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To: Frank A. Coluccio who wrote (1926)8/19/1998 9:25:00 AM
From: Frank A. Coluccio  Respond to of 12823
 
RBOCs vow 1999 will be DSL's year

[All, With Integrators, CLECs and new age IP LECs poised to eat their lunch, they had better. Wouldn't you think? Frank C.]

August 19, 1998

Network World via NewsEdge Corporation : Long
berated as foot draggers in the race to offer high-speed
digital subscriber line services, the big regional phone
companies are making noises that 1999 will be the year
for DSL.

Here's what you can expect from the RBOCs next year:

BellSouth will offer DSL that is faster than T-1 but
slower than T-3. The offering will come with guaranteed
quality of service for ATM over DSL.

Bell Atlantic will launch DSL services that boast various
servjust going point to point.

US WEST will be able to support more customers with
its Megabit service.

While business customers will have to pay far more than
residential customers, the added corporate features
warrant the extra cost, regional Bell operating companies
claim.

Current residential DSL service for Internet access is just
raw bandwidth, with no guaranteed speed across the
entire network.

"It's an as-is service. If it works, it works, and if the
customer is satisfied, fine," says John Cahill, executive
director of Bell South's advanced networking division.

Even as they tout new offerings, RBOCs acknowledge
they cannot offer DSL everywhere. They are going to
target metropolitan areas whe re large numbers of people
telecommute and businesses need to connect remote
sites.

"Our thrust is to connect as many of our customers as
possible with broadband access to network services.
The problem is, when you g et into rural areas, the cost
is prohibitive," says Matt Rotter, executive director of
US WEST's Megabit DSL services.

Next year, BellSouth is looking to offer DSL services that
will run over new or specially conditioned copper lines
and will support higher bandwidths. " It will use ATM
quality of service on part of the link at a higher price,"
Cahill says.

Business customers want service-level guarantees for
availability, bandwidth and time to repair, he says.

Bell Atlantic also wants to offer different service-quality
levels and prioritization schemes. DSL is now considered
a point-to-poin t connection, but in the middle of 1999,
Bell Atlantic will offer a service supporting multiple
destinations, according to Fran Leit head, Bell Atlantic
product manager for XDSL business marketing.

Multiple destination support will be accomplished using
a DSL scheme whipped up by industry heavyweights,
including Microsoft, Cisco and FORE, to run PPP
sessions over ATM over a DSL link.

This way, one customer could connect with an ISP in
one PPP session, for example, and start a new session
connecting to the corporat e network using PPP over
ATM.

The scheme requires outfitting the customer site with an
ATM interface to the DSL line.

Bell Atlantic is also shooting for symmetric DSLs to fill
the void between 56K bit/sec dedicated lines and T-1
lines.

Most current DSL services are asymmetric, with
download speeds more than double the upload speeds.
"Our plans are to get [DSL-based] fractional T-1 services
out to the business market that would be competitively
priced," says Liethead.

He says the company is weighing how high to set prices
for its business-class DSL by looking at what it already
charges for similar- speed frame relay and ATM
services.

Down at BellSouth

BellSouth's Cahill says his company is looking at
symmetric DSL at speeds faster than T-1 but slower than
T-3.

The symmetric DSL implementations are nothing more
than fractional T-1 and T-3 under a different name,
according to Frank Dzubeck, p resident of
Communications Network Architects in Washington,
D.C.

In fact, RBOCs already use high-bit-rate DSL to
provision T-1 lines.

Meanwhile, competitive local exchange carriers (CLEC)
push symmetric DSL, Dzubeck says. "But really what
they're implementing is fra ctional T-1. They can't call it
that because if they do, they'll get into the bind of RBOC
comparisons," he says. "DSL is used as a digital local
loop equivalent of T-1 services, and that's where it
should be at this moment, trying to knock down those
T-1 prices."

Problems solved

While they are bristling now with bright ideas about
DSL, RBOCs have been far slower to deploy the
technology than CLECs. In part, D SLs say, that is
because they face a raft of technical and regulatory
problems and market pressures CLECs don't.

Some potential customers are skeptical. "Maybe they are
letting some of the leaders go out there and establish a
market presence for DSL. It makes you wonder if it is
going to be one of those things where there will be a lot
of hoopla, then nothing happens," says Rick Curry, a
store technical operations team leader for J.C. Penney.

But the RBOCs can and do rattle off a long list of
impediments. The RBOCs are prevented by the Federal
Communications Commission fr om offering
long-distance service, which means they cannot directly
link sites that span local calling areas without calling in a
l ongdistance carrier. This limitation hobbles RBOCs
when they try to offer end-to-end services to customers,
the RBOCs say.

