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Adtran Q108
Adtran reported surprisingly good numbers and made specific comments that indicate the Great North American capex freeze of 2007 is thawing in a few areas. The company also had interesting things to say relative to access market growth and trends in the Enterprise portion of their business.
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.
AT&T Carrier Ethernet Perspectives
Rich Klapman, AT&T Director of Marketing for Ethernet Services, presented yesterday at the Lightreading Ethernet Expo. He provided some perspective on what AT&T is doing in Carrier Ethernet. He was one of several speakers who hit on the scarcity of fiber as a barrier to deploying Ethernet. Here are some raw notes.
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.
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.
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.
Lightreading Gives Ma Bell Both Barrels
R. Scott Raynovich, Editor in Chief of Lightreading, unloads both barrels into retiring AT&T (T ) CEO Ed Whitacre in a Lightreading editorial outlining the massive gap between his pay and performance.
Shareholder activism along the lines of Carl Icahn’s Motorola crusade is sadly absent in the Networking component, equipment, and carrier business that I follow. Companies such as Centillium (CTLM) and Sycamore (SCMR) are allowed to drift along in a zombie-like state at the expense of investors. Even Robert Chapman has abandoned his cause at Vitesse.
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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?
Home PCs and Home Theater Don’t Mix
Anandtech has an absolutely horrifying review detailing the trials and tribulations of setting up a Windows Vista home theater PC (HTPC) with the first HD capable TV tuner from ATI (AMD). Even with the on-site assistance of Dell (DELL) and Time Warner Cable (TWC) (with promptness and technical expertise you or I could never hope to see) it took two days to get the Windows Vista PC, external HDTV cable tuner, and Time Warner Network integrated and up and running. The resulting experience was great, though most consumers would have never had the patience or technical fortitude to get it up and running. It makes one wonder why anyone would bother to do this at all.
