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The October 31, 2004 Issue Provided by System Dynamics Inc.
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Briefly Noted: Updates, Observations and Trends

Each month, we collect miscellaneous happenings, studies, trends or observations that you might have missed. This month’s tidbits include an update on broadband deployment, a look at HDTV in the US, price wars in VoIP and some thoughts on how complicated "telephone service" is becoming.


Broadband Growth

Worldwide

Point Topic reports that the number of broadband lines worldwide rose by 55% to 123 million in the 12 months prior to 30 June 2004. Of these, the number of DSL lines worldwide increased by two-thirds to 78 million and cable modem and other broadband lines grew by 39 per cent to 45 million. "Other broadband" was comprised of FTTx, which had 9 million lines (7.3 percent of the total) by June 30; and other technologies, primarily fixed wireless access and satellite, which accounted for less than 0.3 percent of the total.

In terms of per capita penetration, Hong Kong with 21 high-speed lines per 100 people is edging closer to top-ranked South Korea's 24.4. If the metric used is absolute number of broadband lines, the US is in the lead with over 29 million lines. ( www.point-topic.com )

Latin America

The rate of broadband penetration varies greatly from country to country in Latin America, but Pyramid Research predicts that broadband will be the fastest growing telecom service in the Latin American region between 2004 and 2009. Broadband subscriber lines are expected to grow at a CAGR of 22%, compared to 2% for landline telephony and 6% for mobile phones.

The largest broadband markets in Latin America are Argentina, Brazil, Chile and Mexico, which together account for 83% of the region's broadband subscribers. In terms of growth, the Venezuelan, Mexican and Ecuadorian broadband markets are predicted to grow by a CAGR of 25% or more. In terms of technology used, Pyramid reports that cable is the preferred means in El Salvador, Paraguay and Colombia, but elsewhere DSL is dominant. ( www.pyramidresearch.com )


HDTV Is On the Upswing (Finally)

In long-ago times (the late 1980s and early 1990s), US pundits and politicians were frantic that Japan (and Europe to a lesser extent) was going to gain a Great Technological Advantage over the US through high-definition television (HDTV). Broadcasters asked the FCC to look at the HDTV question, cause an HDTV transmission system to be created, and ensure that spectrum was allocated to broadcast it, if more was needed. The combination of rapid Internet growth and a new administration in Washington caused HDTV to fade to the background for years.

Fast forward and today the HDTV era is finally arriving in the US, albeit slowly. This can be seen from the number of digital televisions being sold; the number of stations broadcasting in HD; the carriage of these stations by cable (and to some extent satellite providers); and increasing publicity and promotion by the FCC.

Sports are a key application for HDTV --> Click for larger pictureAccording to electronics analysts at iSuppli, shipments of digital televisions increased 113 percent from 2002 to 2003--from 1.7 million units to 3.7 million units. Sales estimates predict faster growth this year and will accelerate as prices drop and volumes increase.

FCC Chairman Michael Powell recently reported that 1,445 DTV stations were on the air, compared to fewer than 200 just three years ago. HDTV adoption is also being spurred by the availability of high-quality HD programming on DVD. The NCTA reports that as many as 90 million of the 108 million U.S. TV homes (83%) are passed by a cable system that offers HDTV programming. But systems offering HDTV is not the same as people subscribing. One (unverified) report indicated that only 600,000 homes use the high-definition service at Comcast, the leading cable provider with 21.8 million basic subscribers of which 8.1 million have digital cable.

Meanwhile the transition from analog broadcasting to digital television is slowly moving forward. The FCC phase-in plan for digital tuners requires TV makers to include digital TV tuners in half of all sets 36-inches and above sold after July 1, 2004. All TV receivers between 13 inches and 24 inches and all TV interface devices must include digital tuners after July 1, 2007.

On another front, the FCC unveiled a new Web site to serve as a source of information on the DTV transition and available high-definition programming. It allows consumers to find high-definition programming options available in their home, answers to frequently asked questions about the DTV transition and a guide for DTV shoppers.

We're not very up to speed on other markets, but our understanding is that Europe, which pioneered the Digital Video Broadcast (DVB) standard, has focused to date only on standard definition digital TV. Meanwhile in Japan, according to quotes from the International Broadcasting conference, "NHK broadcasts more HD programming to a larger installed base of HD TV sets than any other country." It is "all in the 1080/50 interlaced matrix it has been refining since the first analog HDTV broadcast in 1986."

We'd love to hear from readers in other countries who can update us on the reality of HDTV in their regions.

( www.isuppli.com ) ( www.fcc.gov ) ( www.ncta.com )


IP Telephony Prices: Where's the Bottom?

Vonage has reduced the price for their unlimited plan by $5, to $25. AT&T has lowered the price of its CallVantage service by $5.00 to $29.99. Packet8 and Lingo charge $19.95 a month for their unlimited plan. All of those include the US and Canada. Broadvoice goes them one better by offering their "Unlimited World" at $19.95, including unlimited calling to 21 countries including the United States.

The way this is going, there are probably some at an even lower price, although we haven't come across them. How low can they go?

( www.vonage.com ) ( www.att.com ) ( www.packet8.net ) ( www.lingo.com/guWeb/ ) ( www.broadvoice.com )