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Cable Tech

Verizon: HD VOD Is Coming

CHICAGO -- NXTcomm -- What's the next big thing that's going to ride down Verizon's FiOS network to consumer homes? High-definition video on demand, according to the company's executives attending the NXTcomm show this week.

After a press dinner on Monday, Verizon Communications Inc. (NYSE: VZ) CTO Mark Wegleitner remarked that a high-def VOD service was "in the lab stage" and that the current fiber network "could support it right now."

Wegleitner added that "there is an internal time table for its launch that is currently being debated." So the launch date's not clear, the service specifics are still being refined, but Verizon is solidly moving toward the biggest, best offering possible in VOD.

During the NXTcomm related event in Chicago, Wegleitner also outlined to a room full of press the reasoning for the decision to go with an FTTP network and shed some light on future technological changes that will be coming, including a move beyond GPON.

"We are looking beyond GPON with a three- to five-year timeframe," said Wegleitner. The next step will be a move to wavelength-division multiplexing (WDM), a technology that would give each customer its own wavelength to its home which translates to about 1 Gbit/s for each individual household. "WDM is ahead of us."

Wegleitner also said that Verizon is moving toward IPTV and that it has an evolution plan in place that would take "two years minimum" to begin. "It's going to be an all IPTV world within a three- to five-year time frame."

— Raymond McConville, Reporter, Light Reading

rjmcmahon 12/5/2012 | 3:05:55 PM
re: Verizon: HD VOD Is Coming 3 Million Homes passed per year is no small investment. If you do not believe those numbers, then I guess you are also saying that Tellabs results are fraudulent. These are also audited.

Seven, do you have the information to balance what VZ spent in 2006 on FiOS with the accounts receivable of vendors?

Here is what the 2006 annual report gives.

"Capital Allocation GÇô Our capital spending continues to be directed toward growth markets. High-speed wireless data (Evolution-Data Optimized, or EV-DO) services, replacement of copper access lines with fiber optics to the premises, as well as expanded services to business markets are examples of areas of capital spending in support of these growth markets. Excluding discontinued operations, in 2006, capital expenditures were $17,101 million compared to 2005 capital expenditures of $14,964 million. Of the increase, $1,602 million was primarily attributable to capital spending related to the former MCI, with the remainder in support of growth initiatives. In 2007, Verizon management expects capital expenditures to be in the range of
$17.5 billion to $17.9 billion"

Where is the FiOS breakout?

From what I can tell, Tellabs received $370M in 2006 for fiber access products but don't know how much was from VZ. Also, how much went to GLW?

All of this in theory should be a trivial exercise. One reason the US is a place to invest is because of our claims of transparency so a simple exercise of balancing FiOS books should be an easy thing to accomplish.
rjmcmahon 12/5/2012 | 3:05:55 PM
re: Verizon: HD VOD Is Coming So, you are accusing Verizon of financial fraud and violating securities fraud. All financials of public companies are audited.

No that's not what I'm saying. I'm saying that FiOS is not independently audited and the numbers I've read have been pro forma. It implies that the project is not completely transparent though does not say it violates securities law. Rather it makes it hard for an outsider to discern the real costs.

A muni project, at least by CA law, has to be much more transparent and cannot cross subsidize. This ability to cross subsidize can be advantage for VZ, but I think chasing TV is a misallocation of resources and is a mistake.

3 Million Homes passed per year is no small investment. If you do not believe those numbers, then I guess you are also saying that Tellabs results are fraudulent. These are also audited.

That's the fine line VZ has to walk. Passing millions of homes but having guys like OldPOTS having a price expectation of $20 a month. (Even the iphone, without all that fiber sunk costs and using a poor quality AT&T network is pricing at $60mo.)

So my argument is that a fiber project can't initially stand on its own without a subsidy. Hence, the suggestion that an ecommerce tax be considered (as well as much higher initial prices for high speed internet access.)

Or another way to think of it. How did VZ start their wireless projects? In house or by creating a subsidiary? I really don't know but I would expect a profitable FiOS to use the same mechanisms.
paolo.franzoi 12/5/2012 | 3:05:56 PM
re: Verizon: HD VOD Is Coming
So, you are accusing Verizon of financial fraud and violating securities fraud. All financials of public companies are audited.

Your perception is incorrect. 3 Million Homes passed per year is no small investment. If you do not believe those numbers, then I guess you are also saying that Tellabs results are fraudulent. These are also audited.

seven


rjmcmahon 12/5/2012 | 3:05:56 PM
re: Verizon: HD VOD Is Coming By the way, Verizon has published its costs for a home passed and a home connected. Why not read for yourself.

What I read of FiOS in the past was bs. I don't believe FiOS is being independently audited. Maybe that's changed. I perceive FiOS as being used as a puff piece for Wall St. and the FCC. A muni project would be more accountable in my opinion. There the challenges of the projects have shown the take rates needed for a ROI, even over the mid to longer terms, are much too aggressive. Anybody claiming a 10 year return I am extremely skeptical of. I don't think Glasgow achieved that even though the picked up their HFC plant at bankruptcy prices.
rjmcmahon 12/5/2012 | 3:05:56 PM
re: Verizon: HD VOD Is Coming But since you seem not to understand the difference between WIRELINE networking and WIRELESS networking, I am betting about now you wish you had not cut and paste that little post.

