Except for Wireless, National Broadband Plan Much Ado About Almost Nothing

Oddly enough, the proposed National Broadband Plan is light on new spending and puts primary emphasis on wireless, while mixing in a bit of a grab bag of existing and vexing voice-related issues. The goal of getting 100 Mbps service to 100 million U.S. homes by 2020 appears to be just that, a "goal," not a requirement.

Some people would call that a mistake, but the Federal Communications Commission is not unmindful of some basic facts, including the requirement that the investment heavy lifting must be done by private industry, and that means raising lots of investment capital from private sources.

Those sources already have made clear their fears that too much tinkering with broadband regulations, especially regulating broadband access as a common carrier service, will choke off investment.

The single-biggest substantive proposal is the plan to make 500 megahertz of new spectrum available for wireless communications by reallocating spectrum presently used by TV broadcasters.

It might be close to heresy, but if you look out 10 years, the business case for investing lots of money in fiber to home facilities is starting to look worse, not better. Many policy advocates call for much-higher speeds and lower costs at the same time. That's not a convincing scenario for investors who would have to take a chance on loaning money in that sort of market.

Also, to the extent that entertainment video has been a big part of the business case, not many observers would believe the future is as bright as the past has been. With voice also under pressure, it may not make as much sense as it once did to invest too aggressively in fixed broadband. Broadband still is the foundation service for fixed networks in the future.

But that is a different issue from the separate issue of how much investment ought to be made, because it is unclear how much users are willing to pay for really-fast service, or how much incremental revenue might actually be created by new applications that require really-fast broadband.

VoIP Will be a Mixed Blessing for Mobile Service Providers

This prediction for use of mobile VoIP by about 2013, made by In-Stat, might suggest the reasons why incumbent voice providers have been somewhat hesitant to fully embrace VoIP.

The pie chart suggests that a majority of VoIP activity on mobile phones will be provided by third party, over-the-top providers, not the "service providers" themselves.

That's roughly the same experience fixed line operators have had: most of the usage is enabled by third-party application providers or competitors, notably cable companies.

Some might find it odd, but VoIP actually has been a mixed blessing for incumbent voice providers. It represents the next generation of voice, but the next generation of voice turns out to be an application "anybody" can provide.

VoIP proponents have hammered away at the theme that VoIP is about new features, not price. The market keeps demonstrating by its spending that price is what VoIP "really is about." Features are nice, especially in the business market, but consumers seem to buy based on their ability to "save money," rather than for the whiz-bang new features.

The fundamental dilemma for an incumbent voice provider is that they essentially must invest more money, to provide new features end users won't pay for, at lower or the same prices. To a certain extent, that's the similar problem service providers face when upgrading to fiber-to-home or fiber-rich access networks. Video services are truly new. But broadband access has been following a "more speed for the same money" trajectory, for the most part. Fiber-rich access networks have made possible new faster tiers, sold for more money, to be sure.

But it would be tough to make the argument that the new sales of faster access, plus revenue from new video services, have earned sufficient return to justify the investments in a classic sense. More often, such investments are strategic, intended to ensure that a provider still has a business, more than investments that immediately produce attractive revenue lift.

VoIP has been a mixed blessing for incumbent telcos, though it has been very satisfying for cable operators and some over-the-top providers.

23% of U.S. Business Sites Now are Fiber-Served

What percentage of U.S. business locations would you suggest now have optical fiber connections available to them? According to Vertical Systems Group, just 23 percent of U.S. sites and 15 percent of sites in Europe have optical access.


While most large enterprise locations in the United States and Europe are fiber-connected, small and medium business sites generally are underserved with fiber from any service provider.


"The good news is that overall accessibility to business fiber has more than doubled within the past five years," says Rosemary Cochran, Vertical Systems Group principal.


The challenge ahead is to extend fiber connectivity to remote business locations. Of course, not all smaller business locations need the fiber that typically supports gigabit-per-second bandwidth. Given that 1.544 Mbps connections are the mainstay for most smaller and even many mid-sized businesses, many customers might be quite satisfied with speeds in the tens of megabits per second.

100 Mbps "Can't be Done"

I learned long ago that when somebody says something "can't be done," it is best to understand that claim as "I can't do it." I think we also have learned that even when somebody says something can be done, they might mean "it can be done so long as not that many people want to do it."

