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 Channel Futures

Telephony/UC/Collaboration


xDSL: First Technology, Now Marketing

  • Written by Channel
  • March 31, 1999

Posted: 04/1999

xDSL: First Technology, Now Marketing
By Peter Lambert

A handful of aggressive competitive carriers, regional Bell operating companies (RBOCs)
and Internet service providers (ISPs) spent much of 1998 trying to prove broadband access
technologies in the real world.

According to analysts, although some technological hurdles remain in their path, the
pioneers in high-speed digital subscriber line (xDSL) technologies now must begin to prove
the business case for broadband access in 1999.

According to Laurie Falconer, DSL analyst for Boston-based consultants TeleChoice Inc.,
both incumbent local exchange carriers (ILECs) and competitive local exchange carriers
(CLECs) must shift their emphasis from technology to the challenges of educating
businesses and consumers on the savings and benefits associated with the speed and
multimedia capabilities of broadband access.

"The CLECs and ILECs have deployed DSL central offices (COs) successfully,"
Falconer says. "Now the issue is marketing efforts needed to spark customer
adoption."

TeleChoice Third Quarter 1998 DSL Deployment Summary
Provider DSL-Equipped COs Customers Passed
US ILECs 565 13.5 Million
US CLECs 179 4.5 Million
US ISP/CLECs 81 2.0 Million
Canadian Providers 104 2.6 Million

TeleChoice Inc., Boston

TeleChoice’s latest research projects 248,000 customers will subscribe to DSL services
by the end of 1999, up from 39,000 at the end of 1998. Through years 2000, 2001 and 2002,
it projects DSL subscribership will grow to 904,000, 1,687,000 and 2,355,000 customers,
respectively.

No longer up for debate is the aggressiveness with which some carriers applied DSL to
expand the capacity of the telephone industry’s installed copper phone-line infrastructure
last year.

By the end of 1998, San Francisco-based CLEC NorthPoint Communications Inc. had secured
more than 500 collocation sites in incumbent COs for its national, wholesale DSL
services–an end-to-end offering at speeds ranging from 160 kilobits per second (kbps) to
1.5 megabits per second (mbps). Now serving 10 markets, including Boston, Chicago, Los
Angeles, New York and San Francisco, NorthPoint plans to expand to 15 more markets by the
third quarter of this year. That milestone will cover 40 percent of U.S. businesses,
according to the company.

At the same time, with $205 million in private funding, Englewood, Colo.-based CLEC
Rhythms Net-Connections Inc. laid the groundwork to offer its 128kbps to 7mbps, national
wholesale DSL services in 11 markets, and plans to cover 35 markets by the end of this
year and 50 markets by the end of 2000.

DSL pioneers also include Covad Communications, Santa Clara, Calif.; e.spire
Communications Inc., Annapolis Junction, Md.; North Pittsburgh Telephone Co., Pittsburgh;
Network Access Solutions Corp., Vienna, Va.; and Pacific Crest Networks Inc., Eugene, Ore.
These companies and other wholesalers partnered with local carriers and ISPs, which, in
turn, are packaging DSL services for their own business customers.

ISP Concentric Network Corp., Cupertino, Calif., for example, is partnered with Covad
and NorthPoint to extend the national reach of its 144kbps to 1.5mbps Concentric DSL
service at $149 per month, including all circuit and Internet access charges. Similarly,
@Work, the business-focused division of cable operator-owned @Home Network, Redwood City,
Calif., has partnered with NorthPoint to complement services it will offer via cable
infrastructure. And ISP Verio Inc., Englewood, Colo., is selling Rhythms NetConnections’
DSL services to local customers in Chicago.

Although some technological hurdles remain, pioneers in high-speed
digital subscriber line (xDSL) technologies now must begin to prove the business case for
broadband access in 1999.

By the autumn of 1998, MCI WorldCom Inc.’s subsidiary UUNet WorldCom joined the
wholesale DSL race, announcing it had deployed DSL equipment in 50 COs nationwide to
deliver its Preferred Access 768, a 768kbps service designed, like other DSL offerings, as
a cost-competitive alternative to incumbent carriers’ T1 services. "Now small and
medium-sized businesses can take full advantage of Internet applications such as web
hosting and remote LAN (local area network) access without the expense of a T1 line,"
says Alan Taffel, vice president of marketing and business development, UUNet WorldCom.

More than pure speed, the DSL carriers have begun to offer value-added services,
including private branch exchange (PBX) and remote data access. Rhythms Net-Connections,
for example, offers PBXpress to extend a business’s PBX service to its employees’ homes
and @Back-up to provide automatic network-based backup of business files.

