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The April 3, 2005 Issue Provided by System Dynamics Inc.
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In This Issue

Heard on the Net

Briefly Noted
Updates, Observations and Trends

Our Fifth Anniversary
Looking Back, Looking Forward

Fiber Update
"Controlling Your Broadband Destiny"

Upcoming Conferences -
The National Show in San Francisco

New RSS Feeds

Your Voice -
Readers Comments


Heard on the Net

News about People and Companies Influencing The Broadband Home

People News

Fred Corsentino has joined Meru Networks as VP of Worldwide Sales. Additional management team additions were Ben Gibson as VP of Corporate Marketing and Jim Ciociolo as VP of Business Development. ( www.merunetworks.com )

Bob DeFeo was appointed CEO of streaming multimedia company Envivio. ( www.envivio.com )

Jeff Fryling has joined Xtend Networks as VP of Corporate Development. Tim Holzer has also joined as Director of National Accounts. ( www.xtendnetworks.com )

John Graham was named VP of Marketing at Entropic Communications. He was previously with picoChip. ( www.entropic.com )

Dean Grumlose has been named VP of Marketing at Ikanos Communications. Chris Smith became VP of Human Resources and Derek Obata was promoted to VP of Worldwide Sales. ( www.ikanos.com )

Gary Hoffman has joined Coaxsys as VP of Business Development. He was previously a consultant for Coaxsys. ( www.coaxsys.com )

Yuichi Kawakami has been appointed President and Chief Executive of NEC Electronics America Inc., effective April 1. ( www.necel.com )

Kevin Martin was named to lead the US Federal Communications Commission by President Bush. ( www.fcc.gov )

Dan Ryan has joined Usurf America to expand Usurf's customer base. Ryan was formerly with Charter Communications. ( www.usurf.com )

Elizabeth Schimel has joined Comcast as Senior VP of Content Development for its Online division. Schimel was previously with AT&T Wireless Services. ( www.comcast.com )

Arvind Sodhani, formerly Senior VP and treasurer at Intel Capital, has been appointed to the position of President. ( www.intel.com/capital )

(Please email people@bb-home.com to report a change in your position.)


Company News

--Acquisitions

Airspan Networks is acquiring ArelNet Ltd. for $8.7 million. ( www.airspan.com ) ( www.arelnet.com )

Colubris Networks is acquiring Kiwi Networks for an undisclosed sum. ( www.colubris.com )

HP has agreed to acquire online photo service Snapfish. ( www.hp.com ) ( www.snapfish.com )

Juniper Networks is acquiring Kagoor Networks, a provider of session border control technology, in a transaction valued at $67.5 million in cash, plus other compensation. ( www.juniper.net ) ( www.kagoor.com )

Legrand is acquiring On-Q Technologies, Inc. Legrandís Greyfox business and On-Q will be brought together to form On-Q/Legrand. ( www.greyfox.com ) ( www.onqhome.com )

SafeNet Inc. is acquiring DMDsecure B.V., a Dutch digital rights management software developer, for $9.7 million in cash. ( www.safenet-inc.com ) ( www.dmdsecure.com )

Thomson has acquired privately held Inventel, a provider of gateways, "home networking" and wireless products, for an undisclosed amount. ( www.thomson.net ) ( www.inventel.com )

--Funding

Bell Canada, Canada's largest phone company, has invested $100 million in broadband wireless firm Clearwire. ( www.bce.ca ) ( www.clearwire.com )

Brix Networks, a provider of VoIP performance management solutions, announced it has raised $5 million in its fifth round of venture capital funding. ( www.brixnet.com )

Camiant, a provider of policy servers for IP based multimedia services, announced the closing of $8 million in its second round of funding. ( www.camiant.com )

Dilithium Networks, a provider of wireless multimedia interconnectivity products, has secured $18 million in Series C funding. ( www.dilithiumnetworks.com )

E Ink Corp., a developer of electronic paper display technology, has raised an undisclosed amount in a strategic investment from Intel Capital. ( www.eink.com ) ( www.intel.com/capital )

