Thursday, July 07, 2005

Everything You Need to Know About Next-gen Broadband

New DSL flavors, DOCSIS 3.0, Bell TV, and more...
Adapted from Written by Karl Bode

ADSL2+? VDSL2? Fiber to the Curb? Fiber to the Home? DOCSIS 3.0? It's hard to get to the truth behind the constant stream of belligerently optimistic press releases. We sit down with industry reporter Dave Burstein to try and make sense of next generation broadband deployment, and find out when (if ever) you'll begin to see next gen speeds from your broadband provider.

BBR: What can we really expect in regards to a bell next-gen deployment timeline?

DB: In three to four years - because constructing facilities for millions of people take that long - expect that half of Verizon should have fiber at 15-100 meg, otherwise slow DSL. Half of SBC should have DSL at 10-20Mbps, from existing boxes 2,000-5,000 feet away (FTTN). The rest will be slow DSL and satellite resale. One-tenth of BellSouth customers should have 50Mbps+ service from fiber to the curb. Half of the rest should have 10-30Mbps DSL, often using two lines.

BBR: As we discussed yesterday, Verizon seems like the poster child of how to do a next-gen deployment correctly. Your thoughts on their Fios plans?

DB: Verizon is going as fast as it can building fiber; one newspaper reported 2,000 crews working just in Virginia! It's really that big a job to rewire a third of the U.S. All the others are constrained more by their decision on how much to spend, not construction limits.

Verizon wants fiber to the home. That's the big deal. Three million homes passed by the end of 2005. They've budgeted for, and are likely to deliver - a total of 7 million by the end of 2006 and 15 million by the end of 2008. That's about half of their 1/3rd of the country target - an enormous build costing $15-20 billion. Verizon and NTT in Japan are the only two large carriers in the world doing large volumes of fiber.

Currently, Verizon has a BPON network with video that matches cable on one wavelength and 19 meg down/ 6 meg up. They intend to switch to GPON for new builds as soon as it's ready, and have pushed manufacturers to have equipment by mid-2006 and accelerated the international standard. That's designed for 100 meg symmetric and higher, for real.

For the 20 million plus other Verizon subscribers, they will continue offering DSL and have given no indication they'll jump from the 1-5 meg ADSL speeds to the 10-15 meg ADSL2+. They stopped the DSL build at 80% or so to concentrate on fiber, but I believe are now going back to reach 90%+. Because they were considering selling rural lines, they didn't invest, leaving half of Maine unserved.

BBR: How about SBC's "Project Lightspeed"? Our understanding is that SBC was testing an ADSL2+/VDSL hybrid, but was unhappy with the results; they should should soon announce the use of VDSL2 for their next-gen network and U-Verse IPTV services, correct?

DB: SBC is selling satellite to 50% of their users -a fancy TIVO style set top and a slow DSL connection, and upgrading the rest to low profile VDSL2 they call fiber to the node. From the projected 2,000-5,000 feet, low profile VDSL2 is maybe 20 meg down, 1-3 meg up, most of which will be used for their video. They've slipped a year, with 2008 now the goal for 18 million homes completed out of their 30 something million home target. Also called "fiber to the press release" (it's really DSL) and "fiber to the rich" (they are only building the "high-value" customers). Investment is less than 30% of what Verizon plans.

BBR: How about BellSouth? Our understanding is they had run more fiber than the other two bells previously - and first settled on ADSL2+ - but now say they'll eventually embrace VDSL2?

DB: BellSouth has 13 million lines, a million of which have fiber to the curb from a quiet build begun years ago, yes. Those are the lucky ones, because they will be upgraded to 100 meg symmetric VDSL over the next few years. Think 60 megs in practice, but still pretty good. BellSouth has just picked that build up to 200,000 lines for 2005 after slowing down for a few; unfortunately, at that rate it will take them fifty years to complete their rollout.

The others at BellSouth are getting a build ready that will be much like SBC's, with DSL from a fiber node in the neighborhood. They intend to bond together two lines for most customers, to give you speeds closer to 30 meg down - more than the 15-20 meg SBC plans - because they think you'll need that for HD video.