Cut and paste was the quickest way to get there. Came from RUS and USDA. Broadband for them is both wireless and wireline. I suspect muni projects will have to support both and they won't be isolated networks, similar to corporate america where both networks operate in a seamless fashion.
paolo.franzoi 12/5/2012 | 3:05:57 PM
re: Verizon: HD VOD Is Coming
Great rj,

Of course, you have no idea what you are talking about. But since you seem not to understand the difference between WIRELINE networking and WIRELESS networking, I am betting about now you wish you had not cut and paste that little post. Unless you really believe that Radio Engineering is part of a Fiber Optic buildout.

By the way, Verizon has published its costs for a home passed and a home connected. Why not read for yourself.


mg,

The basic problem is that government investment in "The Internet" at this point is US taxpayers funding overseas development. So unless we reach some kind of global government, we are in a rock and a hard place.

And Finally,

Utopia is a mixed bag. It is covering a very small number of communities. Some new ones have joined. Some original ones have dropped out. There is a considerable number of municipally owned phones companies (aka some of the IOCs - see OPATSCO for more info). Some are doing either fiber, video or both. The vast majority are not at this time. Those that are not, are generally in areas where cable is not strong and many folks buy satellite.

seven
rjmcmahon 12/5/2012 | 3:05:57 PM
re: Verizon: HD VOD Is Coming No conflicts of interest

Great. You have also demonstrated your financial skills on these boards in the past as well. In your ten year return calculation and, only focusing on projects costs, can you share your results for:

o Detailed breakdown of the Network & Access Equipment Cost. Examples of the items to be included on this schedule are next-generation switches, video headends, optical equipment, digital line concentrators, digital subscriber line access multiplexers, middleware, video-on-demand equipment, radio equipment, data routing equipment, etc.

o Detailed breakdown of the Outside Plant Costs. Examples of the items to be included on this schedule are fiber cable (aerial, buried, underground, and submarine), conduit systems, poles, network interface devices (NIDs), miscellaneous construction units, make-ready costs for aerial plant, etc.

o Detailed breakdown of Building Costs. This shall include the cost of constructing new buildings, renovating existing buildings, and any site preparation cost involved with installing pad-mounted equipment.

o Detailed breakdown of the Land Costs. This schedule shall only include those sites that will be purchased.

o Detailed breakdown of the Tower. This shall include the cost for the construction of new towers and any costs involved with structural changes to existing towers.

o Detailed breakdown of Customer Premise Equipment. Examples of the items to be included in this section are wireless subscriber units, modems, set-top boxes, etc.

o Detailed breakdown of the Operating Equipment cost. This shall be broken down into different categories (Office Equipment, Office Furniture, Work Equipment, and Vehicles).

o Detailed breakdown of all the different engineering costs (site engineering, Radio Frequency engineering, network engineering, project management, etc.) involved in designing and constructing the project.

o Detailed breakdown of any existing notes that are requested to be refinanced to support the project.
deauxfaux 12/5/2012 | 3:05:59 PM
re: Verizon: HD VOD Is Coming No conflicts of interest
rjmcmahon 12/5/2012 | 3:06:00 PM
re: Verizon: HD VOD Is Coming Also, you forgot to comment if there is a conflict of interest or not. Can you say you have no finanicial interests in the outcome of FiOS? I'll take an absence of a actual response to the question as that you cannot.

I don't. I don't own any VZ stock. I don't sell them anything. They are not my phone company. I did listen to their CEO speak once and found him a quality guy.
rjmcmahon 12/5/2012 | 3:06:00 PM
re: Verizon: HD VOD Is Coming Arguing with zealots is a waste of time. I think it is a viable 10 year investment and a fantastic 20 year investment.

Ok, again from an outsider's perspective, you've been specific on critique of BKHM's financials but have chosen to make sweeping generalizations when it comes to FiOS. Anything specific to back it up?
deauxfaux 12/5/2012 | 3:06:01 PM
re: Verizon: HD VOD Is Coming "You spend many of your posts discrediting Bookham's CEO as well as their financials, probably fairly from what I can tell."

I believe that BKHMs board has spoken eloquently about the subject of Mr. Anania

"Well, why not state your case then?"

Arguing with zealots is a waste of time. I think it is a viable 10 year investment and a fantastic 20 year investment.
rjmcmahon 12/5/2012 | 3:06:01 PM
re: Verizon: HD VOD Is Coming If I wast forced to put money on any of the SPs it would be FIOS. This is because their network has some flexibility.

OldPOTs, the problem I perceive is that the profitable access networks to date have been purpose built hence the search for the killer app by all the bellheads. In the early days of the PSTN the telcos tried to transmit audio shows, etc., but at the end of the day it was the ability to charge for phone calls that drove things. All the attempts at providing entertainment proved futile. In that regard, FiOS seems like "what's old is new again."

Also, I think the flexibility comes with dumb bit pipes but there has not been an ROI to drive the large investments needed. So flexibility is great but may not be sufficient to generate a profit.

HD VOD is an example of fast adaptation that is needed as margins in many new services are fast declining and competitors are already there.