And that might be the case as cable operators prep broadband access services capable of running at speeds as high as 250 Mbps, at least so long as most people do not desire to buy services running at such speeds.

Broadband Reports says cable operators will start talking about a 250 Mbps service sopmetime later this year, though nobody will be able to buy it. Comcast also says it will be offering 100-Mbps service to about 25 percent of its potential customers by the end of 2010.

Comcast should be congratulated for that move, though it is not clear what might happen if lots of people actually bought it.  The rub is that providing 250 Mbps requires bonding of about eight standard 6-MHz channels.

The issue there is the same problem satellite operators have when providing downstream bandwidth. There are finite numbers of channels available, so cannibalizing bandwidth for data services reduces the amount of bandwidth available for video services.

The point is that some providers--particularly cable operators--will be able to claim speeds of at least 100 Mbps, at least in terms of what is commercially feasible at low penetration. it isn't clear any network can support 100 Mbps at high penetration, at least not at prices in two, rather than three digits.

Still, it is a reminder that when somebody says something "can't be done," one has to consider the source. Just because one company can't do it does not mean all companies cannot do it.

The other relevant observation is that "hero" devices and services are feasible. What is not clear is whether "mass market" availability is possible.

http://www.dslreports.com/shownews/Comcast-Exploring-250-Mbps-Service-107002

Is This Evidence of Declining Use of At-Home Broadband?

If one looks at the quarterly or annual data on broadband subscriptions during the course of the recent recession, one is hard pressed to find any significant evidence that broadband users downgraded their connections to dial-up or stopped using the Internet.

This data from the Pew Internet & American Life Project, on the other hand, shows leveling in 2009, about a year into the recession, and an actual decline late in 2009.

Some might note that a three-percentage point swing in reported behavior on this sort of survey would be within the margin of error, so it is hard to infer anything conclusively. But even a flattening would be significant, should the trend be later confirmed.

Broadband access at home has not yet ever declined. Virtually all the public firms have reported continual net customer additions, so any slowdowns or reversals might have occurred at private or smaller providers. We'll have to watch this.

100 Mbps for 100 Million Homes by 2020?

If Federal Communications Commission Chairman Julius Genachowski gets his way, the FCC will set a goal of 100-Mbps service delivered to 100 milliion American homes by 2020.

Genachowski says his preferred approach to a national broadband policy would require ISPs to offer minimum home connection speeds by 2020. The “100 Squared” initiative might in fact be too modest a goal, he suggests.

"We should stretch beyond 100 megabits," he adds.

The proposal is part of the FCC's national broadband plan, due for initial public comment in March 2010.
The goal is sure to come under some scrutiny by service providers, in part because there is not currently any way to provide bandwidth of that magnitude on a national basis while pricing service at rates most consumers would pay.

There is not enough usable wireless spectrum to provide that kind of coverage and usage, and fixed access networks are not completely or primarily subject to Moore's Law. While chipsets and processors do get faster, the cost of digging trenches does not get less expensive over time. In fact, construction cost is the dominant cost element for any optical network providing service directly to end users.

 "One hundred meg is just a dream," says Qwest Communications International Inc Chief Executive Edward Mueller. "We couldn't afford it."

Few customers now buy 50-Mbps services where such speeds are available, in large part because the cost is in the triple-digits range. Proponents might argue that the goal is 100 Mbps for not much more money than people now pay for 4 Mbps or 7 Mbps service, but it is hard to envision how even "free" opto-electronices could support such a value-price combination.
 
In other words, even if all the active elements actually were provided for free, could service providers actually build ubiquitous networks offering 100 Mbps or faster speeds, and price in middle-double digits? So far, the answer appears to be negative.

About 60 percent of the cost of building an FTTH network is construction work, ducts and cables, not to mention cabinets, power supplies and other network elements. Still, in some dense areas, it might be possible to do so, since the construction and cable might amount to about $1200 per home passed. Again, keep in mind we assume totally free opto-electronics.

In suburban areas the business case is marginal, at best, since about $2400 might have to be spent on construction and passive elements.

Since the FCC goal only calls for connecting 100 million homes out of possibly 113 million, we can safely assume the cost of most rural networks of such capacity need not be considered.

