The embrace of Digital Subscriber Line technology by big tech companies, telcos and others will test the bond between two interdependent parties that don�t have the best track record when it comes to getting along, but are both crucial to DSL's success: Internet service providers and regional phone companies.
A group of small ISPs was the first out of the gate to offer DSL, but they were often stymied by the high cost of implementing the technology on their own.
But this week�s industry agreement to create a DSL standard is already generating much greater interest among the telcos, which must build the backend infrastructure for themselves and for the ISPs in order to get DSL to work. The Baby Bells, many of which act as ISPs themselves, will compete with independent ISPs to market and sell the service, while customers will have to purchase the pricey DSL modems to use the service.
Regional Bell operating companies (RBOC) aren�t required to provide DSL to their Net access customers or ISPs, but several are beginning local trials. And once an RBOC begins offering DSL, federal regulations will require it to provide access to its ISP competitors, according to John Goldman, communications manager at Bell South in Atlanta. "This shouldn't be a problem," said Goldman. "We're increasingly dealing with wholesale and access type services and we organized a structure just to deal with these arrangements."
Chicago-based Ameritech is also weighing the advantages of DSL and recently began trials in Ann Arbor, Michigan. "It's too early to say what's going to happen, but if DSL makes sense we'll be there," said spokesman Dave Pacholczyk.
DSL provides Internet access at some 30 times the rate of today's conventional modems over ordinary copper lines. And because DSL provides Internet access at higher frequencies than voice communication, users can maintain a constant Net connection over an existing phone line while simultaneously preserving the bandwidth needed for making voice phone calls.
Tech companies Compaq, Intel, and Microsoft joined forces this week with telcos Ameritech, Bell Atlantic, Bell South, GTE, SBC, Sprint, and others in what has been termed the Universal ADSL Working Group, to create an interoperable DSL standard and therefore speed deployment of DSL.
With so many heavy-hitters behind the new technology, the cost of providing DSL to both the ISP and the end-user will nosedive, said Bell South's Goldman. Currently, the price for modems and lines typically cost ISPs more than US$1,000. Though Goldman was unable to provide an exact number, he said the price Bell South will charge ISPs will be "significantly less" than $1,000.
Lower cost is one of the factors seen by ISPs for celebrating the DSL standard announcement.
"My initial reaction is that this is good for everyone's business," said Bill Games of Signet Partners, one of the first ISPs to offer DSL to its commercial and consumer customers. "As a service provider, we think anything that seeds demand for high-speed Internet communication is a real plus for us."
Industry observers are already forecasting success, in part because of the highly regulated environment in which ISPs and RBOCs must both cooperate and compete.
"It was just a matter of time before the RBOCs turned their ships and dropped their anchors in the DSL waters," said Kent Savage, vice president of marketing at NetSpeed, an Internet equipment manufacturer that already makes DSL technology.
"But these ISPs are going to benefit as well because they will move their racks of hundreds of thousands of modems into the RBOCs central office and lease a broadband pipe, which RBOCs must lease because they are mandated by law to provide equal access," said Savage. He added that widespread DSL deployment will lead to some consolidation among the various providers and manufacturers, but ultimately, he believes "there are going to be many winners here."
That notion was echoed by Paulina Reinman, an analyst with IntelliChoice. "I don't think anyone is really hurt by this announcement," she said. "The smaller ISPs should end up being okay since the RBOCs will have to resell their services, it will be good for consumers, and the equipment manufacturers who can easily transition their technology to meet the upcoming standard will be fine too."
Even the cable modem providers, said Reinman, who appear to have the most to lose from DSL competition, may benefit from the challenge. Besides, Reinman noted, most of the alliance members have covered their bets in the cable industry too.
"The only thing that might make things difficult for a time is if the deployment of the [DSL] PC cards gets ahead of the actual service availability," says Reinman. "But that will be just like the current situation with 56K modems. We'll just have to wait a little."
