DSL Prime: New York City's 100 Percent Broadband Plan

It looks like Verizon will deliver fiber to 100 percent of New York City without any subsidy or tax credit. If so, it could set a positive pattern for the rest of the world.

by Dave Burstein of DSL Prime and Future of TV [May 9, 2008]

"Verizon has made 'a historic concession' by agreeing to pass every home in the city, ...What Verizon is building for New York is one of the very best networks in the world"
—Dave Burstein, NY Times, my hometown paper

In September, 2001 Larry Babbio, Verizon President, spoke about the possibility Verizon would fiber New York as their contribution to recovery after the Trade Center attack. He made no commitment, but said "just watch what we will do." They have now agreed to offer FIOS to all 3.1 million New York families by 2014. There is absolutely no subsidy involved, and Verizon will pay the standard 5 percent fee for access to the streets, etc.

This is historic. Korea Telecom has promised 100 Mbps to "villages as small as 20 homes" but I know of no other large city in the West committed universal service at high speeds. In many areas, even slow broadband is unavailable to far too many. For example, Verizon's last figure left 10 percent of New York City without DSL.

Will BT do London similarly? Right now, they are refusing while negotiating for government money. Madrid? Chicago, Houston, Toronto, Las Vegas? Let's hope this becomes a precedent.

The rest of the agreement is predictably one-sided, but I'll bury that part of the story for now. I'm also holding over a story on the shameful U.S. DSL deployment. I don't want FIOS delayed to my home on West 119th Street and Central Park West until 2014.

Important ideas

• Craig McCaw just found the strongest possible partners to put $3 billion into his U.S. wireless network. Clearwire has great prospects in semi-mobile data, as partner Intel will make sure millions of portable computers carry Wimax (2009). When they get the kinks out of Wimax voice, that could be big as well (2010-2012.) But nowhere in the world has wireless taken many home or business connections against DSL and cable. Anton Wahlman is one of the few who believes Clearwire will find a Wimax to home market, but he makes some interesting points. (Below)
  
  
• Is France in danger of losing the broadband lead as it drops to four or possibly three main companies? The evidence from the U.S. is that falling from six to four in wireless has been very costly to consumers. Wireless prices may even have gone up since then. Investment in down. Service quality remains well below international norms.
  
  
• Broadband history has been made where competition is fierce. (at end)
  
  
• Cisco's U.S. service provider revenue was down 3 percent. Worldwide, provider orders were only up 6 percent. They have a difficult product cycle and have been losing share to Basil Alwen's Alcatel edge routers, but these figures suggest deeper capex cuts at carriers. Cisco dominates the core router business, implying carriers aren't spending on core or backhaul capacity. If traffic growth is hitting predictions, Cisco should show 15 to 25 percent gains in provider sales. This is only one datapoint, but significant enough I brought it up top.

P2P Down to 20 to 25 percent of Traffic, US and UK
Bandwidth cost rapidly dropping in UK
U.S. P2P was about 40 percent of traffic last fall and flat to down, I reported. Apparently people have more music than they can listen to and video p2p hasn't taken off. A bittorent video download typically takes hours and occasionally longer than Netflix by mail. So most people don't bother. Now, Danny McPherson of Arbor Networks tells Om Malik they are seeing only 20 percent P2P on the many networks they monitor. Carphone Warehouse found P2P between 20 percent and 26 percent of peak traffic at TalkTalk before begin shaping in March. Streaming, largely YouTube, has taken up the slack. The strategy of stopping video piracy by making commercial video free and ad-supported seems to be working, although Daily Motion still is significant in French traffic, and the BBC iPlayer is catching on fast in the UK.

Totally blocking bittorent cannot make a big dent in congestion problems, because the 20 percent traffic reduction would be erased in nine months by normal growth of 30 to 40 percent per year. Shaping traffic is a cheap bandaid. Also, those claiming that P2P is 60 to 80 percent of traffic are either badly out of date and/or mistaken, because the carriers are holding back real data and the 2+2=5 crowd is spreading misinformation.

Carphone Warehouse is coming strongly with their network buildout. It will give them a massive cost advantage over the ISPs relying on British Telecom for backhaul. CW Network costs per user went down about 30 percent during 2007, although they haven't deployed most of the new backhaul network yet.

They are replacing inefficient 100 Mbps backhaul connections with GigE and finding that reduces the cost by 80 percent. They were paying 115 pounds per megabit per year, and this will bring it down to 24 pounds per megabit.

Including AOL, they have unbundled over 2,000 exchanges, well past 70 percent of the UK, and are ready to go to 90 percent. DSL Prime was wrong last year about how much of the UK can be efficiently unbundled, and I'll again apologize to Ed Richards for that mistake. CW peak demand per user has gone up 23 percent to 22K in the last nine months, That's perhaps 30 percent growth per year, a little lower than U.S. growth rates.

The average CW user takes about 3 gigabytes today, about half what the more geek oriented Plusnet serves. The BBC iPlayer raised demand significantly, and they expect the growth rate to climb.

Copyright 2008 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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