DSL Prime Business

Plenty of news, plenty of stories, including a list of stories being researched.

by Dave Burstein of DSL Prime and Future of TV [September 29, 2006]

Woz Buying Into the Conexant Fab
Amelio, Hancock, and Wozniak paying $260 million
The veteran Apple team raised an $164 million blank check for ex-CEO Gil Amelio to run a company. Original Apple designer, concert promoter, school teacher, and genius engineer Steve Wozniak invested and is CTO. They are buying the old Conexant/Rockwell Jazz Semiconductor plant in Newport Beach for $260 million, a steep price to pay for a unit with a history of losses. Conexant will collect a helpful $100 million cash, with the balance going to The Carlyle Group and others that had planned for an IPO. This is a tough time in the semi business, with EE Times warning of a slowdown. I spoke briefly with Amelio, who's enthusiastic about the hot markets in wireless, automotive, and consumer.

Amelio, a Georgia Tech Ph.D and Bell Labs alumnus, built the Rockwell modem business that continues to be a key product for Conexant. Conexant CEO Dwight Decker and Globespan's Armando Geday also worked at Rockwell. Amelio moved from Rockwell to National Semi to Apple. He brought Steve Jobs back into the company and was soon displaced. Jobs' success since then proves either he can run a company by being cool or that Steve has acquired new management and leadership skills.

Less than half of Conexant's chips today come from Jazz, which has a specialty in high speed silicon germanium chips and analog mixed signal. Best of luck to the new team. Wozniak is considered a genius engineer by those who worked with him, still remembered for completely rethinking how floppy disks could work. Amelio is one of the inventors of CCDs now in the best cameras.

BellSouth: 100 Mbps VDSL To Over a Million Homes
$100 per home where fiber is in place
Bob Blau in 2004 told Washington that Bellsouth would move to 50 and 100 Mbps for their million fiber homes, and the maturing 100 Mbps VDSL has led them to promise to begin in 2007. BellSouth in the 1990s installed fiber to the curb in most new neighborhoods and rebuilds, now reaching about 1.3 million homes, according to Nikos Theodosopoulos at UBS. 100/100 Mbps VDSL is shipping in the millions. I don't know what Tellabs, the likely supplier, will charge, but the necessary gear costs less than $100 per home in Asia. That's less than AT&T is spending on Lightspeed, but 2 to 50 times the speed. The fiber is already paid for.

BellSouth's plans before the AT&T deal were far beyond what AT&T is planning in their territory. Where they didn't have fiber, they intended to bond two lines to most homes for speeds over 30 Mbps downstream, enough for watch one/tape one HD or two HD TV's. They intended to move to a next generation all IP network within three to five years, almost as fast as British Telecom and years ahead of AT&T. They currently have a third fewer homes who can't get DSL, 15 percent compared to AT&T's 24 percent.

BellSouth capex is 90 to 100 percent of depreciation. AT&T is closer to 70 percent. The network reflects that.

Editorial: Protect the BellSouth Engineers
Most experienced hurricane response team in the world
After Katrina, it's amazing that Bill Smith and his team are not guaranteed their positions after the SBC/BellSouth merger. While Bill would be the first to tell you they have procedures that need improvement, the BellSouth response to the crisis was professional and (relatively) effective. Disaster preparedness is not revenue generating, so the folks planning 10,000 layoffs may need to be reminded how crucial protecting these skills are.

September 26th, the FCC Commissioners will proudly introduce a new Public Safety and Homeland Security Bureau. The new bureau will presumably continue the often complimented job of the FCC getting regulations out of the way during Katrina crisis. But D.C. bureaus and committees are not enough. Real public safety requires the most skilled professionals at the companies involved.

One part of the soon to come merger approval should be a quiet conversation between the FCC Chairman, Randall and Ed. A simple comment that the commission will be watching the staffing and level of investment in disaster preparedness will probably do the trick. AT&T has plenty of good reasons to take advantage of BellSouth engineering talent.

Correction
In March, 2001, I wrote "CLECs overall have lost $27 billion in market cap and funding. Some investors may jump in (smart time to find a good deal), but there are at least some more bankruptcies that will generally discourage money coming in."

