Tom Evslin, who has spent his entire life in telecom and data services industries, believes it’s time for Federal Communications Commission (FCC) to come to grips with the reality that people are choosing cellular or Internet voice over traditional phone systems. He points to a recent report from the National Center for Health Statistics that notes that by 2018, only 6 percent of the U.S. population will be using the public switched telephone network (PSTN), which to non-telecom geeks means: your home phone from the phone company.

Evslin, who is on the Technical Advisory Committee (TAC) for the FCC, notes in a blog post that “without continued government support, the PSTN would probably disappear before 2018 since the carriers’ cost to maintain the many miles of copper and the rest of the system doesn’t go down nearly as quickly as revenue from subscribers declines.”

Here were the seven recommendations by TAC to FCC as per a blog post on Avaya’s blog:

1. Target 2018 as the end of the PSTN.
2. Develop a timeline to ensure smooth transition which addresses stranded assets
3. Assure that mobile and/or broadband replacements are available everywhere PSTN is currently provided. The need will be greatest in role areas.
4. Update the National Broadband Plan to support the PSTN transition.
5. Change the Universal Service Fund (USF) funding and spending to support universal coverage and other social goals.
6. Further investigate emergency service impact to assure a suitable replacement capability.
7. Investigate incentive program for mediation devices to bridge older devices without PSTN or towards purchasing new equipment (consumer focused)

As he points out that the Universal Service Fund (USF) that subsidizes the PSTN in rural areas is going to continue to shrink as more and more people opt for non-PSTN calling options. What happens to the telephone network then?  Tom recommends that perhaps that sunset-ing the PSTN should be synchronized with the National Broadband Plan. It would make sense, though as far as I’m concerned NBP is a white elephant. That said, Evslin is right in saying that perhaps it’s time to start thinking about lower-cost options to the old-fashioned phone network.

And when we are doing that, it’s time to think not about the past but about the future: what communication means in the 21st century and not in terms of something that started almost a century ago. Wednesday’s Facebook-Skype partnership is a good reminder of that new reality.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• In Q3, E-books and White Spaces Ruled
• Report: The Enterprise Videoconference Landscape, 2010 – 2015

Deutsche Bank’s 4G comparison, reported in a research note today, arrives at some of the same conclusions that Kevin reported on from a RootMetrics user study: that Verizon LTE blows away the other “4G” labeled competition in terms of speed and performance. In a test of 4G broadband laptop cards at eight locations in the Bay Area, Deutsche Bank found average Verizon LTE download speeds were 13.3 megabits per second compared to 2.13 Mbps for Sprint and 0.87 Mbps for T-Mobile. Uploads speeds were 7.37 Mbps for Verizon, 0.49 Mbps for Sprint and 0.58 Mbps for T-Mobile. It didn’t bother testing AT&T, because it didn’t believe the network merited comparison yet.

The numbers underscore the idea that at this moment in time, LTE could be worth a look for existing DSL subscribers. In a comparison of price and speed, Deutsche Bank found Verizon’s LTE service competes well with current wireline broadband offerings from Verizon, AT&T and Comcast.

This isn’t an apples-to-apples comparison, because Verizon caps its $50/month LTE service at 5 GB, which produces the most favorable comparison with wireline services. The $80/month 10 GB plan outstrips the pricing of other wireline offerings. But for a certain subset of people — those who use less than 5 GB of data a month or need both home and wireless data service — Verizon’s 4G service could make sense as a wireline substitute.

“Even if a customer passes the data caps, the service may offer value. For instance, imagine a customer paying for a home DSL connection, yet also needs a mobile internet connection; the additional cost of a DSL line may be more than the incremental cost of using the wireless service at home. Additionally, a customer who values a fast connection at home and does not use more than 5 GB could be enticed by this offering,” according to Deutsche Bank.

Now, this is a snapshot in time. As more users load up on Verizon’s LTE network, speeds will likely fall, while wireline service is likely to keep getting faster. And with fewer bandwidth caps to contend with, wireline still makes more sense as consumers use more data for things like video. Even with faster LTE, it’s not likely to shake up the pricing options of too many consumers. Verizon’s LTE pricing is no cheaper than its wireline offerings. 4G pricing is also unlikely to go down, especially if AT&T’s T-Mobile acquisition goes through and eliminates another possible 4G provider. But the rise of LTE gives us a powerful glimpse at the potential for mobile broadband, especially as users become more mobile. Not everyone needs unlimited caps at home. The allure of super fast wireless broadband speeds could be significant as the distinction between home and mobile goes away.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• In Q3, the Tablet and 4G Were the Big Stories
• Mobile Operators’ Strategies for Connected Devices

These recent upgrades in the DSL speeds are coming at a handy time – DSL has started to lose market momentum, and carriers are looking for ways to balance their exploding capital expenditure requirements. While fiber networks are better in the long run, most phone companies need to squeeze out more from their copper networks without losing too much ground to cable broadband rivals. Why? Because they have to shift their capital expenditure dollars to beefing up wireless networks, which themselves are growing through an explosive growth.

