Broadband Growth In U.S. - 1.3 Million New Q3 2008 Customers

Leichtman Research Group, Inc. (LRG) has just published a short report that looks at the twenty largest telco and cable companies in the United States. These twenty companies represent 66.7 million (94% of U.S. market) customers. Here's a breakdown of some of the information in the report:

• Cable companies have 36.5 million broadband subscribers.
• Telephone companies have 30.2 million broadband subscribers.
• The top cable companies added over 870,000 subscribers, representing 67% of the net broadband additions for the quarter versus the top telephone companies.
  
• Overall, broadband additions in 3Q 2008 amounted to 61% of those in 3Q 2007 – with cable having 82% as many additions as a year ago, and Telcos 40.
  
• The top cable broadband providers have a 55% share of the overall market, with a 6.3 million subscriber advantage over the top telephone companies.

Bruce Leichtman, president and principal analyst for Leichtman is quoted in the report:

Over the past two quarters the top cable providers accounted for 71% of the net broadband additions, adding over 900,000 more broadband subscribers than the top telcos. Cable’s recent success compared to the telcos should not necessarily be interpreted as consumers suddenly choosing cable’s speed advantage over that of the telcos' DSL service. It is more a function of the telcos' shift in focus towards higher value subscribers while cable has been consistent in marketing broadband as part of its nearly ubiquitously available Triple Play bundles.

The report includes a very nice chart that breaks down subscriber numbers for all 20 of the companies. You can view the online version and download a PDF here.

Cable Companies Selling More Broadband Than Telcos

Last week the Leichtman Research Group published a study that included the nineteen largest cable and telephone broadband providers in the United States. The survey, representing 94% of the current U.S. broadband market, revealed some interesting findings:

• The top broadband providers account for 64.1 million subscribers.
• Cable companies have about 34.7 million broadband subscribers.
• Telephone companies have about 29.5 million subscribers.

And even more interesting:

• The top cable companies added 1.2 million subscribers, representing 54% of the net broadband additions for the quarter versus the top telephone companies
  
• This is the first quarter since 3Q 2004 that cable added more broadband subscribers than telephone providers.
• Overall, broadband additions in 1Q 2008 amounted to 75% of those in 1Q 2007 – with cable having 84% as many additions as a year ago, and Telcos 67%.
• The top cable broadband providers now have a 54% share of the overall market, with a 5.2 million subscriber advantage over the telephone companies.

Cable broadband subscriber rates are growing at a more rapid rate than the telcos. The cable companies have built a network that has always been easier to upgrade and offer broadband services on. Telcos are stuck with having to provision lines for ADSL by removing bridge taps and loading coils on copper wire lines that, in some of the older cities, are approaching 100 years old. The telcos have also had to deal with distance limitations and have struggled with cramming ADSL equipment into remote terminals in the field - there is only so much room in those roadside boxes and if they don't have space for you, you don't get a connection. Here's more from the Leichtman Research Group:

Verizon added a net of just 4,000 subscribers to its copper-based DSL service in the first quarter. It gained 262,000 customers for its fiber-based (FiOS) service during the same period.

Is the low hanging ADSL fruit picked over? The ADSL push by the telcos may be coming to an end - at least for some of the providers.

See the Leichtman Research Group study for details.

Tera-bits Per Second Over Fiber

Tech.co.uk has reported that Tohoku University researchers in Japan have enabled Quadrature Amplitude Modulation (QAM) over fiber to move information at rates of hundreds of tera-bits per second. Here's a few quotes from the Tech.co.uk press release:

At the heart of the development is a technique already used in some digital TV tuners and wireless data connections called quadrature amplitude modulation (QAM). One glance at the Wikipedia explanation shows that it's no easy science, but the basics of QAM in this scenario require a stable wavelength for data transmission.

As the radio spectrum provides this, QAM-based methods work fine for some wireless protocols, however the nature of the optical spectrum means this has not been the case for fibre-optic cables ... until now.

The university team has solved the stability problem using a special laser that makes it feasible to pipe data down a glass fibre using the QAM method at blistering speeds. Although we shouldn't expect to be choosing from internet connections rated in Tbit/s anytime soon, the development could one day make us look back on ADSL as fondly as we now do our 56K modems.

Analog modems have used a form of QAM for years to move information from device to device across the Public Switched Telephone Network (PSTN) or voice network. QAM is also used by cable modems and ADSL modems to modulate (convert digital signals to analog) and demodulate (convert analog signals back to digital) communications signals.

Let's try to get a basic understanding of how QAM works - without any math! Computing devices (computers, PDA's, laptops, etc) use digital signals (1's and 0's) to process, store and manipulate information. Sending this information over long distances though typically involves a conversion or modulation of digital signals to analog signals on the sending device and a conversion or demodulation of analog signals to digital signals on the receiving device. QAM has been the method of choice for transmitting signals this way for years.

