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Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here -- Ignore unavailable to you. Want to Upgrade?

To: Frank A. Coluccio who wrote (1484)	4/23/1998 2:37:00 PM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 12823

Is ADSL a serious threat to Frame Relay business? This article from LanTimes implies that ADSL will be very competitive with frame relay but will have to come down in cost to compete with cable. REMOTE ACCESS Making ADSL a reality for business By Virginia Brooks A DSL has hit the wall. Initially portrayed as a savior for bandwidth-constrained business users, asymmetric Digital Subscriber Line has reached the stage where observers are listing all the reasons why it won't work. This wild ride has left business users scratching their heads just when services are beginning to roll out. Now we can ask: What will it really take to make ADSL a viable solution for corporations, telecommuters, and the small office/home office (SOHO) community? The first requirement is obvious: availability. ADSL services have to be available to business enterprises in as wide a geographic area as possible. The good news is that service providers across the United States are moving forward with commercial offerings. ADSL connections are now available from Eugene, Ore., to Boston, as well as in Canada and Europe. Services must also be attractive, and providers are beginning to differentiate themselves by catering to the ADSL business customer. For example, Covad Communications Co., which bills itself as the first competitive local exchange carrier (CLEC) of data packets, is exclusively an xDSL shop. Covad offers four service options, both symmetric and asymmetric, for the San Francisco area at speeds that range from 144Kbps to 1.5Mbps. Covad sells directly to the corporate telecommuter market and also works with ISPs (Internet service providers) who resell Covad's service to small businesses. Although its customer base is still small, the company has secured financing that will permit it to roll out its services in five additional metropolitan regions. The most important factor in making ADSL a reality will be price. Our research at Aberdeen Group Inc. shows that al-though pent-up demand for higher bandwidth, faster Internet connections, and improved performance are the initial motivators for moving to ADSL connections, the chance to realize considerable savings is the most significant factor in users choosing ADSL over other connectivity options. Current pricing from a sampling of CLECs and ISPs shows that, whereas startup costs for an ADSL service are higher than for a frame-relay connection, monthly costs are considerably less. For example, subscribers in the Boston area can get twice the bandwidth of a 56Kbps frame-relay service with ISP HarvardNet Inc.'s 128Kbps ADSL service for only $50 more per month. Cost benefits improve as bandwidth increases. A 384Kbps ADSL connection costs $3,000 less per year than a 384Kbps frame-relay service. The current shortage of T-1 availability also may speed up the deployment of ADSL. ADSL will be especially attractive for small- to medium-sized businesses that require remote access and have growing bandwidth requirements but cannot afford a T-1 line or a frame-relay connection. Business users' evaluation criteria of ADSL offerings will include ease of installation and use and the relevance of services to their own applications. Service providers are eager to have an access technology that can compete in speed and cost with the threat of high-speed access from cable companies. For ADSL service to compete with cable modems, service pricing will have to come down from the current rate of $200 to $400 per subscriber. A major source of this expense for the home or SOHO subscriber today is the fact that service providers have to install a box called a plain old telephone service (POTS) splitter, which separates the voice channel so the service can be shielded from interference caused by phones, computers, and other electronic devices at the customer site. Doing this necessitates sending a technician to the site. Pricing should improve considerably when Universal ADSL, which is designed to eliminate the POTS splitter, becomes available. This means easier, faster, and cheaper installation. The Universal ADSL standard--which is backed by Compaq Computer Corp., Intel Corp., and Microsoft Corp., among others--will let users attach a Universal ADSL modem to their telephone jack, just as they use a modem today. While Universal ADSL modems will initially be pricey (approximately $300), but they are likely to follow the same pricing pattern as other modems. Once critical mass is attained, prices will decrease dramatically. ADSL won't achieve critical mass before the year 2000, but adoption rates will grow significantly over the next year as service providers focus on appropriate market segments and offer turnkey solutions at attractive prices--along with service and support. The advent of Universal ADSL-enabled computing devices and modems will bring further incentive to move to ADSL, if the service price is right. Virginia Brooks is managing director of networking and telecommunications at Aberdeen Group Inc., a consultancy in Boston.