Ikanos, a maker of broadband chips today introduced a new technology, NodeScale Vectoring, DSL access technology that allows connections at 100 Mbps and higher, something which has not been possible on many of the phone company networks. According to the chipmaker, the cost of deploying this technology is about a tenth of the cost of building a fiber to the home network.

The NodeScale technology allows carriers to eliminate the crosstalk that occurs on copper pairs when offering very high-speed Internet. The cross talk introduces noise in the network, which in turn limits the line quality and thus reduces the performance of the network. Typically, to handle crosstalk issues, one needs gigabytes of memory. There are two ways of handling cross talk. NodeScale essentially tames cross talk at the DSLAM level as opposed to line card vectoring which treats every line card as a separate crosstalk domain.

Ikanos claims its NodeScale Vectoring technology cancels noise efficiently, and ZTE Corporation will demonstrate the first DSLAM employing the technology.  The technology was developed in-house, but Ikanos also licensed the dynamic DSL technology developed by DSL pioneer John Cioffi’s ASSIA.

Back in 2006, Professor Cioffi (of Stanford University) told me that it would be possible to hit Gigabit speeds over DSL. We are inching pretty close to that. We have written about many experiments which have pushed DSL speeds to over 300 Mbps in lab conditions. Huawei, the Chinese telecom equipment maker recently announced that it has tested speeds of up to 700 Mbps.

Today, Nokia Siemens Networks took that even further, announcing that it has tested a technology that could boost the data-carrying capacity of standard copper wires to 825 Mbps over a distance of 400 meters of bonded copper lines and 750 Mbps over a distance of 500 meters. If it is made commercial, it would allow the carriers to eek out more from their copper infrastructure.

NSN does this by the creation of phantom (or virtual) channels that “supplement the two physical wires that are the standard configuration for copper transmission lines.” The approach is called Phantom DSL and can boost bandwidth by between 50 percent to 75 percent over the existing bonded copper lines. NSN hopes to make it part of its DSLAM products. Alcatel-Lucent’s Bell Labs came up with the Phantom DSL technology and announced it back in April 2010.

Related GigaOM Pro Content (sub req’d):

• Who Will Profit From Broadband Innovation?
• The New Net-Neutrality Debate: What’s the Best Way to Discriminate?
• When It Comes to Pain at the Pipe, Upstream Is the New Downstream

The race for faster copper may fly in the face of my own personal desire for a fiber-to-the-home connection, but is necessary because of both the prevalence of existing copper networks around the world and the cost of upgrading all of those networks to fiber. Verizon has spent up to $19 billion transitioning to fiber-to-the-home, but it too has halted further expansion to wait for customer demand to keep up. Contrast that with AT&T strategy of upgrading its copper networks with fiber-to-the node, (where it brings fiber to the equipment in the neighborhood, then uses the existing copper to connect to the home.) I’ve called it the slow road to fast broadband, but it’s certainly less risky and much, much cheaper.

Given that many ISPs are content to use their copper until customers are ready to rip it out of the ground and dig their own fiber trenches, Huawei’s advances are a boon to it and to the end consumer who may well be using DSL for the next several decades at this rate. To reach the 700 Mbps speeds, Huawei is relying on what it calls SuperMIMO (multiple-input multiple-output) technology that uses four twisted pairs to achieve its downstream speeds. This technology addresses crosstalk among multiple twisted pairs and increases DSL bandwidth by 75 percent, from an average of 100 Mbps per twisted pair to approximately 175 Mbps.

Related GigaOM Pro Content (sub req’d):
Who Will Profit From Broadband Innovation?

The New Net-Neutrality Debate: What’s the Best Way to Discriminate?

When It Comes to Pain at the Pipe, Upstream Is the New Downstream

If the U.S. wants more folks to get broadband (and the president and the FCC do), prices will need to drop for the access and the equipment, disinterested parties will have to find a reason to subscribe, and the government or ISPs will have to expand broadband availability for the rest of the country. The data also underscores how telcos are losing broadband subscribers to cable companies, as Om pointed out two weeks ago.

