Bell Canada Positions for New Broadband Landscape

The telecom landscape in Canada is changing quickly and radically, said Michael J. Sabia, President and CEO of Bell Canada Enterprises, speaking at the Goldman Sachs Communacopia XII Conference. Sabia cited three fundamental forces that are reshaping the industry. First, customer preferences are evolving to demand new technological solutions and less complexity. Second, the level of competitive intensity is increasing. There will soon be genuine local competition as cable companies launch their VoIP services. Third, there is a major trend among enterprises to outsource their entire IT operations. For network providers, this raises the question of who controls the customer. Despite the new world of competition, Sabia believes there are many opportunities for telcos that are well positioned. Some highlights:

• In broadband, Bell Canada has about 43% share against the cable companies. Sabia argues that Bell Canada has been the most aggressive North American carrier in DSL. About 75% of the company's footprint is DSL eligible. The company has 1.3 million DSL customers. Its penetration rate is 13%, compared to 6.7% for SBC and 4.4% for Verizon. DSL is Bell Canada's local loop for the future. The next challenge is delivering more advanced services, such as security, music and other content. Bell Canada is partnering with Microsoft on new portal capabilities.



• Sabia described FTTH as a "daunting prospect" economically because "there is no Moore's law for fiber trenching." However, the fundamental direction over the long term is to push fiber deeper into the network.



• Bell Canada's satellite TV service has captured 1.3 million subscribers and continues to grow. The company has two dedicated satellites for its DBS offering. Satellite TV has also given Bell Canada expertise in the content arena. Ultimately, Sabia believes video will be the key for a "broadband home" bundling strategy.



• Bell Canada is ramping up a VDSL offering targeted at multi-dwellings units, which represent 40% of the population in Toronto alone. The VDSL connection will provide video service for up to three TVs from a single set-top box.



• Bell Canada recently completed a major VoIP contract with Nortel Networks and plans to introduce a hosted telephony service for enterprise customers. Bell Canada will initially target large enterprises, followed by VoIP services for smaller companies, and eventually for residential companies.



• Bell Canada's major focus will remain on "simplifying the customer experience." The major goal here is to sell more to the customer while providing a one-stop provisioning and billing interface. Bell Canada's consumer research indicates that 70% of consumers want a service bundle that combines all-distance voice, Internet and video services. Simplification is also expected to drive efficiency gains inside the company. Some 350 projects are underway to support the "one-stop" strategy.

http://www.bce.ca

• In September 2003, Bell Canada announced plans to invest CDN$200 million (approximately US$146 million) over three years in Nortel Networks' IP and multimedia messaging platforms to provide new services to its large enterprise customers. Bell Canada is pursuing a "One Network" approach to the development and delivery of services."
  http://www.convergedigest.com/Bandwidth/newnetworksarticle.asp?ID=8640

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BT to Offer Wholesale Access to Wi-Fi Hotspots

BT will offer wholesale access its to public wireless broadband network. BT Openzone will market the wholesale service to mobile operators, ISPs, fixed line operators and even "virtual mobile operators." The company plans to put BT Openzone Wi-Fi access points in many of the thousands of payphones across Britain.
http://www.bt.com

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SBC Trims Introductory DSL Pricing

SBC Communications trimmed its introductory DSL pricing by $3 per month. Pricing now begins at $26.95 per month for a one year commitment on basic DSL service (dynamic IP address) with a downlink speed of 384 kbps and 128 kbps uplink. Various other pricing tiers are offered.
http://www02.sbc.com/DSL_new/content_new/1,,18,00.html

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PanAmSat and JSAT Jointly Launch HDTV-Ready Satellite

PanAmSat and Japan's JSAT Corporation's jointly owned Galaxy XIII/Horizons-1 satellite was successfully launched into orbit by Sea Launch. The spacecraft, which will be located at 127 degrees west longitude, has 24 C-band and 24 Ku-band transponders covering the continental United States, Alaska and Hawaii. Galaxy XIII/Horizons-1 will operate under dual licenses, with the C-band payload licensed through the FCC in the U.S., and the Ku-band licensed through Japan's Ministry of Public Management, Home Affairs, Posts and Telecommunications. PanAmSat and JSAT will jointly develop and own the Galaxy XIII/Horizons-1 Ku-band payload, using the capacity to offer a variety of digital video, Internet and data services as well as to create new IP-based content distribution networks. PanAmSat will own, develop and market the C-band capacity separately.
http://www.panamsat.com
http://www.jsat.net/en/