Provigent Inc., a provider of chip technology for broadband wireless, received $2 million in add-on funds, closing its third financing round at $10 million. ( www.provigent.com )

Wavesat Inc., a WiMAX chip developer, is receiving a contribution valued at $990,000 from Canadaís National Research Councilís Industrial Research Assistance Program (NRC-IRAP). ( www.wavesat.com ) ( irap-pari.nrc-cnrc.gc.ca )

Xeround Systems, a developer of software for carriers of VoIP, has raised a Series A round of $6.5 million. ( www.xeround.com )

Other News

Bell Canada has announced a wireless VoIP alliance with broadband wireless firm Clearwire, including a $100 million investment. Bell Canada will become Clearwire's exclusive strategic partner for VoIP and certain other value-added IP services and applications in the US. Bell Canada will also become Clearwire's preferred provider of these services and applications outside North America. ( www.bce.ca ) ( www.clearwire.com )

Cable operator Comcast and DVR pioneer TiVo announced the companies have agreed to make the TiVoģ service and advertising capability widely available to Comcast customers in the majority of its markets around the country. Comcast and TiVo will work together to develop a version of the TiVo service, marketed with the TiVo brand, which will be made available on Comcast's current primary DVR platform. ( www.comcast.com ) ( www.tivo.com )

LG Electronics is joining forces with Nortel Networks to work together to jointly develop and market WiMAX products. Nortel is developing software to make mobile phones from LG broadband-ready using 802.16e. The phones are expected to be ready for trials in the second half of 2006. This announcement follows the January disclosure of a proposed 50-50 joint venture. ( www.lge.com ) ( www.nortel.com )

Regulatory

US - The Federal Communications Commission, in a 3-2 vote, has suspended state rules forcing phone providers to offer so-called "naked DSL", which refers to the telco selling DSL access without the customer taking a local phone line. This ruling alerts other states' utility commissions that the FCC has decided states don't have a right to force the selling of naked DSL. ( www.fcc.gov )


Briefly Noted: Updates, Observations and Trends

Each month, we collect miscellaneous happenings, studies, trends or observations that you might have missed. This month we feature two studies on advanced services.

Arbitron and Edison Media Research have released a new study focusing on consumers, their new devices and services and their impact on the consumption of on-demand digital media. The study, conducted in January, 2005, is titled "Internet and Multimedia 2005: The On-Demand Media Consumer". It showed that 27 million U.S. consumers own at least one on-demand digital media device and that demand for Internet-based on-demand services is increasing. A free copy of the report is available for download. ( www.arbitron.com/home/content.stm ) ( www.edisonresearch.com )

CED Broadband Direct recently reported on a new study from Horowitz Associates titled "State of Cable & Broadband". Results of 400 consumers interviewed at the end of 2004 showed that 21 percent say they take HDTV, DVR or VOD services from their cable provider; 8 percent use a DVR; and 6 percent take HDTV services. ( www.cedmagazine.com/cedailydirect/archive.htm ) ( www.horowitzassociates.com )

The DSL Forum issued a press release with the latest counts of DSL subscribers around the world and by country. In February, 2005 the worldwide count passed 100 million, with 35.5 Million new DSL subscribers in 2004. China saw an increase of more than 8.5 million DSL subscribers. Tim Johnson of Point Topic, upon whose research the numbers are based, noted that higher speed DSL options are taking off. "While ADSL continues to dominate current DSL connectivity, deployment increasingly includes newer DSL options. ADSL2plus is rapidly growing in Sweden, Norway and France, with trials beginning in the USA and services coming on-stream in the Netherlands in 2005. ... VDSL had at least 5 million connections by the end of 2004 - mostly in South Korea, Japan and China. VDSL2, delivering 100 Mbps over a single phone line, may provide new impetus when that is standardized in May 2005." ( www.dslforum.org ) ( www.point-topic.com )


Our Fifth Anniversary: Looking Back, Looking Forward

Anniversaries are times for celebration, for looking back on what's changed and forward to what's coming. We published our first issue of the Broadband Home Report five years ago. On this anniversary, we reflect on the status of the broadband home in 2000--mostly a vision--and look at where the industry is today. Then we examine what the future might hold.

