GLG News by Joseph Upton

Implications: ATT is following VZ's lead by offering $200 cash back to existing ATT customers that take one of the three Uverse bundled deals, with or without internet access.  The current slowdown in ATT spending on Uverse and everything else, follows the negative economic climate and failing mortgages situation, which are customers lost.

Analysis: ATT probably should take out advertisements and TV slots as VZ did a year ago, when they were giving away HD TV sets if customers took FIOS.  I wonder how customers are going to find out about this deal.  Perhaps ATT is doing direct mailings to those customers who were passed with Uverse and that just need a little financial persuasion to take the new video service.  Not a bad idea, and it may gain some customers who will figure in the take rate as a positive lift, with ATT trying to make their proposed 1 million takers with 8 million passed by year end, 2008.  Apparently, the vendors are suffering some with a slowdown in RBOC spending that always occurs in the early fall of each year, as the RBOC tries to slow the spending train down and make constrained budget numbers by yearend.  This particular stinky economic year appears to have slowed the spending train almost to a halt, and this bargain basement deal from ATT is a good indication of that spending slowdown.  This writer applauds ATT for the idea and sincerely hopes that the word on this $200 cash deal gets to the right customers.  It is funny that I live in a fiber-rich  (FTTH) neighborhood in FT Lauderdale, and cannot even get DSL, opting to put a Wild Blue dish in my upscale backyard for 1.5mbs.  Uverse may never get to me at this rate.

Implications: Google has locked down the strongest online video share with their Youtube offering.  Are they headed toward locking down customers via landline fiber, where they can act as ISP, Service Provider, and major advertising power on the net?

Analysis: Google is up to something.  The referenced article shows them with the strongest online video market share, which makes them even more powerful as the US undergoes the transition or merging, whatever you want to call it, of internet and television.  Google has the financial power to do just about anything, including building their own fiber optic network.  Monstrous task, yes.  Is it worth the money? Yes.  Consider a world where the fiber optic pipe to a home is really just a gateway for any vendor in the world to enter into a business relationship with either the consumer or the business owners.  Pretty powerful.  Advertising could pay a lot of the ticket to get the customers locked down with a hardline, funded with earnings from such advertising.  Having the name, Google, which is synonomous with just about everything, gets them into doors that most companies would love to have.  One could almost make the stretch that if its Google, it has to be good.  This writer applaudes any company that will help us move into the totally connected by broadband at high speed world, even Google.

Implications: Dan Hesse, CEO of Sprint is focusing on the customer service and new wireless product aspects to help turn his failing business around.  He is also moving forward with a joint WiMax venture with Clearwire, supported by financing from Comcast, Time Warner, Brighthouse, Intel, and Google.  Both of these improvements appear to be making a difference in the future viability of Sprint as a major wireless player.

Analysis: You have to like Dan Hesse.  He evidently is a fighter to the end and appears to be moving the Sprint wireless giant more toward the future than the past.  His plans include improving his technical product package with both new wireless sets and features, and a "Geek Squad-type" idea called "Ready Now" that will allow customers to walk up to Sprint service reps and get their features activated (more revenue/great idea).  Cellphones can be complicated for many of us and being able to get immediate physical help to set up the phones is a real plus for Sprint.  Ever try to get service in a major wireless mall or strip shopping center store?   The customer volume/time of day can be very irritating, and none of us wants to stand in line to ask a question or buy something.  Perhaps, Mr. Hesse has solved that problem and has hired enough customer care people that customers can actually get service quickly on site.  Let's hope so anyway.
Secondly, the Sprint/Clearwire WiMax (XOHM) network appears to be headed toward really being built.  The referenced article mentions that the financial backing of Comcast, Time Warner, Brighthouse, Intel, and Google ($3.2 B) are actually going to happen, and the network will most likely be built over the next couple of years.  It also mentions that Clearwire will need another $2B to finish the job later on, but that finding that money should not be a problem.  Let's hope that Mr Hesse has his numbers, facts, Geek Squads, all in the right order and that Sprint can again take its place in the sun with T and VZ, et al.