Waiting for standards

RBOCs also evaluate gear by stringent routines so they
only put case-hardened equipment in their networks.
That testing takes longer than the tests CLECs might
use.

And RBOCs, more so than the competitive carriers, have
waited for standards to settle down. With their greater
reach, the RBOCs say they need to install gear that can
be installed and maintained across their service areas.

That is not so much a problem for CLECs, according to
Eric Geis, general manager for the western region for
Rhythms, a Colorado-base d CLEC. If Rhythms has
pockets of unique gear, that's OK to a limited degree,
Geis says.

Despite standards problems, US WEST dove into DSL
early with its Megabit service, and had to decide
whether DSL sales would hurt oth er services.

"Some customers who are probably buying Megabit
would have bought ISDN. [With Megabit] they clearly
get more bandwidth for less mone y," USWEST's Rotter
says.

Some critics say RBOCs also fear cannibalizing their T-1
services, which are close in bandwidth to some DSL
offerings. DSL prices ar e typically a fifth or less than
T-1 prices.

But even competitors see DSL as supplemental to T-1
services, not as a replacement. "For many of our
industrial customers, that is e xactly their network
design. A fraction of their links are T-1 lines, another
proportion are DSL. DSL is an addition instead of a r
eplacement," says Gloria Farler, vice president of
marketing for Rhythms.

That may change, she adds, as pragmatic network
managers become more confident in the reliability of
DSL.

<<Network World -- 08-17-98, p. 1>>

[Copyright 1998, Network World]




To: Frank A. Coluccio who wrote (1926)8/19/1998 9:27:00 AM
From: Frank A. Coluccio  Read Replies (2) | Respond to of 12823
 
Wall Street unhappy with FCC proposal

August 19, 1998

Network World via NewsEdge Corporation : New York

Wall Street is turning thumbs down on a government
proposal to encourage large local carriers to speed up
their broadband access-lin e deployments.

With the entire stock market reeling, investment
analysts say regional Bell operating companies are
getting no help from a Federal C ommunications
Commission proposal authorizing the creation of
separate data-services subsidiaries that would escape
some traditional telecom regulations.

The Aug. 6 proposal would enable RBOCs to establish
partially deregulated "advanced network subsidiaries"
housing high-speed equipme nt such as digital
subscriber line access multiplexers (DSLAM). Such
equipment terminates new DSL services, which support
data downl oads of 1M bit/sec or greater over traditional
copper links.

The problem, according to securities analysts, is that
the FCC proposal comes with so many strings attached
that the RBOCs are unlik ely to establish subsidiaries to
speed up their slow DSL deployments, even if the
proposal becomes law. The FCC has promised a fina l
ruling by February 1999.

"RBOCs did not gain any ground in the newly proposed
rules," stated PaineWebber telecom analyst Eric
Strumingher in a note after the proposal was issued.

"These proposed rules are one more piece of evidence
that the RBOCs are getting the short end of the stick in
the deregulation of th e telecommunications services
industry," Strumingher added. "The Bells will be unable
to sustain earnings growth and return on inves tment at
the record levels they have enjoyed over the past two
years."

In its proposal, the FCC states that RBOCs could not
use the advanced network subsidiaries to offer
long-distance transport of data services prior to the
RBOCs gaining general long-distance authority. Two
and a half years after enactment of the
Telecommunications Act of 1996, no RBOC has yet
gained regular long-distance approval.

The RBOCs had hoped to win this right because Section
706 of the act directs the FCC to scrap regulations if
they hinder national br oadband network deployment.

The FCC proposal would end the requirement that
RBOCs offer ports on their DSLAMs to competitors, but
would still require them to of fer space in their central
offices to DSL-based competitors.

Wall Street's verdict on the Section 706 proposal comes
at a time when investors are also combing carefully
through the stock and bo nd prospectuses of RBOC
competitors seeking to specialize in DSL and other
broadband technologies.

Since last May, offerings of high-yield bonds for
competitive local exchange carriers have "dried up,"
according to Mark Langner, te lecom research associate
for Hambrecht & Quist, a San Francisco investment
house specializing in IT companies.

A least one of the five FCC commissioners said he was
voting in favor of the proposal because he thought it
would make RBOCs and oth er local carriers happy and
eager to invest in broadband networks.

Republican Commissioner Michael Powell says there
had been an "unfortunate tendency" at the FCC to pass
rules that "depend upon a co mpany or an industry
acting against its self-interest." Powell says he hopes
the new proposal will spur RBOCs to accelerate their br
oadband offerings because doing so will offer some
deregulation of data services.

<<Network World -- 08-17-98, p. 23>>

[Copyright 1998, Network World]