Looking back, we can see that many of aspects of the broadband vision have come to pass: widespread availability and penetration of broadband access, the growth of home networking, and the growing use of broadband for "media" applications like music, video, and voice. Others--such as "whole home" networking and media servers--are not as far along. And still others--like the rise of personal broadband--were not on our radar screen in 2000.


Broadband in Early 2000

We've been watching and writing about all aspects of the Broadband Home for five years. We published the first issue of this newsletter in April 2000. Two months later, we held our first Broadband Home Conference in Silicon Valley.

To turn your mental clock back to early 2000, it helps to look at some of the trade publication headlines and clips of the time. Here are a few from Multichannel News:

  • "Backbone Help on the Way, from Start Ups Enron, Edgix" Feb 7, 2000
  • "Expect to see a Motorola device with both HomePNA and HomeRF connectivity". March 27, 2000

and from Cable Datacom News

  • "@Home Tops 1 Million Customers"
  • "SBC Communications, America's largest local telephone company, announced it finished the first quarter with 201,000 DSL lines in service, a 75-percent increase since year-end 1999. ... Bell Atlantic said it finished Q1 with only 62,000 DSL lines in service and ... will likely miss its year-end target of 500,000 lines by at least 20 percent."

Five years ago, residential broadband was in its infancy. Broadband was in about 2% of US homes, most installed during the preceding year. Korea, now a broadband leader, had less than one million broadband-equipped homes. Broadband modems were proprietary devices, and modem prices were high. Standardized DOCSIS cable modems were just starting to enter the market and the ITU had just given final approval to the G.lite DSL standard.

In 2000, Home RF was a contender for the home wireless networking standard. --> Click for larger pictureHome networking was in its infancy. The "wireless wars" were under way, with two technologies--HomeRF and 802.11--competing for market share. HomeRF had attracted many of the big players, including Intel. A few smaller players had organized the Wireless Ethernet Compatibility Alliance (WECA) to test and certify interoperable products based on the brand-new IEEE 802.11b standards; WECA's first two "Wi-Fi Interoperability Certifications" were issued the week after our first report. Other forms of home networking were in development, but few products were available and none had reached any market share. Very few homes had Ethernet or routers.

There was lots of talk about home gateways but very little action; vendors thought they would sell them to broadband service providers who would install them in homes as a vehicle for application services. There was lots of talk about VoIP but none deployed in consumer markets.

There were practically no portable digital media devices - no iPods, very few digital cameras or digital camcorders. Mobile phones were used only for voice.

Most consumers, if they were aware of broadband at all, saw it as useful only for PC applications - faster email and faster web browsing. At the same time--the tail-end of the "dot-com" boom--some companies had introduced products to deliver digital media content such as videos to broadband users; for lack of "eyeballs," most went out of business in the next few months as the bubble burst.


Where are we now?

Over the past five years, residential broadband has taken root and is approaching maturity throughout the developed world. Broadband is increasingly taken for granted. It is already installed in 70% of households in Korea and about one-third of households in the US. Neilsen/NetRatings recently reported that 55% of active US Internet users--and more than two-thirds of Canadian users--connect from home with broadband connections. After a slow start, broadband penetration is increasing rapidly throughout Europe.

Different "flavors" of broadband are dominant in different regions--cable modems in North America, ADSL throughout Europe and many parts of Asia, fiber in some countries and wireless in other. Competition for standardized broadband modems has driven the price down to a few tens of dollars. Instead of lowering speeds to cut modem prices (like G.lite running only up to 1.5Mbps) we see the emergence of VDSL2, with speeds claimed to be capable of up to 100 Mbps.

As homes increasingly have multiple PCs, home networking is becoming mainstream. Wi-Fi has taken off beyond expectations, with more than 1500 devices receiving Wi-Fi certification. The Wi-Fi Alliance is now often out in front of the IEEE in adopting and standardizing new technologies--such as QoS and improved security--to meet the needs of the market. Other forms of home networking--over power lines, phone lines and coaxial cable--have achieved some market share. An increasing percentage of new homes are built with structured cabling.

