Fast Net News, DSL Prime, DOCSIS Report

Wilson Young made headlines around the world with a $27 (U.S.) price for a gigabit - with a big catch. It is "up to" one gigabit in-country but the speed connecting outside the country is limited to 20 megabits symmetric, both up and down. $27 for 20 meg up and down is still a damn good deal. More than 90% of HK web traffic is local, including Google and Akamai local servers. No caps or other gotchas visible. It's only available in the building where HKBN has installed fiber all the way to the apartment, a minority. They serve most of the rest of Hong Kong with 100 megabits for $13 using fiber to the basement.

     These prices approximate the marginal cost of the service, with City Telecom/Hong Kong Broadband Network sacrificing margin for very fast growth. You can add voice ($9) and IPTV ($17) for a triple play at about $40 (100 meg peak) or $55 (gigabit peak.) That's not far different from the French 30 Euro/$45 triple play, now increasingly at 100 megabits. Xavier Niel is making $hundreds of millions at that price, proving it's possible.

      What HKBN knows is that no matter how high you increase the peak speed there is only a modest increase in actual bandwidth required. A user with 100 meg uses about 1/3rd more bandwidth than one at 10 meg.

You don't get more significantly email or watch more TV if your speed is 10 or 100 meg. Bandwidth is not free but it's pretty cheap; the difference in bandwidth required is probably costs less than $1/month/customer.

     Update, May: While HKBN does have some Alcatel GPON gear, I'm told that most of the 1 gigabit buildings are pure Ethernet, not GPON as in the original story. The actual equipment is Alcatel GPON at 2.4 down/1.2 up. This is by far the fastest production deployment of GPON, which Verizon caps at 50 megabits. (Shame). I've been speaking of GPON as "200 megabits symmetric" because earlier gear started having problems above that speed. I had heard from Portugal that 400 was working, but no one I know has deployed that. Of course if 3 users tried to pull 900 meg at the same time, or 15 tried 200 meg the system would choke. In practice, that's so rare the full speed should be available 98+% of the time and over 100 meg very close to 100% of the time.

    GPON gear like this is selling for over $200/connection in the West, but I've heard of prices much closer to $100 in China for the same gear. Alcatel has a history of reducing prices as necessary to hold the Chinese market. In addition, since the distances are short less powerful and hence cheaper lasers can be included.

Here's my article from November when HKBN launched 100 meg for $13 a while back.  

Hong Kong: US$13 100 up, 100 down 
Written by Dave Burstein
NiQ Lai of City Telecom charges $13 for 100 megabits up and down and has great ads featuring a Lamborghini. They offer an 80% speed guarantee for non-international traffic, or 2x your money back. They have no cap or major hidden charges. Similar costs $99 in the U.S., $45 in Britain, and something like $20 in France as part of a bundle, and rarely includes upstream.

With five wired carriers in most HK buildings, they have to be aggressive to gain market share. It's a real standalone offer, although you can add voice ($9) and IPTV ($17) for a triple play under $40. They are profitable with little debt, and have set a "Big Hairy Audacious Goal to become the largest IP service provider in Hong Kong by 2016."

"We make Lamborghini 'SuperCar' class broadband available at mass market prices," Lai writes. The one significant limit is they provision only 20 meg per home of International bandwidth. New customers pay installation of US$39 but no equipment charge. The picture is CEO William Leung with a symbol of the speed of his network.
The substantial majority of their traffic profile is local, with most resources from streaming TV to p2p available locally. Like Iliad and other successful new competitors, they run a simple IP network. GEPON fiber to the building (which is less than $100/connection.) Then a simple Ethernet switch with Cat 5e to each apartment. The switch looks very similar to the 24 port 10/100 Linksys or Netgear that costs less than $150 at local computer stores. This is yet one more confirmation of the major savings of IP networks like those I see at Iliad/Fr. The lower costs provide a major competitive advantage.Some editor's thoughts: William dressed in leather to promote his 100 megabit upstream and downstream service, for $13/month. Repeat: U.S.$13/month, 100 meg up, 100 meg down, no cap and generous terms including an 80% speed guarantee. 1.5M homes in Hong Kong are servable, and another 500K under construction. That's a third the price and much faster than anything available in London, New York, Chicago, or Berlin. Triple play is U.S. $40.

Magic? Crazy stunt of a company trying to avoid bankruptcy? Huge government subsidy? No, just strong competition. An aggressive entrant, already profitable, wants to win customers. Speeds like that are practical across 50-90% of the homes in the developed world. Comcast and Verizon in the U.S. Free.fr and Numericable France, and many others are proving out the technology. France's triple play – including “100 meg down” cable modems and fiber in several cities - is under $50. Of course rural areas are harder, but the gap is far too wide.

Every competent regulator needs to look at the leaders and ask, “How can I come close in my country?” Your move, Julius, Ed, Mathias, and other powerful men.