DSL Prime News Briefs

Notes from around the DSL world, plus more about Larry Irving.

by Dave Burstein of DSL Prime and Future of TV [July 2, 2008]

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• I wrote last issue that the Henrys would have been called "the fathers of DSL" if Cioffi's DMT standard hadn't won the DSL "Olympics". A reader points out that J.J. Werner's group at AT&T Labs deserved credit for much of the major technology in QAM modems. I'm happy to show respect for the earlier work which has also been credited by the people who commercialized the technology.Clarity from those who were there would be welcome. You should be able to remember; this was the nineties, not the sixties.

Briefs

• Comcast and other U.S. cablecos plan to deploy millions of Wimax photocells, Dave Williams said in London. They have reserved 5 megahertz of spectrum across the country as part of the Clear wire/Sprint deal. (Michelle Donegal) Meanwhile, AT&T is getting 100,000 GSM photocells from IP Access. Feta is going to be big, but whether it's Wimax or 3G/LTE is a hard one to predict.
  
  
• Verizon and AT&T have decided not to block competitive video, the heart of the Net Neutrality issue. The fight will still be intense, but they know they've lost on that. More to come.
  
  
• Dick Green had a disappointing audience at NXTComm, but the CableLabs message is spreading. There's enormous savings possible if cable and DSL both support "the set top built into the television." One large telco is about $150 million over budget because the set top boxes cost more than they expected. It "wasn't invented here", but the ITU SG9 open standard is darn good.
  
  
• Congratulations to my friends at GigaOm for selling out the "Structure '08" conference. The Internet is inevitably driving down the price of news and every paper in the world is feeling the pressure. The survivors will concentrate on indirect ways of making money, not holding back the tide. Ask Mike Masnick or Chris Anderson for some tips if you want to understand how to do well when the reader will not pay for what you write.
  
  
• AT&T is leaving San Antonio on the Mexican border and moving to Dallas, only slightly closer to Randall's Oklahoma. Unlike the company's previous move from St. Louis, the local country clubs are not the whispered cause of the move. Ed and Randall are welcome at all of them. Victor Godinez, the Dallas Morning News tech reporter who wrote up the move, started writing about games for the paper a decade ago and writes a "Texas Gamer" column. He's also a contributor to National Public Radio and has been to Antarctica. Here's hoping DMN emulates The Denver Post and the Rocky Mountain News, which both do an exceptional job covering Denver based Qwest. There are plenty of stories to write about AT&T and Randall Stephenson, from Asian expansion to whether the poor have to pay more for the iPhone. Randall yet again kept his cards close to the vest. AP reports he met with the mayor of San Antonio earlier this week and didn't tell him about the move.

Wall Street

• CenturyTel's stock price jumped because of the madness of Wall Street crowds. There was no news about the company's earnings or prospects; they are raising the dividend and buybacks with no change in earnings. That simply moves money to the shareholders today while reducing what the shareholders get in the future. It's probably a small positive on balance, but the current market wildly over-emphasizes dividends over earnings. Inevitably, this will change and a bubble burst, but that could take years.

People

• Paul Lacouture has moved on from Verizon. When I first met him, he looked like he hadn't slept in a week. His bleary-eyed look was well earned; he was leading the effort to restore Manhattan after 9/11. Hundreds of Verizon people virtually never went home for a month, many working directly at the very dangerous "Ground Zero." In a more relaxed time, Lacouture explained to me the obsolescence of the traditional switch. One softswitch, he told me, could handle ten exchanges, drastically lowering costs. Several years ago, he calculated that buying and installing softswitches was significantly cheaper than maintaining the existing PSTN. That's a strategy now being executed at BT, KPN, Verizon FIOS, and AT&T U-verse. The proven lower costs of those networks, as well as the all IP networks at Free.fr and similar, is why I believe the right economic move almost everywhere is to carry voice on an all-IP network.
  
  
• Tim Poulus does some of the most interesting European analysis at Communications Breakdown . Lately, he's been expanding the business case for fiber all the way home. He may temporarily have more time to write after a corporate change at his day job, but that's sure to only be temporary.
  