Of course, opto-electronics are not "free." But the point is that construction costs, were nothing else an issue, would still be a tough proposition, if the goal is very high speed access at prices most consumers would pay.
American consumers will be paying more for broadband in the future, if for no other reason than that most mobile plans will require it, and those charges will be paid for on a "per-device" basis, not "per home."

What seems improbable is that U.S. consumers are willing to increase overall broadband spending by an order of magnitude (10 times) to have 100 Mbps or faster service on a fixed basis.

One can of course argue from history. Prices for lower-speed broadband services have declined over time, while the prices for the faster tiers have remained stable, but speeds have increased. The issue is how much price compression is possible.

"In order to earn a return for investors, you have to be conscious of what consumers will pay. I don't know this is something consumers will pay for," Piper Jaffray analyst Christopher Larsen says. "It's a nice goal, but it's a little on the over ambitious side."

Having a "stretch goal" is fine. Firm mandates, though, might run smack up against stubborn consumer willingness to pay and the fixed costs of building access infrastructure.

Google to Build Fiber to Home Test Networks

In the latest version of its Internet access demonstration projects, Google says it will build some wholesale fiber-to-the-home networks. James Kelly, Google project manager, says Google is looking for communities interested in becoming trial sites, and will be accepting requests for information until March 26, 2010.

Initial plans call for building FTTH facilities serving 50,000 people, perhaps as many as 500,000. That's a bit indefinite. Assume a typical household has about 2.5 people in it and one could see perhaps 20,000 to 200,000 homes connected.

But there are lots of unanswered questions. It isn't clear whether Google means "a network passing X number of homes" or "a network serving X number of homes." Those are very different sorts of numbers if Google builds anyplace where a strong cable operator and a strong telco provider already are in business.

As a demonstration project, Google would learn as much serving 20,000 potential customers as 200,000. Frankly, there is very little that is unknown about the cost of building a fiber-to-home network, really. What Google might be interested in is the business case for a wholesale broadband network that didn't have to supply voice and traditional video services.

But again, there is very little that is unknown about that business case, either. We know the cost to build the network and operate it as an ISP. You can derive commercial rates by looking at what is charged in the local, regional or national markets, multiply by take rate of homes passed and you'd have your scenario without digging a single trench.

Kelly says "we are going to try out new ways to build and operate fiber networks and share what we learn with the world."

There likely is not much to be uncovered about the process of building FTTH, so Google likely means sharing what it learns about the business model for wholesale networks, which a few have experimented with in the U.S. market.

Broadweave, which operates in Provo, Utah, is an example, though it is unclear whether the firm will continue to allow wholesale customers to use its network. The current thinking seems to be to operate as a typical retail triple-play provider, rather than as a wholesale provider of access to third parties who may wish to do so.

Broadweave Networks took over a project originally started as a municipal FTTH network, paying $40.6 million for the assets, and struggled in 2009. The company drastically slowed its growth among residential customers to save on the high cost of new sign-ups in the spring of 2009, reports the Daily Herald.

Broadweave began asking prospective customers to foot part of the $1,000 installation bill in an effort to discourage new customers and effectively slow growth while the company grapples with ongoing financial concerns.

The company is instead decided to focus on commercial accounts and reactivation of former customers who already have optical drops in place.

The flow of new customers reportedly was slowed from hundreds a month to "tens or dozens" a month.

Google might attempt to prove the thesis that an FTTH wholesaler can make money strictly as a supplier of access services to third party partners who simply lease capacity on such networks. The big question always has been whether any such network actually is viable in markets where there are strong cable and telco competitors already in place.

Google previously has built limited municipal Wi-Fi networks as well. It isn't clear what Google believes it might have learned from those experiments.

In truth, the gambit most likely is simply another tool to be used in Google's lobbying for setting of national broadband policies, and not much more.

Cbeyond Asks FCC for Mandatory Wholesale Optical Access

Cbeyond has the Federal Communications Commission to reverse its rules on wholesale obligations for fiber-to-customer networks. On copper access networks, competitors have rights to buy wholesale access. The FCC has ruled that on new fiber-to-customer networks, competitors have no similar rights.