Many "gateway" devices--incorporating broadband modems, home networking and application processing--are sold into the consumer markets. Some have been sold through service providers, but many more are sold at retail.

VoIP is growing rapidly. In the US, Vonage has more than half a million subscribers. Cable operators are moving quickly to deploy VoIP-based primary telephony. AT&T is moving quickly from circuit- to packet-switched telephony for consumer markets. "End-to-end" IP telephony is not far off.

Archos PMA 400 Portable Media Assistant --> Click for larger pictureThe iPod is the latest craze and many other portable digital music players are entering the market--including new mobile phones. We just received a Hilton Hotels promotion saying the alarm clocks in their hotel rooms are "A Small Electronic Friend You Can Plug An MP3 Player Into". Digital cameras and camcorders have displaced analog devices. Portable video players are now appearing.

Consumers increasingly use broadband to download music and use "Podcasting" to get other audio material; some download movies. Companies are again developing audio and video applications to take advantage of broadband--this time with enough "eyeballs" for a viable business.

Wi-Fi enabled cities like St. Cloud signal a move toward personal broadband --> Click for larger pictureWith the rapid growth of Wi-Fi hot spots and notebook PCs, consumers look to get broadband wherever they are.


Where Are We Headed?

With all that has been accomplished, the future promises a wide range of new possibilities, some of which are embryonic. Here are some key areas that will see significant growth and change over the next five years:

  • Whole home networking will carry digital media throughout the home (and to your car in the garage)
  • Higher bandwidth--growing to 100 Mbps to and within the home--will enable real-time media applications and undoubtedly will spawn new uses we may not yet recognize.
  • Personal broadband will let people have their broadband wherever they are and transition easily and seamlessly between various environments.

Let's look under the covers at these trends.


"Whole Home" Networking

In the past (and still largely today), homes have had one set of wires for telephones, another for video, and sometimes another for audio and one more for security. With broadband service, many people use Wi-Fi to connect multiple computers to the broadband modem; others use Ethernet or HomePlug.

With all media moving from analog to digital, it makes sense to have a unified network for all these services. The network must accommodate a mix of stationary and mobile devices. It must be suitable for new construction and existing homes, multi-dwelling units (apartments/flats) and single-family homes.

Media Applications

The most important requirement is to support media applications--video, audio and voice--on the same network with data. Unlike data--which can tolerate a wide range of network performance--media applications are highly sensitive to network speed and quality of service (QoS). The network must provide sufficient speed for these applications, and must implement QoS; otherwise, the media applications will be unsatisfactory for consumer use.

High definition video is the most sensitive of the applications, since it requires both high speed and QoS. Voice and audio need less speed, but require QoS to avoid pops and clicks.

Mix and Match

"Unified" is not the same as "homogeneous"--consumers will "mix and match" different technologies to meet their need. The whole home network will have a mixture of "flavors" of sub-networks, which may include structured cabling using Ethernet, Wi-Fi, HomePlug, coax, phone line, ultra wideband and interconnection to 3G. Wired technologies work well for stationary devices like desktop PCs and TVs, while wireless technologies are required for mobile devices like notebook PCS, PDAs, portable phones and MP3 players.

Having devices work together requires more than just networking technologies. It also requires common standards so networked devices can "talk" with each other. Key PC and consumer electronics companies are working together through the Digital Living Network Alliance to define a common language for networked media devices.

Networking Technologies Evolution

Here is a brief view of how some of these technologies are expected to evolve.

Structured cabling based on Category 5e cabling with Fast Ethernet can provide a single wired infrastructure throughout the house. Ideal for new construction, it is fairly expensive to retrofit into existing houses, and the broadband industry has been seeking "no new wires" solutions that provide the same capability. Fast Ethernet operates at 100 Mbps, sufficient to support all the digital applications for years to come. All of the emerging technologies also aim to provide 100 Mbps throughput, and all use Ethernet for interconnection.

For new construction, structured cabling is still the best solution. For retrofit, some structured cabling can provide a "backbone" between floors or from one end to the other of a long house; this can be combined with other technologies to form an integrated network.