Agreed.

I have had several good service offers in the mail from VZ but have not converted yet because they are not at $20.

The fiber projects that I've seen have pricing much higher than this. I believe it's because it really costs much more to build out a new infrastructure. The way we've gotten over this in the past is had the early adopters pay higher prices. This has been true for autos, electricity, PCs, mobile phones, etc. I don't see how it can start out at mass adoption pricing (something the FCC would push.) $20 is way too low and, if that's what FiOS customers expect, I don't see how they can do it (unless they cross subsidize from wireless or something else.)

But your government/municipal network would be left behind as they would be built to rigid specs.

Agreed that this is an issue that needs to be addressed and the model does have to address the issue of technology churn in a way that upgrades can be done without excessive government intervention. I also don't think government spec'ing the thing is the right approach. They don't spec my trash bins, rather it's the trash company they hire that does.

The government role would be limited to areas of their expertise. Things like establishing the entity that could raise the bonds, the board to oversee the project, and provide for the limited ROW exclusivity in such a way that bondholder's risks can be mitigated.

My concerns are with SP/MSO security and availability of networks that will be required. Many of those problems have not yet been fully exposed, and may not be for a few more years when the networks have to scale more fully.

Agreed.
OldPOTS 12/5/2012 | 3:06:02 PM
re: Verizon: HD VOD Is Coming rjm
If I wast forced to put money on any of the SPs it would be FIOS. This is because their network has some flexability. But I have many more investments that make much better margins and profit to shareholders so I have not invested.

HD VOD is an example of fast adaptation that is needed as margins in many new services are fast declining and competitors are already there. I have had several good service offers in the mail from VZ but have not converted yet because they are not at $20. But your government/municipal network would be left behind as they would be built to rigid specs.

My concerns are with SP/MSO security and availability of networks that will be required. Many of those problems have not yet been fully exposed, and may not be for a few more years when the networks have to scale more fully.

OP
rjmcmahon 12/5/2012 | 3:06:02 PM
re: Verizon: HD VOD Is Coming Nope; wrong again. But then again, this is a common predicament for you.

Well, why not state your case then?

Here is what it looks like from an outsider. You spend many of your posts discrediting Bookham's CEO as well as their financials, probably fairly from what I can tell. This behavior also suggests you have financial interests, either yours directly or maybe managing those of others, in the fiber components business.

If you're an unbiased observer of FiOS, having no conflict of interests, and genuinely believe it's a viable 20 year investment than I stand corrected.
deauxfaux 12/5/2012 | 3:06:02 PM
re: Verizon: HD VOD Is Coming "Said from somebody who sells fiber optic components for a living, right?"

Nope; wrong again. But then again, this is a common predicament for you.

deauxfaux 12/5/2012 | 3:06:02 PM
re: Verizon: HD VOD Is Coming Tera

Thanks for the clarification; it makes sense. In general, his posts are quite unimpressive
rjmcmahon 12/5/2012 | 3:06:03 PM
re: Verizon: HD VOD Is Coming Can the following be viable business model ?

"Exclusive advertisement (add-insertion) rights" for the "Access/fiber provider" to finance their fiber networks?

Probably not. In the US ads pay the producers of the content and there probably isn't enough left over to fund infrastructure. Also, our history of radio/tv suggests the outcome of that approach. Finally, all Google has been able to do, even with massive amounts of hype, is put up a few small wifi projects. (Maybe they could stop taking pictures of streets and get to doing some real and basic works?)

The sunk costs require a printing press. There are two choices, debt or equity. Wall Street funded some long haul during the mania of 2000 and those companies are now loaded down with debt. Wall Street didn't drop a dime for fiber access during the same time period.

That leaves debt. The feds waste our money and hire guys like the FCC. The states tend to do a bit better in that much goes towards schools though, due to our war on drugs we now have prison obligations for multiple generations. Hence, that leaves ourselves.

I say sell to those of us who are extremely rich and who don't want to pay taxes, municipal <v>revenue bonds, and use the proceeds from that to finance construction. Repay those bonds, not by a general tax, but buy an ecommmerce tax until revenues are sufficient such that the tax can be sunsetted. (No toll gates forever as done on our bridges.) Also, reduce the risk on the bonds, and hence the interest rate, by granting a limited monopoly, but only for internet access with symmetric access speeds of 1 Gb/s or better.

On the carrier neutral colos, use something like the triple net lease along with sharing of gross revenues to fund that. (Typical in retail construction.)</v>
rjmcmahon 12/5/2012 | 3:06:03 PM
re: Verizon: HD VOD Is Coming Your point is valid. Our world is full of paradox. Now what do we do?

MG: your question to seven, while I'm sure is with good intentions, is a waste of time. Asking him to recognize the con in front of his audience would be like asking a charlatan to admit that his elixir, the stuff he's been selling for $30K a bottle and promising it might cure cancer, is nothing more than sugar water. It won't happen, at least not in public.
ipLogic 12/5/2012 | 3:06:04 PM
re: Verizon: HD VOD Is Coming Folks,

about this neverending access-fiber financing discussion

One idea, I don't know if it might have been discussed before ?

Can the following be viable business model ?

