High-Speed: Spread Too Thin?

The New York Times recently ran an article addressing the issue of high-speed Internet access in the United States. The article examined the often slippery language used by those with a vested interest in winning customers, and stated that such language obfuscates true connection speeds, making it difficult for consumers to determine which option may best suit their needs. As true as it is that a reliable method of determining actual connection speeds needs to be dealt with, some argue that there is a larger issue to be discussed. Those faced with broadband options may be the lucky ones; many in the U.S. have no options and in some cases no access. Just as the language of broadband carriers confuses the issue of speed of access, the numbers reported on broadband penetration confuse the issue of how many Americans actually have high-speed access to the Internet at all.

The New York Times aptly points out, "More than ever, the nation’s phone and cable companies are trumpeting the speed of their Internet connections with ads that pitch 'blazing broadband' at 'up to 100 times faster than dial-up.' But as with so many consumer services, the devil is in the fine print." One much discussed phrase in the Times' article is, 'up to'. As editor of DSL Prime, a newsletter that tracks the broadband industry, Dave Burstein offered this comment, "‘Up to’ is a weasel term that should be taken out of the companies’ vocabulary." This thought is mirrored by others who note that the maximum speed cited by vendors is often achievable only under the best of circumstances; these may include distance from the station and the number of people online at a given time. This is no secret, as the New York Times reports, even providers are aware of it. "Eric Rabe, a spokesman for Verizon, acknowledged that the maximum speed promised was what was available 'under optimal conditions.'" In their defense, providers have argued that these speeds are achievable and that at the very least serve as a benchmark for comparison. Determining an accurate definition for high-speed is, according to the New York Times , important; "As the options proliferate, consumer advocates say it is getting tougher for people to tell what service is best for them — and which packages promise more than they deliver." However, those faced with this question may be among the lucky. Though various reports indicate that broadband adoption is increasing steadily in the U.S. and is serving citizens well, others strongly disagree.

eMarketer reported at the end of December that, "an important milestone will be reached over the next 12 months — high-speed Internet penetration will surpass 50 percent of U.S. households, equating to over 60 million residential broadband subscribers." A Nielsen/NetRatings report released on December 12 states, "78 percent of active home Web users connected via broadband during the month of November, up 13 percentage points from 65 percent of active Web users a year ago." Of the report Forbes says, "That's 1.4 percent greater than in October and up 19.7 percent from November 2005, when 64.9 percent of Internet users had broadband at home. In the last year, the percentage of home Internet users with high-speed connections grew about 1.5 percent per month." The Diffusion Group (TDG) reported the numbers a little differently at the end of November, "2006 will end with close to 50 million broadband households, an increase of 18.2 percent from year-end 2005. Looking forward to 2010, TDG anticipates that more than 71 million U.S. households will connect to the Internet using some form of broadband technology." Leichtman Research Group Inc. reported in mid-November that the 20 largest telephone and cable providers, which represent 94 percent of the market, "acquired over 2.5 million net additional broadband subscribers in the third quarter of 2006. These top broadband providers now account for nearly 50.9 million high-speed Internet subscribers – with cable having over 28.1 million broadband subscribers, and telephone companies having 22.7 million DSL and other broadband subscribers." Numbers like this are one reason advocates are happy with broadband adoption in the U.S., but there is another view.