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ST Announces Volume Shipments of VDSL Chips

STMicroelectronics has begun volume shipments of its ZipperWire DMT VDSL chipset to manufacturers of central office and customer premise equipment. ST expects the VDSL market to grow to 6 - 7 million lines deployed by 2005. The majority of VDSL deployments are expected to occur in Asia.
http://www.st.com

• In March 2003, STMicroelectronics introduced its "ZipperWire" DMT-VDSL chipset, claiming the ability to deliver an aggregate data rate in excess of 100 Mbps over short copper loops. ST's new ZipperWire chipset, which is designed for both central-office and customer-premises-equipment, integrates a complete Frequency Division Duplex DMT VDSL modem from the line to the ATM interface in just two chips. ZipperWire can be programmed for granular, symmetric and asymmetric data rates from 64kbps to 100Mbps in both directions with a reach of up to 4,500 feet. It supports all of the international VDSL-DMT standards (ITU-T, T1e1.4, ETSI) and is compliant with the 997, 998 and Flex frequency plans. STMicroelectronics also noted that its chipset provides spectral compatibility with ADSL, SDSL, ISDN and strong immunity to both bridged taps and radio frequency interference.



• To date, ST has shipped over 50 million ports of xDSL products.

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Level 3 Names Wholesale Ethernet Customer

Level 3 Communications is supplying its new wholesale Ethernet data networking service to InTechnology, a UK provider of data storage solutions and services. More specifically, InTechnology is using Level 3's (3)Flex Ethernet service to securely transport data between London, Paris, Amsterdam, Munich, Milan and Madrid. InTechnology recently acquired Allasso, one of Europe's leading specialist distributors of IT security products. InTechnology also purchases (3)Center Colocation services from Level 3. Financial terms were not disclosed.
http://www.Level3.com

• In September 2003, Level 3 Communications introduced an enhanced wide area Ethernet service for its U.S. and European networks. The new (3)Flex Ethernet service is based on Level 3's MPLS backbone and provides two classes of service (CoS) that can be managed per virtual connection as applications require. The two classes of service are: Optimized, which is a variable bit rate service that combines a committed information rate with the ability to burst up to twice that rate; and Enhanced, an unspecified bit rate service that allows the customer to burst up to full port speed. (3)Flex Ethernet provides scalability from DS-3 and 100BaseT to multiple Gigabit Ethernet interfaces. Customers can access the service via cross-connects, fiber extensions, metro Ethernet and SONET connections. Customers are billed on a usage basis and pricing is distance insensitive.

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Salira Names Former Nortel and Qwest Executive as CEO

Salira Optical Network Systems named Ross Bernard Lau as its new president and CEO. Prior to joining Salira, Lau was president and CEO of Qwest Asia. Before that, he was president and COO of Nortel Networks (Asia) Ltd.'s service provider solutions group. Earlier, Lau was instrumental in launching Nortel's carrier-class fiber optics business. Salira has its major operations in Santa Clara, California and Shanghai, China.
http://www.salira.com

• In September 2003, Salira announced a contract to supply a "triple-play" optical network solution to GuangZhou Pantong Information Broadband Network (Panyu Cable), which provides cable TV and associated services to the Panyu district of the city of GuangZhou, China. The Ethernet, passive optical network (EPON) architecture is expected to scale to reach 260,000 endpoints and deliver 80 channels of broadcast TV, video on-demand (VOD), VoIP and high-speed Internet access.



• In July 2003, Salira announced that China Netcom Corporation is deploying its optical access platforms in Beijing and in Changsha City (Hunan province) to deliver advanced voice, video and data services to business customers in a variety of Fiber-to-the-Premises (FTTP) deployments.



• In October 2002, China's Ministry of Information Industry (MII) certified the Salira platform for commercial deployment. The company has sales offices in Beijing, Shanghai, Chongqing and Shenzhen.

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Starbucks and T-Mobile Offer Digital Content to Wi-Fi Users

T-Mobile, HP and Starbucks will begin to offer an "enhanced digital entertainment experience" to Wi-Fi users at Starbucks coffeehouses. Throughout October, customers using a Wi-Fi enabled notebook computer while at select Starbucks locations can watch classic blues performances from legends like Howlin' Wolf and Muddy Waters, listen to an array of great blues tunes, and see videos of noteworthy musicians sharing how blues music and artists influenced them.