  
• Paul Reynolds has brought his BT ways to his new job at Telecom New Zealand. He's outsourcing heavily to BT/Tech Mahindra. I'm surprised he didn't ask for a piece of the company, one of BT's most profitable investments. BT owns a little less than half the company, and is by far the biggest customer. If TM gets BT to pay a little more on their contracts, the change in TM earnings is multiplied many times in the stock price. The more BT pays, the more their stock is worth. Carried to extreme, BT could pay Tech more than they would pay for the same work with their own employees, a powerful incentive to outsource heavily. There's nothing secret about this, but investors continue to value the stock so highly BT is making a killing.

DSL Prime's past: "There's only one way for Verizon to truly outclass cable. Open the network and let Comcast, DirecTV, EchoStar, and Time Warner offer competing packages over Verizon fiber."

Madness, you say? As things stand video will be a loss leader at U.S. telcos for years. I asked Seidenberg whether he'd consider opening his network. "We're building FIOS to get cable out of the home," was his reply. "My profit comes from telephone and high speed data. I want to keep the customer on my network." His greatest opponent, Comcast's Brian Roberts, says "if the price and details are right he'll consider it."

Policy: you might be a lobbyist, if. . .
Larry Irving, one of the smartest and most liked people in D.C., is very angry that I wrote "Larry Irving is proving to be the most effective lobbyist in D.C."

He tells me that he never calls on anyone in Congress to urge them what to do about legislation and is definitely not a "lobbyist." I've spent almost a decade watching some of the best lobbyists in the world and seeing the crucial role "indirect lobbyists" play. AT&T and Verizon don't win almost every time because of the eloquence of Tom and Jim.

Offer a suitcase with a million dollars to Mike Powell or Kevin Martin and I'm convinced they would throw you out of the office and possibly have you arrested. They are both honest men, who failed miserably per their own principles. The question I'm asking is how they were steered so far away from their own principles. I call it The Paradox of the Honest Man.

Mike and Kevin's main goal was a thriving market that doesn't need government to tell companies what to do. Their results were opposite. 6+ growing U.S. broadband companies are down to two between 1999 and 2005; Four vigorous wireline outfits are down to 1 + cable between 2002 and 2006; wireless, where the U.S. had some of the cheapest minutes in the world, now is seeing price increases as Verizon and AT&T dominate after the FCC allowed the takeover of Nextel and the old AT&T Wireless.

Anyone with money can buy a few ex-politicians and send them around to glad hand and make contributions, and nearly all the corporations in D.C. do exactly that. That's one kind of lobbying. From everything I know, neither Larry nor his partner, Bruce Mehlman, do anything like that, although Bruce does report $200,000 in lobbying fees from AT&T. The best lobbyists influence decisions by "creating a climate of opinion." That's how you influence someone who won't take your money or do you favors especially when what you want is primarily for corporate profit, without consumer benefit. The "direct lobbyists" finance an army of people willing to spread their message. I'm holding back my estimate of how much is spent because the number is unbelievable. Work backwards from the stakes involved. The FCC is currently making decisions that will affect about $12 billion in ICC and USF, with the current plans moving perhaps $2 billion+ a year to the big carriers. $2 billion a year at a pie of 17 is $34 billion. With that kind of return, any rational carrier would invest more in politics than in networks.

One draft of this item used the term "advocate" because it is less charged then "lobbyist." I like plain speaking however. If you strongly and often advocate the point of view of a company that's paying you for the service, and know it will affect government decisions, I think that's "lobbying.' The positions Larry is pushing so effectively were used in Wisconsin to justify an increase in basic phone rates and in Las Vegas to ask for a billion subsidy dollar for the bells. If someone often says things that are untrue, or refuses to provide the basic information required of non-profit advocates, that's even more conclusive. One group that claims to be a non-profit but doesn't file the required 990 form. It's mostly one guy who always supports the bells and I believe receives much of his income from the carriers.

This is the first of a series of articles trying to explain how honest policymakers around the world are led to believe things that aren't true. Most of the U.S. people I'll be reporting are conservative Republicans, including a scandal involving Karl Rove's name. Most of the people with power in DC lately are Republican. If I only criticized my political enemies would anyone believe my reporting? Larry's been a friend to me, and I wrote an editorial a while back suggesting he'd be one of the best choices for FCC Chairman. He now will hate my guts. All I did was say his advocacy was effective enough that by D.C. standards he should be paid over $2 million.

Thinking like a lawyer, I double-checked whether common usage used the term "lobbyist" only in Larry's suggested sense or also includes a broader group of advocates, some indirect. I goggled "lobbyist", and three of the first six entries included people who never buttonholed officials.

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

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