MacObserver states that, "The penetration of broadband in U.S. households has steadily increased over the past few years, but now the growth is slowing." They base their statement on a recent report from WebSiteOptimization. Specifically that report, from November, indicates, "In October 2006, broadband penetration in U.S. homes grew 0.27 percentage points to 76.6 percent, up from 76.33 percent in September. This increase of 0.27 points is well below the average increase in broadband of 1.16 points per month over the last six months." In a piece on satellite broadband New York Times reported that, "Roughly 15 million households cannot get broadband from their phone or cable provider because the companies have been slow to expand their high-speed networks in areas where there are not enough customers to generate what they regard as an adequate profit." There is clearly a disconnect in the perception of broadband adoption in the U.S. FCC Commissioner Michael J. Copps notes the disconnect in an article he wrote for the Washington Post, "Many households are hostage to a single broadband provider, and nearly one-tenth have no broadband provider at all." His dissatisfaction is quite obvious; "America's record in expanding broadband communication is so poor that it should be viewed as an outrage by every consumer and businessperson in the country." It is interesting that a member of the FCC offers such statements; a year ago when the FCC released its study of broadband in America it reported adequate competition and optimistic penetration rates. However, Copps is not the only government representative criticizing the FCC's reportage. After the release of the FCC's report, the Government Accountability Office (GAO) replied with what some see as a harsh rebuttal. The title of the GAO's report, "FCC Needs to Improve Its Ability to Monitor and Determine the Extent of Competition in Dedicated Access Services," is probably enough to indicate something is askew. If the title is not enough, one could use the following statement from the report as a summary, "Although it is clear that the deployment of broadband networks is extensive, the data may not provide a highly accurate depiction of local deployment of broadband infrastructures for residential service, especially in rural areas."

While some may debate the FCC's reporting and others may look to qualify "high- speed," it may be better to take a worldwide view of the situation. With the numbers being reported, even including the possibility of a plateau in broadband adoption, one might be led to believe that the U.S., on track to pass 80 percent adoption sometime this month, would be a hard country to beat. It might, therefore, be surprising to find out that according to the International Telecommunications Union the U.S. ranks 15th.

A more complete version of this posting, with journal articles, and research reports can be found at the website of Analyst Views Weekly.

More information on this topic can be found in the Online Access section of Northern Light's Internet & Information Services Market Intelligence Center.

And in the following articles:

U.S. Broadband Reaches More than Half the Country
eMarketer, December 21, 2006
According to eMarketer's estimates, an important milestone will be reached over the next 12 months — high-speed Internet penetration will surpass 50% of US households, equating to over 60 million residential broadband subscribers.

Broadband Penetration on the Rise
Forbes, December 12, 2006
More U.S. Internet users have high-speed access at home than ever, and they're spending a lot of time online playing games. But gaming and social networking sites ate up the most time.

Not Always Full Speed Ahead
New York Times, November 18, 2006
More than ever, the nation’s phone and cable companies are trumpeting the speed of their Internet connections with ads that pitch “blazing broadband” at “up to 100 times faster than dial-up.” But as with so many consumer services, the devil is in the fine print. In many cases, consumer advocates and industry analysts said, customers do not get the maximum promised speed, or anywhere near it, from their cable and digital subscriber line connections. Instead, the phrase “up to” refers to speeds attainable under ideal conditions, like when a D.S.L. user is near the phone company’s central switching office.

With a Dish, Broadband Goes Rural
New York Times, November 14, 2006
In bringing rural America into the fast lane, WildBlue and its chief rivals — Hughes Network Systems, which markets under the name HughesNet, and Spacenet, which sells the StarBand service — are filling one of the biggest gaps in the country’s digital infrastructure. Roughly 15 million households cannot get broadband from their phone or cable provider because the companies have been slow to expand their high-speed networks in areas where there are not enough customers to generate what they regard as an adequate profit.

America's Internet Disconnect
Washington Post, November 8, 2006
America's record in expanding broadband communication is so poor that it should be viewed as an outrage by every consumer and businessperson in the country. Too few of us have broadband connections, and those who do pay too much for service that is too slow. It's hurting our economy, and things are only going to get worse if we don't do something about it.