Related GigaOM Pro Content (sub req’d): Who Will Profit From Broadband Innovation?

Image courtesy of Flickr user Gavin St. Ours

From AT&T’s investor report (download PDF):

1. At the end of the second quarter, AT&T had 16 million total wired broadband connections, up 404,000 over the past year but down 92,000 from first-quarter 2010 levels. Total broadband connections, which include business and consumer wireline subscribers and wireless customers with 3G LaptopConnect cards, decreased by 93,000 in the quarter to reach 17.4 million.
2. Total consumer revenue connections at the end of the [second] quarter were 44.3 million, compared with 46.3 million at the end of the second quarter of 2009 and 45.0 million at the end of the first quarter of 2010.

Now let’s shift to Verizon. From its second quarter 2010 earnings release:

Broadband connections totaled 9.3 million at the end of the second quarter 2010, a 2.5 percent year-over-year increase. This is a net increase of 28,000 from the first quarter 2010, as the increase in FiOS Internet connections more than offset a decrease in DSL-based High Speed Internet connections.

Now 28,000 net new connections for a company the size of Verizon and AT&T’s decline tells me something isn’t going too well. Sure the operators are desperately trying to get their DSL customers to upgrade to U-verse and FIOS, but those conversions aren’t happening fast enough. Richard Greenfield, who follows the cable companies for BTIG Research in a note earlier this morning to his clients writes:

We estimate loss of 46K (including Q, which is yet to report) - a notable change for the RBOCs in broadband.

Compare this to the cable guys. They just keep ramping up the speeds and keep winning the consumer mindshare. Many view DSL as a laggard technology and are happy switching to cable broadband.  Greenfield further notes:

We expect the top two cable operators (Comcast and Time Warner Cable) to report collective broadband additions of at least 150K, if not more (compared to 398K in Q1 ‘10 and 554K in Q2 ‘09). In addition, we expect positive broadband additions for other major cable operators such as Cablevision, Charter, Cox, Insight and Mediacom, which should lead to an even greater advantage for cable in Q2 2010 versus the RBOCs. Cable’s broadband market share appears to be around 56%, up 100 bps year-over-year, while the RBOCs have fallen to 44% from 45%. We believe cable industry market share could reach 58% by the end of 2011, as share gains are beginning to accelerate.

My quick take: phone companies are too busy chasing the higher margin wireless and wireless broadband revenues that they are leaving their core businesses open to attack.

Related GigaOM Pro Content (sub req’d): Who Will Profit From Broadband Innovation?

Image courtesy of Flickr user Gavin St. Ours

Tomlin noted that the deployment will take advantage of the existing network and is an economical way to expand the reach of the network.

But for those who think that their U-Verse will get faster: It won’t. This isn’t as exciting as the 80 Mbps that AT&T’s John Stankey spoke with me about in May. And for those who don’t already have U-Verse via fiber to the node in their neighborhood, y’all aren’t going to get it. It will extend the range of U-Verse services by somewhere in between 1,000 and 2,000 feet. Basically, this is an incremental upgrade that will help AT&T reach about 6 million more homes before the end of 2011 with the service to hit its goal of 30 million homes passed. Given that AT&T said it would do this by late 2008, and cut back on those plans. I suppose this upgrade is better late than never.

Image courtesy of Flickr user Eddie~S

Related GigaOM Pro Content (sub req’d): Who Will Profit From Broadband Innovation?

Now compared to 5 billion mobile connections, the 500 million number looks puny, but one has to put this in perspective. For instance, the 485 million broadband connections at the end of Q1 2010 represented 8.4 percent of the worldwide population penetration and a household penetration of 30.8 percent. Makes sense: a lot more homes are likely to have one broadband connection, though those home dwellers may have one or more mobile phones.

According to Point Topic, DSL still is the dominant technology with a 64 percent share of the global broadband market (roughly 312 million) followed by cable broadband with a 20 percent market share (about 98 million) and fiber-based connectivity bringing up the rear at 62.5 million connections or 13 percent of the total. China is the largest market for fiber-based connections (23.2 million) with Japan accounting for 17.6 million and South Korea with 8.3 million connections.

At the end of the first quarter of the year, China was the top country with 112.59 million broadband connections followed by the US, which had 87 million broadband subscribers.