Predictably, incumbents say the current rules should remain in place, which allow any voluntary wholesale deals, but do not require incumbents to offer wholesale access. The rules are consistent with rules that apply to U.S. cable companies, which likewise have no obligation to sell wholesale access to competitors.

The Telecommunications Industry Association  and the Fiber-to-the-Home (FTTH) Council have filed comments opposing the change.

The debate is an old one. Incumbents argue that the business case for FTTH is troublesome, and that they need the ability to profit from FTTH investments without being required to make those faciltities available to competitors who do not have to build expensive facilities of their own when they can simply lease capacity from others.

Though it is difficult to prove, one way or the other, the FCC has faced a dilemma. It can seek to spur competition by mandating robust wholesale access, or it can spur deployment of new optical access facilities, but might not be able to achieve both goals.

The reason is that incumbents can simply refust to upgrade their networks when they do not feel they will get an adequate financial return. There is some important evidence that incumbents are right about the ability to raise investment capital for FTTH.

Investors punished Verizon Communications for pushing ahead with its FTTH program, preferring AT&T's less-costly FTTN approach, for example. Calle and telco executives point out that all competitors are free to build their own facilities if they want, and most observers would note that in markets where there are three ubiquitous FTTH or FTTN networks, it has proven difficult to sustain business models allowing all three competitors to remain in business.

The calls for mandatory wholesale come at a time when everybody acknowledges that the business case for traditional cable TV and voice services is becoming more difficult, and that neither cable companies nor telcos can rely on their mainstay businesses (video and voice) for future growth. In fact, both types of companies are seeing steady shrinkage of those legacy businesses.

Under such circumstances, and given the shift to Internet-based applications, it might not make lots of sense to weakent he business case for robust optical access investments at a time when the financial returns for doing so are under pressure in any case.

Supporters of mandatory optical access obviously would benefit from a rule change, as they could offer optical access without incurring the expense of building new facilities. So the dilemma the FCC faces is an emphasis either on innovation or competition, in some clear sense.

Since virtually all applications now can be delivered over IP-based connections, it no longer makes as much sense as it once did to directly link "access" and "competitive" services. With or without broadband access, companies now can deliver virtually any service over the top, on any broadband connection.

Under such circumstances, robust competition occurs at the application level, not the access level. In fact, that is precisely the problem telcos face with VoIP, and that cable companies face with online video.

Despite the Noise, Broadband Subscribers are Highly Satisfied

Judging by some commentary one hears on the Internet and blogosphere, customers are very unhappy with their broadband access services.

After all, isn't the United States woefully behind other nations in speeds?

A new study by Parks Associates shows the opposite. The overwhelming percentage of U.S. broadband customers, across every single platform are "highly satisfied."

There is, to be sure, a small percentage of users on every type of access network who say they are "highly dissatisfied" with their service. The shock might be how few actually are really unhappy.

Granted, continual improvement is a good thing. But the Parks Associates study suggests providers need to keep improving a service that provides overwhelming "high" satisfaction, rather than scrambling to update services that basically are seen as somehow inadequate.

Rural-Urban Broadband Customers Not so Different

Are rural broadband customers all that different from suburban or urban customers? Not so much, a new analysis by Parks Associations suggests.

The percentages of rural broadband households who are very satisfied and very dissatisfied with their broadband services are within the margin of error for all U.S. broadband households, Parks Asociates notes. In other words, they are no more inclined to be pleased or upset with their service and service provider.

Rural broadband consumers desire value-added services on par with all U.S. broadband households, with premium technical support services and online backup as the top-two desired value-added services.

And the overwhelming percentage of U.S. broadband consumers are highly satisfied with their access services, despite a small percentage that say they are highly dissatisfied.

Overall, the rural status of a household has little impact on level of satisfaction with its broadband service. The type of access service does seem to have some bearing on high and low satisfaction.

Households with fiber broadband services report high satisfaction ratings in larger numbers, and households receiving satellite and wireless broadband services exhibit lower satisfaction ratings. But there is an important caveat. Customers who buy bundles of service are happier than customers who do not buy bundles. So the key variable seems to be the ability to buy a bundle, more than the type fo access.

