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To: helkel who wrote (27931)	1/10/1999 4:53:00 PM
From: Emile Vidrine	Read Replies (1) \| Respond to of 36349

The Shape of the Future January 8, 1999 - 11:43 PM By Roderick Beck In the absence of divine intervention, it is clear that there will be no broadband revolution. Rather it will be an evolution. By the end of the year 2000, I estimate there will be 1.5 million cable subscribers and probably 750,000 DSL customers. In contrast, the number of households cruising the Net will easily exceed 40 million. This should not be surprising. A well respected AT&T labs researcher pointed out to me that deploying new technologies on a large scale is far more challenging than small field tests. A model train is easier to manage than a national train system. Nonetheless, cable has a huge lead over DSL and I expect that it stands a good chance of dominating the residential Internet market given its strong coverage of the affluent suburbs. DSL is less competitive in these areas due to its distance limitations. However, densely populated prosperous urban areas are another story. In these areas much of the population lives near a local switching center, well within in the reach of DSL. Moreover, urban areas have an abundance of fiber, making VDSL, the steroid of broadband access, a real possibility. Indeed, in Manhattan, RCN and other companies are putting VDSL equipment in the basement of high rise apartment buildings to supercharge the inside copper wiring in order to provide cable television and high speed Internet access. The fiber lying beneath the streets serves as transport. It is also likely that ISPs will be interested in using DSL as a way of competing with cable Internet providers. AOL has proposed that @Home be forced to wholesale its service to other ISPs. This suggests that DSL might emerge as a serious rival in a year or two when the infrastructure is in place and the learning curve has been largely exhausted. While cable will probably dominate the residential market, it also seems clear that DSL will be the number one player in the business sector. Almost all major players launching DSL offerings are primarily targeting businesses, like financial institutions, with their insatiable demand for high-speed data services. Long distance companies want a cheap substitute for the richly priced high capacity phone lines that they lease. In addition, DSL makes it economical to offer fancy data services like videoconferencing to smaller businesses that were formerly priced out of the market. One reason that DSL is more suited for business customers than cable is that it offers high download and upload capabilities. Symmetrical bandwidth is crucial for distance learning and interactive services. In contrast, cable has limited speed to send data. As mentioned earlier, DSL also has greater potential to jump-start local competition. The greatest obstacle to local competition is the cost of laying transmission lines to the customers. The cost is so substantial to build residential local networks that virtually all CLECs have focused on business customers. DSL will radically reduce the cost of leasing phone lines from the Baby Bells by sharply increasing their capacity. Running IP voice over DSL will enable CLECs to sharply reduce the cost of long distance and thereby gain a competitive edge. The wild card is whether the Internet itself can be improved to offer the quality of service that customers demand from broadband services. It will be a shame if broadband access undermines itself by exacerbating Internet congestion. There is no magic bullet.