Implications: ATT needs to offer as close a package/service bundle as they can to their CATV competitors' offerings.  HD is a major service product and has much interest from TV/Video customers, and up until now, ATT can only offer 2 HD streams to the home simultaneously feeding two different HD TV sets.  The ATT CTO, Mr. Donovan, announced (via the article) that ATT hopes to offer a third HD stream to their Uverse customers "sometime next year".  This will help, but may not be enough to keep customers from going across the line in a Verizon FIOS competitive situation,  since VZ has decided to overbuild Uverse in some geographies.

Analysis: ATT is making HD progress by improving the video compression speeds to 5mbs from 6mbs, in the next year.  Their current offering of HD channels to a Uverse customer is only 2 HD's coming to the home simultaneously, whereas, their competitors (Comcast, Time Warner, et al CATV  plus Verizon FIOS) are offering many more HD channels simultaneously, making all HD capable sets in the home useful.  This improvement is nice, but is it going to keep Uverse customers from crossing the competitive line over to a CATV MSO or VZ?  We cannot be sure at this point.  The Uverse service evidently works well from reading customer blogs, but so does FIOS and most of the cable offerings as well.  So, what stands out about Uverse that will make customers stay with ATT?  One answer would be "great service", another could be "competitive price", which helps with the economic situation we are all faced with.  The answer we all are looking for, however, should be that we can watch as many HD streams as we can afford to have HD TV's in the home, right?  Mom, Dad, Junior, sister, and the elderly parents that moved in all want their own sets, and the number seems to pass the "3" mark for desired HD streams to this writer.  Maybe people can live with 3 HD streams coming to the home, or maybe, just maybe, if the price is the same, the customer opts to go for the most HD, which by the way is DirecTV right now, and maybe even Dish Network. OOPS.  You get my point.  ATT is probably going to sell Uverse where the competition is weakest on the HD side, and that may be a lot of sales.  However, in the major venues, where the other big boys/girls compete, 3 HD streams may not cut it.  We shall see.

Implications: This article refers to Qwest moving away from video over internet protocol in several cities where they have it in play now, instead opting to use DirecTV to provide video and lock down customers away from cable.  ATT, however, is building the same video IP platform and appears to be sticking with it, in the face of direct competition from Verizon's FIOS, in ATT's turf.  The question is when will ATT opt to either do DirecTV video with copper/fiber Uverse or FTTP, like VZ?

Analysis: This is an interesting article that bears reading.  The title says it is about loss of landline losses, but it includes more intelligence on what is really going on in the Qwest broadband playbook.  Apparently, video is definitely the holy grail for all telco players to move the customers coming in the service door away from ever connecting cable tv.  Not a bad idea, and it has been in play at ATT and VZ for years.  The difference here is that Qwest is shutting down their several video over IP cities (Phoenix, Omaha, and Denver), and opting for using all the bandwidth they can muster for data only.  To do this, they will sell DirecTV video and push their FTTNode architecture to provide 20 or so Mbs of data.  ATT, however is still selling 10 Mbs as their high speed data, with VZ selling as much as 50 Mbs for $149.95 to any current FIOS customer that wants it.  Can you see the challenge here for ATT to keep selling Uverse that appears to be not as robust as customers want?  With VZ stepping into the ATT footprint, and possibly into Qwest's service area at some point, VZ becomes the game changer.  This means that whoever's footprint VZ steps into with FIOS, that player will have to go back to the broadband/video drawing board.  Qwest may not be a current target for VZ, but one would think that Qwest will have a much more difficult time competing with VZ than ATT. Some possible scenarios that may occur:  ATT uses the Qwest video model to compete with FIOS head on, offering 30Mbs of data with video from a direct broadcast partner in the sky; ATT decides it is time to build FTTPremise to compete directly with VZ in those geographies that require it; and finally, Qwest has to move toward FTTPremise as well, if VZ enters their space as VZ has done to ATT in TX.  In the end the customers will be making these decisions for the service providers, won't they?

Implications: Qwest has been floundering as a phone company for years, having to deal with PSC fines and general business issues, which appeared to be keeping them from setting goals on newer technology and moving ahead with data sales in particular.  Their FTTNode strategy appears to be solving some of their problems, as they are seeing DSL growth in decent numbers in a down market as experienced by the big players.