Several emerging technologies based on existing wiring provide an alternate way to provide a 100 Mbps backbone network:

  • The next generation of powerline networking technologies should reach the market this year. We've written about several of these emerging technologies including HomePlug AV and DS2. If these achieve their goals and get embedded in consumer electronics devices, it would make sense to use powerline to interconnect stationary devices. Nothing would be easier for the consumer than "plug it in and it's networked!"
  • Emerging technologies based on existing coaxial cable and telephone wiring are also candidates to provide a backbone network, and products should reach the market this year or next. Telephone jacks and video jacks appear in many fewer places than electrical outlets, so we think powerline holds the highest promise--if it can fulfill its objectives of performance and reliability.

With a backbone in place, ultra wideband may play a role within a room. At CES in January, we saw an impressive demo combining HomePlug AV with UWB to carry HDTV.

802.11n is the first wireless technology which provide whole home netwokring. --> Click for larger picturePerhaps the most promising networking technology now in development is IEEE 802.11n--the third generation of Wi-Fi. This is the first wireless technology that may itself provide both sufficient bandwidth and sufficient range for whole home networking. It is aiming at throughput of 100 Mbps--enough for two channels of high-definition TV, several more of standard-definition TV, and lots left over for voice, audio and data. Its use of MIMO technology promises to greatly extend the useful range. Our recent tests of 802.11g enhanced with MIMO suggested that these promises may well be met. Publication of the 802.11n standard is still about two years away. We expect to see products based on draft standards in 2006 and interoperable Wi-Fi certified products in 2007.


Toward 100 Mbps

While home networking is moving toward 100 Mbps, broadband access has lagged far behind. Early "broadband" access services operated at very low speeds--often less than 1 Mbps. In the US today most now operate at a few megabits per second downstream and a few hundreds of kilobits per second upstream. By contrast, some markets--mostly outside the US--have had fiber-based services operating at 100 Mbps for several years. Korea and Japan now have "fiber to the curb" services operating at close to that speed.

Today's new target speed is "broadband at 100 Mbps". Targets are generally useful devices for focusing attention. Whether it was getting "a man on the moon" in the nineteen sixties or "lowering greenhouse emissions" today, such targets clearly serve a purpose.

However, 100 Mbps seems to have taken on a somewhat "religious" coloration. It is easy to preach its virtues with little regard for the economics--or the real needs. The underlying infrastructure of all existing broadband access systems and the Internet is full of bandwidth-limited "choke points." While a few users will soon be able to operate at speeds approaching 100 Mbps, substantial additional investments will be required to upgrade the entire infrastructure to support large numbers of simultaneous users operating at these speeds.

Today there are very few applications--apart from peer-to-peer networking--that could take advantage of such high speeds. And it is very unclear what future applications will need such high speeds. Besides high-definition video, very few consumer applications need speeds of more than the 3 to 5 Mbps they get with today's cable modems and ADSL.

We suspect that high-bandwidth consumer applications will first emerge from entrepreneurial companies in societies with wide penetration of "real broadband" running at or near 100 Mbps, and these companies may gain a competitive advantage over companies in less-fortunate societies. It is probably this competitive risk that provides the strongest argument for public policy (in the US and elsewhere) in favor of widespread deployment of 100 Mbps. But it is far from clear that most governments have the will--or the money--to do much more than preach.

Our readers in places like Korea, Japan and Sweden, where higher bandwidth is already the norm, may have different views informed by their own experiences. We look forward to hearing from our readers regarding what some of these "big bandwidth" applications may be over the next five years.


A Shifting Focus: From Home to Person

Over the past five years, we've seen a key shift in consumer services to a greater focus on the individual, rather than the home. Today we take it for granted that mobile telephone services are associated with individual people rather than a whole household or a specific location. This transition from home-focused to person-focused is starting to be replicated in data and even video communications. Once again, we look at Korea as a key market where this transition is already underway.

We have thought about this transition in the context of our newsletter and where to draw its subject matter boundaries. We identified our domain as "the Broadband Home" and have been expanding outside the home as consumers want broadband wherever they go.

