BBH Central IconBBH Report Home PageSandy and Dave
  CENTRAL home  |   REPORT home About/Contact Us  |   Subscribe  |   Index by Topic  
The March 17, 2003 Issue Provided by System Dynamics Inc.
Print this issue Print table of contents PicturesPictures from this issue

In This Issue


A Personal Note to Our Readers

At this time of danger and turmoil in the world, we send our special thoughts to all of you as we pray for peace.


Heard on the Net

News about People and Companies Influencing The Broadband Home


People News

Craig Dynes has been named CEO of Narad Networks and Chuck Kaplan has become COO. ( www.naradnetworks.com )

Charles Reed was appointed CEO of CKW Wireless Pty Ltd. He was previously VP of of Telecom Venture Group Limited. ( www.arraycomm.com )

David Sales was appointed director of Home Communications for BT Consumer. ( www.bt.com )


Company News

--Acquisitions

Arris has acquired Atoga Systems for $500,000 in cash, plus assumption of certain lease obligations. Atoga has assets in metro optical transport. ( www.arrisi.com ) ( www.atoga.com )

C III Communications has purchased the broadband assets of Broadwing Inc. for $129 million in cash. The unit will continue to operate as Broadwing Communications Services Inc. and C III will retain the current employees. ( www.broadwing.com )

UTStarcom, Inc. is acquiring selected assets of 3Com's CommWorks division in a transaction valued at $100 million in cash. ( www.utstar.com ) ( www.3com.com ) ( www.commworks.com )

--Funding

Cedar Point Communications, a provider of integrated packet-based voice and multimedia switching for the cable industry, secured $25 million in second round financing. ( www.cedarpointcom.com )

Cognio, a provider of cognitive radio solutions, obtained $12.5 million in venture capital backing in its latest funding round. ( www.cognio.com )

Intel Communications Fund announced investments in four companies involved in Wi-Fi technology since the beginning of 2003: rovingIP.net, an inter-network services provider for Wi-Fi service companies; Vivato, a provider of Wi-Fi switches based on Packet Steering technology; Broadreach Networks Limited, a public broadband Internet access provider, and Pronto Networks, a provider of OSS solutions for large hot spot networks. Financial terms of the investments were not disclosed. ( www.intel.com/capital ) ( www.rovingIP.net ) ( www.vivato.net ) ( www.broadreachnet.com ) ( www.prontonetworks.com )

RealNetworks has made an unspecified minority investment in Listen.com. Press coverage indicated that the deal specifies that Real's digital media technology will be the primary platform for Listen's Rhapsody service. ( www.realnetworks.com ) ( www.listen.com )

--Other News

Amperion unveiled both the Amperion Connect Powerline system and PowerWiFi access. The Amperion Connect system offers a suite of hardware and software products that enable broadband access, backhaul, and internal utility services. PowerWiFi access links the power line network to end users via an 802.11b connection. Amperion focuses on medium-voltage power lines. AEP, a large US electric utility and one of Amperion's investors, is one of three utilities performing market trials with Amperion's technology. ( www.amperion.com )

AOL announced the launch of the MusicNet on AOL service which includes music from all five major record labels and major independents; the service includes a 30-day free trial and tiered pricing. AOL is using technology from Sonic Solutions to enable CD-burning. ( www.aoltimewarner.com ) ( www.sonic.com )

BT disclosed its move into the home networking market with the launch of a new concept called the Home of Possibilities at London's Ideal Home Show, backed by a multi-million pound advertising campaign. BT also launched a Home Monitoring service; a "no new wires" Home Networking solution; a Digital Media Player which allows you to listen to streamed audio from your PC anywhere in the house; and a partnership with Microsoft to launch Xbox Live. ( www.bt.com/homenetworking )

Broadcom announced that products based on the 54g™ wireless LAN chipset have achieved Wi-Fi® certification for 802.11b interoperability. ( www.broadcom.com )

Chameleon Technology has revealed their software which allows laptop users to roam from one network to another securely and with limited data interruptions. Chameleon's CEO is Ken Arneson, formerly CEO of Xypoint and an executive at McCaw Cellular and AT&T Wireless. ( www.chameleontechnology.com )

Cometa Networks Inc. announced a deal with iPass so that its hotspots will be part of the iPass Global Broadband Roaming (GBR) service for enterprise users. Cometa plans to begin rolling out its WiFi network in "top" U.S. urban areas during the fourth quarter of 2003. In other news, McDonald's and Cometa announced a pilot program to provide high-speed, broadband Internet access for customers who visit participating McDonald's locations in New York City. During the first three months, customers who purchase an Extra Value Meal(TM) can log on for 60 free minutes of high-speed, wireless Internet access. ( www.cometanetworks.com ) ( www.ipass.com ) ( www.mcdonalds.com )

Etenna Corporation -- an antenna developer for commercial wireless applications -- and Intel are collaborating to create an antenna solution for high performance wireless-enabled notebook computers. Original equipment manufacturers (OEMs) and original design manufacturers (ODMs) can use this reference design to directly address co-existence and incorporate 802.11a/b and Bluetooth™ antennas into their future products. ( www.etenna.com ) ( www.intel.com )