Analysis: I am so proud of Qwest!  The referenced article points to net broadband adds of 31,000 in the second quarter, down from 100,000 a year ago, same timeframe.  This seems low unless you compare it to ATT and Verizon growth who experienced proportionally less DSL growth according to their huge size.  Qwest has embarked on a FTTNode strategy similar to ATT's Uverse without the video piece riding the hybrid fiber/copper medium.  The video is supplied by DirecTV, allowing Qwest to sell 20 mbs data in the copper solution.  The article mentions that Qest has budgeted $300M for the buildout of their FTTN project, passing 1M homes so far, with 19k DSL sales coming from the FTTN network.  ATT can only provide 10mbs of data at this writing, saving the bulk of their Uverse bandwidth for video (high definition and standard video). 
Here is an interesting scenario that ATT may be considering as they are having to deal with Verizon stepping into the ATT franchise in TX and maybe 4 other video-friendly franchise states.  If Verizon is going to build their FTTH, super robust, FIOS network on top of Uverse, with all its limitations, why not adopt the Qwest model for video in those competitive situations?  DirecTV could provide the video, including 100plus HD channels, and data speed sales could be boosted from 10mbs max to possibly 30mbs in the copper.  Video on demand could be provided by the data network and/or DirecTV via the direct broadcast satellite dish.  This would put ATT in a better competitive situation relative to FIOS and all its wonderful bells and whistles and basically unlimited bandwidth, allowing ATT to delay even longer their eventual move to FTTH.  Who knows?  Maybe they are thinking about it now, with the possible re-bid of the direct broadcast contract between Dish and DirecTV in September.  Anyway, hats off to Qwest for just doing something positive and interesting.

Implications: If Verizon agrees to wage increases and medical benefit changes that AT&T doesn't want to accept, this can have severe complications on the AT&T/CWA negotiations scheduled to begin in April, 2009.  AT&T, however, also have many possible changes to the current CWA contract that may inflame the union, without the help of Verizon.

Analysis:  AT&T was supposed to deal with the CWA union agreement on August 6, 2008, but was able to shove the agreement date one year until August, 2009, allowing VZ to work the CWA/IBEW ahead of T going through it.  We don't know what the deal really is between VZ and the unions, until the unions vote on it/ratify it.  Apparently, there are going to be wage increases of several percent per year for several years, along with some kind of medical plan changes.  The RBOCs have been trying to get the unions to pay for more of their medical for years, but always shy away from pushing it at the negotiation table.  The VZ agreement will set the strawman agreement for CWA to negotiate from in their minds.  AT&T would say they would start from scratch without paying any pertinent attention to the VZ agreement from a practical negotiation standpoint. Funny, they all used to be the Bell System at one time, and now we have really two Bell Systems to deal with instead of one. 
What is on the AT&T table in this writer's opinion is the following:  1) AT&T will attempt to bring the medical payment thing to the union, understanding that management is paying over $700/month now for a retired husband/wife, and still having to come out of pocket for lots of things like prescriptions/doctor office copays, 2) the outside plant technician title (the folks that place aerial and underground (in conduit) cable in the old BST states will most likely be eliminated, and the work will go to the master contractors, finally 3) the buried service wire crews that BST has had for some ten or more years will most likely go the way of dinosaurs, because T doesn't believe in having bsw contractors on the payroll:  that is contract work in the old 13 SBC states.  So, what happens from an investor standpoint in the first half of 2009?
INVESTORS pay attention please.  It is normal for all management people to be trained in the craft or nonmanagement jobs prior to a potential strike.  That will be the first thing that indicates T is preparing for a strike or work stoppage.  The next things that happen are capex related:  much heavy spending will take place in the first half of 2009, so that T can ride out a work stoppage if it occurs, heaven forbid.  So, the vendor list that Network has for all the routers, DSLAMs, VRADs. circuit packs, construction work for VRADs, etc, will see heavy PO activity in the first half of the year, most likely.  This will put T in a more powerful negotiating position with the CWA, and it will allow the management people to concentrate on doing the maintenance/installation jobs during a possible work stoppage, keeping T running as if there were no strike at all.  Let's hope there is no strike, but if there ever were reasons for the CWA to strike in 2009, this is it, brother/sister.

