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Weekly Column

And Now for Something Completely Different: How DTMD Could Save Your Local Phone Company

Status: [CLOSED]
By Robert X. Cringely
bob@cringely.com

I promised to explain how we could expand our current copper phone network to offer unprecedented bandwidth -- the kind of bandwidth that makes some industries and destroys others -- and I mean to deliver, but first we need some context. Sadly, the context isn't so much technical as economic and political. There is a grand struggle taking place just now in the U.S. telecom market. Elephants are dancing and the grass -- which is to say we the customers -- risks getting trampled. Once again the issue is between the traditional phone company -- the Incumbent Local Exchange Carrier (ILEC) -- and an interloper generally labeled as a Competitive Local Exchange Carrier (CLEC). Only the CLECs this time around have different names than before and are fighting a very different battle. Today's CLEC combatants are AT&T and MCI, and the battle they are taking to the ILECs isn't over Internet service but over a package of local voice, long-distance and Internet services. These CLECs are offering flat-rate plans with totally unmetered local and long-distance calls, and it is driving the ILECs crazy. The ILECs in turn are offering the same kind of flat rates to compete, and the result is that nearly all the profit is being driven out of the phone business. Something has to give.

What is giving are the phone lines, themselves. Though nobody but me seems to be saying it, at the heart of the problem lies a rapid decline in the number of dedicated fax lines, each of which produces a lot of profit for the ILECs, and the decline of fax is being driven by the success of the Internet. People send e-mails with attached files rather than faxes. This loss of revenue, while it appears small, is crucial.

The ILECs are in trouble because their average revenue per phone line is slowly decreasing. They had hoped to make up this revenue loss through gaining the right to sell long distance service, but the profit is falling there, too. That's why ILECs and CLECs alike need to steal business from each other. And that's why they both like DSL, which is one of the few sources of real additional revenue in years for the phone companies. But DSL has only 25 percent of the U.S. broadband market -- compared to more than 65 percent for cable modems. And DSL has a revenue limit since most data is free and DSL lines aren't fast enough to compete with cable TV, another big revenue source that has started competing for local phone service. This year in America, five million families get their telephone service from their cable TV company and the number is growing. For phone companies, these signs are not good.

The last time the CLECs and ILECs were fighting what gave were the CLECs because they were financially weaker than the ILECs, and the ILECs were playing paperwork games to keep it that way. But AT&T invented all those games and can't be so easily fooled. And since the company sold its cable TV operation to Comcast, it has both the resources and the concentration to make life hard for even the biggest ILEC. This has the ILECs looking for a loophole, and they think they have found one.

A couple months ago, the three strongest U.S. local phone companies -- Verizon, Bell South, and SBC -- decided to coordinate their long-delayed build-out of fiber-to-the-home, which is the very stuff that I claimed last week isn't really happening. The three ILECs agreed to cooperate on technical standards and purchasing with the idea of streamlining the fiber roll-out and really making it work. This kind of cooperation is legal, by the way, because the three companies do not have overlapping service.

This cooperation agreement has yielded a Request for Quotation (RFQ) in which suppliers will bid on doing the actual work of taking fiber into the walls of tens of millions of American homes. The whole project is worth approximately $100 billion, which is also conveniently the number usually assigned as the value of the copper network that is being replaced. This balancing of numbers is no accident.

So the RFQ is out there and companies are preparing their bids. But as a guy who has in the past bid on such projects, won them, then found that the project never materialized, this version of future reality is not necessarily the final version of future reality.

These three ILECs have a plan and that plan is to build out the fiber, then sell their old copper network, maybe for the service it can provide, maybe for the copper in your walls, they don't care. What they do care about is being out of the copper network business because doing so is their way of responding to the threat posed by AT&T and MCI. You see new rules from the Federal Communication Commission issued in February say that ILECs have to share with CLECs only their existing network. If they build a new network, then they won't have to share that. So the ILECs have decided to take their ball and go home. By building a new fiber network, they hope that they can abandon MCI and AT&T, taking their local phone customers along with them. At the same time, the new fiber will allow the ILECs to compete with cable TV to bring video into our homes. At least, that's the plan.

But $100 billion is a large price to pay for such freedom if there is a better way to accomplish the same thing for a lot less money.

Now we're at the part where I explain how to send HDTV over normal phone lines.

Some readers were quick to point out this week that several Japanese ISPs have started installing DSL circuits running up to 26 megabits-per-second, which makes my argument last week for 20 megabits look pretty lame. But not all megabits are created equal. What's being installed in Japan is VDSL, which is very fast indeed, but not as well suited to the U.S. phone market where most of my readers are. Quest does have some VDSL lines deployed in the Midwest. VDSL requires a pristine phone line and even then supports that 26 megabit speed over a maximum of only 4,000 feet, and practically, over less than 1,000 feet. ADSL2+, which is another follow-on to current DSL, is slower still. Both it and VDSL are best suited to networks with fiber to the curb, or at least, fiber to the neighborhood. And many such places exist, just not where I live.

What I want is very simple. I want 20 megabits-per-second (HDTV speed) over a single twisted-pair phone line, and that line should be afflicted with taps, loading coils, and crosstalk, which is to say it should be an average copper phone line circa 1964. I want that 20 megabits to run for at least two miles from the Central Office and preferably three. Out where I live, at 36,000 feet from the CO, I'd like to still see at least seven megabits-per-second on an all-copper network that simply requires swapping out the DSLAMs.

VDSL under these conditions runs at precisely ZERO megabits-per-second.

But there is a new technology in town called Dynamic Time Metered Delivery that offers the performance I am seeking. DTMD applies to copper phone lines many of the spread spectrum techniques developed for radio communication. Combining techniques like Direct Sequence, frequency hopping, and Code Division Multiple Access, DTMD allows the entire frequency range of copper to be used, resulting in a single twisted pair being capable of carrying more than 22 megabits-per-second out to distances of more than 12,000 feet from the Central Office. That is eight times the coverage area of VDSL and the difference between a technology that can be used by a small percentage of customers to one that can be used by nearly all customers. And even out where I am in the boonies, DTMD can do something DSL can't -- it can use multiple wire pairs in parallel to increase aggregate bandwidth. Need 132 megabits-per-second in town? DTMD can do that by using all six wire pairs installed in most homes. Even my house can have 42 megabits-per-second using the same technique. And this service is highly resistant to the very line conditions that kill DSL.

DTMD was invented by a startup called TelePulse Technologies. As always, I have no personal interest in this company. I just like to see new technologies succeed.

DTMD can be deployed on existing copper phone lines and will run on lines that are not currently suitable for DSL. All that DTMD requires is replacing line cards in DSLAMs at the phone company and a new modem at your house. It could give the ILECs the same performance as that $100 billion fiber deployment in vastly less time and for vastly less money. But from the ILEC perspective, DTMD offers something else of even greater value: Like fiber-to-the-home, DTMD qualifies as a new network technology, and under the February rules by the FCC, the ILECs do not have to share it with their CLEC enemies.

DTMD could be deployed everywhere in a couple years. ILECs could use it to offer ultra-high speed Internet connections or use it to compete with cable television. DTMD could support HDTV in nearly all urban and suburban areas, and whatever kind if video is being carried, it can be done as video-on-demand, which means you can stop the show while you go to the bathroom, something that cable TV can't do on a comparable scale.

The phone companies always thought their value lay in owning the copper in our walls. And just at a time when they are finally abandoning that idea in favor of fiber, a technology like DTMD is making that copper more valuable than ever.

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