The business implications would seem to be clear enough. Bundles create higher satisfaction and higher satisfaction reduces churn.  A highly satisfied broadband subscriber is 46 percent less likely to churn from a current provider, whereas a highly dissatisfied customer is 384 percent more likely to leave a current broadband provider.

A subscriber to a triple play of access services (broadband, television, and home telephone)
 is 15 percent more likely to be a highly satisfied broadband customer.

More than 70 percent of cable broadband households subscribe to a bundle, about 25 percent of which buy a triple play. But most, about 66 percent, buy a dual-play bundle of video and broadband access.

DSL providers have 58 percent bundle penetration, with 25 percent of customers opting for a dual-play package of  broadband and video while 17 percent buy a triple-play bundle.

Fiber broadband providers have 78 percent bundle penetration, with 64 percent buying a dual-play broadband and video bundle and 49 percent buying a triple-play package.

Rural broadband customers are 10 percent to 20 percent less likely than broadband subscribers on a national level to subscribe to the most-common broadband bundles. One would therefore expect lower satisfaction in rural areas, since satisfaction and bundles seem to be directly related.

64% of U.S. Broadband Connections Now are Mobile

There are more mobile broadband subscriptions in service in the U.S. market than fixed line.

The CTIA notes that there are now 103 million mobile broadband customers in the United States, according to Informa Telecom and Media. There are more than 58 million fixed line subscribers, according to Insight Research Corp.

By that measure, there are 161 million U.S. broadband subscriptions. So mobile connections represent 64 percent of broadband connections now in use. And mobile broadband has exploded over the last 18 months.

In June 2008, mobile broadband accounted for more than 59 million high speed subscribers, about 45 percent of all broadband connection in the United States, according to the Federal Communications Commission.

Clearly, any effort to create a national U.S. broadband policy would have to recognize the leading role wireless now plays.

Metered Internet Access Plans Coming?

Time Warner Cable CEO Glenn Britt says in a CNBC interview that the question of how consumers pay for their broadband is "an evolving thing." Britt still does not believe the existing flat rate for unlimited usage pricing plans are going to exist universally, indefinitely.

Verizon EVP Dick Lynch also has noted that Verizon would have to consider some form of tiered or metered bandwidth in the future.

One might argue that such plans will be available, with a premium price. But many, if not most other plans likely will move to some pricing format more nearly resembling the way people now buy buckets of wireless minutes or text messages. Consumers nearly universally dislike true metered usage plans, but have shown a level of comfort with "buckets." That suggests buckets will be the path forward for broadband services that must take some account of drastic bandwidth consumption patterns imposed by video content.

Some idea of the need for such plans, sure to be initially unpopular with some consumers, is the cost of continually providing more bandwidth, with modest increases in new revenue. At least some independent service providers have argued for years that fiber-to-home investments cannot be justified in tradtional "five year return on capital" criteria.

In that view, operators need to invest in FTTH "to keep their businesses," essentially. Yankee Group analyst Vince Vittore says that sort of refrain was current at the most recent Fiber to the Home conference.

Cable competition is a primary motivator in that regard. But experience so far continues to show that the financial return from an FTTH network is not assured nor easy. Nobody expects a return on invested capital in five years, as once was possible for many types of network investments.

Nor does anybody seem to believe it is possible to earn a return on FTTH networks based principally on incremental revenue from optical access, or even from providing video entertainment services. One need look no further than that to discern the industry emphasis on new applications, services and revenue.

Usage that is more closely tied to actual usage will happen. That doesn't mean it will be as strictly metered as electricity or water. But think about wireless buckets of use and one can conceive of metered service plans that consumers do not find inherently objectionable.

FiOS Does Not Sell Itself

Even FiOS Doesn't Sell Itself

Verizon's third quarter FiOS revenues totaled more than $1.4 billion, up 56 percent year over year. And FiOS average revenue per user also hit more than $137 per month.

Verizon also added about 18 percent more FiOS TV and Internet customers than in the same quarter last year, including 191,000 FiOS TV and 198,000 FiOS Internet customers, increasing Verizon's penetration to 25 percent for TV and 29 percent for Internet.

Still, net adds were less than the record adds of the last two quarters, Verizon says. Gross sales were lower primarily due to a change in promotional activity, the company says.