Nominally ADSL2+, will morph into VDSL2 low profile soon. But VDSL2 low profile really is a slightly improved ADSL2+ (2-5 meg faster at these distances), not the 100 meg "high profile" that only works 500-1000 feet they are using for the lucky fiber to the curb types.

BBR: There has been a lot made of Swisscom's trouble with Microsoft's IPTV software overseas. Do you think these troubles will cross the ocean, and if so, will any of the big three bells - who've all tied their horses to Microsoft - be exploring alternative options?

DB: Microsoft's software is incredibly ambitious, and like many big software projects will be late, delaying most big deployments until late 2006 or 2007. Moshe Lichtman of Microsoft recently claimed everything was going fine. It's not.

Most carriers will just accept that, because the other software available (Siemens/Myrio, Minerva, etc.) doesn't promise as much. That may be why the other software works already, of course. They also decided Microsoft was a safer partner. Amazing conclusion - SBC even testified against Microsoft in the antitrust case - but the senior folks decided to go along rather than fight. In at least one big telco, that was against the recommendation of their technical staff.

This spring, all the Bells (including Canada) announced for Microsoft, and I wrote the battle for the large U.S. telco TV standard was over. But I soon heard from folks who know, not to assume that's how it will play out. Everyone was checking other options, just in case. But they are more likely just to slow things down than to actually switch away from Microsoft middleware. They probably won't use Windows Media 9/VC1, opting for MPEG-4 AVC for the encoder, even if they use the Microsoft middleware (channel guide, switching, billing, etc.)

Right now, Microsoft is only delivering some of the promised software, and will be late with some. The first to roll services, SBC, is deeply committed to Microsoft ($400M purchase), so will probably go with the flow. The result will be some limits on what SBC IPTV service will be, annoying but probably not crucial. Schedule of heavy testing and first customer rollout in 2005 will probably be honored in form, but things likely will go slowly until Microsoft bugs fixed, probably late 2006. SBC has already added a year to their schedule.

BBR: IPTV in general, do you see it as a serious competitor to Satellite and cable?

DB: Single channel, not HD IPTV is working well, with a million customers around the world and tens of millions coming in the next few years. Multichannel, HD, to several sets turns out to be much harder and takes more bandwidth, which is why it's coming slower. But $30B in planned investment is coming, and almost surely by 2006-2010, millions will be buying fancy TV programming from telcos.

They don't want to cut prices, but behind all the puffery is essentially a me-too service. They'll claim lots is new, but picture in picture multiple camera angles isn't new, and Sky satellite is already making hundreds of millions with "interactivity", mostly gambling. Comcast will have more video on demand than any telco, while net based services, especially Google, will has loads of video as well. So the telcos will either price aggressively or have limited market share. Expect that to be disguised with a lot of advertising about great "new" services that cable already has in some places.

BBR: So is VDSL2 a minimum requirement if the bells really want to enter the market? Can you clarify your statements on the various VDSL2 flavors mentioned earlier?

DB: Everyone's confused because the next upgrade of ADSL is called VDSL low profile, but isn't that big an improvement. VDSL2, as planned by SBC, is only slightly faster than ADSL2+, perhaps 15-25Mbps rather than 10-20Mbps. Useful, especially when you need bandwidth for HD (9 meg per live encoded channel), but not an earthshaking improvement. Since by late 2006, VDSL2 low profile will be within $10 of the cost of ADSL, most carriers will switch over even for the small improvement.

The real VDSL2 - the 50-100 meg plus of the high profile, including a fast upstream - delivers those speeds less than 1,000 feet or so, so requires new construction most places. Fiber to the basement or curb, advancing hard in Korea, Japan, and soon where BellSouth already has fiber. Verizon may do some of it where running fiber in a building is impractical.

Don't be confused because a medium speed ADSL is named VDSL2. It won't give 50 meg to most people in the U.S.. An accident of what came to what standard committee, and the choice of the linecode technical parameters gave VDSL2 low profile a good name, but not the speed you need.

BBR: If VDSL2 is so promising, why is BellSouth still planning on starting out with ADSL2+? Faith in compression?