Ikanos Communications demonstrated ADSL Discrete Multi-Tone (ADSL- DMT) traffic from a combined ADSL/VDSL chipset at Toronto's FS-VDSL meeting. The technology is targeted at saving carriers money by creating a single line card that can switch between ADSL and VDSL. ( www.ikanos.com )

Intel introduced Intel Centrino mobile technology which integrates wireless capability into new mobile PCs. Intel is using the Centrino label to encompass their new mobile processor, related chipsets and 802.11 wireless network functions; the technology includes features designed to enable extended battery life and thinner, lighter notebook designs. Intel has blitzed the market with numerous announcements related to mobility and wireless, with PC makers, wireless network service providers, hotels, airports, retail and restaurant chains.( www.intel.com )

N2 Broadband announced what they term an "open" video on demand (VOD) platform for cable operators. Their platform uses published interface specifications, called "OpenStream" which offers the ability to interchange multiple video streaming servers and applications. The system supports both S-A and Motorola digital systems and video streaming servers from vendors like Broadbus, Concurrent, Kasenna, nCUBE and SeaChange. ( www.n2broadband.com )

Narad Networks announced its first cable field trial with Japan-based MSO StarCat Cable Network. Synclayer is Narad's distribution partner in Japan. StarCat will use Narad's business broadband solution to deliver services such as high-speed Internet access and 30 Mbps video streams to customers over StarCat's existing HFC network. StarCat has a subscriber base of 288,000 with 26,000 subscribers connected to the Internet and 610,000 homes passed. Following the field trial, the deployment is expected to expand to small-to-medium sized businesses in Nagoya this spring. ( www.naradnetworks.com ) ( www.starcat.co.jp/english ) ( www.synclayer.co.jp )

Optical Solutions has formed the Muni Consortium, a group of telecommunications companies and consultants dedicated to helping municipalities and utilities deploy broadband networks via passive optical networking (PON) technology. ( www.opticalsolutions.com ) ( www.municonsortium.com )

Optus has launched Australian hotspot service, called Optus Wireless Connect, and announced plans for 500 hotpots nationally within 12 to 18 months. Telstra also has plans to expand the wireless hotspot network it bought from SkyNetGlobal, targeting food and beverage outlets. Telstra has signed up McDonald's for its upcoming services. ( www.optus.net ) ( www.telstra.com.au )

T-Mobile has cut the price for its Unlimited National hotspot plan from $49.99 per month to $29.99 per month with a one-year subscription. Despite the high profile coverage of Wi-Fi, business model pressures also forced the closing of Joltage's operations. ( www.t-mobile.com/hotspot ) ( www.joltage.com )

Tele-Media, a US MSO with more than 250,000 video subs in nine states, will use Gemini Voice Solutions' IP telephony solution to offer VoCable services to its customers. Tele-Media's private branded service will offer customers anywhere flat fee calling and options for CLASS features and multiple lines. ( www.tele-media.com ) ( www.geminivoice.com )

Toshiba of Canada Information Systems Group (ISG) launched Toshiba Hotspots, bringing wireless Internet access to retail and public locations across Canada. Toshiba plans to have more than 1000 Toshiba Hotspot locations operational across Canada within the year. In the US, Toshiba America Information Systems Inc. announced plans to join with Accenture Ltd. to offer hotspot services throughout North America. Toshiba is providing hardware to potential operators, while Accenture will handle support functions. ( www.hotspot.toshiba.com ) ( www.accenture.com )

TeleSym released its SymPhone Client software for Microsoft Windows-equipped computers. This addition brings voice calling to users of Windows notebook, tablet and desktop personal computers, using wireless (802.11) data networks and across the Internet. The SymPhone System extends the functions of the office telephone to any location with Wi-Fi and broadband Internet connectivity, without paying cellular airtime charges. Intel is an investor in this Wi-Fi related company. ( www.telesym.com )

Ucentric has been awarded a patent pertaining to the distribution of media from multiple sources outside the home and across any number of in-home networks. It also pertains to the processing, distribution and control of the media for presentation on any number of in-home devices, such as televisions, stereos, telephones, computers, etc., in a manner appropriate for each device. ( www.ucentric.com )

Vivato rolled out its 802.11b product for indoor networks, and will add an outdoor network product later this year and 802.11a and .11g products after that. The company integrates phased array antenna technology for increased range and reduced interference. Vivato is targeting the enterprise market. ( www.vivato.net )

--Standards, Certifications and Interoperability

The DSL Forum held a successful multi-vendor interoperability "plugfest" for the new ADSL2 physical layer. It tested silicon from seven different vendors: Analog Devices Inc., Aware Inc., Broadcom Corp., Centillium Communications Inc., Infineon Technologies AG, Samsung Electronics and Texas Instruments. ( www.dslforum.com )

