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February 17, 2000
Bells Find Out Fiber-Optic Lines,
High-Speed Web Access Don't Mix
By LESLIE CAULEY
Staff Reporter of THE WALL STREET JOURNAL
Phone companies are counting on digital subscriber-line technology, known
as DSL, to be their ticket to the world of high-speed Internet access.
They've also been betting on another technology, fiber optics, to upgrade
the old Bell networks, at a cost of billions of dollars.
Now the Bells face a difficult quandary: The two technologies are the
equivalent of oil and water. They just don't mix.
The incompatibility presents a major hurdle for the Bells as they try to
outmaneuver the cable-TV industry for position in the next phase of the
online revolution: Internet service that is super-fast and "always on," just
like a TV signal. Hoping to build and own the infrastructure that will one
day bring high-speed Web access to America, the phone and cable
industries are running a high-stakes race for households and market share,
a technological land grab.
First, though, the Bells have to resolve a more pressing problem. DSL was
designed to be delivered on the Bells' century-old copper networks, not on
the new fiber-optic networks. The old copper networks gave each
customer a "dedicated" wire (actually, a pair of them) to carry the electrical
signal from the phone company's central office to the kitchen phone and
back. Fiber networks, on the other hand, carry a signal that moves as
pulses of light over hair-thin glass tubes along ever-changing routes,
selecting the most efficient path available depending on volume and other
factors.
Right now, the universe of
high-speed Web service is
minuscule. According to a report
by Sanford C. Bernstein and
McKinsey & Co., there were
about 228,000 residential DSL
customers at the end of 1999. By
comparison, there were 1.62
million customers for the cable companies' high-speed Web access,
delivered using powerful modems and upgraded cable lines.
Tom Wolzien, a cable analyst at Sanford C. Bernstein, gives the cable
industry a two-year lead over the Bells. The high-speed market "is cable's
to lose," he says. The Bernstein-McKinsey report says many of
high-speed's best potential customers live in areas already serviced by
upgraded cable lines but not easily reached by DSL.
Cable-modem Internet service is far from perfect. It is a "shared" service,
so users log on to the same fat pipe. They may experience slowdowns in
transmission during peak usage times, just as the water pressure in an
apartment building can drop if everyone takes showers at once.
Some phone-industry experts say because the high-speed cable lines are
"shared," they also may be more susceptible to security breaches. The
cable industry says its high-speed service is no more vulnerable to hackers
than competitors', properly managed networks don't slow down and
network kinks will be ironed out in time.
The phone companies have known for a long time about the DSL-fiber
clash. Still, it's difficult to see how they could have avoided the current
predicament. Fiber-optic lines, with almost unlimited capacity, have been
indispensable in enabling the Bell networks to handle millions of new
cellular phones, fax machines and second telephone lines. The fiber lines
also are easier and cheaper to maintain. But competition forced the Bells'
hands. When cable companies jumped in with aggressive high-speed
offerings, the Bells' dusted off DSL, a 15-year-old technology that had
been sitting on the shelf for years, and hastily repackaged it as a new
technology that would light a fire under consumers.
Right now, getting DSL can be an enormous headache. It can be
downright impossible in many new communities that the Bell companies
have wired with fiber lines. Even senior Bell execs haven't been able to get
around the problem. Sol Trujillo, chairman of U S West Inc., the Denver
Bell, discovered last year that he wasn't eligible for DSL in his new Cherry
Hills home because the neighborhood was served by fiber lines.
The remedy? U S West ran a monster T-1 line, the kind of data line
favored by big businesses, to the chairman's newly constructed home. To
this day, he still can't get DSL.
"None of us has a solution to get DSL to the end" of the fiber lines, says
Amy McIntosh, president and chief executive of Bell Atlantic Corp.'s data
unit. Still, Ms. McIntosh says, she is confident the problem will be solved
soon. "I'll take our hand of cards versus the cable companies' any day."
Even when it has copper lines to run on, DSL has other quirks. Network
experts say the DSL lines shouldn't be located with other data lines in the
same "sheaths," the big bundles that are buried in the ground. That's
because DSL lines can pick up electronic interference from other lines, and
also create it.
Before installing DSL, the Bells typically dispatch a crew to check sheaths
for the presence of other data lines and remove or relocate them if
necessary. These service calls, called "truck rolls," are expensive, and most
Bells try to avoid them.
Then there is the distance problem. Currently, the farthest a DSL signal
can travel without degradation is about 15,000 feet, or a little less than
three miles. That means people have to live within 15,000 feet of a Bell
central office, where DSL signals originate, to be eligible for the service.
But even then, if you have fiber lines you are out of luck. U S West's Mr.
Trujillo, for example, lives only 9,600 feet from a central office.
There are other problems, depending on how the local network is laid out.
Some lines snake around underground so much they can easily eat up
15,000 feet long before they reach houses that would seem to meet the
DSL distance requirement.
DSL performance also can be affected by such things as the thickness of
the copper wire it is riding on. Thin wires don't handle DSL as well as
thick ones, which are pricier. The problem is, some Bells, aiming to cut
down on costs, have deployed miles upon miles of thinner-gauge copper
over the years. As a result, customers who live in those areas may have to
make do with slower DSL connections for a long time. The Bells could
just replace the lines with thicker copper wiring, of course, but that would
be expensive.
And then there are the obstacles many consumers have created
inadvertently for themselves, by doing their own "inside wiring." For more
than a decade, customers have been permitted to attend to the telephone
wiring inside their homes. The all-too-predictable result in many homes is a
mish-mash of wiring schemes, many of which aren't compatible with DSL
either.
John Goldman, a spokesman for BellSouth Corp., says DSL installers
sometimes have to make several trips to clean up the mess. "It can be a
real nightmare," he says.
Clearing the hurdles won't be cheap. SBC Communications Inc., the big
San Antonio Bell, recently committed $6 billion to overhaul its network to
better accommodate DSL. As part of the effort, SBC says, it is working
with manufacturers to come up with solutions to DSL's problems.
One consequence of the DSL-fiber clash is that Bells with the
highest-quality networks are among the least prepared to offer DSL.
Because of aggressive upgrading over the years, Bell Atlantic and
BellSouth have top-notch networks that are crammed with new fiber lines.
Both acknowledge the issue and say they are working with vendors to
come up with answers.
Equipment makers have been working for years to resolve the problems.
Alcatel, the French telecom-gear manufacturer, is currently in field trials
with a "remote terminal," a kind of adapter that is supposed to let DSL and
fiber interconnect. Once installed in neighborhoods, the remote terminals
would act as mini "central offices," extending the reach of DSL while
creating a path for fiber users.
More than four years in the making, the remote units, crammed with
miniaturized components, have their own battery backup power --
necessary in the event of a power outage, because they are powered by
local utilities. They range in price from about $1,000 to more than $50,000
and can handle 24 to 2,000 lines each. The smallest is the size of a big ice
cooler; the biggest, the size of a small Volkswagen bus.
Alcatel Vice President Paul Segre says a commercial-grade model should
be available in about six weeks. SBC, anxious to push ahead, began using
test units in January and says they work fine. Bell Atlantic, another
customer, won't deploy the terminals until field tests are finished around
midyear, Bell Atlantic figures.
Write to Leslie Cauley at leslie.cauley@wsj.com |