A Phase Change for Memory

Non-volatile memory (NVM), memory that can hold data without the need of a constant power supply, has been critical to the explosion of devices such as cell phones, PDAs, digital cameras, and media players. Its consistently shrinking size and price has married non-volatile memory to the devices it serves; the desire for smaller devices driving the design of smaller chips, and smaller chips driving the design of smaller devices. In this arena there is a clear leader; Flash memory currently rules the roost. Semiconductor International says that though, "several technologies compete for a market segment that grows faster than the entire semiconductor market: the market of non-volatile memories," Flash, "is currently the overwhelmingly dominant NVM technology. Besides its economic advantage, it offers high-density, fast-reading access and is electrically erasable." Flash has been able to retain its lead through constant evolution and refinements, and in becoming the clear leader, Flash has made itself a fast moving, hard to catch target. However, though the public's desire for smaller devices is not expected to diminish, Flash has inherent limitations which may make it impossible to hold onto its position as the leader forever.

Though Flash has been able to continually shrink to fit the needs of the market, it is only possible for it to get so much smaller; ultimately it can only reach 45 nanometer level before its data starts to leak at unacceptable degree. When Flash hits this brick wall, though it may be years off, a successor will be needed. According to Semiconductor International, "The growing importance and need of NVM, as well as the limited performance and anticipated scaling issue of the now standard flash technologies, will continue to feed the development of new memory concepts and materials." This need has not been kept secret, major vendors such as Samsung and Intel are already investigating and prototyping Flash's replacement. Taking the seat, according to Beta News, "has the potential to be extremely profitable; sales of the popular memory solution are now a $18.6 billion business."

Many in the know suggest that the next top dog will be a type of memory known as Phase Change Memory (PCM). This thought is based largely on the fact that PCM has the ability to perform faster than flash and can do so far beyond the size at which Flash stops performing. Also, in contrast to the flash design, in which data cannot be addressed one bit at a time but only in larger blocks of data, PCM will be addressable at the bit level. The New York Times says that, "Such a capability means that the new memories will be more flexible than Flash memory and can be used in a wider variety of applications and computer designs." Electronic Design points out another limitation of Flash, "Flash memory cells degrade and become unreliable after being rewritten about 100,000 times. This is not a problem in many consumer uses, but is another show-stopper for using flash in applications that must be frequently rewritten, such as computer main memories or the buffer memories in networks or storage systems."

With these ideas in mind chipmakers are actively exploring the PCM option. According to TechWorld, "Samsung has already revealed details of its phase-change RAM (PRAM) switching 30 times faster than Flash. Commercial availability is expected in 2008." Intel and ST Microelectronics are collaborating on their own solution, this could be seen as soon as this year. By 2010 Elpida is expected to start commercial production of PRAM. PCM, under development for years, recently leaped into the headlines when a company announced it had developed an alloy that could operate 500 times faster than Flash and at sizes far smaller than Flash could ever reach. Perhaps of equal weight was the name of the company involved, IBM. Along with two computer memory manufacturers, Qimonda and Macronix, IBM, which left the memory race years ago, may now be getting back in; not only to with a material that could unseat Flash, but that some say could give the hard drive market a run for its money.

The IBM team over the course of years of research designed a new semiconductor alloy derived from materials currently used in optical storage devices like CDs and DVDs. Some are suggesting that the discovery may give the companies a huge head start when it comes time to replace Flash. Though Intel and Samsung, both very much in the memory market, have already prototyped Flash replacements, IBM says "the new material has performance advantages over alloys now in use in prototypes made by others in the industry." According to the New York Times, "The advantage of the new material, according to the scientists, is that it can be used to create switches more than 500 times as fast as today’s Flash chips. Moreover, the prototype switch developed by the scientists is just 3 nanometers high by 20 nanometers wide, offering the promise that the technology can be shrunk to smaller dimensions than could be attained by Flash manufacturers." As fast as the chips may be, and despite the changes they could bring to the industry, they won't appear overnight; experts believe it could be at least five years before consumers see the results of the research. Placing a release date so far in the future has some analysts wondering. Just as Flash will hit a wall at 45nm IBM's innovation might hit its wall by placing its time-to-market is so far in the future. Combine that with the fact that Flash is already a technological institution and many will agree that the future of small drives is anything but certain.