The HomePlug Powerline Alliance announced the availability of its market requirements document (MRD) for the HomePlug AV specification. HomePlug AV will be designed to support distribution of data and multi-stream entertainment throughout the home, including High Definition television (HDTV) and Standard Definition television (SDTV). Completion of the AV specification is expected in 15 to 20 months, with integrated circuits and consumer products available thereafter. ( www.homeplug.org )

The SIP Forum, an organization established to promote SIP technology and its interworking, has launched a web site to provide up-to-date information about SIP and its applications. ( www.sipforum.org )

The Wi-Fi Alliance announced plans for Wi-Fi certification of products based on the IEEE 802.11g amendment to the IEEE 802.11 wireless LAN standard. Wi-Fi certification testing of IEEE 802.11g products will begin after the IEEE approves the final standard later this year. The IEEE 802.11g draft amendment currently includes both mandatory and optional components. A new line indicating support for 54 Mbps in the 2.4 GHz band will be added to the capabilities label. ( www.wi-fi.org )


Briefly Noted

Arbitron Inc. and Edison Media Research released their new study, entitled "Internet and Multimedia 10: The Emerging Digital Consumer." The research covers not only Internet usage and streaming media trends, but also information regarding consumer interest in new digital devices, attitudes about programming and a variety of media, including digital cable and satellite television. ( www.arbitron.com ) ( www.edisonresearch.com )

CableLabs staff must be smiling this month at the great PR about the broadband industry and their key role in making cable successful. The Wall Street Journal ran a headline story (03/13/03) on "How Phone Firms Lost to Cable In Consumer Broadband Battle". It started by saying about the telcos: "Content to rent dial-up lines, they dawdled on DSL, then ran into glitches." Dave Burstein of DSL Prime writes "Why is DSL behind cable in North America, while racing ahead everywhere else? One reason is CableLabs, which solves problems like this. When the telcos stopped funding Bellcore, they compromised their future." ( www.cablelabs.com )

Cox Communications has published a white paper outlining its strategy and thinking around Voice over Internet Protocol (VoIP) technology. The paper concludes that, while VoIP is potentially very attractive, "apples-to-apples" comparisons of VoIP services with primary-line, circuit-switched, network-powered phone services show that VoIP provides only an 8-to-10 percent cost improvement. VoIP would be much more attractive if the MTA is customer purchased and premises powered, unlike today's primary-line services. ( www.cox.com/pressroom )

Leichtman Research Group, Inc. issued a summary of its findings regarding digital cable, from a survey of 1,250 US households in areas where cable TV is available. It concludes that the number of digital cable subscribers will exceed Direct Broadcast Satellite (DBS) subscribers in the U.S. during the first quarter of 2003. ( www.leichtmanresearch.com )

Raymond James' analyst Phil Leigh has issued a 150 page research report on the future of Digital Media. Copies can be obtained at ( 170.12.99.3/researchpdf/IDIG021003FULLRPT.PDF )

The World's Smallest Film Festival is having a session at CTIA Wireless 2003, but if you're not attending and want to see their showcase of digital video content designed specifically for the new generation of wireless mobile phones, PDAs, and other personal mobile devices, visit ( stonegate.lunarpages.com/wsff/agenda.html )


Clearwire in Jacksonville: A Wireless Case Study in Progess

Chairman Powell of the US FCC has said "The broadband revolution is sometimes perceived as being oriented around a single [or] maybe two platforms." He believes multiple platforms could be used for broadband transmission and has been enthusiastic about the potential of wireless broadband as a competitive alternative. When we read that Clearwire was rolling out wireless broadband in Jacksonville, we were eager to see how they would be positioning it. We interviewed Leo Cyr, Clearwire's President and COO, and followed up with an in-person visit earlier this month.

On the surface, Jacksonville doesn't seem like the ideal place for a wireless broadband provider to enter the market. Comcast (formerly an AT&T Broadband system) offers cable-based broadband in the area and BellSouth provides DSL service. Jacksonville also is the largest city (in area) in the contiguous 48 states. Clearwire says it chose Jacksonville partly because of these features, believing that if it could succeed in these less-than-perfect conditions it would show investors the strong viability of their business.

During 2001, the company -- based in Dallas, Texas -- got new financing, a new leadership team, and a strategic relationship with the Instructional Television Fixed Service Spectrum Development Alliance (“ITFS Alliance”) to deliver wireless broadband Internet access to educational, non-profit, and commercial users. Through this relationship they became the third largest spectrum holder in the US (behind Sprint and WorldCom). Having observed the difficulties of earlier broadband wireless providers, they focused on finding appropriate 2.5 GHz next-generation, non-line of sight, self-install wireless technology. After completing multi-vendor field and lab tests, they chose IP Wireless as their supplier.

Using Clearwire at Starbucks --> Click for larger pictureWith all the buzz around Wi-Fi and its deployment in places like Starbucks, we were amused when our Clearwire hosts invited us to meet them at a Starbucks in Jacksonville. We met with Darren Nichols, Field Market Manager for Clearwire and Tegan Bohan from the McCormick PR Agency. Clearwire has hired staff from the local area and has actively sought to position their company as a "strong member of the Jacksonville community" by joining the Regional Chamber of Commerce and going out of their way to meet with city officials.