Starbucks is currently offering Wi-Fi at 2,600 locations across the U.S. The companies noted that usage of the T-Mobile HotSpot service continues to grow. The average connection is approximately 45 minutes in duration and more than 90% of T-Mobile HotSpot access occurs during the off-peak store hours.
http://www.starbucks.com

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SaskTel Selects Kasenna for Telco VOD

Canada's Saskatchewan Telecommunications (SaskTel) selected Kasenna's video delivery platform to power its new VOD service launched this week. SaskTel has been offering an IP broadcast TV service over its DSL network since last year. The new VOD service is available to subscribers in all 9 cities where SaskTel's television service is offered and is expected to grow to 50,000 subscribers by 2005.
Specifically, SaskTel is using Kasenna's MediaBase XMP software to manage, distribute and deliver video content for the new VOD portion of their triple-play service. Kasenna's software allows SaskTel to deploy servers in multiple locations while using a centralized interface to manage them seamlessly. SaskTel has deployed Sun servers running Kasenna MediaBase XMP video delivery software with Gigabit Ethernet delivering MPEG-2 video at 2.3 Mbps. Financial terms were not disclosed.
http://www.kasenna.com

• SaskTel is using Alcatel's iMagicTV software platform for delivering interactive television service to its DSL subscribers.

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Veraz Networks and NetCentrex Confirm SIP Interoperability

Veraz Networks and NetCentrex completed interoperability testing for their respective Contact Center and IP Centrex solutions. Specifically, the testing confirmed interoperability of the Veraz ControlSwitch and I-Gate media gateways with the NetCentrex Saga800 network-based contact center and IPCentrex hosted telephony solutions. SIP was the common protocol used for interoperability between the products from both companies.
http://www.veraznetworks.com
http://www.netcentrex.net

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XO Launches MPLS-based MultiTransport Networking Service

XO Communications launched a new MultiTransport Networking Service (MTNS) designed in the initial phase to enable legacy Frame Relay-to-Frame Relay and Ethernet-to-Ethernet wide-area-network connectivity.


The service is carried over XO's MPLS-enabled IP backbone using physically diverse OC-192 circuits. Future releases of MTNS will support Class-of-Service (CoS) capabilities allowing customers to set parameters that support the customization of traffic prioritization. The service will also enable the integration of legacy access methods with more advanced access methods. XO said the new MultiTransport Networking Service would provide customers with greater flexibility by enabling full interoperability between varying protocols.
http://www.xo.com/products/smallgrowing/data/mtns/index.html

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Verizon's Babbio Confrims FTTP Commitment

When asked "do you feel better about the telecom business today than you did a year ago?", Larry Babbio, Vice Chairman and President of Verizon Communications, replies with an unequivocal "yes" -- except on the regulatory front. Speaking at the Goldman Sachs Communacopia XII Conference, Babbio said traditional telecom services now represent 45% of Verizon's' overall revenues, compared to 52% in the first half of 2001. The revenue mix is shifting from POTS to new growth areas. Customers are continuing to adopt new technologies at a significant pace and Babbio believes there are significant growth opportunities for a whole range of new services, especially broadband and wireless. Verizon's challenge is to redesign its business around these new growth opportunities while remaining profitable. Some highlights of his presentation:

• Verizon has already moved aggressively to update its core infrastructure. The company has the necessary optical and data backbone capacity for significant traffic growth -- its next challenge is to upgrade the access portion of its network.



• Verizon is committed to a large-scale fiber-to-the-premise (FTTP) deployment. Verizon is negotiating with key industry partners and the RFP process will be completed this month. FTTP deployments will start next year. Babbio said Verizon is committed to reaching 60% of its consumer revenue base with a fiber solution within 5 years. Regarding content partners for the FTTP launch, Babbio said Verizon continues to study its options. No decision on a satellite TV partner or other content aggregator has yet been made.



• Verizon's wireline CAPEX budget for 2004 will be similar to 2003. Spending will shift to FTTP from other areas in the network.



• Verizon believes its has the most advanced wireless network in the U.S. and is moving ahead with 3G 1EV-DO upgrades. Babbio argues that the network is the platform for innovation and will be the key differentiator when mobile penetration rates reach saturation levels. Verizon Wireless in on-track to add 4.5 million customers this year. During the first month of Picture Phone service, customers sent over 1 million such messages. "Push-to-talk" service is selling ahead of expectations.



• Long distance and DSL services are both selling well. Verizon now has 14.6 million long distance customers and 2 million DSL lines. By the end of the year, 80% of Verizon lines will be DSL-eligible. Babbio acknowledged that Verizon's DSL deployments have lagged behind cable modems because they were late to market. He believes that DSL momentum is growing and that Verizon will be able to capture more than 50% of the new broadband adds in its region.