From a regional standpoint, South and East Asia (which include India and China) now represent the largest region in terms of broadband subscribers, followed by Western Europe and North America. Of all the regions, South and East Asia represent the fastest quarterly growth — up 5.65 percent during the first quarter of 2010 versus the fourth quarter of 2009. Nearly 6.8 million subscribers were added in that region, while Western Europe and North America added 2.5 million and 2.1 million new subscribers respectively.

China added 6.05 million subscribers, India added 550,000 subscribers and Vietnam added 150,000 new subscribers during the first quarter. In Mexico, Telmex acquired 247,000 new customers while in Brazil, Telefonica de Brasil added 163,000 new subscribers and NET Servicos added 106,000 new subscribers.

The consumer electronics retail giant, with much fanfare, announced it was buying the independent DSL provider three years ago. It was going to use the Speakeasy brand and expand into the small- and medium-sized business category. Total cost of the deal: $97 million.

Fast-forward three years, to March 2010, and Covad and Megapath — both competitive local exchange carriers — said they would merge their operations and become a managed service local exchange carrier. Now, they’ve picked up Speakeasy, which has about 30,000 customers.

To me, this deal means that there is little or no room for independent DSL providers, especially as we move towards an ultraband future. Sure, there are exceptions like Sonic.net, but in general the capex requirements are getting too high to stay competitive with cable and fiber providers. In a press release announcing the transaction D. Craig Young, MegaPath CEO said:

“The combination of Covad, MegaPath and Speakeasy will create the next-generation CLEC – an MSLEC that can offer customers and partners a full suite of managed IP broadband services and access over a powerful national network…With the additional resources, mature channels and enhancements to the service portfolio, we expect the combined companies to extend their leadership position in the SMB, enterprise and wholesale markets.”

Craig Young, current CEO of MegaPath, will become executive chairman of the combined businesses; reporting to Craig will be Pat Bennett, who will continue as CEO of Covad Communications, and Bruce Chatterley, current CEO of Speakeasy, who will be president of the commercial unit in charge of all non-wholesale customer sales and the marketing division. Covad is owned by private equity firm Platinum Equity Partners.

I like the FCC’s hardware approach better than the strategy of speed testing over a web connection. The prior software method, provided by Ookla, often returns widely varying results for my 20 Mbps home FiOS connection. The results are dependent on the server used for testing and based on a single activity during a snapshot in time. In contrast, the hardware approach will place a box between a consumer’s home network and a provider’s network to measure the constant end-user throughput from the Internet service provider. All activities, including audio downloads, video streaming and basic web browsing, will be captured by the hardware over time, offering more accurate results.

Related content from GigaOM Pro (sub req’d):

Who Will Profit From Broadband Innovation?

Image courtesy of Flickr user pfly

DSL Phantom Mode Explained. Click to view the graphic.

In this era of fiber to the home, it’s easy to dismiss copper-based DSL, the broadband connectivity technology commonly sold by phone companies worldwide. Looks like it’s too soon to completely write off this technology, however. Alcatel-Lucent, a company whose lineage is as old as the phone itself, says its research arm, Bell Labs, has been able to achieve downstream speeds of about 300 Mbps (over a distance of 400 meters) or 100 Mbps over a distance of one kilometer.

This is possible using a technology called DSL Phantom Mode. According to the company:

At its core, DSL Phantom Mode involves the creation of a virtual or “phantom” channel that supplements the two physical wires that are the standard configuration for copper transmission lines. Bell Labs’ innovation and the source of DSL Phantom Mode’s dramatic increase in transmission capacity lies in its application of analogue phantom mode technology in combination with industry-standard techniques: vectoring that eliminates interference or “crosstalk” between copper wires, and bonding that makes it possible to take individual lines and aggregate them.

The idea behind DSL Phantom Mode is that incumbent phone companies such as AT&T, which are heavily invested into the aging copper infrastructure, can keep using those pipes for a lot longer. However, phone companies such as Qwest will need to install new gear in the central office and in consumer homes.

Alcatel-Lucent’s efforts aren’t the only attempts to extend copper’s life and make DSL go faster and faster. Stanford University professor John Cioffi is working on a gigabit DSL solution and has started a company to give DSL a lift.

The map defines broadband as any technology (excluding mobile broadband providers) delivering speeds of 200 kbps down. I challenge folks to surf to Facebook, the new video-heavy CNN site or even get their Gmail over such a connection. It’s not a fun experience. Plus, at those speeds video streaming isn’t going to happen at all.

