VZ
The Wireless Backhaul Opportunity
The best session of the Lightreading Ethernet Conference covered Wireless Base Station Backhaul. Patrick Donegan of Heavyreading and the panelists presented cohesive data and their take on which way the market would head. I gained a new perspective on the opportunity wireless backhaul presents.
The fundamental problem wireless carriers face is the underlying shift from voice dominated to data dominated traffic. Voice is growing linearly, while data is likely to grow exponentially. If leased copper T1’s are used for backhaul, their backhaul costs will scale linearly as capacity is added.
The Real Carrier Ethernet Opportunity
It is amazing how little can change in three years. I spent a great deal of time working on Carrier Ethernet in 2004 and 2005, and the presentations I saw at the Lightreading Ethernet Conference and Expo were no different than the ones I saw in 2004.
Equipment makers such as Ciena (CIEN) sang the praises of Carrier Ethernet (all true) and spoke of the various impediments to deploying it: standardization of inter carrier interfaces, administration & operation, quality of service. It strikes me that the bigger problem is much more basic than the ones being presented.
The Bandwidth Explosion Myth
Not a single day passes where we do not hear the mantra of a “Bandwidth Explosion” used to justify aggressive financial forecasts for equipment and component companies, carrier backbone demand models, even regulation or deregulation of the Internet.
Lacking in these sweeping statements is a reference to a crisp and concise quantitative explanation of traffic growth. This lack of hard data supporting this bandwidth explosion has weighed heavily on us, particularly because we have seen the damage that nebulous predictions of traffic growth caused in 1999-2001.
Everyone remembers the claims of Internet traffic doubling (even more prescient here) every 100 days in 1999? This was pure fiction, yet the political and investment communities accepted it because it was a useful tool for justifying the irrational activity underway. History does not repeat, it rhymes, and the “Video Bandwidth Explosion” sounds very similar to what was said in the Telecom bubble.
Using data from the Japanese Ministry of Internal Affairs (MIC) one can draw conclusions about the growth in Japanese Internet traffic on a per subscriber basis. The conclusions are not what you would expect given the advanced nature of broadband in Japan, and are troubling when compared with image created by the market.
The Proving Ground of NTT
The Japanese Ministry of Internal Affairs and Communications is a great source for data on Japanese communication infrastructure and usage. A recent document provides a state-of-the-network update and lays out the goals for the next 3 years.
Telecom, Meet Web 2.0
Google (GOOG) appears to be buying GrandCentral, a company that merges VoIP and advanced calling features. They provide you with a single phone number and web/mobile interfaces to manage call redirection, voicemail, address books, etc. Think of it as VoIP on steroids and EPO, simultaneously. Click over to their Features page for a better description and familiarize yourself with how outdated a plain landline has become.
State of the Photon - Global FTTH Activity
I haven’t been shy about my prediction that GE-PON would trump GPON deployments and so far I’ve been right. The dominance of GE-PON continues, with large deployments planned or underway throughout Asia. Verizon (VZ) is the only carrier deploying BPON/GPON in size though some activity is promised in Europe. We shall see.
Let’s take a quick look at the state of the photon.
AT&T Lightspeed Gets More Expensive
All is not well at the Death Star today. AT&T (T ) announced that capex for the U-Verse IPTV & Fiber to the Node initiative (known as Project Lightspeed) would increase from $4.6B to $6.5B. They also announced the scope of the project was being reduced from 19M to 18M homes.
This is a sizable increase (41%) in capex for a project that was designed to minimize cost. It is indicative that the decision AT&T made to substitute advanced technology to deliver an incremental solution in favor of laying fiber isn’t going as planned. The price of mediocrity just went up.
FTTH Stakeholders /= FTTH Shareholders
People tout the big benefits of fiber but refuse to allow those who put capital at risk to make big profits. They seem to be afraid that someone, somewhere, might actually make some money.
A report from the Broadband Stakeholder Group summarizes ongoing worldwide fiber to the home (FTTH) projects . The report highlights the need for FTTH in the UK, something BT (BT) has steadfastly refused to do.
I cannot blame BT- asking them to deploy an expensive network and then be forced to lease it out to competitors (with no downside investment protection of course) is a ridiculous thing to expect of a profit driven entity.
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Enterprise Access Capex - A Ray of Hope?
Only one half of Verizon’s wireline (VZ) revenue comes from consumers; the rest comes from business connectivity and services. Verizon, as well as other carriers, have been spending money to deliver better broadband services to consumers. What will happen when they spray this capex hose in the direction of their long neglected business customers? Which equipment companies will benefit?
OFC 2007 - Carriers Speak Out On Peer to Peer
I’ve got 9 pages of notes from yesterday’s OSA Executive Forum that I will distill and distribute this evening. Craig Matsumoto from Lightreading captured and blogged my fastball question to the Carrier panel composed of BT, Comcast, AT&T, and Verizon. My question was:
There has been a lot of discussion today about Video and the explosion of bandwidth needed to carry it but Peer to Peer traffic is now the largest consumer of bandwidth on your networks. Do you view P2P technology as an opportunity or threat and why?
Who Pays for the Online Video Boom?
Everyone talks about the explosion in Video traffic. Everyone talks about the explosion in the bandwidth required to carry it. No one talks about who is going to pay for it. There is one likely source: transit bandwidth inflation.
Comcast: Party Like it’s 1999
Big surprise from Comcast (CMCSA) today in the capex department. Barrons has a nice summary of the results. Revenue, subscribers, operating cash flow all met the expectations of the frothing massess, except Capex projections for next year were $1B higher than anticipated. Yes, 20% higher. Updated w/Chart
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Nyquist Predictions For 2007
Prediction is an entertaining activity better suited for stimulating discussion than providing an absolute outlook on the future. Therefore, the bolder and more controversial, the better. Keep that in mind as you read and respond.
Squirrels Ate My FiOS
It’s not just a catchy title. I lost my FiOS connectivity Saturday morning, rendering my Verizon tripe-play package of voice, data, and television inoperative. The culprit? Squirrels. Continue reading
Fun With Market Caps
Quick, rank the 10 following companies by market capitalization from large to small. If pressed for time, try picking the three biggest and three smallest.
What Matters About The Apple iPhone
The big deal isn’t the iPhone itself, which is what the mainstream investment, gadget and tech media is focusing on. It’s the way that it will fundamentally challenge how carriers have coupled services with connectivity with a hardware distribution monopoly.
Broadlogic and Cable’s Analog Ghetto
Broadlogic announced a chip today that provides a high density solution for converting Digital Cable TV channels to Analog. It’s a slick solution but I don’t think it will see mass adoption. Here’s why.
Pulling the Plug on Tivo
I’ve pulled the plug on Tivo (TIVO) after three years of great service. With my recent FiOS TV subscription, I needed HD capability and I cannot justify paying $800 for hardware I get for free from Verizon (VZ). I just wish I had tried to cancel my Tivo service earlier as they offered to cut the per month fee in half if I stayed. That’s a bad leading indicator for the health of this company.
Net Neutrality Debate - Gilder Telecosm 2006
I woke up in SFO at 4AM to make sure I could get to Tahoe in time for this debate. I’ve written extensively on Net Neutrality and stopped once I realized it was unresolvable.
Broadband Brawl: A Debate Over Net Neutrality
Verizon Opens the FiOS Kimono
Historically, Verizon (VZ) has held it’s FiOS FTTH subscriber numbers close to the vest, and has not provided detailed information about penetration rates or success metrics. Today, they opened the kimono.
