Bernard,
Thanks, although you should know I am technically challenged, I can offer the following counter to your post.
You said "Increasing data rates can
only be accomplished by using modulation schemes
which are more spectrum efficient (high-order
QAM). "
To which I can only reply, OK. Solutions seem a bit limited by that statement, but if it's the only way, I'll take your word for it.
You add, "However, S-CDMA offers no advantage in the
area of spectrum efficiency. Specifically,
orthogonal CDMA (such as S-CDMA) is robust against
narrowband frequency interferers, and impulsive
noise. However, CDMA has nothing to offer in the
area of spectral efficiency."
Is that possibly true? CDMA has nothing to offer in spectral efficiency? What about the fact that CDMA is spread specrum technology which, as Gilder says, "exploits all the
bandwidth all the time, using the codes to differentiate the signals sharing the conduit. Thus, like
wireless CDMA, it can gracefully accommodate bursts of data, such as a rapidly downloaded film or
webfile...?" And..."On May 25th, Terayon announced that its
S-CDMA (synchronous-CDMA) technology now
enables Terayon modems to operate at a full 14
megabits per second in previously unused
downstream cable spectrum where signal loss
prevents the transmission of video channels. In
order to offer broadband Internet service, cable
operators with maxed out older systems no longer
need either to sacrifice existing video channels or
upgrade capacity."
I can't otherwise comment on your spectral efficiency analysis, except to say that it is difficult for me to accept on face value your notion that since it is "extremely difficult to combine the complexity of QAM
transceivers with the complexity associated to S-CDMA. So, S-CDMA can at best offer marginal improvements
in upstream and downstream rates."
I try to be careful when discounting the difficult, let alone the impossible. You do allow that cdma may offer marginal improvements without the expense of sub-dividing clusters or adding switching, and I have to think that this added functionality without plant upgrades, unique to Terayon, certainly adds potential markets where there are no competitors. No other cable modem manufacturer has this added market, and this should well be considered a plus for TERN, I would think.
You say "Suppose you are COX, or Time-Warner,
or Media One, and spent billions of dollars
upgrading you cable plant to 2-way HFC, and installing
DOCSIS compliant equipment. Are you going to
immediately embrace a new standard that offers only
marginal improvement, particularly when brute
force capacity increasing techniques (such as the
cluster splitting method) are available? Probably
not."
Why not? After all, the expense of alternatives you mentioned is sure not helpful. Also, Terayon looks as though it will indeed be DOCSIS compliant, and that DOCSIS will include TERN tech., allowing a mix of technologies in one MSO system. Would an MSO with already upgraded plant buy Terayon equipment? Well, it's happened already. Here's Gilders report on an actual such sale and a comment from a user. "...in March, Terayon and Canadas largest cable operator, Rogers
Cablesystems, a division of Rogers Communications (RG), announced a supply agreement for
modems and headend equipment. Rogers found Terayons modems superior regardless of its highly
upgraded cable plant, which is already 85 percent two-way activated."
You say "Now, suppose you are an operator who has not performed
the 2-way HFC upgrade. Certainly TERN"s equipment
is attractive. However, looking down the road, is
this going to stop you from upgrading your plant at
some point? No, since 2-way HFC makes possible selling
a wide range of services to consumers."
Again, with such future 2-way HFC plans in mind, Terayon has been chosen by cable operators already. It allows them to roll out services sooner, at less expense, while continuing to work in the future with planned plant upgrades as needed. If that's not enough reason to go with Terayon, consider these comments from Gilder too...."Access
Communications, another of Canadas top ten cable operators, switched to Terayons system.
Benefiting immediately from S-CDMAs RF noise immunity, Access reported a 95 percent decrease
in RF related service calls."
All Gilder quotes above are from the GTR and:
terayon.com./news/press/index.html
Terayon modems have passed 100,000 subscribers in the @home network. Customers include Cox and AOL/TimeWarner. I see major possibilities for future growth with MSO's whether already upgraded or not, along the same lines as already achieved sales successes.
Your conclusion that "TERN will have
100% of a market segment which ultimately will
shrink to zero" seems highly pessimistic, and largely refuted by TERN's previously booked sales to MSO's with already upgraded plant and MSO's with future such upgrade plans.
Given the above, I can't concur that TERN's "...long run prospects are quite poor."
And while I can't refute that older TERN enabled MSO's offer some damn slow cable modem service maxing in practice at 256KBPS, and at extra cost for that- neither can I discount the speed of future upgrades to their cost effective system. You seem to assume in your argument that the difficult is impossible. Not likely, IMHO, and clearly, probably not in the opinion of many who've already purchased TERN systems. I don't see a lock for TERN, just lot's of decent reasons not to be a bit shocked at its current speculative price.
TERN has just passed CMTO in both total Modems sold and revenue growth. They also claim "pro-forma" profitability ahead of schedule in the just reported quarter. Forgetting the ultimate losses on the books that are due to "purchasing" customers(as some have put it), R&D, and acquisitions-- based on basic your cost/sales analysis of the past, I think you did not forsee that basic pro-forma profitability could occur for TERN this soon, if ever. Something here seems to be working out better than you imagined then, yes?
Comments welcome,
Dan B |