Implications: Frontier has shown growth in broadband lines while its larger counterparts (T and VZ) are having difficulties  showing positive growth in that segment.  We need to study the reasons why Frontier is doing so well, even though they are seeing heavy wireline losses like all the telco players, and try to replicate those decisions/actions to stem the downward trends we are seeing now in most telcos.

Analysis: The CATV MSOs must be celebrating a little as the various telcos, large and small report heavy wireline losses AND downward growth trends in their broadband growth.  Many RLECs have stepped away from the wireless play, such as Qwest cancelling Sprint and moving over to Verizon/Vodaphone, or Embarq, who stepped all the way from its Sprint parent, having seen zilch in wireless growth for the year past. Most RLECs, such as Frontier (formerly Citizens Tel) are pushing the broadband/DSL segment very hard, trying to regain the revenue being lost daily by the wireline access line bleeding.  Frontier lost 45,400 lines in the past quarter, saw a 3% decline in total revenue down to $563M, and enjoyed a broadband customer growth number (16,300) 3% higher than the previous quarter and 17+% higher than the previous year.  How did they do that?  Anyone that has a broadband play better be looking at why/how this occurred, and try to make it happen in their turf.  The CFO, Donald Shassian also said that non-paid disconnects have "sequentially declined in the last two quarters."   

AT&T's broadband additions in the second quarter were down 90% to 46,000 to quote the article.  Verizon saw a decline of 133,000 as well per the article.  The Frontier CEO, Maggie Wilderotter, says that Frontier offered slower bandwidth speed packages, attracting customers at less than $20/month as part of the reason.  Perhaps another reason is that the CATV MSOs that compete with Frontier are either sleeping or not able to compete effectively, offering low priced packages and playing to the economic climate, as Frontier is doing.  Perhaps, the other telcos should take some lessons from their smaller brother, Frontier and creatively play to the economic situations most are being faced with as prices of everything rise and home mortgages/credit card issues abound.

Implications: High definition television broadcasting is at its peak now, with most local stations and virtually all national network stations either already converted or about to fully convert to HD transmission.  The FCC mandated digital conversion is February, 2009, and customers with the older analog sets must obtain a digital conversion box or buy a new digital set.  The bulk of sets being purchased today are HD capable, so the customers are looking for the most HD channels for the money.  So, who has the most HD?

Analysis: The article focuses  on AT&T's high definition (HD) channel situation with some speculation about HD video-on-demand.  The  AT&T executive wouldn't announce their long term plans or VOD availability, but did say that reaching 1,000,000 Uverse video customers was a key to better negotiating with the content providers.  He said that AT&T had 45 HD channels at this point headed to over 100 HD channels at the near term, whatever that means.  Verizon's FIOS FTTP system has the capability of almost unlimited HD channels, as does AT&T's Uverse Internet Protocol video transport system.  The cost of adding HD channels and the content provider costs complicate moving the number of HD channels upward for both RBOCs.  Of course, they will have high numbers of HD channels over.  Looking at the CATV MSOs' HD capabilities, show they have close to the same number of HD channels as the RBOCs, maybe a little less than 45, although it is difficult to tell how many HD channels they have by looking at their websites.  DirecTV and Dish are the dominant leaders of HD channel availability, with both sending up satellites this year, finally getting them in orbit to meet their HD targets just recently.  DirecTV had a bad launch a few months ago, which has now been corrected with a recent launch.  DirecTV is headed toward the 130 HD channel mark at or near the year end, and continues to be the leader.  Folks that are changing sets heading into February, 2009 (the digital conversion deadline for analog sets) will be looking at which service provider can give them the most HD channels.  No doubt about it, DirecTV (and Dish) will see positive growth as the year progresses, from an HD availability perspective.

Implications: Consolidation among the RLECs has been happening at a steady pace over the last couple of years.  Mergers or acquisitions for a company such as Windstream could either help or cause problems, depending on the activity they choose.

