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To: Nick Morvay who wrote (4775)	9/5/2000 2:13:03 AM
From: CIMA	Read Replies (1) \| Respond to of 5053

From Forbes Magazine (thanks Nick): DSL has high promise but many problems. Elastic Networks solves a big one through a neat software trick. Copper Hopper By Bruce Upbin SINCE BELL LABS FIRST DEBUTED digital subscriber line technology a decade ago, DSL has promised a cheap and easy way to get high-speed access into homes and businesses. It costs less than ISDN or T1 lines, it flows over existing copper wire and, unlike cable, its bandwidth doesn't diminish as more neighbors hop onboard. But DSL has serious technical glitches--and fixing them could be a big business. A significant chunk of phone lines in the U.S. are so degraded or filled with electrical interference that DSL signals can't get through. Only people who live within 3 miles of a phone switching center can get DSL--and even then 40% can't be served because of the problems. Guy Gill wants to fix all that. Chief executive of privately held Elastic Networks in Alpharetta, Ga., he sells a new DSLscheme called EtherLoop, which sends data farther and often faster than the services the Bells offer. One problem is "spectrum incompatibility" among myriad broadband designs--T1, ISDN and nine or so flavors of DSL. Their signals move along copper wire in overlapping frequency and modulation schemes. Their rival electrons collide inside the "binder," the underground black rubber sheathings that carry up to 100 copper pairs. The result is heavy interference. Callers can pick up a neighbor's conversation; data speeds slow to a halt. The static can get so bad that someone living next to, say, an insurance office with a T1 may never get DSL. "Spectrum incompatibility is a hurricane 250 miles off the coast. Nobody is going to pay attention until it gets 25 miles off the coast. By then it will be too late," says Gill, a 23-year veteran of Nortel Networks, which holds a big stake in Elastic after a spinout last year. Elastic uses software to solve that problem. Unlike DSL, an "always on" service that sends bits continuously, EtherLoop zaps data in bursts, just like Ethernet office networks. In between bursts, EtherLoop's algorithms "listen" every ten seconds for other digital signals inside the same binder. Like a cordless phone looking for a clear channel, it can hop on to a less crowded frequency to send the next burst. The result is a cleaner connection at speeds of 200 to 500 kilobits per second, reaching as far as 24,000 feet. Gill says one customer in North Carolina gets 300 kilobits per second, even though the signals travel 30,000 feet, almost 6 miles. In a smaller loop of, say, 4,000 feet, data can hum along at up to 6 megabits per second, nearing cable modem speeds. Gill's road map has plenty of obstacles ahead. EtherLoop isn't compatible with regular DSL phone equipment. Urban customers would all need EtherLoop modems talking to an EtherLoop access device at some central location. The Bells, having spent hundreds of millions on DSL gear from Alcatel and Cisco, would likely balk at ever switching to an EtherLoop design. So Gill has set his sights on more modest but accommodating markets: hotel chains, apartment complexes and rural carriers that haven't yet offered DSL. His shop has installed 30,000 lines thus far. But competitors, including the publicly held Tut Systems and Copper Mountain, are ahead in customer counts and have more cash to burn. Elastic expects $40 million in sales this year and has big backers on its side. Nortel owns more than 50% of the outfit, and its chipmaking partner, Texas Instruments, and venture firm Pequot Capital injected $13 million last year. Another $21 million round closed in February. An IPO is likely this year if the markets calm down. That's an awfully big if. \| back to top \| Read more: By Bruce Upbin From May 29, 2000 Issue

To: Nick Morvay who wrote (4775)	9/16/2000 9:33:06 AM
From: Condor	Read Replies (2) \| Respond to of 5053

From a recent Business Week Magazine Looks like ELAS is well postioned NEWS: ANALYSIS & COMMENTARY Cable vs. DSL: Which One Is the Tortoise? Suddenly, phone companies look poised to snatch the lead Only a few months ago, the race to provide speedy Internet access would have been an easy call. Cable operators were getting fast modems to market much quicker than phone companies could provide their alternative: A Net-access service called digital subscriber line (DSL). But fortunes turn quickly in the Internet Age. Cable companies have run into component shortages. And their infrastructure has proven difficult to upgrade. As for the Bells, with margins in their traditional phone services shrinking, they've been given sharper incentives to chase new, higher-growth services--namely DSL. So they've recently committed to adding the staff and improving the technology needed to roll out DSL faster and more broadly than anyone would have predicted. The result: DSL service is now gaining a march on cable modems. According to industry tracker Cahners In-Stat of Scottsdale, Ariz., DSL equipment sales are now expected to grow at a robust 48% in the fourth quarter, dwarfing the 5% growth rate of cable modems. Although the cable companies still maintain an edge in total subscribers, with double the subscribers of DSL carriers, at current growth rates cable modems will take a back seat to DSL by 2002--or sooner. Leading DSL's comeback is SBC. The San Antonio (Tex.)-based Bell has accelerated a $6 billion project unveiled last year to roll out DSL nationwide. The company says it's on track to nab 1 million customers from California to Texas and Illinois by the end of the year. Similarly, New York-based Verizon's subscriber rolls have ballooned from 30,000 at the beginning of 2000 to more than 250,000 today. That's likely to grow to 500,000 households by December. Qwest, which just announced a restructuring of its business around high-speed access, has 175,000 DSL subscribers, up 280% over the middle of last year. By year's end it should hit 250,000 subscribers. ''SBC and the other Bells are coming,'' says Adam Guglielmi, a DSL analyst for researcher TeleChoice Inc. ''And they're able to upgrade a lot faster than the cable guys.'' In part, that's because cable companies have been stalled by technology challenges and equipment shortages. A dearth of parts needed to make cable modems has caused some of the slowdown. But cable providers are also faced with the daunting and expensive task of upgrading their one-way cable pipelines to the two-way lanes needed for Internet traffic. And they have also been dogged by consumer frustration over service that slows when too many users are retrieving or sending data on the same line. That's why Time Warner and others have been splitting the hubs that reach each neighborhood so that one serves, say, 250 people rather than 500 DESPERATE? For now, much of the cable companies' lead is due to thpeir reach into mid-size markets such as Portland, Me., and Orange County, Calif. But a prominent advertising battle is spreading the fight throughout the country. Earlier this year, SBC ran a series of ads in hot markets like California and Texas that poked fun at cable's speed problem. RoadRunner, a cable-joint venture between Time Warner and AT&T has countered with a series of spots that ridicule the installation nightmares some DSL customers have experienced. Other regions have been marked by similar campaigns. But truth to tell, delivering service that's as fast and easily installed as advertised has been a big sticking point for both sides. With the battle now truly joined, cable operators are hardly raising white flags. On Sept. 1, AT&T unwrapped aggressive new promotions: up to three months of free cable modem service and up to five months of free phone service over cable in 10 markets. A ''desperate'' move, as one rival puts it? Or, as AT&T execs view things, a creative way to over come the ''inertia'' of customers? If so, that's the only thing inert about a market that's rapidly heating up. By Roger O. Crockett in Chicago, with bureau reports