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June 26, 2000 Provided by System Dynamics Inc. in association with Pulver.com

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IN THIS ISSUE:

Heard on the Net

Recap
Broadband Home Summit 2000

"Bredband" In Sweden -
Pioneering the LAN Model

pulver.com 2000 Calendar
Upcoming VON conferences

A Note on our Website


Heard on the Net

News about People and Companies influencing The Broadband Home

People News

David Bukovinsky, formerly CableLabs VP in charge of DOCSIS and PacketCable, has joined startup iSKY, Inc as Vice President, Program Management. iSKY is launching a satellite next year to provide 2-way Ka-band internet access [www.isky.net].

Jay Rolls has left his position as VP, Network Engineering at Excite@Home. He has joined Network Physics, a startup in Menlo Park, CA. The company is creating new technology for boosting the performance of IP networks. (http://www.networkphysics.com)

(Please email people@bb-home.com to report a change in your position.)

Company News

The M-TEC GROUP of Belgium announced a new business unit: M-TEC WIRELESS to focus on the development of a wireless extension to existing broadband networks. The first target will be in-house networks for SOHO and residential users. The new BU coordinator is William Watté, Manager Business Development of the M-TEC group. Existing units within the group focus on HFC broadband, energy and services. (www.mtecgroup.com) (www.mtecwireless.com)

Broadband Internet TV company ICTV has announced an $87 million investment through a group led by Canadian cable operator Shaw and ITV company Liberty Digital. Investors also include ACTV, Adelphia Communications, Lauder Partners, Motorola, OpenTV and TV Guide. The investment validates founder Gary Lauder's perseverance in supporting headend-centric services as providing good economics, simplicity for users and the ability to avoid obsolescence driven by Moore's law. ( http://www.ictv.com )

Canadian cable operator Shaw Cablesystems announced that two hundred and fifty thousand Canadians are now subscribing to its high speed Internet service, Shaw@Home, making it the most popular cable modem service in Canada. (http://www.shaw.ca)

DLEC NorthPoint has secured operational line-sharing agreements with all major ILECs. Line sharing will make DSL-based broadband services more affordable and is key to NorthPoint's strategy to deliver DSL services to the consumer market. NorthPoint's alliance with RadioShack Corp and Microsoft will enable U.S. consumers to "test drive" and order MSN Internet access (using NorthPoint DSL) in thousands of RadioShack stores. (http://www.northpointcom.com)

Telia, Sweden's national telecommunications company, completed an IPO which valued the company at SKr256 billion ($29 billion). The government made 35% of the shares available to the public. Telia is expected to use the newly-raised cash to invest in other European telecomm companies. (http://www.telia.com)

AT&T Cable Services will launch the first U.S. trial to test how multiple Internet service providers can offer high-speed, always-on cable Internet service over an HFC network. The six-month trial, starting in November 2000 in Boulder, Colo., is called AT&T Broadband Choice. It will be used to resolve technical and operational issues so consumers can have a choice of ISPs. AT&T Broadband sent letters to 10 national and regional ISPs seeking their participation. (http://www.attbis.com)

Sega Enterprises Ltd. announced it would start offering broadband Internet access through its Dreamcast machine in Japan. Sega will launch the service July 15 with 40 cable companies, rising to 200 eventually. Sega expects the move to lift sales of Dreamcast and adapters for connections to cable TVs. In other news, Sega is reportedly in talks to license technology from its Dreamcast game console to consumer electronics makers so that Dreamcast titles can be played on a wider array of devices, including set-top boxes. Sony previously unveiled similar plans. (http://www.sega.com)

Amsterdam-based cable operator United Pan Europe Communications (UPC) has continued to delay the initial public offering of stock in its high-speed Internet subsidiary chello broadband on the basis that it is participating in strategic discussions that would be relevant to shareholders. Media reports regarding possible reasons for the delays have included indications that UPC and Telewest were in talks to give UPC a foothold in the UK and rumors regarding merging of Excite@Home's international operations with Chello. In other UPC news, UPC announced that Microsoft agreed to exercise warrants that will increase its total shareholding in UPC to approximately 8%. (http://www.chello.com) (http://www.upccorp.com)