Analysis: The RLECs (Windstream, Embarq, Century Tel, FairPoint Communications and some 1300 other independent telcos) have the same problems the larger RBOCs have with losing access lines to wireless replacements, CATV MSO incursions into their telcom space, and just plain general economy issues, not good right now for any of us.
The article mentions that Windstream posted a revenue slippage from the quarter just reported of 3% year over year, and net income dropped from $115.9 M to $102 M, for a 12% drop in net income.  "Windstream lost 37,100 landlines" in the quarter to quote the article, and that is slightly less than the number lost in the previous period.  So, what does an RLEC do to take care of business with these kinds of numbers? 
FairPoint Communications touts that 60% of their revenue comes from business, so a good place for any RLEC of any size is to start with boosting the business product list with attractive features and services.  FairPoint has a list on their website in one of the papers that lists a page of hot business sales products, many Ethernet-driven, that small and medium businesses are looking for to reduce their costs so they can stay in business during this so-called non-recession period.  With a strong list of salable business services, the next focus should be on boosting the DSLAM capabilities in the residence zones so that there are no roadblocks to selling DSL high speed data.  Of course, the higher the speeds, the more attractive DSL is to customers.  Some gamers that have cable modems love to challenge their DSL buddies, because the modems are much faster and the CATV gamers have a real edge on their friends, who "can't see the bad guys to shoot" because the data speeds are slower than cable.  Perhaps, the next item on the boosting services list is to insure that FTTP is being built in greenfields.  Continuing to build copper in new subdivisions is just not cost effective when competing with CATV MSOs with more bandwidth in their coaxes.  Of course, the normal response of an RLEC to competition, is to say there is no competiton, unless they are up against Comcast, Time Warner, Cox, Charter or that level of MSO.  Smaller CATV MSOs are having the same difficult time keeping an attracting customers and trying to upgrade their systems to triple play all at the same time.  Finally, the last item on the boosting list is for the RLEC to consider how to best secure the video customer the quickest.  Most opt for the DBS (direct broadcast satellite ) route, and partner with DirecTV or Dish Network to get the video to their customers.  Some of the independents actually own CATV cable plant and provide video on an RF basis, sort of playing both the telco and MSO sides at the same time.  Many small independents are looking at buying their competing MSO to both gain the video edge and to stifle their competition.  Comcast is close to their limit on the number of subscribers it can have as limited by the FCC.  Charter is trying to handle its debt issue, and selling small CATV properties helps fund triple play in the major venues for Charter.  Cox is looking at the fiber play and how they can increase fiber and bandwidth, causing them to look more and more like an RLEC or RBOC.  So, to get back to the issue in the article, it appears likely that RLEC consolidation will happen over time, and that investor groups or other telcom companies may be the dealmakers.  Losing access lines on a recurring basis, and not improving the broadband play to increase ARPU is a recipe for disaster.  Or is it a recipe for an acquisition?

Implications: With Alcatel-Lucent and Ericsson leading the way in sales of Gigabit Passive Optical Network (GPON) gear to the major RBOCs and others, is the technology going to stay for awhile, or is Wave Division Multiplexing-Passive Optical Networking (WDM-PON) the next technology to watch?  Nokia could become number 4 in GPON sales, but perhaps they want to be number 1 in the newer technology.

Analysis: This article is primarily an attention-getter and perhaps a little monitor time should be spent on the four or five links posted in the article on WDM-PON, learning some more about the latest technology on the grid.  It appears that Nokia Siemens has decided to back away from the development of GPON, but will support current sales.  This is an unusual stance for a Tier 1 vendor of boxes to back away from current technology.  The article also mentions XL or "Long Reach" technology that will support FTTX customers from 100 kilometers away.  Nokia has a 56% interest in Dasan Networks Inc, an access and optical equipment specialist company, so perhaps this company has some new twists none of us know about yet.  Time for some research.

Implications: Speaking at the Cable-Tec Show in Philadelphia recently in June, 2008, CATV MSO leadership conceded "that the industry" needed to spend more time and resources to sample and fix their video transmission problems.  Huge and complex software integration issues face the MSOs as they install complex video equipment and compression gear, and "only 31 percent said they rely on network monitoring toos to root out video errors.  Companies that do video monitoring should be talking to the CATV MSOs right now.

