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Technology Stocks : Westell WSTL -- Ignore unavailable to you. Want to Upgrade?

To: Trey McAtee who wrote (15286)	2/24/1999 9:43:00 PM
From: brian h	Read Replies (1) \| Respond to of 21342

Thread, More hype. DSL Spells Trouble For Many ISPs Digital subscriber line technology could offer more grief than profits. By Steven J. Vaughan-Nichols, Sm@rt Reseller RELATED LINKS DSL Provider Targets ISPs Ingram Micro Tackles The Need For Speed Stuck In DSL Hell -------------------------------------------------------------------------------- More Breaking News Sm@rt Opinions Issue Index SR Home Page Tomorrow's Internet belongs to DSL, but not all Internet service providers are happy about it. Many ISPs believe that their way into the DSL market is being blocked by the Baby Bells and other Incumbent Local Exchange Carriers (ILEC), which want to keep DSL business to themselves and favored partners. Some ISPs, for example, are outraged by America Online's recent deal with Bell Atlantic. That deal will enable AOL to offer its customers a 640Kbps ADSL connection for an additional surcharge of $20 a month. Ordinary ISPs, on the other hand, will have to pay Bell Atlantic $39.95 per DSL circuit line. Pacific coast ISPs also are concerned about DSL. "Phone company DSL kills ISPs," asserts Dirk Harms-Merbitz, president of Power.net, a Los Angeles area ISP. "PacBell wants to sell DSL to ISPs at full retail prices with a $30, one-time commission. [That] obviously makes no sense" for an ISP. Other ISPs, which requested anonymity, paint an even gloomier picture. Some believe that their local ILECs are deliberately overloading their DSL connections by providing them with insufficient bandwidth from the phone company's central offices to the Internet. Mitchell Lazarus, counsel for the law firm of Fletcher, Heald & Hildreth, P.L.C., and the Internet Service Providers Consortium (ISP/C) believes there is a pattern of ILEC behavior that interferes with potential ISP customers. The ISP/C maintains that, on occasion, phone companies transfer DSL customers to the ILEC's favorite ISP-even when the customer asks for a different ISP. Aside from inflated DSL prices, there remains the unvarnished fact that DSL undercuts ISP bread-and-butter connectivity services such as frame relay, ISDN and T1s. For instance, in the Washington, D.C., area, ISP Concentric Networks Corp., is using Covad Communications Group Inc.'s DSL to provide 384Kbps Symmetrical DSL to customers at $199 a month. But Digex, an Intermedia Communications Company, which has not adopted DSL, offers 128Kbps frame-relay service for more than $900 a month. At twice the performance for $700 less, it's a good bet customers will opt for DSL over frame relay. As a result, ISPs are stuck in a "damned if they do, damned if they don't" situation. They must embrace DSL, or be priced out of existence. But at the same time, it appears as if their old partners, the ILECs, are stacking the deck of cards against them. Whatever they do, 1999 is the year that ISPs will make major changes in both their service and business plans. They no longer have a choice. Brian H.