $300+ per customer in advertising is unsustainable, leaving most pros skeptical. Jeff Citron is brilliant and persuasive, so maybe he will make the IPO work anyway. Both FreeDSL and Vonage business plans count on a large IPO raising capital to survive for the several years, while the underlying business model evolves. FreeDSL's survival would have required a drop in the cost of delivering DSL by at least half from 2000 to 2004, for example.

Interference Cancellation for Greater Range
"Up to 20 percent" improvement claimed
"We are canceling crosstalk," Dipl.-Ing. Roman Tzschoppe writes from the University of Erlangen-Nuremberg. "By means of statistical signal analysis one can measure how crosstalk couples from one line into another line. Using this one can use an adaptive filter to cancel the crosstalk signal. This method can be extended to do this between each wire pairs (for each direction) to get a bundle of crosstalk-reduced lines."

Vierling Communications is commercializing Prof. Dr. Johannes Huber's work. Product Manager Georg Herrmann, on a press release, notes, "They can just connect an interference canceling connector on the lines and the system will immediately begin to measure and compensate for interference. … Now it is a matter of convincing network operators in Germany and throughout Europe of the benefits and securing further financing for the project."

Copyright 2006 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

"The power of the printing press belongs solely to those who own the presses"
—A.J. Leibling

The Internet is the cheapest printing press ever invented.