Analysis: As the CATV MSOs have delved into data and telephony, they have also kept the old standby video transmission of yesteryear as their mainstay product.  Apparently they have had to add large amounts of software and video gear (switched digital video and video on demand for example) and have turned down most analog channels to make room for digital channels, and video monitoring has taken a backseat in the spending arena.  With 31 percent of 9 MSO executives, sponsored by Symmetricom Inc,  saying that they use current network monitoring tools to root out video problems, then there appears to be a vacuum in the video monitoring sector.  Enterprising video (and data) monitoring companies should be knocking on the MSOs' doors right now to help them correct service problems such as tilting pictures, taking too long to load video, and frozen frames (to quote the article).   Data access networking companies such as Gigamon, should be looking into this valuable part of the MSOs' business, offering them cost effective ways to keep track of and to repair video transmission problems that will only worsen over time.

Implications: The CATV MSOs have been marketing to the small/midsize business customers and appear to be making headway, with the percentage of these companies' growing, but the overall data spending by these businesses staying under $1,000.

Analysis: Cox Communications just won a JD Power award for businesses from two to 499 employees.  The award was for satisfying small/midsize businesses for the various categories of customer satisfaction:  "performance and reliability, sales representativies/account executives, billing, cost of service, offerings and promotions, and customer service" in general.  The key point of this article was that the percentage of customers spending under $1000/month has actually increased.  This could be because they just tightened their belts, or it could mean that the MSOs are actually gaining ground with taking RBOC small/midsize business data sales with lowered pricing.  Taking second place in the awards was Verizon, then the big CATV MSOs:  Time Warner Cable and Comcast Corporation who came in third and fourth.  Interesting that AT&T is not in the group, isn't it?

Implications: The major phone companies have competed in the wireless arena for years, no big deal.  However, now Verizon has stepped outside its footprint in Plano, TX and is building FIOS on top of AT&T's Uverse customers (and Time Warner).  Getting together to try to retain phone customers in moves and relos is good, but which company will the customer choose at the end of the move in the new site?

Analysis: Don't you love these little staff-organized PR releases?  Someone may not have told them that T and VZ now are in early competition in some venues for triple play, and maybe now quadruple play with wireless.  With VZ building in Plano, TX, Dallas and an announced five other states that T is serving, the customer will have more choices than ever to select their triple play provider.  It is still a good and worthwhile approach to use Moveroo.com to capture these valuable customers, but it will be possibly more lucrative for VZ than T, since their FIOS triple play package will include more of everything than the Uverse package of a couple HD's, standard digital channels, VoIP, and 10mbs of data/internet.  With FIOS now offering multiple HD's simultaneously, 50mbs of data/internet, and the usual standard digital channels, and VoIP, one would assume VZ to have the FTTP edge on T, as long as the price was the same or less.  This is going to be fun to watch.  Qwest is in this game and that is good, as well, but wait until VZ overbuilds Qwest. OOPS.

Implications: Can Sprint improve customer service, fix the management/leadership vacuum problem, and build a new, competitive network?  Sprint CEO, Dan Hesse has perhaps the most difficult job in US telecom today.  Is he doing enough to allow Sprint to stay alive? Will Sprint rise from the ashes like Phoenix and emerge stronger?

Analysis: Don't we really feel for the guy?  He didn't make this mess, but has to fix it.  Did former CEO, Gary Foresee, foresee this coming?  How does a new CEO do what Dan needs to do?  Customer service attitudinal problems are caused by lots of things, right?  Compensation, or lack of it plus erosion of benefits probably are on the list.  Organized labor problems could be partially the problem, or could possibly even be part of the solution.  When the people that do the work are allowed to vent, then some of the pressure is released.  But incentives have to be real and presented to attract and modify the behavior, or it won't change, it will get worse.  Let's say Dan Hesse can fix those people problems, which apparently include high level leadership modifications as well, so what does he do with the technical side of the company?  Will the Xohm WiMax network solve some or all of Sprint's revenue problems?  Maybe.  Probably not, though.  Is there a Charlie Ergen (Dish/Echostar Holding Co) type miraculous fix that will bring Sprint to the technological leadership position that it needs to achieve?  Has anyone gone to the longtime Sprint customers and sought all the reasons they have stayed loyal to Sprint?  My schoolteacher wife has stayed through thick and thin, even with my hounding her to move into the next century with data and Blackberry crack.  She loves her Sprint phone, her service, all of it.  She hates change.  She wants everything to stay easy to use and friendly and all of us can be happy with each other.  Perhaps, there is a message here somewhere for Dan Hesse:  if you know what Sprint does best, then do more of it.  If you know who left and you can give them what they want, then go after them.  They may actually appreciate the attention.  The Hesse commercials are very good, we give Dan that.  The Xohm Network idea has great potential, if he can make it work.  New and exciting products will certainly help the situation also.  For some reason, none of us really want Sprint to go away.  Maybe it is the American way to want to hold on to things American.  Good luck to Mr. Hesse and Sprint.

