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By admin, November 19, 2011 8:01 pm

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Fiber Home Turns Profitable in Japan

By admin, August 21, 2011 7:04 pm

Kei Takahashi at Merrill Lynch Japan has a buy on incumbent NTT, a company struggling since 2002. Takahashi believes “growth in IP services such as FTTH are offsetting the decline in legacy services such as telephone revenue.” He sees FTTH revenues as stable and is optimistic about the company in both the short and intermediate term.
     Masayoshi Son shocked NTT a decade ago with low priced DSL, coming in at $20 when NTT was at $40 and soon adding inexpensive VOIP calls. I’ve reported Son took millions of customers and set a model which was confirmed by the incredible success of Free in France. NTT’s first response was to cut prices just to stay in the game while they built the world’s most extensive fiber network.
      The Japanese regulator allowed NTT very favorable pricing on fiber unbundling, leaving minimal margin for broadband competitors. Over time, customers have been abandoning DSL for the faster fiber despite higher prices. NTT has a dominant position in fiber and also captures most of the value added in fiber resold to competitors.
    Son’s Softbank has done very well in wireless as the first with the iPhone in Japan. Takahashi reports “Growth is slowing as earnings continue to decline in the broadband and infrastructure divisions due to a decline in ADSL subscribers.” He rates the other Japanese giant, KDDI, underperform.
While the low prices in Japan led to remarkable early growth in broadband take rates, that leveled off years ago. As I recall parents never say never justin bieber latest album movie, he’s from early childhood showed an interest in music.. Today, fewer in Japan take DSL, fiber, or cable than in many Western countries. The prices in Japan, especially when measured as cost per megabit, continue relatively low. One possible explanation was the early growth in wireless data at NTT Documo, but I remain puzzled.

Terabytes to Africa at $2-3/Broadband Connection

By admin, August 19, 2011 12:41 am

Africa_cables_Steve_Song_260500 gigabits of the West African Cable System landed at Yzerfontein in South Africa yesterday, with connections along the way to Namibia, Angola, the Democratic Republic of the Congo, the Republic of Congo, Cameroon, Nigeria, Togo, Ghana, Côte d’Ivoire, Cape Verde as well as the Canary Islands, Portugal and the United Kingdom. WACS is ultimately designed for 5 terabytes and higher.

     Back of the envelope, the $500M cost of the Alcatel-built cable equates to a landed price of $2-3/broadband customer for generous international capability. Although cable capacity is sold as 20 year IRU contracts, I think it’s more realistic to spread the cost over 10 years. That’s about $100K/gigabit/year, or just under $10K/month. Add $4K to purchase transit in London, and the direct operator cost is $12-16K/month/gigabit. Add markups and uncertainties, and the delivered cost/gigabyte to the large operator is $20-30K/month. Allocating 100 kilobits/customer – more than most networks average – spreads that 10K customers at $2-3/month.That’s more than the $1/month typical in most of the U.S. Over the road trucking does has an advantage over short haul defensive driving austin jobs.. or Europe, but no longer a great barrier to delivering a full Internet experience to most of Africa. The question now is whether the savings will be passed on to consumers.
     The problem: “Telco competition in South Africa is like pro-wrestling. There’s a lot of shouting and posturing but the game is fixed.” Song.
      A larger version of Steve Song’s great map below and his presentation on the remarkable growth of fiber to Africa is worth a look The other map below, from the Ubuntu Alliance, shows the relative lack of fiber connecting inland Africa.

5M Lines of Gigabit+ Fiber Home

By admin, August 19, 2011 12:41 am

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Duncan Tait of Fujitsu vows to deliver 5M lines of gigabit+ fiber home to small town and rural Britain, perhaps the largest fiber build in the Western world this decade. It’s about 20% of the country. Fujitsu will provide gear, build and finance the network. U.S. owned Virgin cable will be the anchor tenant, expanding beyond the urban half of the country it now serves. Super salesman Charlie Dunstone (Carphone/Talk Talk) will also sell the network, with Murdoch’s Sky and Vodafone up for grabs.
     Nearly all this build will be in the half of Britain where British Telecom now has a monopoly. The economics of being the second network in an area are very different from being the third, overbuilding where there already is a telco and a cableco. While fiber overbuilders coming third to market have generally struggled, Virgin/TalkTalk/Fujitsu has much better prospects.