CableLabs has announced that it will launch a web site, Go2Broadband, to serve computer makers and retail partners in selling cable modems. The site will become active June 30th and will report the areas where cable modem service is available in the U.S. (http://www.cablelabs.com) (http://www.go2broadband.com)

Into Networks has been working overtime on deals. These include the creation of the Disney Interactive Channel on Into Networks' PlayNow.com service, providing products from Disney Interactive over Into Networks' broadband content delivery platform; teaming with U S WEST to offer software-on-demand to U S WEST broadband customers; and completing a $36.6 million strategic private equity financing. Investors in this round include Cox, NTL, UnitedGlobalCom, Adelphia and Morgan Stanley Dean Witter. (http://www.intonet.com) (http://www.disneyinteractive.com)

DLEC Covad Communications announced a definitive agreement to acquire privately held Nashville, Tenn. based BlueStar Communications Inc., a provider of broadband and Internet services for small and medium-sized businesses throughout the Southeastern U.S. The transaction is valued at approximately $202 million. It will expand Covad's reach beyond major metropolitan areas into smaller cities and rural areas. On a combined basis, Covad will be able to provide broadband services out of more than 1,800 central offices (COs) throughout the country reaching more than 40 percent of all U.S. homes and 44 percent of all U.S. businesses. (http://www.covad.com)

Broadband Gateways, Inc., and Jetstream Communications, Inc., announced a partnership to provide a new, intelligent voice and data broadband solution into the small business and residential markets. Broadband Gateways will launch its new Intelligent Premises Gateway on June 26 at the Broadband Year 2000 exhibit in San Jose, California. Broadband Gateways also announced that it has closed an additional round of equity financing, with a $17.2 million infusion to support its product roll-out. Providence Equity Partners and Prime Investments led the funding, while Texas Instruments provided a corporate investment. (www.bbgateways.com) (www.jetstream.com)

Time Warner Cable of Maine has deployed Broadband Access Systems' CMTS. The operator serves 100,000 video subs in the Portland area, and maintains a data service penetration of close to 20%, one of the highest in the US. (http://www.twmaine.com) (http://www.basystems.com)

Telrad Networks, an Israeli telecom solutions provider, announced the creation of spin-off comMATCH Ltd. comMATCH provides connectivity and interoperability solutions for Access and Public Networks. The company's technology enables the provisioning of enhanced telephony services (e.g., 3way calls, call forward, park on busy tone, etc.) over Next Generation Networks using various infrastructures. comMATCH manufactures the DUET, a set of integrated voice gateways. (http://www.comMATCH.com)


Recap: Broadband Home Summit 2000

We held our first Broadband Home (BBH) conference, Broadband Home Summit 2000, in San Jose on June 6-7, 2000. It brought together more than 125 attendees from 90 companies and 13 countries, representing all sectors of the industry and parts of the globe for two days of roundtable discussions covering many aspects of the industry.

Special thanks to all our speakers and moderators, who were responsible for the enthusiastic feedback we got from attendees. Many panelists and delegates told us how much they liked the opportunity to surface issues and meet with other people working in related areas. A vote of thanks also to MulticastISP, Sonicbox, Symbol Technologies and Tatung for setting up their demos.

The presentations from the BBH Summit are available on the Web. To view them, visit http://slides.pulver.com . Click on "Register" to obtain a password to access the slides.

The attendees generally agreed that the key element of a broadband home was a "fat IP pipe": "always-on" high-speed internet access using IP as the underlying protocol for all or most of the applications.

Beyond this, there was a broad range of opinion on many items:

  • How much bandwidth is enough (even in the near term)?

  • What is it all about? (Fast Web browsing, enhanced or time-delayed TV, entirely new applications)

  • What is the user platform? (PC, TV with digital set-top, TV with game console, Web tablet, PDA, all of the above)

  • Where is intelligence? (In the network, in the home, both)

  • What should a "home gateway" do?

