worldlyinvestor.com
An Excited Voice in the Broadband Debate
By worldlyinvestor.com Staff
05/19/2000 10:35 AM
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Editor's Note: We have received a lot of mail from readers on the most recent columns by High-Tech Stocks columnist Mitch Ratcliffe reagarding the debate on broadband. Check out the original article entitled "How Broadband is Your Portfolio." and its follow-up. The following is the reader response from an executive at Excite at Home (ATHM: Nasdaq).
To the editor:
Regarding your on-going write-ups: "The Broadband Debate Rejoined: DSL Vs. Cable."
With all due respect, I'm afraid that Mr. Ratcliffe is talking out of school. He may have edited an IT publication, but the level of expertise it takes to understand this topic requires considerably more exposure to the technology.
I have been architecting cable modem networks for five years. Additionally, I have been involved with DSL deployments for the past year, as Excite@Home has rolled out commercial and soon to be offered residential DSL services.
Mr. Ratcliffe fails to grasp the benefits of a shared network. One need only look at your typical office environment, with shared Ethernet networks (even when switched) with dozens and often hundreds of computers sharing one 10 Mbps uplink pipe. Further, is Mr. Ratcliffe aware that the downstream bandwidth on a cable network runs at a data rate of 27 Mbps?
When it comes to the economics, the scalability of cable modem networks is attractive. There are two main costs for both technologies -- the modem in the home, and the central equipment the modems talk to. The modem costs are essentially the same, but not the central equipment costs. Cable modems only need to talk with one larger device, but DSL modems require an identical DSL modem centrally for EVERY connected modem.
A fully deployed cable deployment works out to less than $10 per subscriber in capital costs (consumer buys the modem). To give an example, a CMTS device that can cover a footprint of about 72,000 households with 4 downstream and 24 upstream channels costs about $40,000. This device can handle market penetrations up to around 7%. This comes out to a capital cost of $8 per customer.
DSL deployments are almost an order of magnitude greater. Clearly cable holds its own when it comes to service scalability.
Of course all this last-mile technology is moot if you haven't built out the upstream backbone network -- where everyone is sharing, even DSL subscribers. With 15,000 route miles of fiber running at 2.4 Gbps nationwide, Excite@Home has built out the infrastructure to scale all services, both cable and DSL.
Lastly, Mr. Ratcliffe inaccurately states that Excite@Home can only serve a footprint of 10 million homes today. The actual number is 26 million homes.
Jay Rolls
VP, Network Engineering
Excite@Home
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