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China Q2: 5.81M, Not 5.5M
Tuesday, 03 August 2010 12:06
The 5.5M estimate in the last DSL Prime was based on April and May. Lee Ratliff of iSuppli writes the June numbers are in and a strong month raised the actual Chinese total to 5.81M.
     Lee raised his 2014 estimate to 223M because "2009 and the first half of 2010 have been white hot. There's a new trajectory on the curve." He remains concerned about the potential of a melt-down in China’s economy, but notes that kind of thing is almost impossible to forecast.
      Both he and I would very much appreciate data about the rapidly expanding cable industry in China. It's moving to digital, starting to add modems, and I expect it will be a powerful incentive for all companies to invest more and grow.
Blocking Video: AT&T Tries, Deutsche Wants
Friday, 30 July 2010 20:14

obermann_and_smiling_merkelAT&T insisted that Apple throttle or cut off YouTube on the iPhone. AT&T's Kris Rinne demanded Apple "restrict its YouTube app to run only over Wi-Fi. Maybe the iPhone could feature a smaller, lower-resolution videostream or cut off YouTube videos after one minute," In Germany, René Obermann of DT is demanding that Google and Apple pay extra to get ordinary decent service on his network.


     All the folks who thought this was never going to happen now have to face the facts. The technology to slow done some video in order to force a payment is now starting to work.

   It may or may not be right for government to enforce neutrality; governments often create more problems than they solve. But let's all be honest. Telcos want to make money; if they can get away with demanding it, they will. Deutsche Telekom has 12M subscribers, 47% of the enormous German market. Very few video companies could resist paying them if the alternative were having their streams partially blocked.

     9 million people streaming Netflix every month, often in HD, have little or no trouble on most major networks. They now stream up to 3.4 megabits and most shows look fine on Jennie's 50 inch plasma. That's dramatic evidence that most U.S. networks are effectively neutral. CTO level executives from Verizon, Comcast, AT&T, BT Wholesale, and Free,fr have confirmed it to me.

Last Updated on Sunday, 01 August 2010 19:57
3 Million Going Naked at France Telecom
Thursday, 29 July 2010 01:39
david3,126,000 French homes are buying "naked DSL" from FT in France, 736K more than a year ago. They also unbundle 1,240,000 naked lines. 3M homes take IPTV and 7M VOIP from FT, one of the largest deployments in the world. DSL Q2 is up 46K to 8.942,000, and fiber from 37K to 42K. Fiber is now available to 605K homes, barely up from 582K homes a year ago despite many promises to the regulator. ARPUs are up 3-5%.
      The big news in France is that Bouygues' quadruple play (adding wireless) is doing extraordinarily well. Frederic Jeanmaire of Merrill Lynch calculates Bouygues'  ideo quadplay is now taking 25% of the fixed line adds. Their quad play is 15 euros cheaper than buying services individually and is selling remarkably well.
       FT in Poland is going nowhere in DSL, flat at 2,261K and slightly down from last year.
Last Updated on Thursday, 29 July 2010 02:47
$4B Cut in Verizon, AT&T Fiber+ DSL Spending
Friday, 23 July 2010 09:28
 Dave_Ivan_Seidenberg_Dick_WileyVerizon's wireline capital spending in the first six months of 2010 was 3.35B down nearly $1B from last year. For the full year that is nearly a $2B drop, which corresponds to their plan to cut the FiOS build in 2010 by 2/3rds. Since they've also cut the post 2010 FiOS build by 2-4M homes, this is probably a permanent drop. The numbers at AT&T are similar but not broken out. AT&T cut U-Verse by 1/3rd last year, one reason they went 92K negative on broadband this quarter.
     Spread over 4 years, the total cut in Verizon wireline/FiOS spending would be about $7B, about the same as the total government money spent on the broadband stimulus. It also corresponds to the Verizon's likely share of the broadband tax. (I am writing separately that the broadband tax will go mostly to the company's bottom line, not expanding broadband.)
    These multi-billion dollar cuts came after the U.S. enacted a stimulus program and now is talking about huge subsidies supposedly for broadband. Ivan is a smart guy who told investors that he thinks the government will pay up if he doesn't invest. The stimulus, as Tom Hazlett predicted, resulted in fewer new broadband connections as company after company reduced spending hoping the government will pay instead. Verizon is claiming 20-30% of their lines require a subsidy and asking for billions or they might discontinue voice service. Ironically, V & T just reassured wall street their wireline margins are staying up.
Last Updated on Saturday, 31 July 2010 17:11
Chunghwa: Double Speed, Same Price To Find Subscribers
Friday, 16 July 2010 07:25
Broadband Taiwan USTaiwan's achieved 80% household penetration - higher than the U.S. - by keeping prices down. The market is so close to saturation that modest problems led to Chunghwa actually losing broadband customers in 2009. To counter that, and with government encouragement, they've doubled speeds at the low end. ~$8/month DSL will go from 256K to 512K down. The ~$22/month offering goes from 1M/64K to 2M/128K. That's after an 8% price drop last year. Low income customers get 50% off the line rate and disabled customers also get discounts.
     Much of the island can get 100 megabit VDSL and IPTV. Any building promising to sign up 20 apartments will get 100 megabits within a few months. They've just ordered 200K IPTV set tops for $90 each in an open tender. The suppliers - DinYen and HwaCom - surely would love to bring their low priced units to other markets.
     Chunghwa often pays less for equipment than giant companies such as Telstra and AT&T because open tenders work.
Last Updated on Friday, 16 July 2010 17:05
U.N. Broadband Chief's Opponent Dead
Wednesday, 14 July 2010 19:24