"Exclusive advertisement (add-insertion) rights" for the "Access/fiber provider" to finance their fiber networks ?
(like the free newspapers/free TV that feed only with advertisement)


For example the fiber/access provider can place own "gatekeeper" that does add-insertion in *ALL* content going to the subscriber.

Visually: when you open google or yahoo, you do watch their content-&-Adds, but the *"Bottom 5-10%"* of the i-explorer/netscape window *would* contain advertisement exclusively inserted by the access-network provider. This advertisement then help the access-network provider ROI and operations for the access-network.

Technically: it would be like DPI looking in the HTTP, P2P (and other) sessions, and has (lawfull) right to insert own advertisement in that "HTTP extension" (which is yet to be invented), BUT *just insert*, and NOT disturb/delay/deprioritize/stop the content flow.

(simplest way would be pop-up window, but I don't like them as they *can be closed* (to disadvantage for the advertising access-provider), I'm thinking more of *integrated advertising space* inside the http window and http protocol)

So this would use DPI and the "Gatekeepers" for "positive purpose" to "finance the fiber and content-freedom", instead of using them to "cut content".

The access-network provider will not care *which* content you watch, rather he always wins as long you download *any* content, since this ensures that his adds are part of it.

Additional benefits of this advertisement is that it can be "personalized" (and more effective and costly), i.e. you send me adds that fit GÇ£my subscriber profilesGÇ¥ which increases the probability for a *hit*.
They might also go for the pay-per-click model.

Is there enough money in this kind of advertisement to cover cost of building fiber access infrastructure (including the GÇ£add-insertion gatekeepersGÇ¥) ?

If you have N-users/M-homes community:
fiber+digging+operations-$$(M) < advertisement-$$(to N)

For me (the subscribers) it means I pay $20 monthly flat (which I like), but I do spend $200+ (and much more) buying other stuff (that I *freely choose*) and part of this money then comes back in my FTTH.


Cheers,
rjmcmahon 12/5/2012 | 3:06:04 PM
re: Verizon: HD VOD Is Coming If you are going to debate with rjmcmahon, you have to know where he is coming from. He heavily espouses the municipal broadband concept, like the Utopia project in Utah (which, I have to admit, actually seems to be working).

This is my position. I don't like it as most muni governments are laggards but it's the only way I can see that we can actually make some progress. If we taxed ecommerce like we do retail commerce (which goes towards city coffers) but did it in a way that city governments couldn't divert funds to pet projects, then we might see some actual cracks in the foundation of our silly ideological walls, walls which are keeping us from self reliance.

If a phone company is putting in a short-sighted system to please share-holders but is bound to fail long-term, then he thinks that is great.

This is incorrect. I don't think conning naive shareholders is a great thing. The shareholders are victims in my opinion. Victims of ideological nonsense. The nonsense is being preached to pacify the FCC. But shareholders are using their own free will to buy into the BS. There are plenty of better companies to invest in.

If a company like Verizon heavily invests in fiber-to-the-home with profit only coming in the long term then he gets so upset you can almost see the spit flying out of his mouth. Verizon's success would make municipal broadband a hard sell.

Got this one chronologically backwards a bit. The cable boys (Armstrong, et. al.) pitched the bundle 10 years ago to Congress (during all those mergers and consolidation) and net results, nothing. Municipal broadband activist tried bundling and that has failed. Now VZ steps up to the plate. There is nothing different and there is no reason why it will work for VZ either.

So, the country needs investment in broadband infrastructures. 100s of billions on the low side. The bondholders will demand an ROI. Time has shown there is only one service to sell and that's internet access.

So how do we really get it done? I suspect letting go of fantasy and seeing the world as it really is would be a good step.
opticalwatcher 12/5/2012 | 3:06:05 PM
re: Verizon: HD VOD Is Coming "if you want to spout rhetoric defending the U-Verse service as a viable video delivery platform then we can simply agree to disagree. I think you are wrong." --derac

If you are going to debate with rjmcmahon, you have to know where he is coming from. He heavily espouses the municipal broadband concept, like the Utopia project in Utah (which, I have to admit, actually seems to be working).

If a phone company is putting in a short-sighted system to please share-holders but is bound to fail long-term, then he thinks that is great. If a company like Verizon heavily invests in fiber-to-the-home with profit only coming in the long term then he gets so upset you can almost see the spit flying out of his mouth. Verizon's success would make municipal broadband a hard sell.
rjmcmahon 12/5/2012 | 3:06:05 PM
re: Verizon: HD VOD Is Coming VZ has made a 20 year+ bet with their investment in fiber. It will pay off.

Said from somebody who sells fiber optic components for a living, right?

FiOS is not going to pay off. It's more snake oil.
rjmcmahon 12/5/2012 | 3:06:05 PM
re: Verizon: HD VOD Is Coming Fine.. if you want to spout rhetoric defending the U-Verse service as a viable video delivery platform then we can simply agree to disagree. I think you are wrong.

No u-verse is not a viable video delivery platform but that's not the point being made (and a rather silly assumption to boot.) The telcos getting into video delivery is being shoved down their throats by an activist FCC. Remember Martin's rhetoric "Competition before deregulation." In that regard all they really need to do is pacify these idiotic regulators who live in a fantasy world by giving them the illusion of facilities based competition.