QAM combines amplitude modulation (think height of a sine wave) and phase shift (think of a sine wave moving along the x-axis relative to a zero degree reference) and allows multiple bits (combinations of binary 1's and 0's) to be transmitted for each cycle of a sine wave. I like to use the term multiple bits per cycle when I describe QAM.

QAM is categorized by the number of bits that can be transmitted in one sine wave cycle. To get a simple understanding let's take a look at 16-QAM. 16-QAM is considered rectangular QAM - the square root of 16 is 4 and this indicates that each cycle of a 16-QAM waveform can represent a 4 bit binary (1 and 0) pattern. Using the same method we can calculate 64-QAM represents an 8 bit binary (1 and 0) pattern because the square root of 64 is 8. 256-QAM can represent a 16 bit binary (1 and 0) pattern because the square root of 256 is 16, etc.

QAM signals are susceptible to instability and noise but it appears the Tohoku University researchers have figured out a way to stabilize optical signals and use QAM methods for tera-bit level data transmission. I have not been able to find any detail on the stabilization methods being used at this time.

HAPPY THANKSGIVING!

Verizon Launches 20 Mbps Symmetrical FIOS Service

On Monday of this week Verizon announced 20 Mbps symmetrical FIOs service in parts of New York, New Jersey and Connecticut for as low as $64.99 a month. There are two things that I find exciting about this offering. First - it's great to see the bandwidths continue to go up. I feel this is just the start and we'll see bandwidths of over 100 Mbps within the next two years in selected areas as the telcos, like Verizon, go head-to-head with the cable companies like Comcast. If you are lucky enough to live in an area where FIOS is available you re in for a real treat regarding bandwidth.

The second exciting thing I see here is a shift to symmetrical services. Broadband products to date, including FIOS, ADSL and cable modem, have always been asymmetrical - the "A" in ADSL is even short for asymmetrical! Asymmetrical services provide more downstream bandwidth than upstream bandwidth. It's been a way for the providers to "cheat" a bit based on traditional Internet usage. Consider the way you traditionally surf the web - you enter a small amount of information in the address bar and hit enter. The address you type ends up going to a DNS (Domain Name Service) server and is looked up. The DNS server sends back the IP address of the site you want and your browser is directed to that site location. The site server then sends your browser the site contents you want to see.

Think about it - in the traditional model - a little information gets sent upstream and lots of information comes back downstream. Recognizing these patterns the providers have designed their networks to provide a little upstream bandwidth and lots of downstream bandwidth. Well...... all this has changed with this new FIOS offering from Verizon. Here's a quote from a Verizon press release:

"Verizon's new symmetric service is a smart response to the changing usage patterns of high-speed Internet subscribers," said Vince Vittore, senior analyst with Yankee Group. "We believe that as user-generated content continues to expand and telecommuting increases in popularity, upstream speed will become just as important as downstream for all users."

User generated content........ upstream speed becoming just as important as downstream for all users...... these are historical times!

Update - 10/31/07 - I found this video product demo on YouTube.

Broadband Gaming in the Sticks

I'd like to thank Karl Kapp for including my blog in his Blog Book Tour for Gadgets, Games and Gizmos for Learning.

Karl's book takes a look at members of the "just starting to retire" baby boomer generation - highly skilled individuals who will be taking with them all of their expertise. Simultaneously, a new generation of employee (dubbed by Karl and others as "gamers") is entering the workforce with a different focus and learning style. For the first time, our workplace will experience the invasive influence of video games, Internet surfing, blogging, and podcasting. Karl's personal website is linked here, the book website is linked here and you can purchase his excellent book by following this link to Amazon.

In my blog today I take a look at broadband access and availability - critical for gamers and many of the applications Karl discusses in his book. My post is a little different than most that have been posted on the blog tour - I hope it makes sense and you can make the connections to gaming, gamers and Karl's book.

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One of my passions is what I refer to as the "broadband divide" - basically the broadband "haves" and "have-nots" in the United States. In today's blog I focus on availability in some of the rural parts of my state - the Commonwealth of Massachusetts. Broadband availability and affordability are critical as our online efforts in education (including gaming) move forward - whether it's bandwidth on our campuses or in our student's homes. Residential access is especially important for community colleges since most do not have dorms - students are commuting back and forth from their homes.

Let's get into some of the things going on in my state - I think you may find similar scenarios wherever you live.