  • Who will install and maintain the home network and home gateway; who will guarantee security and privacy?

  • How can speed and latency be guaranteed, especially for end-to-end packet telephony and multi-player gaming?

  • What is the business model for making money on broadband services?

Some differences of opinion seemed to come from different perceptions of what people want and need, their readiness to adopt new technologies and their willingness to pay for them.

Many service providers and vendors think that the critical near-term customer need is to connect several PCs around the home to the broadband pipe. These companies are working to launch home networks and gateways, sometimes packaged with installation and ongoing support.

Other providers believe that applications and content aimed at digital set-top boxes, Web tablets and other new Internet appliances (not at PCs) are really what's most important for the mass market.

We agree with summit speaker Monica Marics of MediaOne, whose group observes how real customers use broadband technology. She observes that whatever vendors predict about how people are going to use new technologies, they're often quite surprised by how they actually use them. This fits well with Sandy's favorite quote from the Summit: "Customers are not SNMP manageable" (Mike St. Johns, Excite@Home). We believe that service providers need to put capabilities in the customer's hands to find out what delights and provides value to them.

We were very encouraged by the positive response and enthusiasm of the Summit attendees and look forward to hearing from them and seeing them again at our Fall conference.


"Bredband" In Sweden -- Pioneering the LAN Model

It was the signs around Stockholm that surprised us. They were all over - on suburban train platforms, in bank office windows and in magazine ads. While awareness of broadband is not yet widespread in the US, Sweden has made "bredband" a priority for the country. It partly comes from a government drive to keep the country and its companies competitive by mandating the availability of broadband service throughout the country, directing subsidies to the lightly-populated northern regions. It has been spurred by the aggressive sales tactics of an ambitious new entrant determined to grab the lead with an intriguing new model for broadband access.

After one of our Swedish subscribers had emailed us about why he believes "the broadband revolution is starting in Sweden", we wanted to check it out for ourselves. During our recent Stockholm visit for Europe 2000 VON, we met with three broadband services companies. We also visited our Swedish email correspondent to hear his views and see how he and his fiancé use broadband in their Stockholm apartment.

Some things in Sweden were familiar from our US experience:

  • high PC penetration (in Sweden the government has provided tax incentives to encourage widespread PC adoption, higher than in the US)

  • high Internet awareness and usage (URLs everywhere, including the sides of motorcyles and the masts of sailboats)

  • faster access to existing Internet content as a driving application for broadband

  • competition between multiple broadband service providers

  • government pressure to open broadband providers' networks to other service providers.

However, some of the differences are significant. For example:

  • Over 60 percent of households in Sweden live in multi-dwelling units (MDUs), much higher than in the US where most households are in single family dwellings. The high population density in MDUs substantially reduces the underlying cost for broadband connection.

  • Many local municipalities have built fiber infrastructures (or have done so jointly with companies) to create metropolitan area networks (MANs).

The Ethernet or LAN Model for Broadband Access

We visited three leading Swedish service providers: Bredbandsbolaget, Telia, and Telenordia. We came away from these meetings with the strong feeling that Sweden is acting as the test case for a different and very appealing model for broadband access: the Ethernet or LAN model. This may well provide an alternate model to the cable modem and ADSL models now being widely deployed in the US.

The essence of the LAN model is to run high-speed Ethernet over fiber to an Ethernet switch serving an apartment building or multi-dwelling unit (MDU) or a group of private homes. Each home or flat has an Ethernet port capable of operating at 10 megabits per second (Mbps) or higher. The service is symmetrical, permitting the same speed in both directions.

This approach is in contrast to the standard US models, which are asymmetrical and operate at much lower speeds. The cable modem model shares 30 or 40 Mbps between several hundred homes, and is asymmetrical with substantially higher capacity "downstream" (toward the home) than "upstream" (away from the home). No home can expect to get more than about 1 Mbps downstream and 100 Kbps upstream except in lightly loaded periods.