Wi-Fi equipped Kodak EasyShare-One Camera --> Click for larger pictureSome of the technologies, applications and user needs can't easily be segregated between inside and outside the home. For example, a Wi-Fi network may cover not only inside your house but also the surrounding area. Companies have exploited these capabilities to offer services to wider geographies, as seen with metro Wi-Fi.

The Aireo is a Wi-Fi connected MP3 player. --> Click for larger pictureA wide variety of new portable media devices have appeared on the market. Increasingly, these devices have built-in wireless communications so they can be connected without wires. Some have Wi-Fi, others 3G or other wireless technologies.

The Motorola MPx is a mobile phone, PDA, email and Internet device with Wi-Fi and more. --> Click for larger pictureThe Sony Playstation Portable is an example of the new Wi-Fi connected mobile devices --> Click for larger pictureWe've reflected this in the stories we've written. The tone at first was focused on what you couldn't do: in September, 2000 we wrote The Broadband Home -- "You can't take it with you when you go". As wide-area wireless technologies started to emerge, we started writing about "broadband anywhere" and "personal broadband". Most recently, we wrote about mobile video in The Next Big Thing: Video-on-the-Go.

The Double "Triple Play"

For many years, we've heard about the "triple play": voice, data and video delivered over a common wired infrastructure. Many cable companies are now offering the full triple play, and telephone companies are preparing to join.

Some companies believe that the new basis of competition will move beyond the traditional "triple play". Some are focused on the "quadruple play," adding mobile voice to the mix.

Those looking furthest forward are focused on what might be termed the "double triple play"--fixed and mobile voice, data and video. Their belief, and ours as well, is that your location shouldn't limit your communications, information and entertainment options. You'll get the services you want and need, most cost effectively and with transparency between the mobile and fixed versions, up to the limits that technology, devices and user behavior can accommodate.

Although we'll continue to use the "Broadband Home" moniker for what we write, our focus will follow the industry: with consumer broadband increasingly meaning broadband services and technologies, wherever the individual wants to use them. We thank you for being with this on this exciting ride, and hope you'll come along for the next five years. We're sure it won't be dull!


For further reference:

  • At the Broadband Home Summit--our first conference in June 2000--we laid out many of the issues we have discussed over these past five years. See the Roundtable Details page page for an outline of the Summit. Some of these issues have been resolved--many are still in process today.
  • Our talks at conferences--including the Broadband Home Conferences we organized in 2000 and 2001--are indexed on the Presentations page.
  • Our reports going back five years are indexed chronologically on the "Back Issues" pages and topically in the Topical Index.
  • For more on home networking, see our Topical Index to Home Networking.
  • For a description of the requirements and "bandwidth budget" for whole home networking, see the Whole Home Network page.
  • For our earlier reporting on whole-home networking--and especially video networking--see our Topical Index to Whole-Home Networking.
  • See the Topical Index to Powerline Networking for our reporting on HomePlug AV and DS2.
  • See the coaxial cable and telephone wiring pages in our Topical Index for more on these forms of home networking.
  • See Wi-Fi's Leap Forward: Adding MIMO To The Mix for our reporting on MIMO.
  • For our reporting on "broadband anywhere" see the Topical Guide to Portable Broadband.

  • Fiber Update: "Controlling Your Broadband Destiny"

    Fiber to the Home Comes of Age

    Despite the public illusion that a new technology takes shape suddenly and soon has revolutionary impacts, the reality is quite different. Those of us who use services like Amazon or Travelocity may be surprised to know that on-line shopping and travel services were part of the original Prodigy business plan way back in 1982. Fiber to the home is another concept that has been floating around for a long time--waiting for the alignment of customer needs, competitive pressures and sensibly priced technology solutions.

    With many towns--Jackson, Tennessee (see ), Loma Linda, CA and Provo, UT, to name a few--supporting fiber builds locally and Verizon now rolling out fiber in portions of 14 states, the momentum seems to have started.