Hey, I got an idea! Let's really add some competition to the mix!. Let's force all the water companies to install fiber access networks. Then we'd really some progress. Darn! Can't do that because the FCC doesn't regulate water infrastructure.
deauxfaux 12/5/2012 | 3:06:05 PM
re: Verizon: HD VOD Is Coming Look at the take rates: uverse as a viable video deliver platform? Puhleeeze. Uverse wouldn't even qualify as good DSL in Korea.

Does uverse offer a superior video product compared with cable: NO

Does uverse offer a superior video product compared with Satellite: NO

Does uverse offer a superior video product to many major Market HDTV terrestrial broadcasts for FREE: NO

Does uverse offer superior internet performance compared with cable/DOCSIS 3: NO

VZ has made a 20 year+ bet with their investment in fiber. It will pay off, and ATT will end up "reinventing" or "extending the greenfield strategy" or whatever else it needs to say to spin the truth; uverse is garbage
derac 12/5/2012 | 3:06:06 PM
re: Verizon: HD VOD Is Coming Fine.. if you want to spout rhetoric defending the U-Verse service as a viable video delivery platform then we can simply agree to disagree. I think you are wrong.
materialgirl 12/5/2012 | 3:06:09 PM
re: Verizon: HD VOD Is Coming Dear Seven:
We both know that cable Internet access is what it is because they saw a profitable way to attack the telco bundle. Since this was done under the guise of "information service", they could provision it as they desired.

As to the Internet anarchy, you are right. Bad guys are out there, and were not an initial design consideration. It creates problems. Open connectivity both creates opportunity and risk. It is like Ben Franklin said, howerver, about how those who would trade freedom for security deserve neither.

Your point is valid. Our world is full of paradox. Now what do we do?
rjmcmahon 12/5/2012 | 3:06:10 PM
re: Verizon: HD VOD Is Coming Certainly U-Verse is a less expensive alternative than deploying fiber. Using that logic and ignoring the user experience [ or the competition ]one could argue that leaving the dial-up network in place would have been an even cheaper alternative.

Actually, I don't think anybody with a little historical background in dial-up would make this argument.

Phone companies didn't invest in dial-up per se, it was 4000+ independent ISPs who purchased the statistical multiplexing equipment and upgraded this equipment on a regular interval (so did the customers by buying new MODEMs.)

The phone companies sold PRI and T1 lines, their inherited TDM technologies. The independent ISP saw the profit in overlaying stat mux onto this TDM. This was a new market we called internet access. DSL presented a very low cost way for phone companies to take this market from the independent ISPs. (Some saw the market as unnatural anyway becase it was somewhat based on regulation and arbitrage.)

Also, direct competition doesn't motivate businessmen to invest. Profit and ROI does. Competition, in this context, drives price to the marginal cost to produce which something businessmen don't desire.

But if the service fails to deliver and AT&T loses customers to cable/satellite, etc. then it looks like a poor long term decision.

Fiber customers don't buy the bundle so there is no ROI. The other choice is dumb pipes which isn't something the incumbents want to do. So u-verse is the rational choice. Anybody who suggests differntly is misguided.
derac 12/5/2012 | 3:06:10 PM
re: Verizon: HD VOD Is Coming Certainly U-Verse is a less expensive alternative than deploying fiber. Using that logic and ignoring the user experience [ or the competition ]one could argue that leaving the dial-up network in place would have been an even cheaper alternative. In the short term, U-Verse is a better decision in that the cash outflows are far less. But if the service fails to deliver and AT&T loses customers to cable/satellite, etc. then it looks like a poor long term decision.
OldPOTS 12/5/2012 | 3:06:18 PM
re: Verizon: HD VOD Is Coming My sense is that VZ has decided that GPON and HD is coming faster than they expected. While they can delver HD VOD easily on the BPON video bandwidth they currently instal, they need to push a vendor (including the existing) to develop a cheaper solution for migration to GPON, so they also hold out the DWM PON to show faster movement. (they didn't promise what they would spend). It makes them Hip at all those seminars and Standards meeting to those that make future product decisions.

OP
Raymond McConville 12/5/2012 | 3:06:18 PM
re: Verizon: HD VOD Is Coming Tellabs said at NXTcomm they are seeing a lot of increased activity with Verizon as of late to upgrade their video capabilities. They wouldn't say it was directly related to HD VOD but the correlation definitely exists.
rjmcmahon 12/5/2012 | 3:06:19 PM
re: Verizon: HD VOD Is Coming These debates always dance around the core issue of the Internet not having a viable economic model in and of itself. It enables significant economic growth, but does not generate its own return.

If we taxed ecommerce in a way that revenue couldn't be diverted away from actual construction, allowed for monopoly provision of internet access over a limited time period (excluding telcos and cablecos from anything but that that the FCC defines as the minimum for broadband), and mitigated the threat of lawsuits from the incumbents, I suspect we'd see lots of projects starting up with viable financial plans. Until something like the above happens we're all just pissing into the wind or replacing rational thought with blind ideology.
rahat.hussain 12/5/2012 | 3:06:19 PM
re: Verizon: HD VOD Is Coming OldPOTs nailed it with "DWM PON is just a dream of the CTO who needs to keep his job for at least 5 years"

Carrier CTOs need to keep the mill running, with the following steps:

1)New startups can create business plans based on the CTO dreams,
2) VCs can invest because clearly YouTube and (carrier of choice) are good brand names to be associated with,
3) A brand new RFP can go out touting all the new startups features.