Our computer showed that there was a Wi-Fi access point active, but we ignored it and connected via the IP Wireless modem and Clearwire's service. One of their selling points to businesses is that, unlike Wi-Fi which operates in unlicensed spectrum, they operates on FCC-licensed frequencies, which minimize the chances of interruption and help guarantee security. Their service has multiple levels of authentication. While sitting at Starbucks we downloaded a file at about 750 Kbps.

Darren explained "our research shows that up to 20 percent of residential customers in Jacksonville have no access to high-speed Internet, and up to 50 percent of local businesses cannot access DSL." Their initial target users have been from a few major categories: those not covered by other broadband services; small and medium businesses (SMEs) currently on dial-up; and those who want to have new cutting-edge techology.

For the last group, Clearwire's pitch is that in addition to high speed Internet access in their primary location, they can take the broadband connection with them around the coverage area in Jacksonville. For certain vertical markets who tend to move around, this is particularly compelling. The current IP Wireless modem can operate on a battery, but has a battery life of only about 45 minutes; they expect this will improve in future versions. IP Wireless also plans a PCMCIA card later this year.

Clearwire starter kit --> Click for larger pictureClearwire competes with cable and DSL with a "try it, you'll like it" offer with a 30-day money back guarantee. With current special offers, the activation fee is waived and a credit makes the modem free. They have created pre-qualification tools which predict which customers should be able to do a simple self-installation. The installation kit, touting "The Freedom of Speed" (SM) contains the modem and cables, a quick start guide, an installation software CD and simple instructions.

Clearwire currently has four operational towers, each with three 120 degree “sectors” and 3 RF channels to reduce the likelihood of interference. Since service availability is limited to a portion of the city, some potential customers attracted by media advertising lie outside the current service area. Only customers in the strongest coverage areas can self-install the service. For those in areas with weaker coverage, Clearwire offers professional installation, typically done by local integrators using a window-mounted antenna. They also provide "industrial" installations in cases where businesses need a building antenna.

Clearwire modem on car's rear window --> Click for larger pictureTo assess coverage in different spots, we drove around some of the city with the IP Wireless modem in a "cradle" attached to the car window with suction cups. Darren emphasized that the service is advertised as "portable" rather than mobile. Despite that, we were able to read the morning New York Times on the Web while driving around. As we drove, we saw the coverage drop off; as we moved several miles away from a tower we no longer got a usable signal with the built-in antenna. The current software release drops service when the signal is lost and does not reconnect automatically; Darren said this will be upgraded in future releases.

Darren was unable to provide the number of current users, but said that their year-end objective is 2000 installed units. The current split of customers is about half the units being used by residential customers and half by businesses; 75% of revenues come from the businesses.

We were curious what percent of current Clearwire customers had a wireline broadband service available to them and went with Clearwire anyway. Clearwire has not yet pulled together the quantitative data to provide us an answer, but said that the number is higher than they expected. Most of the businesses who had another choice but went with Clearwire said they had DSL available, while the residential customers more often said cable was the other choice. We look forward to seeing the quantitative results regarding users and their characteristics as the rollout progresses.

Subsequent to our visit with Clearwire, the US FCC opened a proceeding regarding fixed and mobile broadband access in the 2500-2690 MHz bands; the rulemaking includes the IFTS spectrum being used by Clearwire. FCC Chairman Michael Powell said "By today's notice, the Commission explores ways for the American people to enjoy the full potential of a large parcel of previously underutilized, prime spectrum real estate. ... The opportunity is monumental -- the MMDS/ITFS band encompasses 190 MHz of contiguous spectrum. This is more than double the 83 MHz that spurred the development of WiFi at 2.4 GHz. It is roughly equal to all spectrum currently devoted to terrestrial, mobile wireless." FCC Commissioner Copps expressed concern that those who received free spectrum for the purpose of providing educational services might now profit from selling their licenses. The potential impact of these proceedings on Clearwire is far from clear.

( www.clearwire.com ) ( www.comcast.com ) ( www.bellsouth.com ) ( www.ipwireless.com ) ( www.fcc.gov )


A Wireless Trial: BellSouth in Daytona

While Clearwire is using wireless to provide competitive broadband service in Jacksonville, BellSouth -- the incumbent local exchange carrier -- is running a broadband wireless trial nearby in Daytona. After receiving press releases about the trial, we arranged a phone interview with Mel Levine, who is directing the trial.

Mel told us that BellSouth was looking for a cost-effective approach to provide broadband services to BellSouth customers that could not be reached by current DSL technologies. BellSouth acquired licenses for wireless spectrum in the 2.3 GHz band when it was planning MMDS video in the mid 1990s, and holds licenses throughout its nine-state region. It is not aiming to reach all of its customers, but only those out of DSL range.