    Kim Kersey of JEA showing gateway for fiber to the home in Jackson, TN --> Click for larger pictureFor a new movement to gain momentum, it needs champions: leaders who are true believers with a strong drive to take action. Some of these leaders have long track records in deploying large-scale network technologies. Several had long backgrounds in cable, including Kim Kersey of Jackson Energy, Paul Venturella of iProvo and Jim Farmer, CTO of fiber solution vendor Wave7 Optics.

    FOCUS: Fiber Optic Communities of the United States

    FOCUS tries to build awarness of fiber communities and their benefits --> Click for larger pictureWe recently interviewed Max Kipfer, another cable veteran now championing fiber communities. As a result of his experiences helping some developers plan and implement their own fiber communications networks, Kipfer saw the need for a group which would "build awareness of fiber communities and give consumers a valuable resource for learning more about their fiber network and its capabilities." Six months ago he created Fiber Optic Communities of the United States (FOCUS), a non-profit organization designed to amplify his efforts and those of other fiber community leaders.

    In our conversation, Kipfer emphasized that the primary goal of FOCUS--unlike other organizations which concentrate primarily on technology--is to help communities "take their broadband destiny in their own hands". He emphasized that does not mean that the organization is antagonistic to incumbent providers. In fact, one of the early projects Max participated in was the community of Brambleton in Virginia, where Verizon became the provider of their fiber-based services.

    A Florida development where fiber to the home is one of the amenities. --> Click for larger pictureFOCUS currently has 38 members, comprised of both communities and vendors. The organization's by-laws insure that the communities have the controlling voice in the organization. Kipfer and the FOCUS organization believe "the customer is king;" service providers should not say "no" to customer requests, but simply tell them how much something will cost. The positioning of broadband fiber in this context is not as a great technology, but rather as a high-end amenity for community residents.

    There are two broad models for community-based fiber--whether deployed by a developer for a new subdivision or by a government entity for a existing community. The retail model is similar to the traditional telephone and cable model: a single entity builds the infrastructure and provides services for the end user. In the wholesale model, the infrastructure is built and maintained by one entity, and the services--voice, data and video--are provided by one or more service providers who have their own relationships with the end user and pay a wholesale rate to the infrastructure provider.

    Some fiber projects use a mixed model. For example, Jackson Energy is building the infrastructure and providing video services; other companies provide retail telephone and data services.

    The UTOPIA Project

    The UTOPIA project is a good example of the pure wholesale model. UTOPIA is a FOCUS member and the largest community-based fiber deployment in the US.

    The UTOPIA consortiium has 14 member cities. --> Click for larger pictureFOCUS sponsors bi-monthly audio conferences designed around the interests of its members. We recently listened in as guests to a session featuring Paul Morris of UTOPIA. The call was supplemented by a presentation on the FOCUS website and followed by an extensive Q&A period. Much of the discussion was about how the UTOPIA project is structured and its realities. Here are a couple of samples of the Q&A.

    Q: What was the biggest problem you faced? A: (from Paul) Educating people in the communities and the state.

    Q: How is end user pricing set? A: UTOPIA provides the infrastructure and private providers set the terms and pricing for end-users and offer the end-user services. The private providers pay UTOPIA a wholesale rate, based on a per-service, per-subscriber wholesale cost. The wholesale pricing is success-based: when the service provider gets a paying subscriber they pay a wholesale rate which becomes lower as the volume of subscribers increases.

    Guests are welcome to participate in one FOCUS audio conference and possibly more on an "as space is available" basis. More information on past and future sessions and membership can be found on the group's Website.

    One Approach to Fiber Implementation: DynamicCity

    To get a clearer view into the construction, operation and technology behind the UTOPIA project, we arranged a follow-up interview with DynamicCity, UTOPIA's primary provider. We spoke with Ben Gould, their CMO and Jeff Fishburn, CTO.

    Dynamic City is in the business of building, financing and operating open service provider networks. Such networks exist in many parts of the world, with Scandinavia leading the way.

    Gould explained that DynamicCity's networks are built on four principles:

    • Infrastructure is open and wholesale--there's a separation between fiber ownership and the service providers who use it
    • Carrier class
    • Provide highly scalable bandwidth
    • An open and vendor-independent architecture.