    Fujitsu, with support from Cisco, is fine with the relatively modest $200-$300/home subsidy offered. This team is betting $billions fiber is profitable over time based on the real world costs and experience of Verizon, NTT and others. Communication Minister Ed Vaizey is so enthusiastic he joined in the press release. Vaizey, to make the deal final, needs only to require BT to share existing ducts and poles at cost + a generous profit, standard unbundling terms.

Vermont FiberConnect: What It Will Do for Schools

By admin, August 19, 2011 12:41 am

The stimulus is paying $33M to run fiber to 340 “community anchor institutions” – schools, libraries, government buildings etc. (I’ll just call them schools). Some schools are unhappy, because they feel pressured to spend $100K-$150K and more in addition. The money goes to a private company, Sovernet, working with a quango, the Vermont Telecommunications Authority. The controversy has been reported by Vermont Public Radio, the Boston Globe, Muninetworks, Burlington Free Press, and others.   
       Whether the deal is good or bad is a separate article. There’s so much confusion around I wanted to get into the facts.  It would be simpler if things were set up as perhaps $2,000/month for a 100 meg Internet connection but that’s not how the NTIA proposal played out. Sovernet has broken the service into two: transport (the fiber itself) and ISP (the connection to the Internet.) A school could buy transport from Sovernet and ISP connections to the net from someone else. Smoke Alarms: Preventing a fire loss is important to you and especially to you renter’s affordable company.. I consider that a theoretical sidepoint unless I see many of the schools actually doing that.

Sovernet’s offer to the schools

Their primary service they describe as “100 megabits burstable to 1 gigabit.” “Burstable” means that the service is 100 megabits all the time and can “burst” for limited periods to a gigabit. Usually, that means up to 5% or 10% of the time. It’s a good deal because it allows for far more throughput than 100 megabits for occasional peaks.

Here’s what it costs from Sovernet:
Transport: $1,000/month for “transport” to a “hub”
(Discounted to $700/month to connect an additional location. such as another school in the district.)
ISP services: Price not yet disclosed. Until Sovernet publicly offers a price, I’m going to use a figure of $1,500/month. Depending on volume, location, and services needed, similar in well connected areas can cost from $400 to $2,500. That’s a pretty broad range, but Rich Kendell of Sovernet would not provide me a price. I’m not the only one in the dark about Sovernet’s actual pricing; there was a complaint at the Readsboro Board of Selectman meeting. The schools need to know that cost  to make an intelligent decision, because many will feel they have no choice. 
Term: 5 years
Total cost over 5 years: $150,000 if the price of ISP service is $1,500/month, all included. $120,000 if ISP costs are $1,000/month. That’s a substantial sum that the school should make a wise decision about, looking at all choices. I can confirm that most schools in the country pay substantially more if they want that level of service.

Fairpoint cost for similar: Fairpoint offers 100 megabits for five years for $135,000, $2261/month. Mike Smith of Fairpoint says they’d like to offer service over the “open access” fiber from Sovernet/VTA, which might be even less expensive. Neither he nor I have been able to determine what’s involved in interconnection or even where the network will be going. 

$20 For Verizon 3 Meg Fiber – With Catches

By admin, August 19, 2011 12:41 am

Verizon wants to shut down the copper where it has FiOS, so it’s offering a sweet deal at the low end. Karl Bode at DSLR reports Verizon is offering “select users 3 Mbps downstream and 1 Mbps upstream FiOS service for just $20 a month.” He quotes Verizon’s Bob Elek “We’re using the 3 Mbps FiOS Internet offer principally to migrate our 1 mbps High Speed Internet (DSL) customers and as a retention offer.” However, this may only be for the first year and jumps after that. It requires a Verizon landline, otherwise a disappearing species.

    Fiber costs less to maintain than copper and Verizon wants to kill the old network ASAP. Australia’s NBN is going further, cutting deals with Telstra and Optus that gives customers no choice but to transfer. That was the original plan at British Telecom but ran into operational problems.

    Getting the most reluctant to move to the new system will be a challenge. That’s one of the reasons AT&T and Verizon are pushing the FCC to “turn off the PSTN;” it will give the stragglers no choice, even if the prices are higher.