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Added half a percent of the Internet's users each year over the past two decades." Iljitsch van Beijnum has captured the status in a great headline. There is no unifying force that implements Internet rules. Each of the network of networks takes its time.
While the world average is about 10%, Google's data finds the U.S. at 25%.
If so, my article that AT&T will use 400-700 megabit G.fast to five million is a mistake. AT&T's press release I just read (below) promises "Within 4 years, AT&T will offer its all-fiber Internet access service to at least 12.5 million customer locations, such as residences, home offices and very small businesses." It may well be that the pr people at AT&T don't understand the technology being used and much of the build will in fact be Fiber to the Basement and copper, probably G.fast, to the apartment. But if I may have an error, it's my job to issue a correction.
The Halo Effect: Announce you're offering a gig to a few thousand people and a million become more positive about your company. The pr is working well. AT&T discovered signups increased across 10X or even 100X more homes than they actually reached. At AT&T, ~5% have the option - and the large majority never will.
AT&T explains to Wall Street they believe 45-70 megabits is enough to compete with cable while teasing consumers with what's mostly a token rollout.
FT/Orange Spain going to 10M & 14M. Without much publicity, Spain has pulled far ahead of other large nations in fiber homes. The U.S., Italy and France have passed fewer than 25%, Germany and England less than 10%.
The center of the Internet has moved South. Carter Horney of Forward Concepts has just published a Global 4G analysis with a detailed geographical breakdown. His projection for 2018 is 315M smartphone Internet users in India and 317M Africans connected. The U.S. population is 315M, some of them under 4 years old and not connecting to the net. His estimate is close to the 300M in 2017 I projected with Cisco's help http://bit.ly/Africa300M last year.
These estimates are very rough but the trend is clear. Both India and Africa have over a billion people. $50 smartphones are affordable to hundreds of millions more than are connected today. Carlos Slim told me two years ago that $50 smartphones will connect two billion more people. He's proving right.
Verizon and Nokia refuse to wait for 2020 for 5G. Massive MIMO promises major speed jumps in the same spectrum. Testing in 2016 for Massive MIMO, beamforming and interference cancellation. Hopes for huge speed boost starting in 2017. Think 64 antennas and 5-10x throughput. Good engineers tell me it's possible but didn't expect it so soon. At the new 5GW News:
Confirms the importance of going beyond vectoring to eliminate other noise. Because I'm on the Advisory Board of ASSIA, I choose not to do any assessment of this competing product. The pr is below. Because there are almost no details of the product in the press release, I've also included a recent Broadcom patent filing for "reference noise technology" to suggest possibilities.
Gigabit (shared) to nearly all of 53M homes and businesses. Comcast is going to upgrade 40% of the U.S. to DOCSIS 3.1, offering a gigabit. Brian's boys are going to start in 2016, probably early, and continue for another year or two. Comcast VP Robert Howald dropped a bombshell. "We're testing it this year. Our intent is to scale it through our footprint through 2016. We want to get it across the footprint very quickly. We're shooting for two years," he said in Mike Dano's Fierce Cable interview. The story was picked up by the Washington Post and a dozen others. Everyone in broadband has known for years gigabit cable was on the way and now the big papers are getting the message.
"Shared" speeds will be 500+ megabits down 95+% of the time, I predict. That's similar to the 400-700 megabit speeds of AT&T's coming "gigaclear" G.fast fiber to the basement.
Joe Garner of BT claims Britain is ahead of other big Euro countries in "superfast" broadband. BT deserves credit for offering ~80% of Britain 30 meg or more downstream, a little ahead of Germany and well ahead of France, Spain and Italy. "Superfast" is pure hype. BT's deployment is mostly DSL from their 100,000 street cabinets, typically 30-70 megabits. Unlike Germany, Belgium, Swisscom and Australia, England isn't using vectoring to ~double many connections. Half of the UK is able to get 100 meg or more from cable, as well as nearly 90% of the U.S. ~50 meg would have been superfast in 2007 but is only medium in 2015.
