Sprint out of FCC auction. Is there really a spectrum shortage? (5GW)
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'a 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.
Tim Coonan 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.
"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.
Every cableco has plans but how will they price? Using DOCSIS 3.0, Videotron now is serving customers in Montreal (pr below) with the whole city set to upgrade in the near future. Hitron modems are going into use in the U.S., presumably at Altice's Suddenlink and at GCI in Alaska. (Also below). Suddenlink is charging $109 for the gigabit.
Comcast and Cox also offer a gigabit in many areas but today it's mostly a pr stunt. Comcast is charging $300/month and $1,000 for the install. They run a dedicated fiber and deliver the service as they would for a large business.
Both companies tell me they will switch to using their existing coax when DOCSIS 3.1 is ready.
Bruno wanted G.fast but DT chooses cheaper 35b. February 2014. CTO Bruno Jacobfeuerborn startled the broadband world by suggesting they would deploy 500 megabit G.fast. Kabel Deutschland has been winning customers away by offering twice the speed of DT for the same price. BJ knows gigabit cable is close and he wanted to stay in the game. 25M homes were initially promised the upgrade and that's now been raised to ~30M, or 80% of the country.
A year later, his plans were cut back because of DT's financial problems. DT has lost billions on T-Systems, their computer outsourcing division as well as billions on T-Mobile USA. The losses in Greece and Eastern Europe are also high. Over the last four years, they've paid more in dividends than their net profits. Debt is up by six billion.
Two hours after the announcement, Jim Baaker put out a national press release looking for clients to sue Ikanos, Qualcomm or their insurers. Since the price was reasonable - 50% above the previous share price in a tough market for chips - the suit has little merit. But the companies might enrich the plaintiff's lawyer to avoid the time and expense of a trial.
Giant steps in. Ikanos, which absorbed Globespan, Virata, Conexant and Centillium, is a crucial part of the history of DSL. In a flat DSL market, they've struggled for several years. Promised products for node scale vectoring and G.fast are not visible in the market although I understand they are far advanced. CPE chip sales have declined as Chinese chipmakers entered the market. A year ago, Dado Banatao's Tallwood VC firm and Alcatel bailed them out in the belief the new chips would find buyers. Time and money have run out and they've accepted the offer. Ikanos has been on the block for a while, with an asking price of $80-100M.
Qualcomm's entry surprised me because they don't offer complementary chips for cable and fiber. The deal was presumably inspired by Intel's purchase of Lantiq, creating a powerful combined offering of DSL, cable (formerly TI) and wireless (formerly Infineon) chips for home connections. Ikanos also sells Fusiv, a network processor for gateways.
LTE + DSL gateways are in modest deployment in Germany and could play a surprisingly important future role. LTE with realworld speeds of 50+megabits is deploying widely around the world. Many people believe spectrum limits LTE capacity so much that the telcos can't afford to use LTE bandwidth to supercharge DSL. That's probably true in midtown Manhattan but 95+% of the time LTE towers run far below capacity. This is especially true in rural areas, where DT intends to sell DSL + LTE in volume.
4G will be almost everywhere with peak speeds often over 100 megabits. 100 megabits will be slow for wired connections in the developed world. Most developing countries - except China - have very few landlines and it's not clear wireless will have enough capacity for much video over the net. Prices in strongly competitive markets will be flat to down because the costs of modems, Internet transit, and nearly everything else are going down. In the more common weakly competitive market, like the U.S., prices will creep up unless the regulator is strong.
Two billion more people will be connected to the net as LTE phones drop under $50. Africa will have more Internet connections than the United States by 2017, more than the 315M population of the U.S. India is growing almost as fast, and China already has twice as many connected as either the U.S. or Europe. The rich countries are today 40-45% of connections; by 2019, that will be down to 35-40%. 5% to 25% of homes will be screwed as rural areas have limited coverage and competition.
Light Reading. The equipment cost for a gigabit will be similar to the 100 meg cost. Next year, most cablecos will begin using gigabit-capable modems for new customers whether or not they have gigabit service. The cost to the carrier of the extra bandwidth would normally be less than $2/month/customer, often far less.As gigabits deploy, why throttle down to 100 megabits? Since 2005, DOCSIS 3.1 was designed to go to a gigabit and more, shared. But NBN will only offer 100 megabits when it rolls out in a year or two, NBN CTO Dennis Steiger tells Alan Breznick at
Confirms cartel. Weldon notes "China allows foreign vendors to claim a maximum 11% of the wireless market; Alcatel-Lucent and Nokia each have an 11% share." (Jessica Lipsky, EE Times http://bit.ly/china11share) 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. Lipsky quotes Weldon, "I think what is definitely true is we will both be stronger in wireless in either company. We’re hopeful that means we can maintain the aggregate market share and not have that renormalized.”
Fearing bankruptcy of Alcatel and Nokia, the EU threatened high "dumping" tariffs on China's Huawei and ZTE. The Chinese were taking market share and driving down prices. The threat was highly credible. The U.S. had blocked Huawei, citing "security" but without any proof. EU Trade Commissioner Karel DE Gucht went public with the statement below.
In 2014, the tariff investigation was put on hold. The industry rumor was the governments reached a behind the scenes agreement on market share. China allowed Alcatel and Nokia a share of the Chinese market and Huawei/ZTE accepted a limit on their market share in Europe. Equipment prices went up.