"As it turns out, we had a couple of promotions that worked, didn't work as well," says Ivan Seidenberg, Verizon CEO. "What happened is we had a couple of better quarters and we toyed with how we could sustain that and found that it was difficult in light of maintaining a fiscal discipline against it."

In other words, Verizon probably did not spend as much as it could have on marketing FiOS services, and the results probably slowed because of that conservatism.

The point, perhaps, is that as powerful a marketing platform as FiOS represents, the value proposition appears to remain less obvious to consumers than we inside the business sometimes think.

Verizon remains committed to adding about one million new FiOS customers every year, on a base of homes passed that stands at about 45 percent of all Verizon residential passings, with video available to about 34 percent of total households passed.

That illustrates part of the problem. Whatever Verizon does, it potentially can sell video services to about a third of all residences, though it can sell FiOS broadband to about 45 percent of homes. It always is tough to market services when a third of homes can buy them, not all.

And as service providers have learned in the past, easing up on promotions, or banking on the wrong promotions, can have significant effect on results. Not even fiber-to-the-home service, in and of itself, seems to "sell itself" to most customers, as powerful as those sorts of connections always have seemed to people in the business.

Broadband Users Generally Satisfied

U.S. consumers generally seem to be aware of the importance of bandwidth as a determinant of their Internet experiences, says Mike Paxton, In-Stat analyst. For the most part, they also seem satisfied with their current access speeds.

Anecdotal evidence suggests many consumers are aware there is a difference between theoretical bandwidth and the actual bandwidth they get when lots of other users are on the network at the same time.

For that reason, consumers increasingly are receptive to higher-bandwidth offers, In-Stat argues. Most consumers probably are not aware that, at peak load, the average bandwidth they may be able to use is as much as an order of magnitude less than the theoretical bandwidth.

That said, more than 83 percent of respondents to a recent In-Stat consumer survey, which included a speed measurement, said they either were "very satisfied" or "somewhat satisfied" with their current connection.

In large part, that finding is testament to generally enhanced access speed offerings by virtually all suppliers.

The survey of 700 users found an average downstream speed of 3.8 Mbps, while the average upstream speed is 980 kbps.

The average downstream fiber-to-home speed was 8.8 Mbps, while cable modem connections averaged 4.9 Mbps and DSL averaged 2.1 Mbps, In-Stat says. Those findings are generally congruent with research published by the Communications Workers of America in 2007.

The average monthly price for broadband service is a bit over $38.

FTTH is inevitable

No matter what posturing now occurs, cable operators and at&t someday will switch access platforms and adopt fiber-to-home as the standard wired access approach. For the sake of pleasing investors, who seem to hate investments in FTTH that are the only long-term hope for any wired access provider, lots of companies insist they do not presently need to do so, and they arguably are correct.

Other small independent providers in very-rural areas likewise will insist they cannot afford FTTH. That ultimately will be resolved either by new forms of rural or high-cost area subsidies, or by some new hybrid delivery platform using fixed wireless as the tail circuit.

None of that is relevant. Demand continues to increase, and at some point, the only sane choice for a fixed network that has to deliver a minimum of 100 Mbps worth of data bandwidth, not to mention video, is FTTH.

We might be four to eight years away from that point. The precise timing, though, isn't so important. No matter what executives may now believe, they ultimately will have to scrap hybrid fiber coax and fiber to the node, for competitive reasons. When wireless broadband starts to offer anything close to that sort of bandwidth, no wired network is going to be able to avoid upgrading.

That doesn't mean it is sound business practice to deploy platforms of such bandwidth today, in the mass market. The ramp up frankly is best handled on a gradual basis, as local competitive conditions dictate, to conserve capital for a time when the move is unavoidable, under conditions where there is little incremental revenue to be gotten.

But that won't always be the case. One way or another, service providers are going to discover and then create funding mechanisms that make FTTH a rational choice. Just because we can't predict in precise detail what those mechanisms will be is not the issue. Neither could cable industry executives have rationally explained in detail what all the new demand for video choices would be if capacity were upgraded.

Nor could wireless executives, 10 years ago, have presented a clear and compelling line of argument about why text messaging, email or ringtones or music would be generating significant or growing amounts of revenue.