Implications: The Chinese are growing every way an "emerging" country can grow, from consuming fuel to driving fiber deeper.  Their whole economy is booming and focusing on building the most fiber additions to the internet in the world will drive their economy even faster.

Analysis: The target article is internationally based and the numbers are not easily verified for accuracy; however, it appears that the Chinese are not only taking over the world's petroleum consumption and driving prices higher for all of us, but they are building fiber faster than the rest of the world combined.  4.2M fiber subscribers to the internet were reported to be added in the first quarter of this year with 2.5M cable modem customers signed up.  Verizon is driving the US fiber internet connection numbers at most of the 303,000 adds mentioned in the article.  China, however, made up 2.5M of that total, with 16.7M overall fiber-connected internet subscribers.  More than half of the almost 80M cable modem subscribers in the world are made up from US CATV MSOs.  Chinese economic growth is spawning stronger and more powerful fiber-based internet connections, which will drive the Chinese economy even faster in this writer's opinion.  With the manufacturing growth in China, and these strong internet numbers, China's future becomes even brighter than it is today.  Perhaps our children should learn Chinese?
The recent Cable-Tec show in Philadelphia in June, 2008, produced a record number of RFoG products for the CATV industry to consider providing, when fiber optic solutions were being considered for the medium of choice.  Many vendors touted these products for the first time, and the CATV industry appears to be taking note, with a touted request for information from one of the large MSOs, supposedly looking for what kind of optical CATV gear is out there today.  Questions that arise from this kind of study, are:  is coaxial cable going the way of copper telephone cable, and is it moving even faster down that hill?  With real estate developers demanding fiber optic networks in their new subdivisions that don't sell houses without glass connections, CATV MSOs have to play in the RFoG game to stay in the game.  Perhaps, we are seeing a definite shift from coaxial cable to fiber in the early stages, and a 2009 comparison will show a marked shift to the optical side as time progresses through the current economic downturn.  Is it true that "he who gets glass to the home first, wins the game?" Maybe so.  At least in China, we know that is the case.

Implications: Whoever gets fiber to the customer first wins, or whoever gets future-proofed revenue-producing services to the customer wins, however one wants to say it.  Once the CATV MSOs begin seriously investigating FTTP, PON or other fiber-based final customer loop decisions, things are heating up on the CATV MSO/RBOC frontier.  This means all vendors, telco, CATV, and the like need to heed the noise of future business opportunities where there were not any before.

Analysis: Whoopee.  First Verizon starts invading AT&T's Uverse footprint, then starts selling 50mbs data to FIOS residential customers, and now Cox Communications, is apparently seriously beginning to survey the market for the proper fiber fit to take fiber to CATV customers' homes.  They are having to do this already in some RFOG situations, where the RBOC or RLEC is providing FTTP to the new greenfield developments, and they have no choice to be able to compete.  However, for Cox to be considering overbuilding their brownfield footprints is something radical and exciting altogether.  What ONU/PON equipment will work with the RF legacy system they have in place today?  Or will they begin to look more like a telephony play and change to an IP based system, virtually changing everything they own?  Probably not, but we should all open our eyes and ears and begin to look at the CATV MSOs a little differently, wet nose, sideways stare, and tongue hanging out.  Perhaps, there is business for fiber box makers, fiber cable folks, fiber management players, splitter guys, IPTV chipmakers, and so on.  Anyway, it all bears more than a cursory glance at a nice article. Kudos to COX!  Wonder how long this infection will spread?

