While RBOCs drag their heeels, CLECS, ISP mean business
telecommagazine.com
While RBOCs Drag Their Heels,
CLECs, ISPs Mean Business
Small Companies are the First to Benefit from DSL Rollout
Susan O'Keefe
While many vendors and service providers claim Digital Subscriber Line (DSL)
equipment and services are ready for the mass market, actual deployment has
been a slow and painful process. Many of the technology questions have
been answered, but rollout has been hampered by RBOCs caught in a double
bind: how to compete with cable modems without jeopordizing existing access
services. Analyst Michael Kennedy, a partner with Network Strategy Partners,
said the incumbent local exchange carriers (ILECs) are using the technology as
a “last resort” solution in areas where cable modems are making strong
headway. “The RBOCs are really only aiming at the residential market,”
Kennedy said. At
the Networld+Interop trade show in October, Kennedy said one RBOC
conceded that it doesn't even offer DSL services to business users because, in
doing so, it wouldn't be able to market its more-expensive T1 services.
Competitive local exchange carriers (CLECs) and Internet Service Providers
(ISPs), on the other hand, are aggressively marketing DSL services to business
customers. “They are taking a whole different approach to the market,” said
Lisa Pelgrim, a Dataquest analyst. “They don't want to deal with the residential
market where users want to be able to surf the Net faster. They are avoiding
the retail model and direct selling to a lot of smaller businesses. And from the
looks of it, they are having some success.” CLECs are also likely to see less
competition from cable operators in the business market because cable
modems are a shared medium. In areas where cable modem service is offered,
DSL providers are emphasizing the security and bandwidth advantages of a
dedicated medium versus a shared medium.
The success, however, is limited and is hard-won because offering service
means co-locating in an RBOC's central office. It's something that the Telecom
Act of 1996 mandates, yet “the RBOCs are experts at throwing up obstacles,”
Kennedy said. He pointed to HarvardNet, a New England-based ISP, as an
example of a company that has been aggressively marketing its DSL services.
“They've made quite a bit of noise, but their service is prohibitively expensive
for a 128-K connection,” Kennedy added. “I believe that a large reason for that
is it's probably very expensive for HarvardNet to get on the copper. Overall,
DSL services are limited, high priced, and low performance.” But, Pelgrim
contends, co-location is happening, and as economies of scale are built, prices
will fall. “Granted, DSL rollout is not happening as quickly as many anticipated,
but CLECs are deploying service and to do that, they have to have access to
the central office,” she said. “Going after the businesses is proving to be a
smart play for the CLECs because the business market is not as price-sensitive
as the residential market.”
As expected, CLECs are first targeting the larger metropolitan areas and dense
high-tech regions, such as Silicon Valley, Research Triangle Park, N.C.,
Chicago, and Boston. But while ADSL (up to 7 Mbps upstream and up to 384
kbps downstream) has received most of the hype, many of the CLECs and ISPs
are offering flavors of DSL services that are less suitable for Web surfing and
more suitable for running IP networks, such as symmetric DSL (SDSL) and
ISDN-based DSL (IDSL). “The CLECs are really targeting geographic areas, so
that when they turn on a central office, they can sell out all of the ports they
have available to that geographic area,” Pelgrim said. “It's really a quick
turnaround for them.” Where there has been debate about ADSL causing
interference with T1 service, SDSL (up to 1.1 Mbps upstream and downstream)
and IDSL (128 kbps to 144 kbps upstream and downstream) are based on 2B1Q
line coding--the same line coding on which ISDN is based. “The phone
companies feel pretty confident about adding it to their mix of services
because it won't interfere with other services they are offering,” Pelgrim said.
“This is where vendors like Copper Mountain and Diamond Lane are really
making their marks.”
DSL coverage is still limited to pockets, but here's a look at some of the
aggressive CLECs and ISPs that are making progress:
Covad Communications. Covad, a Santa Clara, Calif.-based data-only CLEC,
was one of the first service providers with widespread availability of DSL
services. Covad offers service by partnering with ISPs, which co-brand the
service and sell it as part of a bundle. Covad started with availability in
northern California last spring, quickly expanded its TeleSpeed service to Los
Angeles, and plans to offer service to more than 4 million homes in New York
and Boston by the end of this year. Covad recently added SDSL-based
services to its IDSL and ADSL offerings. TeleSpeed 192 is an entry-level
alternative to the service provider's TeleSpeed 144 IDSL service with an easy
migration path without equipment change. TeleSpeed 768 is geared to
corporate customers with needs for speeds between the current 384 kbps and
1.1 Mbps offerings.
NorthPoint Communications. NorthPoint, based in San Francisco, recently
made an aggressive move, announcing that network service providers that
partner with the CLEC can purchase full-duplex T1-speed transport at 1.544
Mbps upstream and downstream. The SDSL service, which is backed by
service level agreements that guarantee 99.99 percent packet delivery, is $250
per month, compared to legacy T1 rates of $350 to $600 per month. NorthPoint
also introduced a lower-end IDSL service that provides 144 kbps connectivity
and is compatible with leading ISDN modems and routers for an easy and
inexpensive migration path. Service is available in the San Francisco Bay area,
greater Los Angeles, Boston, New York, Chicago, San Diego, and
Washington, D.C. By the end of the year, service will be available in Dallas,
Detroit, and Houston, with 14 additional markets on-line by Q3 99.
Concentric Network Corp. Concentric, an ISP based in Cupertino, Calif., is
mostly reselling DSL services from NorthPoint and Covad. Service is available
in northern and southern California, and Boston with downstream speeds
ranging from 144 kbps to 1.5 Mbps and prices from $149 to $359 a month.
Pelgrim said while only a small number of service providers have actually rolled
out DSL services, the telecom landscape is going to get cloudy as
deployments progress. “Are the ISPs going to partner with the CLECs or act
like CLECs, or are the CLECs going to act like ISPs? And when the RBOCs get
involved, are they going to partner with ISPs or become like ISPs? It will be
interesting to see what happens to a lot of these service providers,” she said.
Susan O'Keefe is senior editor at Telecommunications. |