NFV, SDN starting to inspire white box fears. (Update 4/31 Adtran's stock climbed and Calix plummeted, leaving them both about the same % lost.) Adtran's stock fell 10% Wednesday, about $100M, to the lowest level in five years. Tom Stanton's company was hit hard by disappointing sales to two major customers. Quarterly sales were slightly down, partly explained by the euro falling against the dollar. Interim CFO Interim CFO Mike Foliano didn't warn the street of the sales decline. The analysts expect a wink and nod in advance with inside information.
Adtran remains a capable and profitable company but the market has been treating it as a growth stock. Telecom is not a growing business. Nearly no company except Huawei has seen sales increase.
AT&T canceled a project to upgrade some of the old BellSouth territory. That's not much of a surprise; AT&T's $4B capex cut this year is the largest of any telco over the last decade, anywhere in the world. Craig Moffett for several years has been pointing to how hard Randall has to work to cover the dividend. Over the last four years, dividends have actually exceeded earnings per share.
Deutsche Telekom is trying to weasel out of their repeated commitment to meet the EU 100 megabit speed with vectoring to 24 million homes in 2016.
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.
50-100 megabits so cheap it can go everywhere. Lantiq's new VINAX dp8 is designed to lower the price of an 8 port DSLAM to $20/connection. Include the hookup cost and it's only about what the customer pays in a single month. Lantiq says similar units today cost more than twice that. The nominal speeds in the lab are 200 down, 100 up; 50+ megabits down, 25+ up will often be practical for 500 meters. In small buildings, performance will be much better, often 100/50. While larger buildings can be served with multiple cheap units, the interference in the binder becomes a crucial factor. With vectoring, the rate reach would often double, but that's a more expensive and complicated system.
The unit is based on their existing 8/16 port VDSL chips, controlled by an inexpensive network processor Lantiq originally designed for their GPON system on chip. Eliminating the high-performance network processor simplifies design, further reducing cost.
NY Times, WSJ, WP: You need to make offers to Stacey at staceyhigginbotham dot com, Kevin Fitchard at gigaom.com (or via me if that email is shut down.) In the day, Om Malik and Saul Hansall (NYT) were the only reporters who consistently beat me to major broadband stories. Soon after Gigaom began, Saul was disappointed. We expected Gigaom would do well and now Saul would never have the chance to hire Om for the Times. To a large extent, Best Bits in the Times was based on what Gigaom was doing.
"Just watch. Stacey is going to be incredible," Om said to me when he hired her. He was right. Kevin Fitchard was in a tough spot just before Stacey & Om hired him, virtually singlehandedly trying to report every story in the business as Telephony dropped almost all the reporters. He remained productive at Gigaom while dramatically upping his game.
Soon, the cost to the telco for 10 gigabits will be little different than the cost of ten megabits. 1 gig service over fiber costs the carrier very little more than 10 or 100 megabits. Equipment going in today is almost all ready for a gig. There's rarely any savings using obsolete gear that tops out at lower speeds. PCCW's Hong Kong telco has now upped the ante, bringing a ten gig - presumably XGPON - to all 800,000 fiber customers. Trials have begun and they expect to cover nearly all 800K by the end of 2015.
Hong Kong consumers are among the luckiest in the world. Despite wages often as high as the U.S., prices both for wired and wireless service are typically half what they are in the states. Pricing for the gig service isn't announced and will be determined by what the market requires. Even with the low revenue base, HKT is going fiber or vectored VDSL to nearly all the city while investing less than 10% of revenue. Their LTE is going to 300 megabits.
Hong Kong HKT's cost should be somewhere between $400 & $1,000 per home - probably closer to $400.
Late arriving chips push DSL pioneer into Intel deal. Intel is back in the DSL business more than a decade after losing about $2B without bringing a DSL chip to market. Lantiq is a solid company with excellent engineers around the world.
Not long ago, CEO Christian Wolff was planning for a $1B IPO. Imran Hajimusa was exhibiting spectacular demonstrations of world-beating performance WiFi, some of the first publicly shown vectored VDSL and more. The chips haven't made it to market. Update 3/03 Vectored VDSL chips for modems are shipping, although other chips are not.
Very limited sales of ADSL, VDSL chips for now. Ikanos was the first with VDSL2 DMT, today's standard. They've incorporated Globespan-Conexant, once the largest ADSL chip provider. But until their vectored & G.fast chips ship, sales are dismal. With investments from Alcatel and Tallgrass, they have time to turn things around - when the chips get out the door. Tallgrass and management bought an additional $12M in equity early in February.
They are particularly enthused about G.fast. On their investor call http://bit.ly/1BcvVC1, "One is that G.fast is obviously the flagship of the 1-gig push forward, if you will. We expect that market to be -- as the percentage of the total to be around 25% of the mix of the balance of the DSL technology, but one of the things that interesting around G.fast is an end-to-end replacements or deployment takes place.
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. This is very hard politically in the U.S. and Obama didn't even try.
Which means that Obama's plan will help very few. I'm calling it the seven percent solution, because it probably won't have any impact on more than 7% of homes.
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.
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."
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.
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.
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.