However, there are only a few areas of the nation that don’t have access to at least 200 kbps at the end of 2008, and according to the map many folks have a choice of between four and six providers. However, given that some of those are undoubtedly meeting the old minimum standard of 200 kbps or even the new minimum standard of 768 kbps, I can’t say this map really proves a competitive broadband market for anyone who wants to do anything more than get email.

Even if the map’s not your thing, the report does have some good data, such as the nifty chart below that shows the distribution of access technologies based on the speeds they provide. Given that we’re moving toward a video-centric web that’s going to require faster download and upload speeds, I think the title of this chart should be, “Why DSL is Doomed.”

Related GigaOM Pro Content (subscription required): 

When It Comes to Pain at the Pipe, Upstream Is the New Downstream

The data also shows that over the past 12 months, Latin America and Eastern Europe were the fastest-growing broadband regions. Meanwhile Europe has emerged as the hub of IPTV activity, with some 13.6 million IPTV users as of the end of June. France remains the “champion” IPTV country, with more than 7 million subscribers, the Forum said in a press release.

The number of broadband subscribers in Europe now stands at around 135 million. As we’ve noted previously, Europeans get much faster broadband than those of us in the U.S., largely due to competition in the region.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• TV Apps: Evolution from Novelty to Mainstream
• Why iPad 2 Will Lead Consumers Into the Post-PC Era
• The Near-Term Evolution of Social Commerce

Thankfully, my wish was granted when Covad offered an ADSL2+ connection with a download speed of up to 15 Mbps. And ever since that connection came into my apartment, life has been good. The speeds have been fairly consistent, generally hovering around the 9 Mbps mark, while at times falling to around 7 Mbps or rising to as much as 12 Mbps. That made pulling down email, web pages, RSS feeds, tweets, videos, iTunes, Flickr, and Facebook incredibly easy.

The problem arose this past week when I decided to do two things: one, sync my music collection between two computers using DropBox, and two, back up my Macbook Air using using Mozy’s Pro online backup service. It’s been about four days since I set everything up, and the results are dismal. Only 1 percent of my hard drive is backed up and less than 15 percent of my music has been uploaded.

Why? Because I’m getting upload speeds that are abysmal. While a speed test shows an upstream bandwidth of around 860 Kbps — Covad promises up to 1 Mbps in upstream bandwidth — the actual data transfers are much slower, around 90 Kbps. And when I tried to do the backups in the office, the performance over AT&T’s Business DSL line was simply terrible. I looked around and it turns out most DSL service providers have terrible upload speeds — 768 Kbps or lower.

The cable guys are a little better, though not by much. On principle, I don’t use Comcast, especially since they instituted metered broadband. Of course I could move back to New York and sign up for either Verizon FiOS or Cablevision, but that isn’t exactly a realistic option.

The point is that inadequate bandwidth means the actual upstream speeds fall short of what the speed test claims — and that has left me unable to do practically anything. Forget sharing big files, and I can’t even make a decent Skype call. My T-Mobile BlackBerry Curve can’t use the UMA connection, and uploading photos to Flickr/Facebook is a pain. As more products come to market that need symmetrical high-speed Internet access, the paucity of bandwidth is going to become a bottleneck. The problem is that we get so enamored by download speeds, we forget that we need solid upstream capacity as well.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Report: The Ongoing Battle for the Digital Home
• A 2011 Connected Consumer Forecast
• Connected Consumer Q4: New Platforms and OTT’s Dynamic Duo Dominated

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A 2011 Connected Consumer Forecast
• Connected Consumer Q4: New Platforms and OTT’s Dynamic Duo Dominated
• Big Data, ARM and Legal Troubles Transformed Infrastructure in Q4

DSL is still the most widely used technology, but fiber is rapidly catching on. In 2002, there were 18,000 fiber broadband subscribers — now there are 45 million. Whichever way you look at it, this is a massive achievement and the numbers show that broadband is the platform. Had it not been for broadband, we wouldn’t have seen the emergence of Skype, YouTube, and countless other such innovations. But it’s all coming under threat, thanks to the backward-looking policies of companies like Time Warner Cable, Comcast and AT&T, all of which want to put a meter on bandwidth — and with it, innovation.

We will worry about that another day. For now, remember: 400 million broadband subscribers.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Why iPad 2 Will Lead Consumers Into the Post-PC Era
• The Near-Term Evolution of Social Commerce
• Content Farms: The Players, The Benefits, The Risks