Posted: 11/2000

Survey: DSL Wholesalers Get Mixed Reviews
By Judy Reed Smith and Nick Regas

DSL. It was a brilliant idea: Widen the bandwidth spectrum over the same
copper wire that telephones already use enabling data and voice data to travel
simultaneously at high speeds.

It could not have happened at a better time.

Demand for high-speed Internet access is growing exponentially. In the past
few years, government regulations have forced telephone companies to share lines
with competitors, opening up opportunities to establish telecommunications
networks at little capital cost.

Strategy consulting firm ATLANTIC-ACM Inc. (www.atlantic-acm.com)found
the projected number of lines carrying DSL service for 2000 was 2.6 million, but
the number projected for 2006 was nearly 60 million with corresponding revenues
to hover around $13 billion.

But providers face unique challenges. They must overcome the physical
problems of old phone lines and the introduction of new, fiber ones. And because
DSL providers are in cooperation with local telephone carriers, providers and
consumers must wade through a complicated partnership system to get their needs
met.

The result is that many DSL providers have had a hard time providing exactly
what they have promised. Some do better than others.

ATLANTIC-ACM surveyed ISPs and, using responses from 92 of them, created a
report card on the five leading wholesale DSL providers.

NorthPoint Communications Group Inc. (www.northpoint.net)
Covad Communications Co. (www.covad.com)
Rhythms NetConnections Inc. (www.rhythms.com)
Qwest Communications International Inc. (www.qwest.com)
and SBC Communications Inc. (www.sbc.com)
were rated for their performance in six categories: provisioning, operations
support services (OSS), network, products, pricing and billing.

In addition, respondents ranked the categories by importance. ATLANTIC-ACM
weighed each company’s score relative to the category’s importance. The result
is a comprehensive report that rates the companies and highlights the factors
that really matter.

Scores

Provisioning and OSS were the most critical areas of DSL service and often
the most troublesome. Network, pricing, product and billing followed them
respectively in importance to ISPs.

Chart: Overall OSS

The report was able to pinpoint clear winners among the companies after
analyzing the data: Rhythms, which received the highest overall score, was
trailed closely by Covad and NorthPoint.

While the ISPs rated internal delivery and timing of provisioning as good,
some companies had below average delivery of promised services. And the ISPs
were frustrated with ILEC cooperation, though Rhythms showed far stronger
cooperation success than the others.

Rhythms also led the pack in this category with a 5.9 score out of 10. The
range of scores fell as low as 4.3 for SBC.

Opinions about OSS varied greatly from DSL provider to DSL provider and from
service to service. Providers were measured by their responsiveness to ISP
problems, pre-qualification search engine, technical expertise, customer
interface and e-bonding strength. NorthPoint was rated highest in OSS with a
5.6, Rhythms received a 5.5 and Covad scored 5.3. Again, SBC received the lowest
rating: 4.2.

Network reliability varied across the board. ATLANTIC-ACM measured the
strength of the provider’s network and the strength of the provider’s ability to
respond when a disaster struck. The top three overall providers scored between
6.3 and 6.2, while Qwest and SBC each scored 5.6.

Pricing was a close contest among the companies, and though most ISPs were
generally content with the pricing of asymmetric DSL (ADSL) across the board,
they had mixed reviews about symmetric DSL (SDSL), ISDN DSL (IDSL) and
high-data-rate DSL (HDSL) pricing.

The range of scores was very close, with Covad taking the lead at 5.9 and
NorthPoint bringing up the rear with 5.5.

Respondents rated products and billing above average, but also rated the two
categories least important. Rhythms received the highest score of 6.2 while
Covad and SBC scored 5.7. Qwest and NorthPoint received 5.3 and 5.1,
respectively.

Trends

The DSL market is exploding–a projected market of $1.5 billion in 2000–with
the five compared providers leading the charge. DSL service is reliable,
relatively inexpensive and allows constant high-speed access to the Internet.
And yet, many consumers report poor provisioning because of the complexity of
the relationship between the ILEC, the DSL provider, the paperwork jungle and
the physical limitations of copper wire engineering. Services cannot be offered
to all locations, and as copper phone lines turn to fiber, DSL is shut out. What
does this mean for the future of the service?

ATLANTIC-ACM’s report details that most ISPs view DSL as an interim solution
for the next few years, but during that time it will become cheaper, more
accessible, and an important, prosperous sector of the telecommunications
industry.

Judy Reed Smith is CEO and Nick Regas is a data analyst for ATLANTIC-ACM
Inc. (www.atlantic-acm.com)
a Boston-based strategy consulting firm. They can be reached at +1 617 720 3700
or [email protected].