One Garner comment in the Telegraph is offbase. French prices by almost any measurement are considerably lower than Britain. Miles Brignall in the Guardian just wrote "Ripoff Britain: why we pay more for broadband than Europe," with a comparison to France at half the price. Garner's comment, "Britain has the lowest landline, broadband and superfast broadband prices among major economies" is a mistake. The original source, Analysys Mason, had it wrong. It should be corrected by sending a letter to the paper.
Consumers at carriers with fewer than 7M customers wind up paying a high price. At Goldman Sachs, CFO John Stephens suggested major synergies for the DirecTV deal due to “There's about a $17 difference on average between the price the U-verse platform pays for content on an apples-to-apples basis than the DirecTV platform pays. And on 6 million customers, you can get your head around about $100 million a month of expense.” That's an important datapoint to understand the U.S. TV market. Hollywood takes most of the gross income. Seeking Alpha transcript, more below.
Possible implications
EU investment "incentives" already failing. The latest Dell'Oro projection is that capex in Europe will be flat in 2015 despite a strong turn in EU policy in favor of the telcos. Julie Learmond-Criqui of Dell'oro emailed me In 2015, we expect Capex in Europe will be flat." That's consistent with what the larger carriers are telling investors about their plans for the next several years.
I've found that the three most important factors in the level of capex are competition, new technology and direct return on investment. Policy changes rarely make much of a difference unless far more forceful than what most Western regulators would consider. The exception are policy changes that create or protect competition.
Possibly using spies and black bag jobs. Update: Further Snowden documents confirmed NSA used spies in Germany & Korea. The undoubtedly excellent engineers at Deutsche Telekom couldn't find how the NSA was tapping them. "Reporters for Der Spiegel, working in collaboration with The Intercept, contacted Deutsche Telekom and NetCologne several weeks ago in order to give them an opportunity to look into the alleged security breaches themselves. The security departments of both firms say they launched intensive investigations, but failed to find any suspicious equipment or data streams leaving the network." Those NSA guys have to be really good to fool the Germans.
We all "knew" that surveillance was everywhere, but continuing revelations from Laura Poitras & Edward Snowden remain startling. The latest report suggests heavy use of undercover agents and physical intrusion. That's what spies do, after all. England's GCHQ is deeply involved, along with the Aussies and the Canadians.
America's role changes. DSL speeds would be much lower and tens of millions of current DSL customers wouldn't be served without the extraordinary work of Tom Starr and dozens more on "The DSL Committee." We'd have far more problems with interference if the T1E1.4 committee hadn't developed a set of rules 20 years ago. Tens of millions of homes that today get 3-6 megabits would probably have been capped at 1.5 megabits if they didn't create competition for the first ADSL modem. Literally hundreds of problems were prevented or resolved by the work they've done.
America is no longer the center of the telecom world, so perhaps it was inevitable that the American standards committee would fade away.
Dan Berninger making it happen. “All major operators offer HD voice to at least a segment of direct customer,” Dan writes, ”But there remains no interoperability across operators.” More than a decade ago, Dan, Jeff Pulver and friends convinced everyone in the industry HD voice made phone calls much better.
Broadband allows doubling the frequency range and better codecs improve everything. The additional cost is trivial, something like ten cents/month all in for better mics and network gateways. The gear is so cheap that many phones the last two years include HD. Carriers included Telstra in Australia are turning it on.
The bottleneck: no one carrier could make HD effective. Both ends of the call need to be HD and most calls go from one network to another.
Tom Cloonan of Arris is confident of remarkable speeds. (Video and transcript below). At CableLabs' 2015 summer event he predicted DOCSIS would reach 15 gig (shared) in a few years and 50-80 gig a decade later. 15 gigabits would require using 1.7 GHz and higher speeds would require going to 6GHz and more. Jeff Baumgartner at Multichannel calls this "supersonic DOCSIS."
