|
Karen Brown
Even as MSOs are in an all-out marketing blitz of cable modem rollouts, telcos are striking back with a big push for Internet access via Asymmetrical Digital Subscriber Line technology.
Although many analysts have pointed to the higher cost and slower transmission speeds as a weakness for ADSL in the war for high-speed Internet subscribers, telco marketers insist the future is bright for the product, particularly in attracting business clients.
Asymmetrical Digital Subscriber Lines are part of the DSL family of systems that transmits data over standard twisted pair copper lines by creating separate upstream and downstream channel segments for voice, high-speed data and medium-speed duplex transmissions. Faster speeds are assigned to downstream channels to the user compared to upstream from the user to the Internet - hence the term asymmetrical.
Unlike shared-bandwidth configurations for cable modems, ADSL boasts a dedicated access line between user and the local telephone office. Maximum speeds downstream of 1.5 megabits per second (Mbps) are widely marketed and, in some markets, zippier versions can reach upwards of 7 Mbps.
But the down side is a distance to speed scale - the farther away a user is from a central telephone office, the slower the speed. The distance limit between user and telephone node to maintain a 1.5 Mbps speed is 18,000 feet.
Still, telephone companies eager to get in on the high-speed Internet access game are rolling out ADSL service in selected markets across the country as fast as they can. And to better compete with cable modem Internet products, many telcos are slashing monthly rates.
Bill Rodey, VP-ADSL Forum industry group, points out ADSL is already available to about 80% of the public via telephone lines. By comparison, about 69% of all homes passed by cable, and only a small proportion of these homes are in areas with hybrid fiber-coax systems capable of supporting cable modems.
ADSL lines carry a guaranteed bandwidth access between the user and the area telephone office, so they don't run into the hit or miss variable connection speeds of their cable modem rivals. Since the bandwidth is not shared, ADSL can ensure users don't run the risk of sharing their Internet access with the neighborhood teenage computer hacker, Rodey said.
"The ADSL network provides better bandwidth guarantees and better security," he said.
Rodey also points to the better customer service track record for telephone companies compared to their cable company rivals.
"Telephone companies have been in the data systems since there was a data system," Rodey said. "They are experienced in providing high-quality, high-speed data systems."
But ADSL has suffered a bad reputation as a system limited by distance to the local telephone office. Although transmissions speeds drop as the distance to the local office drops, Rodey estimated 80% of the telephone customers are within the 18,000-foot limit and can eventually be reached by ADSL.
"Unfortunately, people have taken that as a weakness of the technology," he said. "But that's the wrong way to look at it - you can wire 80% of the customers within 18,000 feet."
For the remaining 20%, local telcos can bring them into the fold with fiber optic upgrades, much of which is already in place as the industry replaces traditional copper with fiber-optic wire, Rodey said. By extending fiber optic from the local telephone office to the halfway point and creating a Digital Subscriber Line Access Multiplexer (DSLAM) link, a telco can extend the service to outlying areas via standard copper wiring.
Cost is still a major factor in the race between ADSL and cable modems for the high-speed Internet market finish line. Entry-level ADSL has been running about $40 per month plus an average $20 for an Internet Service Provider, compared to an average $40 per month for comparable cable modem services. But in recent months a parade of ADSL providers - including BellSouth, US West and Bell Atlantic - have been dropping their rates to about $50 combined.
As part of its ADSL rollout in Charlottesville, Va., in May, Sprint has introduced a package of options to lure new customers. Basic monthly ADSL service with a one-year service commitment is $42.99, and the addition of the Earthlink ISP - which Sprint partly owns - is offered for a $62.99 special. Another offer to customers is for ADSL plus a bargain-basement selection of 10 special telephone features such as call messaging for $62.99 a month.
There are, however, some one-time fees added onto Sprint's ADSL service. They include a $129.99 installation fee; a $199 fee for purchase of the DSL modem, Ethernet and any necessary splitters or filters; a $49.99 service activation charge; and $14.99 shipping and handling for the software and modems, which are shipped directly to the customer. The installation fee, however, is waived if the customer agrees to the one-year service commitment.
Eventually, Sprint hopes to make the installation easier and cheaper by having the customer do much of it, according to company spokesman Lloyd Carnes.
In addition to direct ADSL service, Sprint is also using ADSL as a "last mile" hookup in local markets for its Integrated On-Demand Network (ION) product, which provides multiple telephone, fax, video and Internet service in either home or office.
Sprint plans its next rollout in Las Vegas in July, with deals similar to those in Charlottesville offered to potential customers.
Internet powerhouse America Online Inc. has also jumped into the ADSL game by forging agreements with Bell Atlantic and SBC Communications Inc. to provide digital subscriber line access as an upgrade to AOL customers. AOL will begin product tests this summer and aims to introduce a DSL variation to its customers in the Bell Atlantic territory, offering it for about $20 a month in addition to AOL ISP hookup. A similar ADSL rollout schedule will follow for SBC, which includes subsidiaries Southwestern Bell, Pacific Bell, SNET, Nevada Bell and Cellular One.
One of the more aggressive telcos in the ADSL game is BellSouth, which has launched its FastAccess service in major cities such as Atlanta, New Orleans and Ft. Lauderdale, and has plans to introduce it in 23 markets this year. Similar to Sprint, BellSouth is offering ADSL with 1.5Mbps speed and unlimited BellSouth.net Internet service at $49.95 per month to its "Complete Choice" enhanced phone service customers. There is a one-time $99.95 service activation fee and a $199.95 installation fee.
Tying together marketing of local telephone service and ADSL is a key for BellSouth, according to Terry Yarbrough, senior director for product management. Complete Choice customers make up 23% of the market, and are most likely to be interested in high-speed Internet services.
"Naturally we are interested in leveraging that in our marketplace, so naturally we are combining that with ADSL and Internet service in one package," he said.
He added many Complete Choice customers who have added a second line to handle their computer modem are interested in hooking up to ADSL and its single-line format.
"That's a big deal, and we will be leveraging that a lot in the marketplace," he said.
Farther north, Bell Atlantic has introduced ADSL service in Cambridge, Mass. It also recently dropped its package of basic ADSL Infospeed at 640 kilobit-per second plus an ISP connection for $49.95 a month and plans to expand to the rest of the Boston metropolitan area. Bell Atlantic already offers ADSL service in areas of Philadelphia, Pittsburgh, Washington and areas along the Hudson River in New Jersey.
And in one of his first moves as president of US West, Sol Trujillo announced in May a 25% cut in its ADSL fees. The deal drops the rate for the basic MegaBit product from $40 to $29.95 per month and from $60 to $47.90 for its MegaPak package including ISP.
Marketing to businesses is one area where ADSL providers appear to be beating out cable modem peddlers. While cable operators have focused primarily on residential cable subscribers, ADSL has expanded into the high-speed data markets for business. With more workers putting in business hours at home, this is an ideal situation for telcos sporting ADSL, Rodey said. Higher-speed ADSL services aimed at businesses and home-based business customers are offered in the $100 range, well below the cost of a standard ISDN or T-1 line.
"It's really attractive to someone who isn't just using the Internet to access e-mail," Rodey said.
For now, the battle between ADSL and cable modem providers is adding fire to an already expanding high-speed Internet access market, which has been starved for options thus far, according to Boyd Peterson, an analyst with the industry watcher, The Yankee Group.
"I think this is signaling that the Bell companies are taking DSL seriously," he said.
Back to this issue
|