BellSouth has been thinking about broadband wireless for some time. They ran a trial of a frequency division duplex (FDD) system three years ago in Louisiana, and decided to wait for non-line of sight self-install technology based on time division duplex (TDD). After evaluating several vendors, they chose Navini Networks for their trial in Daytona. (Verizon, another US incumbent telco, is trialing broadband wireless for "DSL fill-in" with BeamReach Networks equipment in Fairfax, Virginia.)

Since BellSouth is most interested in extending DSL service, their criteria for selecting technology were primarily based on the coverage area for service at 1.5 Mbps downstream and 256 Kbps upstream. They wanted the technology to permit self-install for users within the main coverage area. The ability of users to use the equipment at other places in the city was viewed as a nice feature, but portability and mobility were not viewed as requirements. (BellSouth is a partner in Cingular, a wireless service provider that plans to roll out 3G service to provide mobility.)

Mel told us that they were deploying two base stations to cover a large part of Daytona. The first base station is using three sectors, while the second will use an omni antenna. For this trial, the sector antennas are mounted rather low at 140 feet; based on the test results, BellSouth will calculate the effect of mounting them higher. The primary test area is 3 miles from each base station, but they are testing coverage as far out as 8 miles.

The Daytona 500 auto race took place recently, and BellSouth used the trial system to enable the press and crews to get online from the Daytona International Speedway - located about 3 miles from the nearest tower. BellSouth connected a small number of Navini modems with broadband routers to provide 120 access ports, including 90 at the media center. Photographers were able to upload high-resolution digital photos just after they were taken.

The trial will continue through April. After BellSouth has completed evaluating the results, it will decide whether and when to deploy wireless as a DSL extension.

( www.bellsouth.com ) ( www.navini.com ) ( www.daytonaintlspeedway.com )


Fastweb's Success: Innovation Plus Results

FastWeb promotion in Genoa May 2001. --> Click for larger pictureAfter visiting with FastWeb in Milan in June 2001, we wrote about their rollout of a pure-IP fiber-to-the-home service throughout Milan. We concluded that FastWeb and its parent company eBiscom were leading the way into the future of converged services and called them "a world leader in creating a comprehensive and durable model for the broadband future."

While many companies with great ideas and plans don't look as good a year or two later, this is clearly not the case with eBiscom. After reading their press release on 2002 results, we scheduled a follow-up interview to explore their progress. We were delighted to speak with Mario Mella, Network Planning Director for FastWeb and Jason Jacobs, International Media Director for eBiscom.

What we learned was not surprising after our visit, but was a pleasant change from the many depressing telecom stories we've read:

  • FastWeb has continued to implement their business plan and is achieving impressive results.
  • They continue to introduce new services at the same time as surpassing their financial targets.
  • The incumbent is trying to compete on the basis of "me too" but has the disadvantages of less-capable infrastructure and greater bureaucracy.

Let's look at the facts behind these conclusions.


Impressive Results

FastWeb beat all its consolidated targets for 2002 in terms of subscribers, revenues, and EBITDA.

  • It tripled its subscriber base, ending with 176,100 customers.
  • It tripled its revenues, generating 221 Million Euro.
  • After less than 3 years of operation, it posted its first positive FY EBITDA of 9 million Euro.
  • The average revenue per user (ARPU) for residential subscribers rose to over 780 Euro annually for December 2002, compared with year-earlier 690 Euro.
  • The average video-on-demand revenue per home more than doubled to 10.5 Euro.

FastWeb now operates in six major metropolitan areas (Milan, Rome, Turin, Genoa, Bologna and Naples) and offers services to both business and residential customers. Residential services represented 28% of services revenue in 2002. While all-fiber transport is the objective, they also offer service over ADSL as a tactical measure to capture the customer prior to rolling out fiber.


Services

FastWeb "triple play" promotion --> Click for larger pictureFastWeb's complete bundle of residential offerings includes voice, data and video:

  • Voice: Flat-rate telephone service to all fixed-line phones in Italy.
  • Data: Flat-rate Internet access at a speed of 10 Mbps in areas where they have built out fiber.
  • Video: A complete lineup of broadcast services, plus VOD with over 3000 titles available.
  • Video Communications: High-speed video (768 Kbps) on the PC, or on the TV with a TVcam.

These services are available unbundled and in a variety of bundles with flat-rate and metered pricing. Unbundled services start at € 30/month for TV plus metered phone and Internet access ("TV di FastWeb"). The complete flat-rate service bundle "Tutto FastWeb" is priced at € 110/month including the TVcam. All services include primary telephony, so the subscriber can disconnect and stop paying for primary service from Telcomm Italia while keeping the same phone number. There is a one-time activation charge of € 95 for any service.

FastWeb offers a network-based PVR service called "virtual VCR" at a charge of € 2.80/month for 5 hours, with additional options for recording specific events, more hours etc. Traveling users can use an Internet-connected PC to set up to record programs anywhere they are.

