Broadband Access
for the Middle Market
Business Networks
Michael Kennedy
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We are being bombarded with media hype about communications services that promise to change the way we work and play. In fact, technologies such as gigabit Ethernet and IP telephony and services such as videoconferencing and Web multicasting are available now. Unfortunately most of us have no affordable means of plugging into these services. There are formidable technical, economic, and political obstacles standing in the way of connecting our high-tech information age appliances into the equally high-tech optical/terabit backbone networks. For most of us, the only connection option is twisted pair telephone plant, which was designed for POTS (literally a horse-and-buggy-age technology).
Medium-size companies (50 to 500 employees) are most severely affected by this lack of affordable broadband access. Large companies have been able to use their marketplace clout to obtain direct fiber connections to network backbones, while consumers typically have both cable TV and telephone connections which can be retrofitted to meet current needs. Medium-size businesses, including corporate branch offices, require high-quality switched voice services and Internet access. Most also require a data communications capability to support collaborative work with other offices, mobile workers, and business partners. In addition, medium-size branch offices of large companies require high-speed data connections to the enterprise data communications network. The combined voice and data access bandwidth requirement of such businesses is typically 2 Mbps to 5 Mbps. This amount of capacity is not likely to be priced affordably and may not be available at any price if the incumbent local exchange carrier (ILEC) has failed to modernize its facilities. Furthermore, cable TV options may not exist if the establishment is located in a commercial district.
The economic challenge to affordable broadband access is that once the bandwidth requirement goes beyond what can be squeezed out of twisted-pair cables, the cost to upgrade is essentially fixed. This means that it costs the same to provide a new fiber cable to an office building that requires 150 Mbps service and will pay $20,000 per month for services as it costs to link an establishment that requires 3 Mbps service and is prepared to pay $900 per month. The business case for installing new cable to the medium-size business just doesn't exist. Furthermore, the legal and regulatory barriers to new cable construction are just as high as the economic ones. The federal Telecom Act of 1996 seems to have done little to lower these barriers, and medium-size companies lack both the barrel of money and army of lawyers needed to remove them.
New technologies and service concepts, however, may soon make affordable broadband access more feasible. Several service providers are building out high-speed digital access services by employing ATM switching, digital subscriber line (DSL), and digital microwave transmission. The technical trick is to use ATM to deliver affordable quantities of bandwidth to individual businesses via a shared communications facility. For example, wideband 10-Mbps Ethernet service can be provided by deploying an ATM switch in an equipment closet located in a multi-tenant office building. The ATM switch is then connected at SONET speeds via digital microwave or fiber-optic facilities to a service provider's backbone network. High-bit-rate DSL (HDSL) technology running on existing twisted-pair distribution cables is then used to connect the Ethernet service to each building occupant.
This type of service is currently offered by Intermedia Communications using fiber-optic connections in about 50 office buildings. Advanced Radio Telecommunications is using a similar setup with a 38-GHz digital microwave link to provide Internet services to medium-size businesses in three western cities. A similar concept is likely to be deployed by the winners of the Local Multipoint Distribution Service (LMDS) frequency spectrum auctions.
The use of the ATM switch, Ethernet, and HDSL technologies provides a technical means of sharing the high fixed costs of local access facilities among smaller businesses that could not bear these costs individually. In addition, use of digital microwave provides a means of avoiding the legal and regulatory obstacles to building new cable or gaining access to ILEC facilities.
Despite the promise of these new technologies, it will not be easy for medium-size companies to obtain affordable broadband access in the short term. The digital microwave providers are just beginning to build out their systems, and the shared-tenant solutions involve a piecemeal building-by-building roll-out. However, if these new approaches to broadband access achieve significant scale, the ILECs will be forced to abandon their strategy of investing only in strategic accounts and begin wholesale replacement of their aging copper plants. This will bring us all from horse-and-buggy-age access technology to the 21st century. |