• Verizon's "Enterprise Advance" initiative is on track. The company has 32 enterprise services to date and signed contracts with 59 Fortune 500 firms. A nationwide network rollout is still underway.



• Babbio described the FCC's recent Triennial Review Order as a "huge disappointment" and said Verizon will continue to fight with every legal channel available.



• Verizon had 154,000 employees at the end of Q2 2003, down from 178,00 in Q4 2001



• Verizon's CAPEX / Revenue ratio for 2003 will be in the range of 17.6% to 18.7%, compared to 27.5% in 2001 and 19.4% in 2002.



• During the first half of the year, Verizon generated $3.6 billion in free cash flow, compared to $2.8 billion for the second half of last year



• Overall debt has been reduced from $57.8 billion in Q2 2002 to $48.1 billion in Q2 2003



• Verizon continues to have margins in the 40-42% range

http://www.verizon.com

• In September 2003, Greg Evans, Vice President of Service & Access Technology for Verizon Communications, confirmed that the FTTP RFP launched earlier this year has resulted in a short-list of three potential suppliers. The FTTP architecture is based on the international FSAN standard. The process has now entered a lab testing phase to verify critical requirements and Verizon Communications has entered into private negotiations with all three of the suppliers on the short list. Each of the RBOCs will establish separate contracts with suppliers although the architecture would remain common. Verizon's vendor(s) selection could occur by the end of this month. More on Verizon's FTTP project.
  http://www.convergedigest.com/DSL/lastmilearticle.asp?ID=8766
  

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Deutsche Telekom Credits DSL and Cost Cutting for Turn Around

Booming DSL growth is a major reason for the stabilization of Deutsche Telekom's fixed line business, said Kai-Uwe Ricke, CEO of Deutsche Telekom, speaking at the Goldman Sachs Communacopia XII Conference. A second reason for Deutsche Telekom's on-going turnaround is that the company has made significant progress in improving its overall efficiency, reducing its size, and cutting its debt. Ricke is confident that DT's net income will be positive for the full year 2003 -- the first time it has achieved this positive result since 2000. The company's overall debt has fallen from a high of EUR 64.3 billion to EUR 53.0 billion. Some highlights:

• Deutsche Telekom is number one in Europe for DSL. The company's T-Com division has over 3.7 million DSL subscribers. The company expects to reach 4.2 million DSL subscribers by the end of the year. Compared to the first half of 2002, DSL wholesale traffic revenues have increased by 40%, while DSL retail traffic revenues are up by 190%.



• T-Mobile USA continues to outperform its peers in the U.S. market for adding new users. The subscriber base has now passed 10 million. The company credited it reputation for value and innovation for its subscriber growth. Ricke also believes T-Mobile USA has achieved a cost-advantage over its competitors because it has one network, one billing platform, etc.

http://www.telekom.de

• In August 2003, Deutsche Telekom reported half-year 2003 revenues of EUR 27.2 billion, up by EUR 5.0 billion compared to last year. Net income also rose by EUR 5.0 billion to a positive EUR 1.1 billion.
• 
  
  In November 2002, Kai-Uwe Ricke was named as Deutsche Telekom's new CEO. Ricke previously served as chief operating officer of T-Mobile International.

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DIRECTV Selects Space Systems/Loral for 2 New Satellites

Space Systems/Loral (SS/L) received orders to proceed with the design and construction of two satellites: DIRECTV 8 and DIRECTV 9S. Aggregate revenue for the construction of the two satellites will be in excess of $220 million.


DIRECTV 8, to be delivered in the late first quarter of 2005, will provide national coverage from the 101 degrees West longitude orbital slot, DIRECTV's primary orbital slot. The satellite will carry 16 high-power transponders.


DIRECTV 9S, scheduled for delivery in the late second quarter of 2005, is designed to operate from orbital locations at 101 degrees West longitude or 119 degrees West longitude. As a back-up for DIRECTV's 4S and 7S satellites, it will be capable of providing up to 54 transponders for high-quality local and national digital video service broadcast into 27 beams. In an alternate configuration, the satellite will be capable of providing up to 44 transponders broadcast into 30 beams.
http://www.ssloral.com

• SS/L is currently building DIRECTV 7S, a high-power, spot-beam satellite scheduled for launch in mid to late first quarter of 2004.