In October, they launched TV-based videoconferencing and videotelephony. They report that over 15% of their fiber-based customers are requesting it. Their strategy is to offer the service as a free trial for a while to build community and a critical mass of users who have become accustomed to using it and then start charging for the service. The service is not limited to the FastWeb network since users can connect with others via ISDN using H.323.

A centerpiece of FastWeb's strategy has been to build offers starting with a foundation of telephony, then add data and video. We believe they did this for three reasons:

  • Italy's PC penetration and Internet usage are low compared with many other countries (19.5% per 100 inhabitants in Dec 02, according to the ITU and currently 35% of households, according to FastWeb). Thus any service based first on data would have been a niche.
  • FastWeb believed that voice was the most demanding service in the triple play (voice, video and data), and believed it would be easier to layer on additional services later if they built the network and support systems for primary voice. (This contrasts with B2 in Sweden, whose initial thrust and focus was Internet.)
  • They believe that providing whatever the customer needs in order to disconnect from the incumbent is a key success factor -- and voice is primary here.

Competition

FastWeb's main competition comes from Telecom Italia, the incumbent. FastWeb's success has spurred Telecom Italia to offer more than before, but they do not offer truly competitive services. In DSL-based data at the start, when FastWeb offered 1.2 Mbps data downloads, Telecom Italia offered 256 kb. FastWeb then offered 2 Mbps and now offers 4 Mbps. The incumbent has increased speed but has not matched FastWeb. Telecom Italia has countered FastWeb's new video communications offer by offering a PC-based function, but doesn't offer the TV-based version which appeals to a wider audience. FastWeb says its ARPU of 780 Euro is 3 times that of Telecom Italia.

We'll continue to track FastWeb to see if they can continue their rapid growth. We're especially interested to see what happens when they start charging for their video communications service. Sandy would be delighted to see it succeed; involved with video communications for many years at AT&T, she remains skeptical about the behavior changes that are required in order for the service to spread beyond a small group of users.

( www.fastweb.it ) ( www.ebiscom.it )

See http://www.bbhcentral.com/report/backissues/Report0106.html#link4 for our first report on FastWeb.


A Different Approach to DSL - An Interview with Celite Systems

In last month's issue, we briefly mentioned Celite Systems a start-up company with a new approach to broadband over phone lines. Celite (pronounced seh-LEET) says its approach blends the best elements of standard DOCSIS cable modem technology with the best elements of standard VDSL technology. Although the company is a relative newcomer to the industry, its team is composed of industry veterans, including CEO Roger Dorf who founded Promontory and sold it to Nortel.

Since it was novel to hear DSL and DOCSIS mentioned in the same sentence, we decided to learn more about their technology, and arranged a phone interview with Tim Waters, Celite's Vice President, Marketing and Business Development.

Celite architecture --> Click for larger pictureCelite's approach, while operating over twisted-pair phone lines, is more like a cable approach than the traditional DSL approach. Celite hangs a metal box it calls a "DSL headend" on each neighborhood cross-connect cabinet. This box is pre-connected to a subscriber pair for each home in the neighborhood, so a new subscriber can self-install the matching Celite broadband modem. The backhaul side of the DSL headend is connected to the CO by up to eight ADSL or T1/E1 lines with the subscriber load shared across the group.

This is in marked contrast to the usual DSL approach, where each subscriber DSL modem is connected to a dedicated port on a DSLAM on a one-to-one basis. The Celite DSL headend functions much like the cable modem termination system (CMTS) in a cable system: it provides a set of downstream and upstream VDSL modems used in common by a group of subscriber modems on a one-to-many basis. The current models of the DSL headend can be equipped with 2 or 4 VDSL modems, each providing 10 Mbps downstream and 1.8 Mbps upstream and designed to support 108 subscriber lines over a distance of 6,000 feet (1,800 meters).

Like a cable system, the LEC bears a front-end cost to install the DSL headend and pre-provision the cross-connections to the subscriber lines - and then reaps the benefit in reduced time and cost for each incremental customer installation. Tim said that the cost to pre-provision a neighborhood would run about $30 per household, including installation, based on 400 homes per cross-connect cabinet.

Celite says its solution is much more cost-effective than traditional DSL for mass-market penetration. It claims a cost cross-over at a 10% take rate, and half the cost per subscriber at 20%.

Tim told us that the system is "out of the lab" and that Celite is in discussion "with every RBOC, IOC and PT&T to get into a lab trial". He says Celite is talking with several major chip vendors to bring the deployment cost down.

( www.celitesystems.com )


Exploiting Existing Paths for Broadband's Last Mile

At the Intelligent Cities Conference last October, we met Dr. Jey Jeyapalan, a consultant in pipelines and last mile optical fiber networks. In a session on alternate deployment strategies for the last mile, Jey spoke about the increasing political and economic problems in deploying fiber in dedicated conduits. He made the argument that sanitary sewers, storm drains, waterlines, and natural gas lines already reach the very buildings which need the last mile access and represent an existing and currently unused path which could be used to overcome the last mile bottleneck.