DB: VDSL2 is just moving from lab samples to first, untested chips. BellSouth will move when the chips are reliable, late 2005 or more likely 2006. They just aren't announcing things that aren't ready, but they are completely on top of the technology and will move soon as well. They've accepted that getting the speeds they want will often require bonding two lines (24-35 meg, although the press releases wisely promise a little less). With the doubled capacity, they can use either ADSL2+ or VDSL2, so they are waiting till VDSL2 works well and comes down in price.

SBC instead was betting that VDSL2 would get here fast, and have enough extra performance they wouldn't need to give many customers two lines. They also were betting compression would reduce the bandwidth they needed. Vendors of course promised all this, but SBC (and everyone else) is waiting for the chip guys to deliver this month. SBC's tech guys knew they were taking a risk, but management decided that was a better option than spending the money Verizon is.

BBR: What are your thoughts on the various compression flavors the bells are exploring for IPTV and HD?

DB: MPEG-4 and Windows Media 9/VC1 are separately fighting out the war for the codec and the associated royalties. Microsoft in particular muddied the waters by showing great demos of carefully pre-encoded HD movies that ran at 6Mbps, and some uninformed CEOs and COOs didn't realize live TV, especially sports, needs much more bandwidth.

Two HD channels at 6 meg require 12 meg, maybe 14 with overhead, which sounds like it can fit in 20 meg and leave some room for data and a third standard definition set. But the real codecs for live TV, shipping late in 2005, will need 9.3 meg per channel, and even the companies selling them know they've sacrificed some quality to get it down that far.

So to watch one HD show and record another requires about 20 meg, and leaves things very tight unless you designed for 30 meg in the first place. Verizon looked at that, and said we better go for fiber; BellSouth and Bell Canada are thinking two lines bonded, and SBC is praying they can squeeze everything in without critical compromises.

Currently, MPEG-4 AVC 264 is a little ahead of the Microsoft codec, probably a quarter or two. So most telcos are going MPEG-4 even if they are using the Microsoft IPTV software for copy protection, network management, channel switching, etc. Microsoft is pushing hard to get in, so the situation is dynamic.

BBR: While we're only starting to see DOCSIS 2.0 deployment, and the higher speeds it can bring (Adelphia & Cox 15Mbps), DOCSIS 3.0 should only be a few years behind. Do you see the cable industry having any trouble keeping up with these bell plans?

DB: The "15 meg" speeds Cox is offering where they compete with Verizon fiber are mostly advertising. It's really 38 meg shared among 100 or so users, the same speed as the current services advertised at as 3 and 7 meg. That's too much oversubscription to deliver 15 meg most of the time, if even 5 or 10 people are downloading on the node. To regularly get past today's 5 meg or so, you need to bond more channels, which is what DOCSIS 3.0 offers.

DOCSIS 3.0 is real, mostly agreed, and the key vendors have the details and are making equipment for 2006. It's a shared 160/120 or higher, easily expandable to a shared gigabit. Real speeds to users will often be 20-50 megabits. It was developed to compete with higher speed DSL in Asia. Early in 2005, the U.S. cable companies realized Verizon was serious about fiber, and pushed CableLabs and suppliers (Cisco, Motorola, Arris, Broadcom) to get DOCSIS 3.0 ready for the U.S. ASAP, and 2006 is realistic with some pricey gear.

What we don't know is whether the Verizon will scare the cable companies into actually doing the upgrades. It's not terribly expensive. CableLabs chose the Arris/Motorola/Broadcom 160/120 proposal over Cisco 1 gigabit alternative because it can be done with software in the CMTS and a new modem, relatively cheaply. It doesn't require running new fiber or anything terribly expesive. But it's more capital spending than the cablecos planned.

Like the telcos, they've cut 20% or more from what they were investing in 2001. Very dynamic situation with some tough choices - no one outside the companies really knows, with the analysts busily watching every comment and reading tea leaves. I'm pretty sure the cablecos haven't decided yet. Inside at least one giant, they have plans to delay the upgrades but a very vocal disagreement trying to move the company faster.

So maybe Verizon will inspire the cablecos to upgrade, which will in turn put pressure on SBC/Bellsouth. But maybe that won't be enough, and they'll hope marketing and program selection will beat technology. We just don't know yet.

