DSL Prime News Briefs

Several fascinating books about the industry will soon be available. Also: sad numbers from DSL.net.

by Dave Burstein of DSL Prime and Future of TV [August 25, 2006]

E-mail

• Craig Settles, who wrote Fighting the Good Fight for Municipal Wireless, is enthusiastic about Google's Wi-Fi network in their home town of Mountain View. "Service is good. People's expectations have been properly managed, so there's not wailing and gnashing of teeth about issues such as needing customer premise equipment to get indoor coverage. It showcases of a working network with positive reviews. This is going to give heart to those municipalities—and related vendors—who are in the middle of deployments. Though they're saying they have no plans to build networks elsewhere, if they change their mind Google will have credibility. Google will get its million dollars back in publicity, the ability to have real-world trials of business ideas, and a daily 1-to-1 relationships with residents that had more impact than banner ads generate. Nokia is sponsoring Wi-Fi networks in NY City so it can showcase—and sell more—new mobile devices."

Briefs

• Chunghwa has launched a new tender for DSL equipment, after problems with the Alcatel video system. Rumors were they've cancelled orders from Alcatel, but they may have reached a temporary settlement. Readers in Taiwan, please help me get details on this, especially if you can introduce me to the Chunghwa PR department or send a news clipping I can run through translation software.
  
  
• AT&T pole climber Randy Molina was challenged by a 100-pound mountain lion. "We were working on a pole about 200 feet from the road," Molina tells newspaper The Union. "We looked over our shoulders and there he was, all hunched up and ready to go. If there had been just one of us, he would have attacked. …When he saw us both, he went up Red Dog Road in the shrubs as it heads toward the back side of Nevada City. It was a huge mountain lion," Molina added. "This guy was hunting, he's a big guy and he's looking for food."
  
  
• Cable is taking many steps to expand bandwidth, including "switched digital" that Mike LaJoie, CTO of Time Warner Cable believes adds "60 percent gains in efficiency," CED reports. Vendor C-COR claims the cost is less than $10 per home. Less publicized is a quiet transition to 1 GHz passive devices, which CED notes, now cost no more than the traditional 750 or 860 MHz units. The additional 140 MHz, 23 channels, could add about 900 Mbps of shared capacity for cable modems. That's an "FTTN" killer deployment.
  
  
• U.S. cable is goosing earnings with price increases, including a 13 percent jump reported by The New Iberian near New Orleans. Echostar is also raising rates, as telcos and cable with VOD and DVRs slow U.S. satellite growth rates. The Bells take advantage of the anger over these rates to get favorable video franchise rules passed. Something really ugly is likely in the next two weeks in California, where a AT&T is looking to squeeze things into the fine print of a bill that will give them a statewide franchise. They've paid $150,000 to Governor Schwarzenegger, even more to state legislators, including the top Democrats.

Wall Street

• Marvell is the latest company in our field to have a government investigation on options grants. Silicon Valley has apparently standardized on goosing options as an employee perk. It has the advantage of hiding the cost from investors and reducing payroll taxes. Presumably, only a few of the most egregious have been caught. Marvell is not usually considered a DSL company, but they've hired some key engineers and rumors are flying. John Cioffi was on the board until recently, which gives them insight in next generation DSM requirements.
  
  
• Another shout out to Glen Campbell and Merrill Lynch's 2006 Global Phone Book. For my Telstra article, I found solid international comparisons. To get a sense of how much is wasted in U.S. ICC and USF, I'm pulling profit comparisons. For my "false profits" series I'm calculating capex to depreciation ratios. (SBC is 70 percent, Qwest was down to 55 percent and most RLECs equally low.) My one complaint is needing a magnifier for some of the figures. I assume most investors get Merrill's research, but I'd also recommend it to anyone who needs to analyze the data.
  
  
• At DSL.net, CEO David Struwas believes "our outstanding network assets, VoIP platform and technical abilities have operational value that can be commercially leveraged either by the Company, with additional funding, or by a strategic partner." CFO Walter Keisch adds. "We will need to raise additional financing in the third quarter of 2006 in order to meet our ongoing operating requirements and to repay all of our secured debt obligations. We continue to actively pursue financing and strategic opportunities." The market cap is only $8 million, and debt about $12 million.
  
  
• Zyxel Q2 revenues dropped 10 percent from the prior year, with weak orders for DSLAMs, (Digitimes). They were consistently above $30 million for the last four quarters, Dell'Oro reports, but dropped to $21 million for Q2. Zyxel has momentum in VDSL, after bidding $66 for 100 Mbps VDSL DSLAM + modem at Chunghwa. They hope to leverage the experience of 200,000 lines in Taiwan into other contracts.
  
  
• Rafat Ali, an excellent reporter at PaidContent.org, worries that some web investments are "definitely in bubble territory." He points to the $15 million round at Netvibes, led by Index Ventures and Accel. Netvibes offers a personalized homepage/RSS reader service based out of Paris. Ali points to the many competitors that make this a risky investment.
  
  
• UTStarcom has been a consistent disappointment to investors, as the Xiaolingtong "Personal Handyphone" struggles. From MII come discouraging figures: 800,000 in the first half of this year, down from a monthly average of 1.68 million new subscribers in 2005 and 2.27 million in 2004 (via Digitimes). The continued drop in price of ordinary mobile handsets, now $25 to $40, is tough competition. Xiaolingtong prices also are coming down, as Atheros has reduced most of the circuits to a single chip. Now that inventory has been worked off, maybe even slow growth may make this a viable market.
  
  
• Softbank reported a $12.4 million profit, almost surely an accounting fudge. Softbank's interrelated companies leave their accountant plenty of judgment decisions that could produce profits, and the market reward for even a small profit is high. Softbank and Yahoo BB have pursued unusual financial measures, such as issuing securities backed by customer modems which have less resale value than the cost of collecting them. Yahoo BB hit a catch 22; they've been so successful NTT has moved ahead to fiber, making Japan the first country to enter the post-DSL era.

People

• Hossein Eslambolchi, the dynamic ex-CTO of AT&T, has written 2020 Vision: Business Transformation Through Technology Innovation. He looks ahead 15 years to the year 2020 for perspective on what are the major technology trends. I'm calling it a "must read" sight unseen, knowing how interesting the author's ideas are. SBC made a major mistake not finding a way to keep Eslambolchi when they took over AT&T; Randall desperately needs people who can look at the long term issues. The book is from a small New Jersey outfit called Silicon Press, which previously printed Narain Gehani's Bell Labs: Life in the Crown Jewel. As usual, Scoop Malik was early with the story, although Ephraim Schwartz of Infoworld beat us both.
  
  
• Best of luck to Shara Evans, whose Market Clarity is a finalist for "Services to the Industry" at the SPAN-CommsDay Awards in Sydney August 31. Evans has been a primary source for DSL Prime for several years.
  
  
• For job ads, visit the DSL Prime website.

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

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