Compensation to be negotiated. SASAC, the State Holding Company, will have 50% - 1 share in the combined Nokia China and Alcatel Shanghai Bell. Yuan Xin will continue as chairman and party secretary. No word yet on whether Luis Martinez-Amago will continue as second in command. Nokia, the European survivor, will have 50% +1 but is unlikely ever to challenge Chinese control. Chinese sales are absolutely crucial to Alcatel and Nokia. They had no real negotiating room and had to take whatever the Chinese offered.
As part of the EU/China deal for a telecom equipment cartel, Alcatel Shanghai Bell and Nokia each have a share of the Chinese market, crucial sales for the struggling companies. In an interview with Jessica Lipsky of EE Times, Alcatel CTO Marcus Weldon notes, "China allows foreign vendors to claim a maximum 11% of the wireless market; Alcatel-Lucent and Nokia each have an 11% share." Whether China will allow the merged company 22% or only 11% is a major factor in the future success of the company, but nothing is decided.
Unlike Canada, Holland and England, telcos falling behind. Overall growth continues at about 2%/year. Some of those without broadband are signing on. There's a surprisingly modest loss to "wireless only" broadband despite speeds of 5-15 megabits and going up. AT&T lost 136,000 broadband customers while Time Warner Cable added 189,000. Both AT&T and Verizon showed large gains where they've upgraded (U-Verse, FiOS) and large losses where they haven't.
Saul Hansell in NY Times got this one right: AT&T & Verizon and Verizon put much of their network into "harvest mode," back in 2004-5 with the intent of milking those lines and/or selling them.
Attractive real estate come-on. Rent any of 224 apartments in a new real estate development and automatically get connected at a gigabit. Natural prices for a gigabit are $40-$100, Google's $70 +- $30. Gigabit Internet is a very attractive amenity. One proponent believes "fiber to the home increases the value of a $300,000 home by $5,300 to $6,500," (below)
A $40/month discount is a modest marketing concession on apartments that rent for $1100-$1400. Bakersfield is 120 miles and 3 hours by train north of Los Angeles. It's a desert town dependent on imported water and probably a hard place to sell apartments in a drought.
Randall Stephenson literally 10 years ago told the street that AT&T was already installing fiber in all new developments. After all, glass is cheaper than metal. It was the right thing to do even back then but in practice AT&T was doing nothing of the sort. Carriers without high speeds are just leaving themselves open for folks like this to jump in.
George Soros has put £50m behind Hyperoptic, an English company doing the same.
"It's great for us," Christoph von Schierstädt of Lantiq tells me. I compared the company at merger with the hopes of a few years ago. http://bit.ly/lantiqbye Christoph is looking forward and writes,
"Honestly, I don't really agree that the Lantiq / Intel story isn't a good one. In fact it's a great proof of everything we did to bring the company back on track - We made the company faster, lean and nimble. Dan Artusi installed four key principles which we are acting under since then: customers, speed, simplify, participation. He furthermore demanded and successfully installed the 'see a problem, fix it' mentality; means we all care for the success of the company and remove roadblocks faster.
"Even on a cost avoidance basis, the AWS3 bids could reflect economic values," a reliable source emailed me. More spectrum makes it cheaper to add wireless capacity, especially now that LTE-A aggregation is widely available. I ran some numbers and to my surprise even $45B is plausible - if not exactly cheap!
AT&T certainly didn't intend to pay $15-20B for about 40% of the 50 MHz available. John Stankey put $10B on the table for the auctions. That seemed like enough to scare off smaller bidders. Someone wasn't scared, probably Charlie Ergen, and pushed the bidding up.