Covad, at about $2/share, was not in fact a good deal and sold lower for most of the five years since. Every other substantial consumer CLEC in the U.S. died.

Coming in DSL Prime, if I ever catch up

• A reader in Taiwan sent me details on a story I mentioned I was working on. Help very much appreciated.
• How to buy DSL chips, answering a question from India.
• Repeaters for near universal service
• G.SHDSL making inroads in Europe
• How Cablecos Can Destroy (most) Telcos Using Wideband Voice, DOCSIS 3.0 speeds, cheap wireless
• How Verizon Can Beat the Cable Guys—most of which is anticipated above
• AT&T brings call centers back to reduce churn
• AT&T's video prospects in depth. The imminent HD TV, the hardware problems to solve (routers that can't keep up with multicast channel changes among them), and the surprisingly likely early successes.
• A long look at what AT&T can include in the BellSouth merger agreement that is economically practical and would make a difference.
• Massive Layoffs at DT May Include CEO
• Huawei wins in Verizon Virginia
• Telecom Italia's incredible wiretap scandal, with 30 arrests, major newspaper censorship, and apparently the Justice Minister one of the victims.
• Germany Affirms GNU License
• Surprising reliable cable modem speeds (Bell Canada—reconsider your FUD campaign)
• Two positive Bell Stories: Sarah Deutsch of Verizon on protecting net users and John Stankey of AT&T with an thoughtful comment about downloading versus live video.
• DSL control, end-to-end Internet, and the four freedoms
• I desperately need some positive Alcatel stories. Two stories I've written, and three to come, will make me seem biased. One came from research I did on IPTV, the other four directly from Alcatel customer comments. Mike, Michel—I know this is a hard time for the company to speak publicly, but please help me find some stories to balance my coverage.

Brief

• Open DSLAM management and DSM is a major issue for several telcos. The main piece of the story I'm working on came independently from a carrier. To avoid embarrassing the people involved and have them accused of leaking things to me, I reminded ATIS that their charter is to be open. I hope they will find a way to make sure I get all the facts right on this. Secret dealings in international standards are simply wrong, especially when the organization works so closely with the U.S. State Department and FCC. ATIS until recently proudly allowed open participation, until a budget crunch led them to demand payment find out what's going on. That shouldn't apply to the press, although I'm ready to ask readers for contributions to a non-profit in this field if joining for over $1,000 is the only way to get the facts.

Research

• Vectored DSLs with DSM: The Road to Ubiquitous Gigabit DSLs is an important description of the way forward, with authors at Stanford, Assia, and France Telecom. Anyone who thinks fiber is the only way to go—or that 6 or 25 megabit DSL won't soon be obsolete—should check out this pdf file.

Wall Street

• John Hodulik on the Citizens/Commonwealth deal: "Expect to see more transactions in the future. We believe the high payout and leverage companies to be the most likely acquirers given the premium in their stock currency." Yet one more reason far too many rurals aren't investing; they are prettying up their financials for a sale, or artificially boosting the stock price to be a buyer. Several are likely to hit crises in 2008 to 2010 as cable runs over them.
  
  
• Broadcom is up 7 percent on the day I'm writing this, and Conexant up nearly 5 percent. That's welcome news for DSL of course, but the volatility should scare away anyone not ready to lose their investment.

People

• Balan Nair, former Qwest CTO, has moved to AOL as EVP Technology Operations. He brings to the company experience running one of the highest performance backbones in the world, a major asset as AOL moves heavily into video downloads. Nair has moved rapidly into civic activity in Virginia, joining the board of the Northern Virginia Technology Council and the Governor's Health IT Council.
  
  
• Ulrich Schumacher, Infineon's former CEO, accepted cash kickbacks of several hundred thousand, former associate Udo Schneider testified in court. EE Times notes Schumacher has always insisted that he never took any money.
  
  
• Jay Wilson, who led Adtran's successful DSLAM operation, is now senior vice president and general manager of Carrier Networks.

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

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