    In the course of our discussion with Gould, it became clear that "open and vendor-independent architecture" meant a specific approach to fiber deployment: Ethernet over point-to-point fiber. We wondered why their approach excluded other fiber architectures, such as passive optical networking (PON) and analog video combined with ATM or Ethernet data over fiber. We arranged a follow-up talk with Jeff Fishburn, DynamicCity's CTO, to better understand why they were so particular about the specific fiber architecture.

    Jeff suggested we "look at it through the eyes of a municipality." DynamicCity believes a municipality should lay down the physical infrastructure with a very long life. "A fifty-year deal is feasible. It's like when they build an airport. Our philosophy is to first design the outside plant fiber infrastructure--it's at least a twenty year investment. The electronics come later and will have a much shorter life--perhaps a five to seven year investment. We can always trade out the box to the house" as technology changes over time.

    Jeff said the key advantage of Ethernet over point-to-point fiber is "today there are at least half a dozen interoperable products" meeting DynamicCity's "carrier class" standard; after the phone call he sent us a slide showing 22 companies making suitable Ethernet products. With any other approach, you're tied to a specific vendor for the electronics at both ends: "If I put in the Optical Solutions PON, I can't trade out the technology in the home without also replacing the core. Our philosophy is that no vendor can own both ends of the link."

    Finally, we asked about the economics of an "all IP" solution over a more traditional approach using analog RF video today along with Ethernet. Jeff said "We've done the math -- looked at the CPE cost, coax cabling, IP set-top box, RF set-top box, and services. The cost of an IP-based solution is within 5% of basic RF video delivery. We're looking at competing against satellite which needs a set-top box for each TV.

    "IP video has crossed over: an IP set-top box is now less expensive than an RF set-top box. With Ethernet and MPLS, all tagging and marking is on the edge of the network."

    Finally, we asked about dedicating an Ethernet port to each subscriber home. "I've deployed OC-3 and lots of other shared facilities. It's an evolution--we're walking on a path. There's no sense to share the switch port. Today's switches cost less--a party line doesn't make sense any more. We're using single-mode fiber. We pick up two vendor's products, hook the boxes together, and the link light comes on."

    For further reference:

    • See IntelligentCities 2002: The Rise of Community Broadbandfor more information on community broadband and the UTOPIA project.
    • The UTOPIA website has a good description of the Open Service Provider Network model created by DynamicCity. Other pages under "Business Case" describe the specifics of UTOPIA's projected revenues, costs, financing and break-even analysis.

    ( www.jaxenergy.com ) ( www.iprovo.net ) ( www.wave7optics.com ) ( www.communitiesinfocus.com ) ( www.utopianet.org ) ( www.dynamiccity.com )


    Upcoming Conferences -- The National Show in San Francisco

    The 2005 National Show is here. It is being held in San Francisco April 3-5. This is the world's largest cable show, organized by the National Cable & Telecommunications Association, the US cable industry trade association in Washington.

    We've been asked to organize and moderate a panel discussion on the role of wireless for cable operators. Our panel, Wireless Opportunities and Challenges for MSOs, includes the senior strategists from three top cable operators, so it should be a great discussion. It's on Tuesday, April 5 from 2:00 to 3:15.

    If you're at the National Show, look us up and say "hi"!

    ( www.thenationalshow.com )


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    Your Voice -- Readers Comments

    One of our Canadian readers reacted to last month's reference in the AT&T article to convergence. He commented that: "Things are heating up North of the Border too. Good to get your newsletter and keep in touch with what's happening. When you have a moment you should peek under the covers of the Cable & ILEC battles forming in Canada for the triple play."

    One of our readers wrote to point out another city considering municipal Wi-Fi: "You may note that just this week, Chicago announced it is looking at a citywide WiFi deployment."

    Another reader provided a different perspective on "large high tech projects such as fiber to the home". His view comes from an old-timer in the broadband networks field, having started with Jerrold Electronics and starting his own construction firm forty years ago. His concern is that craftspeople are not paid much more than what they received ten years ago. The result, he asserts, is that: "Most of the veteran craftspeople are getting out of this business, just when we need them the most."


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