Of course, the end result may be something different for the startup:

1)Didn't receive the RFP since they did not have the "support structure" or "balance sheet",
2)They were not connected high enough in all the organizations
3)One of the big guys decided to put all the startup's features on their future releases and won the deal, .....

n) Startup gets acquired by the big guy for a song a year later since the big guy still doesn't have the features!

And of course, through this entire cycle, that lasts over 5 years, CTO and cronies were the most popular and in-demand guys and this importance made them feel good.

Winners: Carrier, Carrier CTO office, Big incumbent vendor.

Losers: Startup, VCs.

Fool me once, ...

ODO
materialgirl 12/5/2012 | 3:06:20 PM
re: Verizon: HD VOD Is Coming Dear Seven:
Hopefully the UN does not run the Internet. However, someone has to establish rules for investing in the common good. This is typically what Governments do.

If one believes that open communications are a critical common good in an information economy, then someone has to decide how to pool resources to make that happen. Expensive, down-only, walled gardens are not the best solution here, IMHO.

Just like we did not need Interstates before cars became popular, we did not need open communications before PCs became popular. Now, we do.
rjmcmahon 12/5/2012 | 3:06:20 PM
re: Verizon: HD VOD Is Coming The Interstates were built to move troops during war. Not for economic gain. They were built in the 1950s, not the 1920s when the roads were cow paths.

Both statements are incomplete. Yes, politico's used defense as a rationale to build the interstates, but troops and supplies could have easily been moved using better railroads, as was done in WW1. Also, some major roads were built in the 1920s, though not interstates. The economic motivations for the former was the car and truck industry and the latter was real estate speculation. Read up on Robert Moses and you'll find that the parkway he wanted to build to what became Jones Beach was stalled for a decade or so, until he sacrificed his ideals and gave into land speculators who also happened to be part of Tammany Hall. It was this self interest (or corruption) of the local officials that moved the project forward.

http://en.wikipedia.org/wiki/J...
http://en.wikipedia.org/wiki/T...

With fiber access there isn't land speculation to drive things. Our industry component (i.e. the equivalent autos/ trucks) is not political astute enough to move things forward. We're so naive that we'll march to the FiOS drum beat, while the captains have given up on us and moved on to wireless and the bandwidth scarcity that comes with that.
paolo.franzoi 12/5/2012 | 3:06:20 PM
re: Verizon: HD VOD Is Coming
mg,

Then you are at odds with the Internet community in general that basically believes that anarchy fosters creativity.

Right now, there are no real laws on the Internet. Governments can try to impose them, but it will fail as people that break the laws can just move jurisdictions.

You have made your walled garden arguments, but never talk about the fact that cable is a completely closed Internet environment. Why is that?

seven



paolo.franzoi 12/5/2012 | 3:06:21 PM
re: Verizon: HD VOD Is Coming
The Interstates were built to move troops during war. Not for economic gain. They were built in the 1950s, not the 1920s when the roads were cow paths.

What government runs the Internet? The UN?

seven
rjmcmahon 12/5/2012 | 3:06:21 PM
re: Verizon: HD VOD Is Coming I guess we are in violent agreement then that U-Verse will struggle given the other options available.

The point of u-verse and FiOS is two things.

<ol>
<li>Pacify the regulators by "investing' in broadband</li>
<li>Try to boost your stock price by suggesting to Wall St. traders you're an innovative company</li>
</ol>

Neither of the above really helps to increase cash flows, so the cheaper option is better, hence u-verse is the choice that a rationale businessman or businesswoman would make.
materialgirl 12/5/2012 | 3:06:21 PM
re: Verizon: HD VOD Is Coming These debates always dance around the core issue of the Internet not having a viable economic model in and of itself. It enables significant economic growth, but does not generate its own return. Until we as a society decide how to invest our collective resources, we will just continue to waste our future estate.

The Interstates would not have been built without Government interference. Instead, we would still be a nation of cow-paths, all of which lead to Main Street so you can buy another burger and add to the local tax base. While we may debate the unintended consequences of the Interstate build, one cannot debate its impact on mobility, efficiency, choice and economic growth.

On the telecom side, we are still building cow paths, or at best, private highways.
derac 12/5/2012 | 3:06:22 PM
re: Verizon: HD VOD Is Coming I guess we are in violent agreement then that U-Verse will struggle given the other options available. I didn't see any reason to denigrate the technology when it is simply being misused.
rjmcmahon 12/5/2012 | 3:06:24 PM
re: Verizon: HD VOD Is Coming ATT, on the other hand....

Is responding to market signals and putting capital into places that will likely generate an ROI. Let's see what happens with the iphone. Whitacre isn't a dummy and neither is his replacement. VZ on the other hand is pandering to FCC chairman Martin.