kagame_sarkozyRwanda President Paul Kagame co-chairs the U.N. ITU Broadband Commission. Under his regime, Rwanda has dramatically increased both international connectivity and local computer use. But is he the right choice if "Rwanda Opposition Figure Found Dead" is the newspaper headline? Josh Kron (NYT) reports  "the nearly beheaded body of party official Andre Kagwa Rwisereka, was found by the banks of a river." Reporters Without Borders called on the European Union to suspend their assistance to the Rwandan government "following a series of grave press freedom violations," including the murder and arrests of journalists. He has also been involved in the war in Congo, where millions have died.

      On the other hand, Kagame played an important role in ending the massacre of hundreds of thousands nearly two decades ago. He works hard and intelligently for his country's development. The issues here should be closely examined, which is why I'm writing this story.

     This tech reporter, 7,000 miles away in New York, is not the one to judge.

Last Updated on Thursday, 15 July 2010 01:26
"It’s hard to believe that basic things like capacitors are in such short supply"
Monday, 02 August 2010 10:50
Ikanos_chips_colorful.joglantiq_chipIt's hard to imagine that in a very weak world economy there's real demand that blows out the whole system. But shortages are widespread. A manager of a very large network emailed "Our biggest problem at the moment is getting equipment from our key vendors.  It’s hard to believe that basic things like capacitors are in such short supply." 
       Shortages often comes from self-fulfilling prophecy. When you fear a shortage, you naturally stock up to protect yourself. U.S. TV host Johnny Carson once made a joke about a toilet paper shortage on the East Coast and by the following afternoon there was one. Shoppers had bought up everything in the stores.
       Lots of datapoints suggest the shortage clears rapidly but currently TSMC, the world's largest foundry, is running 100%.
Last Updated on Monday, 02 August 2010 12:28
Newsbreak: AT&T Asked Apple to Block YouTube on iPhone
Friday, 30 July 2010 15:57
Kris Rinne of AT&T asked Apple to "restrict its YouTube app to run only over Wi-Fi. Maybe the iPhone could feature a smaller, lower-resolution videostream or cut off YouTube videos after one minute," Vogelstein, Wired, Great article), I checked with AT&T and they did not deny this was true. AT&T sells its own video packages, of course, and did not intend to limit those. That concrete evidence of AT&T's desire to throttle should be enough to put a monkey wrench in the works but TANJ.
Cicconi_laughingTaukeKyle_McSlarrow      This weekend, uber-lobbyists Cicconi (AT&T), Tauke (Verizon) and McSlarrow (Cable) are at the FCC to make a final deal on net neutrality, Arbogast and Kaut report. Ivan Seidenberg has put enormous pressure on the White House to intervene, and the rumor is that chief of staff Rahm Emanuel is telling agencies to go along. Seidenberg, who has been to the White House 16 times,made a major D.C. speech suggesting that the business community would throw their money and power against the Democrats in the campaign. NN was one of the specific points he demanded. 
       Under pressure like that, Julius has already agreed to almost everything Cicconi really wants, including loopholes wide enough to carry 350 TV channels. K & A say there is still some opposition so that nothing is final and that the public interest groups are ready to assail Julius. Meanwhile, Verizon and Google are discussing a separate peace that will make the FCC irrelevant.  
       This one is about power and money, not principle. The likely outcome is an agreement that will allow everyone to say noble things, will allow Julius to look himself in the mirror, and will essentially have no substance.
       I hope I'm wrong. 
note - big error. It's Verizon and Google talking a separate peace. I accidentally wrote Verizon and AT&T. 



