Can Telcos avoid a speed race with cable?

During the development of the VDSL2 standard, both BellSouth and SBC Communications were vocal about wanting a technology that would allow them to offer a total bandwidth of around 30 Mb/s. Although not getting close to the 100 Mb/s that cable operators will be able to offer, there is a significant segment of the market that believes telcos shouldn't get into a race for speed but should be heavily marketing the total package of services — and pointing out to customers that 100 Mb/s from a cable operator is still on a shared pipe.

“From the telco side, there are a lot of advantages,” said Ken Madison, senior product marketing manager of chip vendor Centillium. “If you're just talking about the bandwidth battles, those are going to be fairly well fought by telcos because of the introduction of VDSL2. One of the advantages of DSL is it's a point-to-point connection, so essentially you're getting the full pipe. That's a clear advantage that cable only can overcome by really pumping up the pipe to 500 Mb/s.”

At the same time, telcos also must step up their bandwidth to at least be comparable with cable, he added.

“Somewhere between 30 and 50 Mb/s of bandwidth is what's going to be used in this triple play,” Madison said. “SBC wants 30, but my personal feeling is that 30 Mb/s isn't going to be enough. I think it's going to settle closer to 50 Mb/s.”

Madison also points to the Japanese market as a potential harbinger of the coming high-speed battle. In the battle between NTT and Yahoo Broadband, the latter was offering a 47 Mb/s service for the equivalent of a few more dollars per month compared to NTT's 45 Mb/s service.

“You saw people signing up for the faster service even though they had no clue what they were going do with an extra 2 Meg,” he said. “After the dust settles, I think people are going to really start looking at what they are getting, though.”

Perception also can play a big part in telcos' marketing plans, said Ken Couch, director of marketing for broadband networks at Nortel Networks, which is advising carriers not to get into a battle of speed with cable operators.

“In the end, over the long term, that has little value to the consumer,” he said. “Do I care if my presentation uploads in 1 millisecond versus .001 milliseconds? The marginal benefits you get aren't that important.”

Instead, telcos carriers should put their efforts into the converged services model that integrates IPTV and other data elements. Not surprising, of course, is the company's pushing of the IP multimedia subsystem architecture, where services are interchangeable regardless of their delivery system. Cable companies simply can't match that flexibility.

Couch sites the example of carriers offering a sports package of services to subscribers. In that bundle there would be plenty of traditional cable sports networks but also the ability to link into customized information when away from home, say in a hotel with a broadband connection or in a mobile environment via wireless handset.

“That kind of service level to a consumer would be very attractive,” he said.

Likewise, as carriers move into that environment, consumers' concern over bandwidth will disappear. In the IPTV environment, for instance, users won't care how much bandwidth is being fed to their homes because it will be more than just video services that they are using, said Rich Cardone, director of marketing at Tazz Networks.

“There's a lot of stuff going on that is data related, but you might not even realize it because the interfaces are changing,” he said. “Buying a shirt you see someone wearing on TV, for example. What it comes down to is what you offering.”