Broadband technologies vie for dominance
Cisco has made a bid to change the definition of broadband by promoting the idea of Ethernet services direct to businesses and homes. Service providers from Sweden, Italy, Austria and the UK backed its claim at the Broadband DSL Forum in Berlin on Wednesday. But a parallel announcement that Alcatel -- the market leader in DSL -- had reached 20 million DSL lines, including more than a million in China, showed that Cisco's metro Ethernet has a very long way to go, and is never likely to be an option for universal broadband.
"Broadband [DSL] is one of the fastest growing consumer electronics products ever," said Per Edin, associate principal of McKinsey & Company. Broadband is expected to reach 25 percent of the US in 2004, six years after its introduction. The video recorder (introduced in 1952) took 34 years to reach this penetration, and the PC took 15 years, the mobile phone 13 years and the World Wide Web seven, he said.
Cisco used the conference to announce upgrades to its "metro Ethernet" products that, it says, will bring faster broadband to homes and businesses. The Catalyst 4500 and 3550 now include better integration with legacy SDH protocols and support for VLANs.
Meanwhile, Alcatel upgraded its DSL access platform to improve remote configuration of other vendors' DSL modems, and a low-power, low-profile DSL solution for small phone exchanges, cutting the cost of delivering DSL.
"Metro Ethernet supports voice video and data on one network," said Michael Bayer, director of service provider marketing at Cisco Systems. This "triple-play" would let service providers make a profit, he said.
Italian metro Ethernet company FastWeb, a subsidiary of e.Biscom, has cabled the whole of Milan with fibre and has extensive fibre networks in five other Italian cities, over which it is delivering voice, video-on-demand and data at 10Mbps to homes and businesses. "Our target is the full replacement of the incumbent [Telecom Italia]," said Mario Mella, FastWeb's network planning director. FastWeb customers spend an average of 780 euros (about £500) per year on the combined services, he said.
Austria's Wienstrom is offering 10Mbps Ethernet in its Blizznet service in Vienna, and B2 sells Ethernet services in Sweden. All three use Cisco metro Ethernet equipment.
"Service bundles increase revenues and decrease churn," said Slim Bousetta from Cap Gemini Ernst & Young, quoting figures that showed that a UK cable company lost 11 percent fewer of its bundled customers compared with those buying cable TV only, and the bundle customers each spent more than the average total spent by customers of each service separately.
However, the broadband market is so fragmented that no generalisations can be made, warned Edin. FastWeb is a special case, he said, since Italy has little competition from cable modems. The company got a cheap head start using fibre lines installed for the EU-backed Socrates network project, and gained its IPO funding at just the right moment, so that it has not suffered yet from the telecoms downturn. "There is a critical density for metro Ethernet," said Edin. "But that varies according to local factors such as regulations, the competition and the local culture".
Service providers do not see the battle as the suppliers do -- they are far more pragmatic: "Our main customers for Blizznet are dissatisfied cable and ADSL users," said Reinhard Brehmer, managing director of Wienstrom. "We look forward to them getting more customers".
FastWeb also, despite its impressive fibre roll-out, is using Alcatel's DSL equipment to fill in the gaps in its fibre network in cities such as Rome and Genoa, pointed out an Alcatel spokesman.
Alcatel's announcements included a further extension of its Chinese DSL dominance in a deal with Zhejiang Telecom, adding 180,000 DSL lines to the Zhejiang province, and joining other deals including one with the dominant Chinese provider, China Telecom.
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