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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
15 Miles from Power: Adtran in Alaska
Wednesday, 07 July 2010 11:28

Valdez_gold_rushMitch Vieu, plant manager, Copper Valley Telecom likes the Adtran 1124 because it works "70 miles from the nearest office and 85 kilofeet from the nearest commercial power source,” The local mountains get 700 inches of snow and there's not a town on the map within 50 miles of Valdez.  CVT is a co-op and wants to provide service everywhere, a tougher problem around Valdez than in most territories.

     Adtran traditionally was a Bell supplier but is now moving aggressively after independent carriers. They have a reputation as reliable but high-priced, but they've been cutting prices drastically to win new customers. Their big win was in the ex-Verizon territory of Frontier, where the better part of 1M lines are being deployed.

      While there are a few places that are brutally expensive to serve, the broadband plan found truly high costs at fewer than 1/2 of 1% in the U.S. The Adtran is a line-powered 24 port DSLAM that goes almost anywhere. Ericsson has units the size of a book for 12 ports.  There's nearly always a cost effective way to get to customers, despite what you hear from the beggars in business suits demanding subsidies.

Last Updated on Thursday, 08 July 2010 18:27
Components Currently Are Short
Monday, 05 July 2010 13:59
Except possibly in consumer wireless, enduser demand in the continuing recession is not enough to logically create shortages. Computers and mobile phone sales are up 10-20% because of demand from Asia, but other sectors are not growing that fast in our economically troubled time. There are clearly shortages of many components along the supply chain, but it's hard to know how much of that is over-ordering for protection. Production levels are strong and most delivery commitments are being met. Those who want additional quantities often must wait two to six additional weeks, however.  
  This story was inspired by Rick Pierson's report "Severe Shortages Impact Key Commodity Components." Rick is with iSuppli, a reliable analyst firm, and his findings correspond to what I'm hearing informally.  " Across the board, lead times are longer than forecasts indicated a month ago. The lead time in June was 20 weeks for power MOSFETs and small signal transistors, and 18 weeks for bipolar power devices and rectifiers.availability remains extremely tight for widely used analog Integrated Circuits (IC) and memory ICs. The supply situation is even more critical for standard logic ICs and power management discretes such as low-voltage MOSFETs and tantalum capacitors, which now are experiencing shortages and effectively are on allocation status. 
      The Semiconductor Industry Association (SIA) reports worldwide sales in May were $24.7 billion, a sequential increase of 4.5 percent from April when sales were $23.6 billion.
Last Updated on Tuesday, 06 July 2010 12:56
$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
Can Kang Conquer Capitol Confusion?
Friday, 09 July 2010 11:51

cecilia_kangSaul Hansell's NY Times article last year was critical in killing a $1B pure giveaway to Verizon that was added to the stimulus by the Senate Finance Committee. Saul's moved on, and Cecilia Kang at the Washington Post can become a leader in U.S. telecom reporting if she follows up her story on universal service. David Cameron has killed off the despised broadband tax that was really a giveaway to British Telecom, but the FCC is considering a multibillion dollar levy on broadband that will almost all go to the companies in return for very little investment. The big telco lobbyists expect a windfall of at least $1B/year and more likely $3-4B from ICC & USF changes.

“Over the past three years, AT&T received $1.3 billion in funds to deploy phone lines to rural areas [and] Verizon got $1.27 billion,” Kang reports. V&T have invested virtually nothing in expanding broadband. They are treating rural customers the way the Romans treated the Sabine women while they try to sell off the lines. Bell broadband coverage in rural areas is among the worst in the developed world.

There's plenty of muck to rake if Kang's editors give her enough time to do some investigation. There's the $91K/line giveaway to Sandwich Islands, part-owned by Democratic politicians. There's $B or so in savings possible in the schools and libraries program if they efficiently and publicly sought the lowest prices. There's the “for-profit” subsidiary of NECA, a huge conflict for a non-profit that distributes what's ultimately public money. It's rumored to be making the officers rich, but refuses to give me any information. An FCC Chief of Staff told me the ICC calculations are obviously illegal because they are not based on the costs of terminating the calls as the law requires. No one reporter can cover all of this, and I'll happily share files and sources with anyone interested.

Broadband's Great Middle: France, Germany, UK and (yes) U.S.
Wednesday, 07 July 2010 00:55

France has 30.4 lines per 100 people, Germany 30.3, Canada 29.6 and Britain 29.5. The penetration is effectively identical. While the U.S. is lower at 26.4, much of the difference is larger family sizes and more extreme poverty.  Scandinavia, Switzerland and Korea are far ahead, but most of the larger countries are surprisingly close. 

     France has the 30 euro triple play but as Scott Wallsten mentions is not much more deeply penetrated. Japan in the past had very attractive prices. Although that edge has eroded, it's surprising to find them at 24.8. I believe that's because many in Japan are happy reading their email etc. on their cellphones. Canada had been far ahead of the U.S. for years, but CRTC has allowed Bell and the cablecos to effectively create a cartel and raise prices.

     Those unhappy with U.S. policy or wanting government charity have been screaming "the U.S. is #15." That's true, but the gap with most contries is modest.  My opinion is being in the great iddle is unacceptable and that the U.S., the first in large deployments, should be among the leaders. The FCC obviously doesn't agree, because they've just allowed another series of price increases.

Last Updated on Wednesday, 07 July 2010 12:49
Julius & Frontier West Virginia: The Very Ordinary Facts
Saturday, 26 June 2010 14:22
Davy_Crockett_Frontier200,000 to 400,000 currently "unserved" homes would be getting broadband without any federal subsidy if Julius had taken advantage of the Verizon/Frontier deal.  He certainly could have asked for more, especially since Verizon needed a controversial tax break worth $hundreds of millions. Instead, Frontier is going to do a very ordinary build, far below world standards at 80-85% in West Virginia.

    Steven Crosby of Frontier tells me they will bring West Virginia to 15-20% not covered with DSL from about 40% today. Frontier's planned 15-20% unserved is similar to some U.S. rural territories, although far more than the 8-9% (and improving) of the rest of Frontier's coverage. Rural carrier Madison River had 100% DSL coverage without subsidies. Literally dozens of small rurals (98-100%) prove to me it's practical to do better  There's near 100% coverage in the Scottish islands and the Welsh highlands. The broadband plan found that only about 1/2 of 1% of lines were prohibitively expensive to serve. Even in rural areas the very expensive are rarely more than 5%.

    It's almost certain that most homes Frontier will now serve are those who can already get cable. Very few homes that are currently unserved will be reached. Cable in 2008 (last available FCC figures) had an 85% served/15% unserved rate in West Virginia areas passed by cable. Verizon has been bleeding customers at 15+% a year where people can get cable but not DSL, so Maggie almost certainly will target those territories.

      In other words, Frontier is doing about the minimum any commercial company would do taking over the territory. "We want to have the service available to sell to as many people as possible. That's our business." Crosby adds. 

Last Updated on Sunday, 04 July 2010 16:22
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