The ADSL (Asymmetric Digital Subscriber Line) model typically provides 1.5 Mbps downstream and 64 or 128 Kbps upstream to each user, although routers can reduce the actual data rate.

The US models are optimized for conventional Internet applications such as Web surfing, which is highly asymmetrical, and email, which doesn't require much data. By contrast, the emerging Swedish model is optimized for self-hosting (each user acting as a Web host) and for full-screen video delivery.

Bredbandsbolaget

We visited Bredbandsbolaget (The Broadband Company, also known as B2), the pioneer of the LAN model, and met with Eric Anderbjork, the manager of consumer applications. B2 was formed about a year ago by Framfab, a leading Internet consultancy and service provider, and has moved very aggressively to sign up MDUs.

Several characteristics of the Swedish market have allowed B2 to move very quickly. More than half of Swedish families live in MDUs, and disproportionately more in the larger cities. Swedish city dwellers have very high PC and Internet penetration, probably the highest in the world. Dark fiber is widely deployed in the cities by several competitive providers. All of the cities in the southern portion of Sweden are interconnected by fiber.

B2's approach is to negotiate a three- to five-year deal with a building's owner's assocation or with a landlord, based on a commitment that at least 40% of the units will subscribe to the high-speed Internet service. B2 bears the expense of the fiber connection to the building, and builds the LAN structure in the building, pulling structured wiring to each unit and installing a high-speed Ethernet switch in the basement.

B2's initial consumer service is high-speed Internet access - truly high speed, since B2 guarantees 10 Mbps in both directions through its network. B2 prices this service at 200 Swedish crowns (about $25) a month, with a one-time installation fee of 2000 crowns (about $250). The user can connect multiple PCs within the unit (sharing the 10 Mbps guarantee), and B2 has recently started offering additional wiring for a one-time fee. They also have offers for the SOHO and enterprise markets.

Unlike most US cable and DSL providers, B2 encourages its users to operate servers, in the belief that every user should be a content producer as well as a consumer. It is especially encouraging uses to create and offer audio and video content. The aim is to increase the content available to the Swedish-speaking market by having much of it created by B2's users. B2's only stated restrictions on user-operated servers is that they cannot charge a fee, provide e-commerce, or provide illegal content. (For a higher fee, B2's SOHO service permits e-commerce and fee-based operations.)

B2 plans to deploy two additional services later this year - IP telephony and IP-TV. It will deliver IP-based telephone service over its LAN infrastructure, and plans to charge a flat rate for telephone service throughout Sweden. This is in strong contrast to the standard charging system in Sweden (and in most of the world except the US) where all telephone calls, including local calls, are metered. B2 expects that its flat rate and number portability will attract many of its Internet customers away from the incumbent telephone provider.

It will also use its infrastructure to offer television services. It is creating a center to encode all of the standard Swedish TV channels in MPEG2, and will deliver the video streams in multicast to each apartment unit. A special digital set-top box will "tune" and decode the MPEG2 streams, providing the equivalent of cable TV or satellite service.

Both telephone and TV services require quality of service (QoS). B2 asserts that they have equipped all of their routers to implement the necessary QoS so that the telephone and TV services will be indistinguishable from more conventional services. Plans for VOD are also on the horizon.

B2 has an impressive set of investors, including NTL, Investor, Intel and Carlyle Group. With their ambitious but capital-intensive plans and backlog of committed installations, their challenges will be to grow their staff, meet their current commitments, and deliver on their future promises. (http://www.bredband.com)

Telia

At Telia we met with Hans Ericsson (CTO of VoIP), Bruce Horowitz (Telia Research, Broadband Services) and Jonas Ahrberg (Broadband Services).

Telia is the renamed Televerket, the government-owned monopoly telephone company that was much admired for its world-class engineering. Sweden has been moving to a competitive telephone structure, and the Swedish government recently completed an IPO to spin out an initial 35% of Telia. Telia has all the advantages and disadvantages of an incumbent former monopoly provider (including lots of infrastructure, systems and people and inertia--both of customers and the company to change).