Simultaneously, some incumbent carriers, led by US WEST Inc., Denver, and GTE Corp.,
Irving, Texas, also aggressively rolled out their own DSL services in their local service
regions in 1998. However, new competitors argue that the RBOCs are continuing to drag
their feet on DSL, since it threatens to cannibalize their existing, lucrative T1
businesses, and CLECs such as NorthPoint believe their DSL reach will surpass all Bell
company DSL infrastructures combined by mid-1999.

Enabling Tools

Regardless of any allegations that incumbents purposefully are slowing down DSL
deployments, technological factors continue to gate the speed with which any carriers can
launch DSL services.

Whether offered by incumbents or new competitors, the primary economic argument for DSL
lies with the fact that it can avoid very costly network rebuilds by leveraging the
existing twisted-pair, copper phone-line infrastructure. However, the condition of that
old plant also represents a barrier for DSL, which generally cannot reach customers beyond
16,000 feet from a CO.

Also, user-friendly, plug-and-play end-user equipment has been hard to come by, meaning
that carriers have faced expensive technician truck rolls for every new DSL installation.

Further, as DSL begins to push greater and greater capacity management challenges into
carrier operations, the need grows urgent for complete CO solutions that tackle the
grooming and concentration of voice and data traffic through interfaces between DSL access
multiplexers (DSLAMs) and wide area networks (WANs).

On all these fronts, significant progress is being made. Some local carriers now are
telling customers that their vendors expect to extend DSL reach to 20,000 feet within the
next year. In the meantime, vendors such as Pulse Communications Inc. (Pulsecom), Herndon,
Va., are offering line-testing equipment to predict the loop performance of DSL, thereby
enabling carriers to avoid over-promising the service.

Even so, carriers continue to hedge bets around DSL because of those distance
limitations. While the cost of deploying fiber in the local loop "continues to
decrease, it hasn’t yet become as economical as copper for voice services alone,"
notes Bill Smith, vice president of network strategic planning for BellSouth Corp.,
Atlanta. "However, when we consider the operational economies associated with fiber,
especially in areas with higher operational costs, along with new high-speed services,
it becomes affordable to use the fiber in the new build and facility-
exhaust situations." Consequently, BellSouth has committed to escalating its
fiber-to-the-curb deployment to 200,000 homes in 1999, while still deploying asymmetric
DSL (ADSL) and wireless digital infrastructure where it’s economical.

Yet whether over fiber or copper local loops, carriers could begin to overleap the
plug-and-play barrier this year by using the newly standardized "G.Lite"
asymmetric version of DSL that precludes the need for complicated deployment of
home-wiring splitters. G.Lite promises to pave the way for retail modem sales and self-
installation by remote business employees and other consumers at home. That effort enjoys
the support of consumer products makers such as Compaq Computer Corp., Houston, which last
year introduced not only DSL modems integrated into personal computers (PCs), but also
DSL-based "Networked Home in a Box" products.

In October 1998, GTE; Intel Corp., Santa Clara, Calif.; Fujitsu Network Communications
Inc., Richardson, Texas; and Orckit Communications Ltd., Southbury, Conn., announced
successful G.Lite tests in Hillsboro, Ore. The test results were shared with the
International Telecommunica-tions Union (ITU), which voted to endorse the G.Lite ADSL
standard that same month.

"We are pleased with the early success shown in this test," says Don Slater,
GTE’s assistant vice president for product strategy. "This supports GTE’s belief that
G.Lite is viable and essential to achieve a broad-based deployment of high-speed
access."

Finally, a broad range of manufacturers has thrown resources at solving network
integration challenges for DSL. Diamond Lane, Petaluma, Calif.; Copper Mountain Networks
Inc., Palo Alto, Calif.; Paradyne Corp., Largo, Fla.; Ascend Communications Inc., Alameda,
Calif.; Adtran Inc., Huntsville, Ala.; FlowPoint Corp., Los Gatos, Calif.; Netopia Inc.,
Alameda, Calif.; Newbridge Networks Corp., Herndon, Va.; Carrier Access Corp., Boulder,
Colo.; Jetstream Communi-cations Inc., San Jose, Calif., and other vendors are integrating
DSL with wide-area switching, routing and gateway technologies, as well as incorporating
remote configuration, provisioning and management systems into their products to support
end-to-end control for carriers.

"Now it’s a matter of educating customers in what DSL can do for them, starting
with access speed and the fact that it can become an affordable alternative to T1
services," Falconer says.

In marketing, Falconer hopes DSL carriers take a cue from competitor Comcast Cable
Communications Inc., Philadelphia, a leading cable operator that already claims tens of
thousands of broadband access customers and has launched a World Wide Web site
(www.onbroadband.com) to showcase broadband applications.

"The next big opportunity," she adds, "is in the content that’s enabled
by broadband access."

Peter Lambert is features editor for PHONE+ magazine.

Tags: Agents Telephony/UC/Collaboration

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