Fiber in Vienna's sewers --> Click for larger pictureJey said that using existing conduits for multiple uses is not new. "The idea started in Europe, Japan, and South Africa 20 years ago. As a matter of fact, a number of water utilities have permitted telecom cables to be put inside of water pipelines going back 100 years. A number of cities around the world have used existing utility pipes for building their broadband networks while serving their originally intended functions. Tokyo, Taipei, Berlin, Toronto, Vienna, Boston, New York, are among the growing list of progressive cities where such creative business partnerships have been successfully implemented." He said that EPA rules in the US require most cities to upgrade their sewers and waterlines in the coming years, thus providing a potential opportunity for multiple use of these facilities.

Jey went on to propose a partnership among telcos, pipe owners, service providers, and vendors, where each has something to gain by cost sharing. He indicated several different business models for making this work, and provided a few examples:

  • The fiber builder will either purchase or lease existing retired pipelines that are no longer used in active service in exchange for either an upfront payment or an annuity type payment to the owner of this strategic asset. Pacific Gas and Electric, Key Span Energy, Con Edison, Atlanta Gas, Peco Energy, are examples of this model.
  • The pipe owner will build and own the fiber network. The cities of Tokyo, Hamburg, Vienna, Boston, New York, and Los Angeles are examples of this business model.
  • The fiber builder will make the pipe owner a business partner, where reserve capacity in the existing pipe network could be used by the fiber builder for installing last mile fiber in exchange for a negotiated percentage of the gross revenue. The cities of Albuquerque and Indianapolis are examples of this model.
  • The owner of the existing pipeline network will take network providers, content providers, and vendors as partners to install fiber in their pipes and operate this network. Other than the few strands needed by the pipe owner for their needs, the rest would be leased to any number of the above partners for additional revenue to the pipe owner, where the cost of the fiber build out will be borne primarily by the pipe owner. The city of Berlin is an example of this model.

Jey's bottom line is that pulling fiber thru shared underground space can be accomplished faster and more cost effectively than by creating new dedicated fiber conduits. The details depend upon the specifics of each situation.

Additional information can be found at ( www.hhevents.com/T2jeyapalan.pdf ) and ( www.astm.org/SNEWS/AUGUST_2002/jeyapalan_aug02.html ) or by contacting Jey at jkjeyapalan@earthlink.net (+1 860.354.7299).


Broadband Home Labs - More on IP Telephony

Last month, we wrote about our tests of SIP-based IP telephony using the Vonage DigitalVoice Service. We continue to use the Vonage service and are running two other tests. We invite our readers to participate in our tests.


Vonage and Earthlink

Earthlink, a leading US ISP, announced last week that it has started offering EarthLink Unlimited Voice to many of its broadband customers, including its DSL and Time Warner Cable customers; the service is not available through Earthlink to Comcast or Charter cable customers. (Comcast has its own plans to offer primary-line VoIP service with backup powering, E911 and 411 -- features not offered by Vonage.)

The Earthlink service is a rebranding of Vonage DigitalVoice with unlimited local and long distance calling to the US and Canada for $39.99 a month. See our article on DigitalVoice in last month's issue - http://www.broadbandhomecentral.com/report/backissues/Report0302_6.html


snom 100 VoIP Telephones

snom 100 on Dave's desk --> Click for larger pictureWe are testing a pair of snom 100 VoIP Telephones from snom technology AG, based in Berlin.

  • One of the phones is on Dave's desk in New Jersey. It is connected to our cable modem through our Ethernet network and a SIP-aware Intertex IX66 Internet Gate firewall.
  • The second phone is at our daughter's house in California. It is connected to her DSL modem through a pair of Phonex Neverwire 14 HomePlug powerline Ethernet bridges and a cable/DSL router.

Unlike the Vonage service, the snom phones work entirely over the Internet, without any use of the PSTN. The service is free.


Windows Messenger

Eutectics IPP200 USB handset --> Click for larger pictureWe're using Windows Messenger 4.7, which provides SIP telephony under Windows XP. We're also using a Eutectics IPP 200 USB handset and the Free World Dialup service from pulver.com. The Eutectics handset provides a familiar interface and moves voice processing from the PC to the handset.

The FWD service provides a short phone number used to call between members of the service. This also operates completely over the Internet, and the service is free.


Talk With Us

If you'd like to talk with us using SIP-based VoIP, you can call us from analog or SIP phones or from a PC. Please visit our web site at http://www.broadbandhomecentral.com/bbhl/communications.html for our phone numbers.

( www.unlimitedvoice.com ) ( www.vonage.com ) ( www.snomag.de ) ( www.intertex.se ) ( www.phonex.com ) ( messenger.microsoft.com/default.asp?client=0 ) ( www.eutecticsinc.com ) ( www.freeworldialup.com )


HomePlug in Europe

After our reports on HomePlug last year, a UK reader wrote to ask whether it would be approved for use in Europe. He said "I’m led to believe that HomePLUG is unlikely to succeed in Europe as it doesn’t meet some of the stringent regulations that we have over here."

