Cable Tech

Access Market Sings the Blues

BURLINGAME, Calif. -- The access equipment market, like some attendees at the NGN Ventures conference, could use a bit of a stimulant.

Specifically, there's a growing consensus here that if the telecom business is to recover, the access sector -- which arguably gives carriers the quickest return on their investment -- needs something to release it from its melancholy (see Optical Oracle: Access is Gold ). Be it regulatory help, some cheap, profitable way to deliver DSL, or an explosion of new markets altogether, the companies here are looking hard for answers.

Each potential stimulant, however, has its side effects. Take the regulatory environment. The gripe about regulators, panelists say, is that their increasingly pro-RBOC leanings (and, oh, yeah, the failure of deregulatory efforts such as the Telecom Act of 1996) doesn't give the incumbent carriers any competition to prompt them to roll out DSL any faster (see Tauzin-Dingell Takes Another Step).

"The state public utility commissions are more interested in your grandmother's POTS [plain old telephone service] line than they are in your DSL account," says Jim Sackman, CTO and VP at Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI).

What about federal regulators? "[In the FCC], you historically have gotten a bunch of people who just don't have a clue," says Tench Coxe, Managing Director at Sutter Hill Ventures (see FCC Commissioner Weighs In). Indeed, broadband doesn't appear to be the national priority of regulators, according to John McQuillan, president of McQuillan Ventures.

Sure, new regulation is supposed to prompt carriers to launch broadband services faster, panelists said, since it makes it so they don't have to share their networks with competitors. Right now, however, they won't roll out new DSL service with Wall Street watching their every move.

"CEOs are focused completely on producing profits," says Coxe, who notes that service providers are not worrying about new services -- they're going back to their bread and butter in an attempt to get out of debt.

Another thing hampering the access space is that power consumption has kept DSL gear costs high, Sackman says. "Power and batteries and stuff like that are under the high-tech radar."

Indeed, for each broadband connectivity solution there are limitations on distance, cost, functionality, and performance. The constant trade-offs, however, have encouraged some startups to try and find untapped access markets.

Take Actelis Networks, which presented here (see Actelis Draws High-Profile Investors). That startup is building a solution -- with one box in the service provider's central office and one inside a customer's building -- that provides fiber-like bandwidth over the existing copper pair. This new set of gear will allow service providers to offer businesses outside of the denser metropolitan areas some kind of connection that's greater than a T1 (1.5 Mbit/s) line, according to Actelis CEO Yuval Baron.

The catch? To succeed, Actelis must convince service providers to attack a brand new market, which they're hesitant to do very soon. "Timing is the issue," says Coxe. "[Actelis] is clearly going after a niche where its needed, but I don't know if its market will develop in time."

Baron says he's not worried. The 110-employee company has raised $75 million to date and has about half of that still in the bank. Actelis's challenge will be to convince service providers to take a chance on a startup, something that draws sneers from larger equipment companies.

"Startups are not able to deliver innovation and products in a way that service providers can use," says Sackman.

— Phil Harvey, Senior Editor, Light Reading
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joestudz 12/4/2012 | 10:31:51 PM
re: Access Market Sings the Blues Notice where in the below news release about a new patent where patent holder has patented the term FSO-to-the-home. Could they be thinking that FSO might be the access technology of the future.
schoenfelch 12/4/2012 | 10:31:42 PM
re: Access Market Sings the Blues I was really disappointed in the food...peanuts and pretzels! come on! At least they were serving a decent cabernet.
vlui 12/4/2012 | 10:31:40 PM
re: Access Market Sings the Blues To some degree that might be true. But another comment in the article was that CEO is only about making profits... You wonder first of all, why is he so worried in the first place? in my opinion is because of the pressure from the board and their VCs to spend hundreds of millions laying infrastructure, conquering the world, dreaming this ideal business, 100x the evaluation, get IPO'ed or acquired, so they can loose their baggage. And when the carriers are out of gas, they let them die. Carriers as in the new wave of SPs, not the RBOCs. So who's really the root of the problem? By all means, they are the ones who jumpstart a great deal of innovations, but they are also ones who have driven a lot of deals into deep waters.

(By the way, the article seems to have drifted away to talking about a particualr vendor rather than going into more details about the panelist discussion?)

It's a waste of energy and time to wait for the RBOCs or to see regulations change for the better, unless there is really one central collective effort that can knock some sense into PUC, FCC, etc.