The cable cos and the libertarians got that part right. The FCC should be disbanded and capital should flow without its influence. The second Martin is gone, FiOS is dead in the water, as egg will no longer be able to land on his face.
UberNeoCon 12/5/2012 | 3:06:24 PM
re: Verizon: HD VOD Is Coming "I would have said, it is throwing money down the drain."

What is another name for something that you throw down the drain that begins with "G"?
rjmcmahon 12/5/2012 | 3:06:24 PM
re: Verizon: HD VOD Is Coming I am very interested to see how they manage the BPON to GPON transition. The risk of 'stranding' early adopters is a real issue.

The stranded costs will borne by those who invest anything more than a nickel into these PON efforts. It's already been proven as a failed model. Nobody buys the bundle but rather one and, maybe two, so-called "services" which means insufficient cash flows to cover the sunk costs.
opticalwatcher 12/5/2012 | 3:06:25 PM
re: Verizon: HD VOD Is Coming "1) Verizon says that an all "IPTV" world is coming in 2-3 years. What does this say about their investment BPON? "
Actually it has put them in a good position relative to their competitors. IPTV clearly had some problems at ATT. Verizon has been able to run a cable type system to supply its customers with product and can take its time getting IPTV working.

"2) HD VOD. What technology will they use to deliver this? " Depending on the stability, scalability of IPTV, it can do it like cable, or it can do it through IPTV or it can do one, then upgrade to the other.

"3) WDM PON. They state they will be there in 5 years....Does this imply that VZ will have to make once again massive investments to upgrade the PON network they just built?"
I assume the biggest cost is the trenching to place the fiber, the drilling to get fiber into the house, and the power system including the battery--not to mention negotiating franchise agreements to let them do all this. These expenses will not have to be repeated, even if they want to upgrade to a 100Gig system 50 years from now.

ATT, on the other hand....
twill009 12/5/2012 | 3:06:27 PM
re: Verizon: HD VOD Is Coming Sailboat, thanks for trying to elevate the discussion.

FWIW, as an observer of technology companies, i usually heavily discount what companies say about things 3-5 years out. They know they will not be held to account for such statements by either investors or the SEC, so they can make Grand Pronouncements and demonstrate that they have 'the Vision thing'. No one will ask them in 2012, "Hey, didn't you say you'd be doing WDM PON by now?"

More to your points: from what i have heard, GPON is happening later at VZ than originally thought, not sooner. Anybody else have insights on this specific issue?

I am very interested to see how they manage the BPON to GPON transition. The risk of 'stranding' early adopters is a real issue.
paolo.franzoi 12/5/2012 | 3:06:28 PM
re: Verizon: HD VOD Is Coming
The term "garbage" would equate to your comments. Which is that even if it worked perfectly, that there is not enough bandwidth in U-verse to compete in the video market. I would have said, it is throwing money down the drain.

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derac 12/5/2012 | 3:06:28 PM
re: Verizon: HD VOD Is Coming I wouldn't go so far as to call U-Verse garbage but I think it is 'challenged' when it comes to the onslaught of HD content that we are witnessing. The TV viewing model will change but it will take time and during that transition the current cable, fiber and satellite video delivery systems will prevail.
OldPOTS 12/5/2012 | 3:06:29 PM
re: Verizon: HD VOD Is Coming Cable has the same type of problem.

See; 'Bandwidth Dogs Digital Transition' ....
In addition to freeing up shelf space for HDTV services, operators must also find gobs of bandwidth to accomodate the February 2009 digital TV transition ''';

http://www.lightreading.com/do...

And I keep being told bandwidth is almost [email protected]#$%^&*(#$%^

OP
OldPOTS 12/5/2012 | 3:06:30 PM
re: Verizon: HD VOD Is Coming My best guess of the technology scenario;

For existing customers, and until they get GPON they will use HD over analog part of BPON. Initially GPON will be installed in large greenfields and then in all new installations. DWM PON is just a dream of the CTO who needs to keep his job for at least 5 years.

OP

Been there, done that
rjmcmahon 12/5/2012 | 3:06:31 PM
re: Verizon: HD VOD Is Coming I think Semel got whacked because Google fileted Yahoo in virtually every category where success could be measured.

I guess it depends on how success is measured. From a user perspective Yahoo has much more to offer. Google really has only been a fast follower and hasn't really offered much that is new and innovative.

Google has dominated in one application, indexing and search, and primarily indexing and search of user generated content. Advertisers have rewarded them for that and they make much more money because of it.

So yesterday Semel missed on the coupling of user generated content to advertising revenue which, if extended into the future, implies that chasing broadcast content, though good for HD set makers, may not be the winning distribution strategy for an internet content aggregator.
materialgirl 12/5/2012 | 3:06:32 PM
re: Verizon: HD VOD Is Coming Dear Seven:
No, the legacy telcos and cable cos will be around in two years. They have cash. Companies vanish with their cash. However, before the cash goes, their revenue drops. Then their margins sag. Then the cash flow goes negative. Then they lie about their financials. Then they go for mergers or debt. Then the liars get caught. Then new management comes in to fix the mess. Then sometimes they vanish, like WCOM.