When most people think of Massachusetts the first thing they think of is probably Boston and second maybe the Red Sox or New England Patriots. If you've been to Boston and the surrounding area you know, like any big city and its suburbs, it's relatively congested. The fact that it is congested is good in some ways - typically it's great for things like broadband roll out. Houses are close together with short consistent length driveways. Many of the neighborhoods are older and there are still poles carrying power telephone and cable services. It's relatively easy for providers like Verizon to come into a neighborhood and run a piece of aerial fiber down a street and then add relatively short and consistent length drops to homes on the street. As a result, people in these kinds of neighborhoods (including school kids) have lots of bandwidth available for information, education and entertainment.

Those in the more rural parts of Massachusetts (and many other areas in our country) are not so fortunate when it comes to broadband availability. Today, there are 32 towns in rural parts of Massachusetts that have no high-speed Internet, or broadband, access whatsoever. An additional 63 are under-served, with broadband access available in only some areas of the community. Many of these rural town are parts of regional school districts which can present significant problems for students living in these towns. I'll use the beautiful town of Blandford, MA as an example. Blandford is part of a regional school district that services seven towns. Blandford does not have broadband availability (no cable modem or DSL) while others do (although coverage in some of these towns is not complete). Students living in Blandford are at a "broadband disadvantage" when compared to other students that do have access.

In a podcast interview late last month, Stan McGee, Massachusetts Assistant Secretary for Policy and Planning for the Executive Office of Housing and Economic Development and also Director of Wireless and Broadband Development (try to get all of that on a business card!) talks with Sharon Gillett, Commissioner of Telecommunications and Cable for the Commonwealth of Massachusetts. The two discuss Governor Deval Patrick’s recently announced broadband initiative.that will invest up to $25 million over five years, and will seek to make broadband available in all under-served towns in Massachusetts by 2010 and "improve conditions" in many of the under-served communities. Here's a few quotes from the show-notes:

The main elements of the plan include creating a Massachusetts Broadband Incentive Fund. And the fund will be capitalized by the issuance of a $25 million broadband bond. The fund is proposed to be managed by the Massachusetts Broadband Institute, a division to be created within the Massachusetts Technology Collaborative. Once this management entity is in place, we believe public-private partnership developed here can be extended to under-served regions of the Commonwealth to ensure ongoing broadband equity.

The Commonwealth’s approach will be to invest public funds into essential and long-lived broadband infrastructure assets. These include things like fibers, conduits, or towers for wireless broadband services. By investing in these assets, the Commonwealth will lower the overall cost of deployment for private providers.

Public-private initiatives have worked in some situations and failed in others - several Municipal WiFi projects come to mind off the top of my head. There have also been some successful wireless initiatives in rural areas including an AT&T implementation in Alaska I blogged about recently.

The Massachusetts initiative is referred to as "ambitious" and I'll add challenging but it is something we must do. Here's one of my favorite quotes from the podcast:

We believe that any individual or community without high-speed Internet access today is educationally and economically disadvantaged, and Governor Patrick tasked us early on to prepare a plan that would bridge the digital divide that faces all too many communities across the Commonwealth.

It's great to hear this kind of spirit and ambition and I hope it does not get bogged down in state politics. I do have concerns that $25 million may not be enough to push this to critical mass in Massachusetts. It's a start though - I look forward to the day when all of my students and their families have available and affordable broadband access in their homes.

Goodbye Copper?

There’s been some recent press about Verizon and their FIOS product installation. FIOS is a fiber optic network service that delivers voice, video and data services. You may also see it referred to as a Fiber to the Premises (FTTP) or Fiber to the Home (FTTH) service that Verizon is selling and installing in select markets in 16 different states.

Most who have the service installed are extremely happy with the bandwidth and cost when compared to lower bandwidth DSL and Cable Modem services. The product has become so popular that it is even being used as a selling point by real estate agents when marketing homes.

A few are complaining though. It appears Verizon, when installing the FIOS service, is cutting out the existing copper lines leaving the customer with only one option – fiber and FIOS. There are a couple of good reasons from a business perspective for Verizon to do this. The first is the existing copper wiring is old and requires a significant amount of maintenance – Verizon spends hundreds of millions of dollars a year just maintaining the existing “copper plant” and it makes sense to remove it when it is replaced. The second reason is the Telecommunications Act of 1996 which requires the telephone companies (like Verizon) share their existing copper lines with competitors. There is no current legal requirement for Verizon to share new fiber optic lines with anyone.

In fairness to Verizon, there is a three step notification process for people who sign up for the FIOS service. According to the International Herald Tribune, customers are told by the Verizon sales person, it is indicated in the sales contract and the customer is told by the technician that the copper will be cut out. Currently, Verizon is publicly stating they will replace removed copper if a FIOS customer wished to revert back to copper service.

Also according to the International Herald Tribune, Verizon has filed more than 100 notices with the Federal Communications Commission to retire portions of copper throughout its network.

I can understand the customer concerns about lack of choice and some technical issues like battery back-up and also Verizon’s concerns about having to maintain two separate networks.