Last Updated on Friday, 30 July 2010 19:00
Attackers: U.S. Beating China, Russia Beating Both
Tuesday, 27 July 2010 19:57
sibiu_Romania_faster_than_most_of_the_USAlthough China has 30M more broadband subscribers, the U.S. is leading in one statistic: attack traffic. According to Akamai's new State of the Internet, the U.S. originates 10% of attacks and China 9%. Russia ahead of everyone at 12%, while Taiwan, Brazil and Italy rank high. 74% are coming on Port 445.
   Carriers can generally reduce malware by monitoring outgoing traffic for obviously compromised machines and working with their users to fix things. The high U.S. rate suggests that some carriers are being lazy and therefore increasing Internet problems. Some of the 20,000 jobs being eliminated at AT&T and Verizon were probably staffers who kept malware down. These are "non-revenue positions" and therefore more likely cut.
Last Updated on Tuesday, 27 July 2010 21:26
AT&T & Verizon: Worst Broadband Quarter Ever
Thursday, 22 July 2010 10:25
AT&T lost 92K broadband customers, to 15,952,000, the first time T fell since the beginning of broadband. Verizon added 28K, with 196K FiOS adds and 168K DSL losses. Jessica Reif-Cohen of Merrill thinks cable has won and much of the street agrees. Cable is doing better in broadband but not particularly well this quarter. Rogers in Canada added only 7K and Comcast 118K, with the others still to report. While cable is pulling ahead, I believe telcos with $40B/year in free cash flow could fight if the FCC lights their fire. T has brought back $14.95 "introductory" pricing (DSLR) but the regular prices still begin at 1/3rd higher than they previously charged.  
     V &T are making more money because wireless data is expanding, they are getting away with price rises, and they are firing another 20,000 or so. Verizon took a $2B writeoff to peaceably get rid of 10,000 mostly union workers, far more generous severance than Randall at AT&T tries to pay. The stock went up enough in one day to cover the full writeoff. 
     Wireline margins went up, making D.C. look very foolish stuffing $billions a year in giveaways to V & T in the new USF bill. These are two of the most profitable companies in the world, with $20B cashflows. They don't need new subsidies with a fig leaf proclaiming the money is going to broadband deployment. Maybe some people will start reading the bill and discover it puts a $5-10B annual tax on broadband and mostly gives the money to the big telcos' shareholders. Less than 20%, and probably less than 10%, will actually go to expanding broadband.  
    As Ivan Seidenberg fades into the sunset, everyone at Verizon is focusing on the next quarter, not the longer term results. CFO John Killian is making his play with the capex cuts and other ways to improve cashflow. Lowell McAdam, presumed from the outside to be heir apparent, is riding phenomenal results at Verizon Wireless. Don't trust outside speculation on any of this. Ivan himself got the job at the last minute over the objections of former CEO Ray Smith, who preferred another candidate according to a reliable source.
Last Updated on Monday, 02 August 2010 12:36
AT&T's Bonding for the Millions; No Speed Increase
Thursday, 15 July 2010 20:40
bonding"Why would anyone want more than 24 megabits?" AT&T now-CEO Randall Stephenson asked me years ago. The remarkable sales of 50 and 100 megabit DOCSIS 3.0 around the world have answered that question. Users want speed unless the price is ridiculous, with cablecos in Holland, France, and England dramatically increasing their growth rate. In Holland, Mike Fries of Liberty Global/UPC tells me DOCSIS 3 is actually outselling fiber where they compete head to head.
   T will only use bonding to extend the range of their IPTV from about 3,000 feet to close to the original specification of 5.000 feet. They will continue to hold speeds to 18-24 down, 3 up. 70% or so of U-Verse homes - including all of them now served - could get 50 meg down and 5 up, but overpriced cable competition in the U.S. leads T to believe they wouldn't find a market.
Last Updated on Thursday, 15 July 2010 22:02
Wall Street Confirms: Modest if Any Investment Effect of Net Neutrality
Wednesday, 14 July 2010 17:07
camelNet neutrality/reclassification opponent Thomas Seitz (Height Analytics and previsously Barclay) today joined the parade of top analysts doubting the claims that Net Neutrality rules would produce a serious cutback in broadband investment.Washington is inundated with claims NN will clobber investment, but the carrier CFO are telling Wall Street it won't be a determining factors. Seitz joins John Hodulik of UBS (voted #1 telco analyst), Craig Moffett (voted #1 cable analyst) and Michael Rollins of Citigroup as well as several others who haven't gone on the record. 
      There are plenty of sensible arguments against Net Neutrality, voiced by Dave Farber and others. Governments frequently muck things up when they get involved. But the "investment will be clobbered" doesn't stand up to the facts. A panelist added "competition is a far more important factor in driving investment. ... the market usually adjusts to things like this successfully." Columbia's Bob Atkinson, who led a factfinding report on future broadband investment for the plan, at the NYLS seminar said he didn't think NN - or most other policy measures - would have a major impact.  Atkinson and Schultz's paper is used by all sides in D.C. as a primary reference.
      Seitz thought "Title II reclassification" to enable NN would be bad for investors, but probably not NN itself. "It's the nose of the camel in the tent. The real investor fear is that the laws other provisions - including 'reasonable and fair prices' - might be enforced. It's those other issues that make people fear reclassification." Moffett is even more blunt. "Importantly, the regulatory issue here has nothing to do with 'net neutrality.' The section of the Communications Act mandating 'just and reasonable rates' – opens the door to broader price regulation."
Last Updated on Wednesday, 14 July 2010 19:47
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