We followed up with several of the companies, and can report that several HomePlug products have been certified to work in Europe and more are in process.

Kevin Chen of ST&T writes that "ST&T's M51 and U21, U22 have got the CE EN55022 approval. M53 will get the CE approval next week. U23 is still testing."

We talked with Brad Warnock of Phonex Broadband. He said that the QX-201 NeverWire 14 was designed to operate in Europe as well as North America, and has been certified to comply with appropriate EU directives and standards. See http://www.phonex.com/regulatory_approvals.htm for details.

See our description of these products on our website at http://www.bbhcentral.com/bbhl/homeplugproducts.html .

( www.stt.com.tw ) ( www.phonex.com )


Your Voice -- Readers' Comments

The day after we put out a report, there's nothing that makes us feel better than hearing from our readers. Of course we love the ones filled with praise, but all notes are a reminder that you are reading the report and thinking about what we have said. The one we liked the best this month said: "I loved your newsletter today. I can't afford much outside training right now and you guys are so great at explaining technical things in "non-geek" ways." Thanks!

More on Vonage and SIP Telephony

Several folks from Commworks were visiting when the phone rang on our incoming Vonage line. Alick Wilson was calling from Wellington, New Zealand to test SIP telephony all the way around the world using his PC, XP Messenger, an analog phone with an Actiontec USB Phone Wizard, and a cable modem. We picked up on our conference phone and talked for several minutes. Afterwards, Alick wrote "At my end I found the call quality extremely good. Your voices were very clear, there was no background noise, there was no clipping, no noticeable latency, no dropout." At our end, the quality was pretty good part of the time, but some words had problems and there was definite clipping and delays. And the call dropped without warning.

Daniel Pentecost wrote to tell us about his experience with Vonage. He helps employees who work from home install Vonage in their home offices and said that he'd seen very different performance with different broadband connections: "On good DSL connections Vonage actually sounds better than our analog lines. On more latent connections, Vonage definitely sounds worse than a good analog line." He reports they've had "the best experience on Bellsouth and SBC (in former SW Bell territory). Our experiences with Verizon are either hot or cold with little inbetween - meaning it's either great or it's horrible. I haven't been extremely pleased with the results on any of the cable modems we've tried. We've tried it on Road Runner and AT&T Broadband. Road Runner tends to vary not only by market but also by neighborhood. Whenever possible we choose DSL over cable simply because we get the most consistant performance on DSL connections. Cable's ubiquity is alluring... but DSL's consistant performance is usually worth the hassle."

We'd love to hear from other readers on their experience with Vonage and other VoIP services.

"Metered Broadband"

Neil Smart, a long-time reader from New Zealand, wrote to point us to a recent talk in Australia by Ewan Sutherland, the Executive Director of the International Telecommunications Users Group (INTUG), based in Brussels. The talk (see http://www.intug.net/talks/es_2003_03_rmit_text.html) covered the differences in broadband penetration around the world and how public policy decisions affect the availability, pricing and penetration of broadband.

Sutherland observes that some countries have much higher broadband penetration than others, and blames "metered broadband" for the low penetration in countries like Australia and New Zealand. We've always believed that charging for broadband on a metered basis - especially using "bandwidth consumption" as the meter - is sure to discourage adoption and use. The US LECs would probably have used a metered approach if the cable operators hadn't used flat rate - which has proven very effective in getting adoption.

In North America we expect to see various kinds of tiered pricing to cope with P2P, but we suspect the rates will be "effective flat rate" much like mobile phone pricing here.


Events on our Calendar

We enjoy meeting our readers face to face. If you're planning to be at one of the following conferences, please let us know if you'd like to meet, or just look us up.

We've organized and will moderate a session on "Wireless: The Road to Broadband Anywhere" with speakers representing fixed and mobile broadband access and hotspots at: FastNet Futures 2003 April 1-3, San Jose, California, USA ( www.pulver.com/fastnet/ )

We're also speaking at: Broadband Wireless World 2003 April 9-10, San Jose, California, USA ( www.shorecliffcommunications.com/bwwf03 )

At the CableLabs Winter Conference last month, we organized and moderated a session on wireless called "Cutting the Cable: New Horizons for Cable Data Services". This session discussed how wireless technologies could be applied to complement wireline broadband and included speakers representing fixed and mobile broadband access and hotspots. ( www.cablelabs.com/news/newsletter/SPECS/JanFeb2003/story2.html )


Website Changes

We made two changes to the Broadband Home Labs section of our website:


Subscription and Copyright

If you are aware of others who would like to receive our report, please ask them to visit ( www.BroadbandHomeCentral.com/report/subscribe.html ) to subscribe.

To change your email address, report format, or other subscription information, or to unsubscribe, please visit ( www.BroadbandHomeCentral.com/report/change.html )

Please send your comments and feedback regarding this issue of our report to editor@bb-home.com. Your suggestions for topics to be covered in future issues would be greatly appreciated.