BBR In the end, which solution do you see as the best of the next-gen options?

DB: Verizon's fiber is the best stuff out there, especially after they switch to 2.4 gigabit shared GPON in a year. That's why the smart cablecos are worried. What BellSouth and SBC are doing is essentially matching cable of 2002. By the time they deploy in 2007, cable should be well ahead.

But better technology doesn't always win. Perhaps SBC, by spending less, will be able to price lower and do ok after all. Nobody really knows, although everyone has an opinion. My opinion is that the best tech is needed, especially in an HD world, and Verizon is making the right choice. But some very smart people have looked me in the eyes and said "the fiber numbers just don't work. Still costs too much," and other similar comments.

BBR: Any insider information on how soon before Time Warner and Comcast cross into the 10-15Mbps range?

DB: Both will be experimenting with how to fight Verizon, but remember the 10-15 is mostly illusion once loads go up. Your mileage will vary. It's the same physical system that now often doesn't hit the promised 4 and 7 megabits, with a faster connection from the modem to your computer.

Where they do good traffic engineering (splitting nodes when necessary, etc.) performance will be good; where they are sloppy or cheap, Broadband Reports is sure to be the first with the story. I mentioned to a top Comcast guy recently how many disappointed California users were writing in to BBR, and he said he'd look into it. Company policy is to solve problems like this, but it's sometimes expensive and timeconsuming.

BBR: Wimax: Is it a serious player in the next-gen broadband battles, or simply a niche-solution?

DB: I'm the guy who writes about DSL, TV, and fiber, so the wrong person to ask. But everything's related, so I do keep my eyes open. Some very smart people (Dewayne Hendricks, David Isenberg, Robert Pepper, Eben Moglen) believe wireless could be a big part. Needs plenty of spectrum for the 10 meg plus speeds that will be common in a few years here (and already are in Asia); the current services at a meg or two won't be competitive in most cities.

Meanwhile, Verizon's EV-DO is getting raves for delivering 500K surprisingly reliably to people on the move. Watch for it to become as ubiquitous as Blackberries in the business class. WiFi should be able to cover most cities with an interesting service for $15-20, so I've testified in its favor and hope it shakes things up. Meanwhile, TD-CDMA is working surprising well in London and elsewhere.

None of which answer your original question about Wimax, the most hyped of the many wireless technologies on the way. Both Bill Smith (CTO BellSouth) and Balan Nair (CTO Qwest) tell me the trial results are impressive, although neither is committed beyond trials today. It won't handle mobile outside of Korea before 2007-2008, which is the key niche. Alvarion, the key supplier of "pre-standard" Wimax, just announced a down quarter as Telmex cut orders.

Some things are clear. Wireless can be very cheap (if slow and not rock-solid reliable), so where it plays it is interesting competition. The stuff coming from the cellphone world is working well, and might turn out to outdo the more hyped Wimax. We desperately need more choices, so I hope some of the above proves out.

BBR: One final question, do you see a future for independent ISPs?

DB: AOL admits its dead as an ISP over broadband, and MSN has also given up in favor of other strategies. Earthlink and some of the local keep trying, but it will be very tough for them to remain a factor. Covad is too small, undercapitalized, and afraid of getting the bells fighting back to matter. For most Amreicans, everything but the cable company and the telco is of little relevance. I fear wireless data and power line won't be interesting players, but hope I'm wrong.

It doesn't have to be so. In Japan, two independents (Yahoo BB and eAccess) are consistently beating NTT. Hanaro has a third of Korea. signed up over a million in the last year. In the UK and France, regulators set wholesale prices low enough that neither BT nor FT dominate.

Killing the ISPs and most of the CLECs was a political decision, that might still be reversible if wholesale prices were dramatically changed. But I doubt Kevin Martin will make that decision, although I will editorialize about why he should.

Dave Burstein has been offering excellent insider broadband reporting for years, months before it's picked up by major outlets and paraded around as fresh content. You can read his frequent thoughts on the broadband industry via his DSLPrime website or via his newsletter, which is frequently published over at ISP Planet.