Implications: AT&T's Uverse is doing well, people are buying it, and VOILA!  Along comes VZ overbuilding T, AND selling 5 times the AT&T data speed to customers.  This puts CATV MSOs and AT&T/Qwest and anyone else not doing FTTP in a quandry.  Do they continue to build hybrid fiber-copper systems or hybrid-fiber coax systems or move in the fiber all the way direction to the home/premise?

Analysis: Darn that Verizon. NO, just kidding! They are easy to love these days, with this referenced article on 50 mbs data to the FIOS masses, overbuilding AT&T in TX, and continuing to grow the FIOS take rate.  Even Wall Street appears to nod positively in their direction and they are seemingly being endorsed as having picked the right technology to maintain their business in the face of CATV MSOs offering HFC-based everything (voice, data, video).  Scaling the 50 mbs data offering, appears to be an easy thing for Verizon to provision, so what is up their technical sleeves next?  AT&T and the CATV MSOs have to be thinking it is time to step up the competitive pace.  In a recent article in Cable Digital News, titled, "Fighting FIOS With Fiber", the CATV MSOs are "exploring, testing, or even deploying various fiber plant extensions in their markets."  So, we should all thank Verizon for stirring the pot and improving markets that needed improving.  Yea for VZ!

Implications: Verizon appears to be on target to make their financial and customer passings targets with their FIOS FTTP system overbuild.  ATT and Qwest are building similar, but not the same FTTNode systems that incorporate copper in the solution.  So, who has the better, most salable, more competitive solution here?

Analysis: Verizon continues to make headway toward their targeted net income positive and operating income positive dates relative to rolling out their FTTP FIOS initiative.  By 2010 they say they will have passed the proposed 18 million customers, be EBITA positive this year, operating income positive the following year, and net income positive the year after that.  Meanwhile, AT&T continues to roll out Uverse FTTNode passings, targeting some 8 million passings this year and both AT&T and Verizon are trying to reach around 20% of the video market when they pass the 18 million passing mark.  If they are able to do numbers similar to these suggestions, then that leaves the CATV MSOs in a loss of customer position, similar to the RBOCs losing access lines to wireless providers and CATV MSOs/CLECs.  Only time will tell if any of the numbers are even close, but it is positive to hear that Verizon is on their proposed financial targets, after taking so much heat from investors for the $20 billion spending for the FIOS through 2010.

Implications: The pricing of CATV MSOs has been holding steady in the face of heavy intrusion from both RBOCs and other interlopers, such as CLECs and municipal broadband providers.  The main implication of this article and analysis is that perhaps we will begin to see price erosion on the  CATV MSO side shortly to maintain market share.

Analysis: Most of us that are not drooling, teething, or eating animal crackers have been through the telecom bubble or bust, call it what you will.  Post 2001, we all watched the fiber cable manufacturers chop headcount, lower prices (that are still tanked today), and make decisions in competitive bids to retain market share.  Bring yourself back to today and take a glance at the broadband pricing between the CATV MSOs, the RBOCs/RLECs, the CLECs (with their UNE-P pricing), and the municipal overbuilders such as Wilson, NC's Greenlight broadband service.  The referenced article lists many reasons that Wilson residents are changing from Time Warner Cable to the Greenlight muni broadband system.  Interestingly, the local telco is not even mentioned, whoever they may be.  Perhaps, from the article's viewpoint only, "price" appears to be paramount in the minds of the potential Greenlight customers. Sure, this is only the first neighborhood of the year long rollout of triple play, FTTH services, but it does point out that customer perception (true or imagined) is that Greenlight will offer significant-enough price reductions to allow Wilson jumpers to be saving money with the new muni system.  This gets us to thinking:  price vs services:  if the services are the same or close to the same level, then price appears to take over.  For a Wilson, NC muni, or an Xfone CLEC, or a Verizon FIOS to overbuild incumbent telcos and CATV MSOs, something must be happening with price.  It should be going down, not up.  For CATV MSOs to  continue to hold prices level as competition intrudes with similar or equal services, then to maintain market share, the CATV MSO prices must come down.  That, my friends is American competition at its best.  When or if it happens that is.