DSL Prime: 100 Mbps Gunslingers

Companies like AT&T that plan to deliver only 6 Mbps will be shot down by the competition.

by Dave Burstein of DSL Prime and Future of TV and the Web Video Summit [June 7, 2007]

"Like Wild West gunslingers, cable TV operators and telephone companies are squaring off for a contest over who's the fastest."
—Jon Van in the Chicago Tribune

Brian Roberts showed his 120 megabit cable modem, the answer to Ivan's BPON fiber. Ivan's ready to up the stakes, promoting the GPON now starting trials as 400 megabit. Roberts has the trump card—120 megabits (shared) will cost only a few hundred dollars a home, with the cost dropping way under that by 2009.

(Warning—serious Jupitermedia plug here) If you had been at my Fast Net Futures conference in 2004 or 2005, you'd have seen all this coming. Don't make the same mistake this year—join me at Web Video Summit in San Jose June 27-28 to learn how the net will change.

Paul Reynolds at BT knows his customers deserve a world class 100 megabit service, and Ed Richards of OFCOM knows his regulations should make the possible. They are at a standoff, with Reynolds saying his shareholders don't want to make the investment and Richards saying he doesn't want to waste tax money on a subsidy. Both are probably right, but if the standoff isn't resolved, the British people might have a second rate internet for a decade.

Randall Stephenson on June 3rd replaced Ed Whitacre as CEO of AT&T and therefore the most powerful man on the internet. Randall the Unknown leads the next DSL Prime. The takeaway will be Randall has done an exceptional job reducing staff and investment while raising prices. Personal anecdotes welcome and will be kept anonymous.

Kevin Martin made a mistake testifying to Congress. The FCC "broadband" data now includes 11 million wireless to mobile data subscriptions. That non-standard inclusion may be useful for some purposes, but is confusing folks from DC to Australia. Martin "said New Jersey had a higher penetration rate than Korea" Blair Levin reports, but I checked the numbers and it simply wasn't true. Martin was comparing FCC data including wireless with OECD that specifically didn't include wireless. Shara Evans in Australia did a important paper covered below, unfortunately with the same misleading U.S. stats.

From FCC Chairmen to lowly reporters, we all make mistakes. One of mine is the lead story below. Meanwhile, everyone in California who cares about video and the web should at least come to the free June 27 Wednesday afternoon sessions at WVS. If this is your business, spend $795 for the complete two days. Fun, lively, and full of things you need to know. Some of the best in this business are coming.

Correction: Telcos Not Nearing Destruction Due to Technology, VOIP, and Competition
$100+ billion increased stock value, billions in higher profits
It's only fair if I call out Kevin's mistake to feature one of my own. Three and four years ago, I believed the giant telcos faced hard times. Similar sentiments came from the best analysts I know.

A typical report in DSL Prime called "on target" an analyst comment, "The VoIP threat to telcos can be likened to an iceberg, with the less-visible substitution pressures in the business segment presenting at least as great a threat as the highly visible competitive pressures in the consumer segment."—The Bells Struggle to Survive A Changing Telephone Game by Seth Schiesel

It simply hasn't played out that way. In just over a year:

• British Telecom is up 80 percent .
• AT&T over 70 percent
• China Telecom, nearly 50 percent, despite actually losing customers except in rural areas.
• Century Tel, also 50 percent
• Bell Canada 40 percent (on takeover rumors)
• Verizon, often criticized, up 30 percent
• Telfonica, also up 30 percent
• Vodafone, about 25 percent

France Telecom, Deutsche Telekom, and others are at or close to five year highs. These results are generally better than Google, Yahoo, Microsoft or eBay. Profits and especially cash flow are up at many of these companies. The market price and profit figures are indisputable, even if I don't yet understand why we were so wrong.

Copyright 2007 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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