Though the Motley Fool says, "The only question remaining is whether the technology is scalable," and suggests that experts say the prospects are good, there are others who have more doubts. PC World says that, "While its prospects appear bright, the technology faces several hurdles." Rob Lineback, a senior market research analyst at IC Insights said in a TechNewsWorld article, "It seems like every time that people think Flash is going to run out of steam, companies find a way to extend Flash . . . This is a promising development, but it will be a couple of generations -- three to six years -- before we see if it's going to be any major force in the marketplace."

While things shake out, Flash providers are remaining optimistic. The need for what IBM may offer may not be imminent says Gordon Haff, principal IT advisor at the research firm Illuminata, “In general the need for capacity in portable devices is not growing at a very rapid rate, whereas Flash memory capacity is.” SanDisk CFO Judy Bruner, sees a pretty clear future, “We think that this marketplace for NAND Flash will continue to be a fast-growing market over the next three to five years,” and further, “We’ve been growing over the last several years at a very rapid rate. We think this is one of the more exciting marketplaces.” Scott Nelson, director of memory marketing for Toshiba America Electronic Components agrees, “The opportunity out there for new NAND products is tremendous." These two are not just talking either, their companies are backing up the words with major investments. SanDisk and Toshiba, Flash memory's original developer, recently joined hands, agreeing to invest $2.6 billion through 2008 on a Flash memory fabrication plant in Japan. The Semiconductor Industry Association (SIA) is projecting growth in the market as well, predicting that through 2009 sales of NAND Flash memory will grow at a compound annual rate of 11 percent. According to a piece in Red Herring, "In 2006 the market is projected to reach $16 billion to $17 billion, and by 2010 the market is expected to reach $34 billion."

A more complete version of this posting, with journal articles, and research reports can be found at the website of Analyst Views Weekly.

More information on this topic can be found in the Processors & Semiconductors section of Northern Light's Software, Computers, & Services Market Intelligence Center.

And in the following articles:

Flash, Meet Phase-Change Memory
Top Tech News, December 12, 2006
IBM's new phase-change memory alloy, also called GS for the two elements -- germanium and antimony -- that make it up, can quickly move between amorphous and crystalline states, reproducing the ones and zeroes used to store the world's electronic data. The GS alloy is faster than current flash memory by a factor of 500, uses half the power, and, like flash, retains its data when the power is off.

Collaborative Research Project Yields Potential Successor to Flash Memory Chips
electronic design, December 12, 2006
Working together at IBM Research labs on both U.S. coasts, the scientists designed, built, and demonstrated a prototype phase-change memory device that switched more than 500 times faster than flash while using less than one-half the power to write data into a cell. The device's cross section is a minuscule 3 by 20 nm, far smaller than flash can be built today and equivalent to the industry's chip-making capabilities targeted for 2015.

New Memory Device Could Trash Flash
Unstrung, December 11, 2006
Leap-frogging Moore's Law, scientists from IBM Corp. (NYSE: IBM - message board) will announce on Wednesday a prototype of a new type of memory device that has the potential to replace flash memory in mobile devices such as music players, cell phones, and digital cameras.

IBM Touts Flash-Killer
TechWorld, December 11, 2006
IBM has built a prototype storage device with two partners that they claim is 500 times faster than Flash. It uses less than half the power of Flash memory and can be built in ultra-thin form factors most likely unavailable to Flash. In short, a Flash-killer and potentially the answer for a universal memory type for mobile devices.

'Phase' Memory Beats Flash
PC World, December 11, 2006
Flash memory and hard-disk drives could face a challenge from a new chip technology, dubbed "phase-change" memory, being developed by a group of companies led by IBM. The companies today announced results of their latest research into the technology, which they say does a better job of storing songs, pictures and other data on iPods and digital cameras than current flash memory, and could someday replace disk drives.

Alloy Holds Out Promise of Speedier Memory Chip
New York Times, December 4, 2006
Scientists at I.B.M. and two partner companies have developed a promising material that they believe will lead to a new kind of computer memory chip able to meet the growing appetite for storing digital music, pictures and video.