However, as young eyeballs go to YouTube, we are in the first innings of this decline. Death takes years.
^Eagle^ 12/5/2012 | 3:06:32 PM
re: Verizon: HD VOD Is Coming OK,

How about some real discussion about the technology mentioned in the story instead of every one grandstanding with opinions about macro trends how our culture is entertained.

Some things I would like to understand about Verizon's announcements and that are mentioned in the story.

1) Verizon says that an all "IPTV" world is coming in 2-3 years. What does this say about their investment BPON? As we know, BPON based on tri-plexors at the customer premise is what VZ has been deploying these last few years. That triplexor based design was put in to carry standard video signals (Analog and QAM) down the fiber to the house. If VZ is going to all IPTV, did they waste their money on those ONT's based on triplexors?

2) HD VOD. What technology will they use to deliver this? Again, VZ states this can be delivered over the EXISTING pon infrastructure. To my knowledge, the existing BPON does not have enough bandwidth to have HD VOD delivered over the "IP" portion of the pon architechture. NOTE: I said the "IP" part. The IP part is the data stream to the house. In the current VZ designs, as stated above, the video goes down it's own analog path.

Therefore I ask, are the two statements: HD VOD and IPTV referring to 2 different efforts? I do not see how they deliver HD VOD over the current IP part of their PON. Perhaps they are actually going to deliver HD VOD over the ANALOG / QAM part of the network in order to deliver HD VOD over the current architechture and currently deployed systems. This would imply a nice win for someone like SA / Cisco or Motorola or Arris, or Harmonic or someone to install a robust QAM and SDV network overlay to feed the HD VOD to the OLTs.

And is the move to IPTV implying that they will move to GPON sooner than the market believes?

3) WDM PON. They state they will be there in 5 years. 5 years in our industry is relatively fast, especially for massive changes in the access network. Does this imply that VZ will have to make once again massive investments to upgrade the PON network they just built in a time period as short as 5 years???? They haven't even finished the first build out. From my read of this, in 5 or 6 years VZ will have old legacy (Legacy by 5 years from now) BPON systems based on triplexors, GPON systems using all IP to deliver everything and WDM PON systems.

Sounds like a LOT of capital equipment being deployed that will almost immediately have to be replaced or upgraded.

What does this mean for VZ's budget, stock price, etc.?

Are the VZ CTO statements / goals realistic?

Be kind of cool if they could really deliver on this. Would mean LOTS of capex spending and all of us who work in the communications industry will see larger flows of money.

anyone care to comment on the real technical and business aspects of VZ statements about IPTV and HD VOD and DWDM PON?

Sailboat
rjmcmahon 12/5/2012 | 3:06:32 PM
re: Verizon: HD VOD Is Coming Be kind of cool if they could really deliver on this. Would mean LOTS of capex spending and all of us who work in the communications industry will see larger flows of money.

So if VZ pisses away rate payer's monies but it goes into your pocket that's cool?
deauxfaux 12/5/2012 | 3:06:33 PM
re: Verizon: HD VOD Is Coming I think Semel got whacked because Google fileted Yahoo in virtually every category where success could be measured.

Plain and simple the GOOG guys "cracked open a can of whup-a**" on Yahoo
deauxfaux 12/5/2012 | 3:06:34 PM
re: Verizon: HD VOD Is Coming I am sure that Murdoch built 2 all HD satellites and retrofitted the other 2 with as many HD transponders as he could in order to make sure that he could beam YouTube everywhere. I can see him cutting ties with all of the content guys as we speak.

Hollywood is probably trying to beat him to the punch, because I am equally sure that they want YouTube to be their primary distribution.

Ditto that for sports and PPV.

Samsung, LG, SONY, Hitachi, Mitsubishi, Sharp, etc. are also completely screwed up with chasing this HD thing. 1080P is overrated, as is 720P. What they really need are big screen sets that take 70P and blow it up to display YouTube in its full glory.

YouTube has its place, but it won't be prime-time for years. Broadcast video over Sat, Cable, and Fiber is going to be around for a very, long, long time. Uverse is a piece of garbage



rjmcmahon 12/5/2012 | 3:06:34 PM
re: Verizon: HD VOD Is Coming deauxfaux;

While I agree with your analysis and enjoyed the sarcasm it's also topical that Semel is no longer CEO of Yahoo. This suggests that the guys chasing professional broadcast content aren't necessarily winning either.
rjmcmahon 12/5/2012 | 3:06:35 PM
re: Verizon: HD VOD Is Coming I'm not a big believer in IPTV or YouTube as end all be alls. Steve Case sold these visions to Time Warner but most forgot to notice that the infrastructure piece of the problem wasn't being solved. No infrastructure improvements than we stay exactly where we are (though that won't stop Wall Street financiers from pushing fantasy onto naive shareholders.)
paolo.franzoi 12/5/2012 | 3:06:35 PM
re: Verizon: HD VOD Is Coming
mg,

So, cable companies and sattelite companies will be out of business in 2 years?

Wow, hope you are shorting those stocks.

seven
materialgirl 12/5/2012 | 3:06:36 PM
re: Verizon: HD VOD Is Coming "2 years minimum" to begin IPTV with an "all IPTV world in 3-5 years" is quite a laugh. Those two just don't work together. It will be a YouTube world in 2 years.
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