Though there now is an investor revulsion to financing "build it and they will come schemes," in fact that precisely is the history of innovation in the communications and entertainment business. When given choices, developers have responded and consumers have bought.

That doesn't mean every new application, or even most, are going to succeed in the mass market. The point is that we never are very good at figuring out what developers will dream up, and what consumers will flock to.

It is clear that supply creates its own demand, ultimately.

Singapore Gets 10 Bidders for 100 Mbps Network

Singapore’s Infocomm Development Authority has pre-qualified ten bidders for a new optical access network that will be open to any retail providers who want to use it.

The proposed network would feature initial capacities of 100Mbps downstream and 50Mbps upstream, with the ability to upgrade to 1 Gbps.

Alcatel-Lucent Singapore, Axia NetMedia Corporation of Canada, BT Singapore, City
Telecom Hong Kong, NTT West, Nokia Siemens Networks Singapore, Singapore Computer Systems Limited, Singapore Telecommunications Limited, Singapore Power Telecommunications and StarHub are on the list.

Fiber to Home: Density Matters

When evaluating prospects for fiber-to-home deployments, density really does matter. As recent data from the Fiber to the Home Council shows, countries with higher rates of fiber access tend to be highly dense, where a "fiber to the basement" approach is feasible. Japan is the exception. Generally speaking, fiber to the home penetration is high in countries with high density, though other factors, such as government financial support and regulatory framework, also play an important role.

Price Per Megabit: Japan and France Lead

When observers talk about places where broadband access is both fast and affordable, Japan is certain to come up. Maybe they should talk about France. As this chart created by the Wall Street Journal shows, French users can buy broadband at prices per megabit that are quite close to what users in Japan are able to do.

Also, despite all the whining about how far behind the rest of the world the U.S. providers are, it doesn't really appear such sentiments necessarily are based in fact. Over the last year, cable and telephone companies have been boosting capacity while holding prices steady. And that provides a much better "price per megabit" relationship.

Is FiOS a Different Product?

Verizon says it has 8.2 million broadband access subscribers. During the fourth quarter, Verizon added 245,000 net new FiOS Internet customers and 19,000 net DSL subscribers. So here's the question: is T1 (1.54 Mbps) a different product from a DS3 (45 Mbps) connection? Is T1 a different product from an asymmetrical cable modem or Digital Subscriber Line service? I suspect most people who create and deliver such services would say "yes."

So if a customer buys a FiOS fiber to home service, is that a different product than the alternative it replaces? If Verizon added just 19,000 DSL subs and an order of magnitude more FiOS subs, what does that suggest? Right now it is hard to tell what it means, as Verizon does not appear to be providing detail on DSL penetration as distinct from FiOS Internet.

So far, Verizon says it has 21 percent FiOS Internet penetration where it can sell the service.
Presumably that includes virtually all of the DSL subs who converted over to FiOS. At the end of March 2007 Verizon said it had overall broadband penetration of about 16.8 percent.

So it is conceivable that FiOS availability boosts broadband access penetration by something slightly less than four percent of marketable homes, as well as garnering 16 percent of homes as video subscribers.

For the moment, FiOS Internet appears largely to be a substitute for DSL. That should change over time, as nearly all major market consumers in Verizon's footprint have a chance to buy Ethernet services ranging from 10 to 50 Mbps. It's hard to imagine that not emerging as a differentiated product.

Verizon FiOS TV up 356% Year Over Year

Verizon has broken the one million TV customer mark for the first time, growing its subscriber base 356 percent in 2007. Clearly, Verizon's network construction and video franchising phase now is yielding to the marketing phase. The next couple of years will provide us with a better handle on just how well Verizon will do as a provider of video entertainment services, but FiOS TV does not appear to have suffered the technology or performance challenges that have beset at&t's U-verse offering in the past.

So the issue now is how well Verizon will do in the market share battle with cable companies, as each swaps share in their legacy businesses while trying to gain the upper hand in the broadband access business. Up to this point cable has had the advantage, gaining more voice customers than Verizon and at&t have gained video customers.

Depending on whose data one wished to cite, telcos either have closed the gap with cable or are taking more new share in the broadband access business than cable companies are. The installed base generally is seen as reflecting a lead for cable, but the installed base gap is expected to close over the next couple of years, by most estimates.