DSL Prime: The Actual Speed

Yet another report that actual speeds are less than advertised. In Canada, a competitor arrives with the pricing that changed everything in Japan and France.

by Dave Burstein of DSL Prime and Future of TV [July 3, 2006]

"Up to 20 Mbps" ADSL2+ often less than 10
50 percent get 9 Mbpsor more, 75 percent 5.5 Mbps in good district
Of about 500 customers in the Perth Australia suburb of Riverton,

• Only a handful could download at 20 Mbps
• Only about 20 percent could reach 10 Mbps
• 40 percent got five Mbps maximum or less

The results are from Greg Bader, CTO of iiNet, an Australian independent. They are adding 6,000 customers a month on ADSL2+ DSLAMs, despite Sol Trujillo's intense struggle to raise prices and use the government to kill Telstra's competition. They now have 100,000 customers on the faster units, while giving on their web site these suggestive figures. Results are likely very different with the short loops of Italy, Paris, New York or Boston or long loops in the American West.

Michael Malone, iiNet CEO, notes many territories will do better than the results above. "Riverton was an odd choice for us, but we chose it as a counter to the Sydney suburbs. The Sydney suburbs are pretty high density inner suburbs. Riverton is more like central suburbia, average blocks are 800 square meters (close to a quarter acre) and the suburb is large."

"Up to 22 Mbps" across Canada
70 COs, 2 to 3 million homes at Primus for $62 (U.S.) voice + data
Primus is selling ADSL2+, no speed limit, for the same price as 1 Mbps ADSL, the strategy that changed everything in Japan and France. Comparable offerings from Bell and Rogers, with much slower speed limits, cost 10 to 25 percent more. Primus didn't move to the $25 to $40 prices for voice + data that won six million customers in France and Japan and persuaded half a million to sign up with Carphone Warehouse in two months in the U.K., but the increased speed alone should draw customers from Bell.

If you are in the right location, Primus is offering "up to 22 Mbps downstream DSL" and a complete local and long (U.S. and Canada) phone package for $70 Canadian ($62 U.S.) ADSL2+ performance goes down with distance; I'm about three quarters of a mile from my Verizon CO, and would probably get 10 Mbps or so, still a major improvement on the 3 Mbps Verizon offers. Primus Canada President Ted Chislett tells me tells me some of his customers actually are getting the 20 Mbps speeds.

Primus has targeted COs serving large urban populations, so they may have shorter loops than the Australian example above and could perhaps deliver 10 Mbps to about half. The Zhone gear allows just about any connection the customer wants, including fiber, metro Ethernet, and even T-1. It connects efficiently to the Primus VoIP systems.

If I were in Canada, I'd buy the faster, cheaper service right away, but it's too early to predict whether the Primus deal is attractive enough to create a stampede. Primus is probably smart not to push for fast growth, given the mixed operational history of the Primus Lingo VoIP service reported at DSL Reports. One Lingo user posted "Virtually there is no support." Primus in the U.S., the parent company, faces NASDAQ delisting and recently had to refinance debt.

Rogers Cable also is offering DSL in about 100 COs with ADSL2 DSLAMs in cities including Vancouver they do not cover with cable. They were installed by Sprint Canada before Rogers bought them out. Terry Canning tells me they've decided for now to offer DSL speeds similar to what they offer on cable. With little more than a few lines typed on a management console, I believe, Rogers could offer the 10 Mbps and higher speeds within a few minutes of making the decision.

Bell is currently rebuilding around similar technology, ADSL2+ and VDSL (low profile), often from nodes closer to people's home. The shorter loop from remote nodes mean they can offer many subscribers a real 20 or 25 Mbps if they choose. Bell also plans to give many homes two lines bonded for speed at longer distance. Currently, Bell is talking mostly about IPTV, and suggesting they will only sell the fast connections at a high rate. Their top people, however, have seen the French and Japanese examples where one company offered unlimited speeds for a low price and everyone had to follow.

Videotron Cable is the Canadian price leader, taking many customers from Bell in Montreal. So far, Bell apparently hopes Videotron will join the polite understanding that has allowed Canadian price increases this year. Bell President George Cope told Wall Street he was going to "increase margins" and put through a DSL price increase with the connivance of Rogers and Shaw.

Will Videotron and now Primus actually keep prices down? Key Merrill Lynch analyst Glen Campbell notes that Videotron is among the most successful cable companies lately, in profit as well as customer count. He believes Cablevision, also price aggressive, is succeeding for similar reasons. Perhaps that will inspire sufficient competition, important because the new Canadian regulator has little courage to fight the duopoly.

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

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