Vendors can have all sorts of bleeding edge technology to pump terabits over copper, but they will also run out of time and money by the time RBOCs even take a look at them. I may be wrong, but i hardly believe that they (the carriers as mentioned in the article) would care about Wall Street watching over them. Nothing against the RBOCs, because chances are they may be the only ones who can legitimately get broadband and fiber to a greater mass market.

Any other thoughts??
rjmcmahon 12/4/2012 | 10:31:39 PM
re: Access Market Sings the Blues Nothing against the RBOCs, because chances are they may be the only ones who can legitimately get broadband and fiber to a greater mass market.

The manholes I see in most US cities are electric power, natural gas, cable, telephone, water and sewer. Last mile fiber technically works in any of those rights of ways.

The RBOCs have too many employees and they want to charge way too much. Their tactics of deploying half steps with things like DSL indicates to me that aren't serious about broadband.

Municipal governments seem like the immediate way for progress.

tjax 12/4/2012 | 10:31:31 PM
re: Access Market Sings the Blues Re the derogatory tone used in the comment about the carriers CEO "only being concerned with producing profits" uhhh, excuse me, but isn't that what he or she is SUPPOSED to be doing? I know as a shareholder, I certainly appreciate the focus on profits! And why, pray tell, in an uncertain economic environment and a regulatory playing field that disincents the RBOC's from deploying broadband would they not want to wait things out?
bigturtle 12/4/2012 | 10:31:27 PM
re: Access Market Sings the Blues Imaging, if politicians loose regulation grips, new broadband providers could supply telephone with image, cable TV, teleconference, Internet all in one. A transceiver is not expensive. Currently, it drops to around US$30 (Taiwanese companies amde for Japan's fiber optic to home).

Awake! this means death of those big telephone companies from where
- politicians get their camgaign fund
- politicians get union endorsement
- militant politically correct community group get their milk

Sadly, I do expect politicians to side with big telephone companies
rjmcmahon 12/4/2012 | 10:31:24 PM
re: Access Market Sings the Blues Sadly, I do expect politicians to side with big telephone companies.

It's a double whammy. The second part is that politicians need the broadcast networks for their political ads.

The money source starts from the consumers monthly toll. The RBOCs collect this monthly check and give a portion to the politicians. The politicians take their portion and give it to the broadcast network owners. The FCC stands guard to make sure that these revenue flows are preserved.

Watching Pennyslavnia Senator Arlen Specter go to bat for Comcast Tuesday by complaining about how much Brian Roberts has to pay for NY Yankees broadcasting rights was hilarious. A senator behaving as a slave to cable network owner and making silly arguements for cheaper access to baseball programming makes for great comedy.
Bumper_car 12/4/2012 | 10:31:13 PM
re: Access Market Sings the Blues The idea that nothing happens without money seems to be common thoughout history. This will be true of broadband packet access to residential end users, as well as the commercial market. The real problem is that packet services have such low profits that they have to be run with high statistical gain which in turn makes them unsuited for most commercial needs, not to even talk about the secuity issues. It was a disapointment to a lot people that the broadband packet market couldn't make it as a profitable venture.

The politicians and other people may complain about the cost of access; but they won't pay for anything but the best, so guess what, they pay the higher price. Of couse, given the amount of money that the sports players are making, complaining about the cost of reliable, stable, 100% usable access link seems a little out of place.
coolhand 12/4/2012 | 10:31:11 PM
re: Access Market Sings the Blues Big Turtle,

You simplify way too much, 30 bucks is a tip of the iceberg. The new breed of SP is only interested in skimming the high margin services re; business T1's. You, I and all the little people with phones - who services us?

RBOC's do suffer a high overhead rate, unions and the expense of supporting huge amounts of copper will do that. But again - how do you do it without those.

We need more focused FCC and PUC regulators to push BB focus in RBOC - until then, more of same.

But today, in the worse telecom climate I have seen in 20 years of doing this - bottom line is profit - and that won't change for 2 -3 years.

Just my opinion

rjmcmahon 12/4/2012 | 10:30:52 PM
re: Access Market Sings the Blues The idea that nothing happens without money seems to be common thoughout history.

Much of the time nothing happens even when money is present. Leadership and commitment are the other two legs required to hold up that stool.

Many in Congress have forgotten who they represent. The public must speak out in order to be represented.
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