Telia is a strong believer in the benefit of broadband services, and has been moving to deploy ADSL services. In the near term, Telia's ADSL deployments should be accessible to 90% of Sweden's population. This will provide much greater availability of DSL than in the US, where loop lengths and remote terminals have limited the percent of the market currently reached by DSL.

Telia appears to have been challenged by B2's aggressive LAN approach and is now moving toward deploying LAN services in competition with B2. In distinction to B2, which will concentrate on services and deploy infrastructure only to enable the services, Telia intends to continue competing at all levels of the value chain--from fiber and cable in the ground on up through network management and services at the top level.

Telia's view is that over time, IP is the key, regardless of access method and regardless of service.

We came away from the meeting impressed with the quality of Telia's people and planning, but wondering if its strong corporate culture will permit Telia to respond effectively to a determined competitor like B2. (http://www.telia.com)

Telenordia Broadband

At Telenordia Broadband we met with Margareta Le Calve (its Managing Director) and Johan Torsleff. Telenordia Broadband is an operating division of Telenordia, a competitive local exchange carrier formed in 1995 by Tele Danmark, Telenor, and BT (British Telecom). The Broadband division was formed recently to compete in the broadband services market.

Telenordia plans to approach broadband access on the LAN model, using much the same approach as B2. However, it is not planning to follow B2's capital intensive investment in building wiring, but rather is trying to encourage each building to bear the cost of installing its own wiring. The rationale is that in Sweden's rapidly-changing competitive market, building residents and owners should avoid getting locked into long term commitments to a particular services provider - especially to a newcomer without a track record.

Since Telenordia is the third largest ISP in Sweden as well as a competitive telephony provider, they have offered free Internet access to customers who presubscribe to Telenordia telephone service. Although they do not yet have an IP telephony service, they are trying to attract customers by offering fixed monthly rate telephony over the existing infrastructure. This reflects their view that customers care most about features and cost, not technology. Thus they will move aggressively to capture market share while preparing to deploy IP technology to reduce the cost of telephone services.

Telenordia's future plans include many additional broadband services, but we did not hear the kind of specificity that made them seem to be imminent. (http://www.telenordia.se)


pulver.com 2000 Calendar - Upcoming VON conferences

We will be organizing and moderating the Broadband track at several upcoming VON conferences. (See the complete calendar at http://pulver.com/conference )

Fall 2000 VON - Sept 11-14, Atlanta, GA (http://pulver.com/von)

VON Asia 2000 - November 13-16, Hong Kong, China (http://www.pulver.com/asia2000/)

Broadband Home Fall 2000 - Oct 3-5, San Francisco, CA

The Broadband Home Fall 2000 Conference (BBH Fall 2000) will take place October 3-5 at the Sheraton Gateway Hotel in Burlingame, CA, near San Francisco airport. This follow-on to the BBH Summit will feature senior executives responsible for driving this industry forward. Based on the feedback from Summit participants we have scheduled both industry perspective talks and 24 break-out sessions.

The conference will include a reception for delegates and participants. This will be a great opportunity to take advantage of unique business and personal networking opportunities.

Visit the conference Web site ( http://TheBroadbandHome.com/bbh2000 ) for the preliminary conference schedule. Conference brochures, registration and hotel reservations will be available through the site in early July.

If you're interested in speaking at this or other pulver.com conferences, please visit http://www.pulver.com/speak , enter your proposal and be sure to check the box for the appropriate conference at the bottom.


A Note on our Website

We continue to add new links and additional resources based on your input. We welcome corrections, comments and suggestions from our readers on how to make the website most useful to you.


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Please send your comments and feedback regarding this issue of our report to editor@bb-home.com. Your suggestions for topics to be covered in future issues would be greatly appreciated.

Sandy Teger and Dave Waks
Sandy and Dave's Report on The Broadband Home
Originally published as The Broadband Home Report
June 26, 2000

editor@bb-home.com
http://BroadbandHomeCentral.com/report



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