Telcos need to keep up with traffic increasing at 30-70% per year. They can increase capacity with more cell sites, more antennas, and network efficiencies instead of spectrum. They calculate how much less they could spend on capex if they had additional spectrum available. They calculate cost avoidance numbers from that and develop a maximum bid range. Then they hire nobel-calibre game theorists and auction economists to ensure they spend much less.
The savings in capex just might justify the high prices. AT&T has just cut capital spending by $4B, the largest decline in the last decade anywhere in the world. Just a quarter of that, $1B, would support over $30B in spending on spectrum, at 2.8% effective interest rate.
The world is on the way to gigabit LTE. Using 40 MHz, Korea's largest mobile company is upgrading 26,000 cell sites over the next few months. The maximum speed is 300 megabits, shared; if the cell site is crowded or you're far from the tower, the speed is lower. 95+% of the time, however, you can expect 50-100 megabits. SK is using 20 MHz in the 1.8GHz band, 10 MHz in the 800MHz band, and 10MHz in 2.1 GHz band.
SK claims this is the first commercial 3 band deployment, but there are dozens to come. LG, Korea's #3, intends to deploy next month and KT is in trials. http://bit.ly/1BoDP7N. SK's 26K cellsites for 51 million people is about three times the density of AT&T or Verizon's network. The American giants have < 50,000 cellsites for 315 million people.
Verizon was first, after Scandinavia, to LTE but now has a distinctly inferior network. While Germany has peak speeds often at 100 megabits, Verizon is still advertising 5-12 megabits. England, France, Finland and many others soon roll out common speeds of > 100 megabits.
Dropping 10M wired homes, 50-75% of territory. Please don't shoot the messenger - I still support DSL. CEO Lowell McAdam intends to shut most copper served homes, 10-15M. This is not because those homes aren't profitable, but they will be even more profitable if served by Verizon's LTE.
Here's what Lowell told the CITIBANK conference.
"We're moving a lot off of copper onto wireless, as well, especially for voice services and lower speed DSL. And that allows us to have the maintenance savings and gives the customers frankly better service than they would on antiquated copper. So we're doing a number of things to sort of prune the assets down and be a bit more focused."
The 2012 Ibuka Medal went to three people on the video standards committee for H.264/MPEG4-AVC. The 2013 award went to three on the High-Efficiency Advanced Audio Coding committee. For more than 20 years, the DSL Standards group has been advancing broadband from 1.5 megabits in the pre-DMT days to G.fast’s hundreds of megabits. It’s time to put together a nomination. This year's nominations are due January 31. The chair of the committee is Kenneth Wiegand of Fraunhofer, one of those who won the award for video standards. Balan Nair, also on the committee, installed millions of lines of DSL as CTO of Qwest.
The 2014 Award went to Marty Cooper, cell phone inventor and friend to many of us. Marty’s Marconi Panel in D.C. in October upended many people’s thinking about spectrum. Two dozen of the most influential in D.C. were in the audience to hear “We’ve never had a spectrum shortage and we never will.” The video is well worth watching http://bit.ly/Marconispectrum
For information on the award, http://www.ieee.org/about/awards/tfas/ibuka.html If we don’t get this together for this year, let’s make sure to do it next year.
Program will help far fewer than 10%. Barack has a delightfully folksy video chat about needing better and more affordable broadband. http://bit.ly/WHbunkum He flew out to Ceder Falls to make a second speech. http://bit.ly/WHCedar Unfortunately, his proposals are highly unlikely to impact 5% of Americans and almost certainly won't reach 7%. (Proposal below)
The only item of apparent substance is Obama's plan to override state laws in a minority of the country that prevent cities from building municipal systems. That's the right thing to do, but won't affect many people. Even if the proportion of municipal broadband in the states affected doubles or triples, that's less than 5% of U.S. homes. Doubling or tripling would be a surprise.
If you want to help more than 10% or 20% you therefore have to make the incumbent bring down prices.
December 22
I'm moving from fastnetnews.com to fastnet.news everything since July 2014 is here.
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Vectored VDSL, |