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Cisco and Huawei Stay Litigation

Cisco Systems and Huawei agreed to stay the litigation that is currently pending in a district court in Texas. As part of the agreement, the two companies have agreed on a course of action that they expect -- upon full implementation and pending completion of an independent expert review process -- will lead to the end of the lawsuit.


Specifically, Huawei agreed to continue to abide by the terms of a Preliminary Injunction Order. To address Cisco's concerns, Huawei has voluntarily made changes to certain of its router and switch products. The parties have agreed on a process for reviewing these changes. All other terms of the agreement are confidential.
http://www.cisco.com
http://www.huawei.com

• In January 2003, Cisco Systems filed a lawsuit against Huawei Technologies and its subsidiaries Huawei America and FutureWei Technologies alleging unlawful copying of Cisco's intellectual property. In particular, the suit alleges that Huawei unlawfully copied and misappropriated Cisco's IOS software, including source code, copied Cisco documentation and other copyrighted materials, and infringed numerous Cisco patents. Cisco claimed that Huawei's operating system contains a number of text strings, file names, and even bugs that are identical to those found in Cisco's IOS source code.



• In March 2003, 3Com and Huawei Technologies said that they would form a joint venture based in Hong Kong with principal operations in Hangzhou, China. Huawei's contribution to the JV will include enterprise networking business assets, including LAN switches, routers, engineering, sales/marketing resources and personnel, and licenses to its related intellectual property. 3Com's contribution to the JV will include $160 million in cash, assets related to its operations in China and Japan, and licenses to its related intellectual property. The name of the joint venture will be 3Com-Huawei in English and Huawei-3Com in Chinese. 3Com said the JV would provide it with modular layer 2 and 3, 10/100/1000 MB switches. The JV and Huawei will also provide 3Com with a full line of enterprise routers.



• In June 2003, a U.S. District Court judge issued a preliminary injunction against Huawei Technologies.

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BellSouth's Ackerman Sees Growth in New Services

Although the process is gradual, four major and historic network transformations are underway at BellSouth, said Duane Ackerman, the company's president and CEO, speaking at the Goldman Sachs Communacopia XII Conference. These transformations include: narrowband-to-broadband; electrical-to-optical; circuit-to-packet; and overlay-to-shared. The major goal is to arrive at a more flexible infrastructure with quicker provisioning and rearrangement of services. BellSouth is focused on pushing fiber to the outer edge of the network. By the end of the year, fiber-to-the-curb will pass nearly one million homes in the company's territory. Since 1996, all new feeder cables have been fiber and, as a result, about 60% of DLCs are now fiber-fed. This means about 60% of BellSouth's DSL lines could support downstream rates of 5 Mbps and 80% could support 3 Mbps.


Ackerman said the FCC's recent Triennial Review Order will only prolong the legal fights and delay re-investment in facilities-based competition. The UNE-p section of the order is nothing new and BellSouth's current strategies address these challenges. BellSouth will need to run state-by-state campaigns to challenge market impairment claims by its competitors. Ackerman described fiber deployment is a long term proposition and that the FCC's current broadband policy "reduces visibility" for the foreseeable future. He hopes the fiber deployment issue will be clarified in upcoming FCC proceedings. Some other highlights of Ackerman's presentation include:

• During the first half of 2003, BellSouth lost on average 96,000 lines per month to UNE-p competitors in the consumer market and this negative trend is accelerating. For comparison, BellSouth lost an average of 37,000 consumer lines per month to UNE-p competitors in 2001 and an average of 87,000 lines in 2002. Service bundles are leading to increasing customer win-backs.



• The average monthly line loss for small business customers is now 3,000, down from 29,000 line losses per month in 2001, and 14,000 monthly line losses in 2002.



• Total LD consumer penetration across BellSouth is now at 20%.



• The company now has 1.2 million DSL subscribers, representing 50% year-over-year growth. BellSouth has launched tiered pricing models for its DSL based on access speeds. About 80% of new DSL customers choose the full-rate service



• The company's "Answers" bundles now have 2.1 million subscribers and ARPU of $62 per month.



• Service bundles reduce customer churn by 45%



• The recent agreement with DirecTV will add significant value to the BellSouth bundle



• Cingular Wireless continues to experience significant customer growth. Net additions for the first half of the year were 729,000 compared to 540,000 net adds for the second half of last year.



• BellSouth's net debt has been reduced from $15.9 billion in Q2 2002 to $11.3 billion in Q2 2003.

http://www.bellsouth.com

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