May 1999

Working The DSL Seam

BY CHRIS WHALEN

DSL is hot. The demand for faster and cheaper access to the Internet has created a virtual diamond mine of opportunity for broadband access providers, and Digital Subscriber Line (DSL) is one of the hottest new offerings. One of the reasons for DSL's popularity is that the technology provides businesses with Internet access at speeds rivaling - and in many cases better than - T1 lines (and other leased line options) at a fraction of the cost.

Traditionally, a business has had three options for accessing the Internet: analog dial-up modems, ISDN, or leased lines. Dial-up has fed the demand for Internet access by bringing the Internet to the masses. Monthly costs are low but, unfortunately, so are the speeds. ISDN has proven to be a cumbersome technology for the telephone companies. Not only is it difficult to install, but is can be expensive for end users when metering charges are added to monthly fees. In addition, the speed is lacking at only 144 Kbps. Leased lines, such as T1s, have proven to be the most popular option for businesses communicating over the Internet. However, $2,000 monthly charges for a T1 line are often prohibitive for many small to medium-size businesses.

DSL, on the other hand, offers the speeds that business customers are looking for (up to 2.3 Mbps symmetric speeds for SDSL; 8 Mbps downstream and 512 Kbps upstream for ADSL) at affordable prices (approximately $400 a month). DSL's popularity is further evidenced by the number of competitive local exchange carriers (CLECs) rolling out DSL services, as well as "Data CLECs" focusing their services entirely on DSL deployment. Log On America, a Providence, Rhode Island-based CLEC, is one example of a service provider co-locating DSL Access Routers (DSLARs) in central offices (CO) of incumbent phone companies (see sidebar) to offer high-speed DSL Internet access to businesses and SOHO workers located within 18,000 feet of the CO. And Log On America isn't alone. According to the 1999 Telechoice xDSL Atlas, the market for DSL is projected to reach 2.3 million subscribers by 2002.

MTU APPLICATIONS
Until now, the opportunity to become involved in the DSL service business has been restricted mainly to those who have spent countless hours and dollars becoming CLECs. Having CLEC status gives service providers access to the phone companies' copper wiring and the ability to co-locate DSLAR equipment inside the CO. These two factors are critical to any successful DSL service.

However, opportunities are now emerging for aggressive Internet Service Providers (ISPs) and value added resellers (VARs) looking for ways to offer business and consumer clients DSL access, but who don't have the desire or the means to become a CLEC. This opportunity comes in the form of placing access equipment inside high-rise buildings or multi-tenant unit (MTU) properties to offer DSL services to the residents.

Using DSL technology in an MTU environment results in significant savings since it utilizes the building's existing copper wiring. DSL allows high-speed data transmission over that existing wiring to and from all customers inside the building. Think of service providers as miners seeking to make the most of precious resources. DSL's use of existing copper wiring could be likened to a new mining technique that greatly increases the value of an existing seam by allowing the miners to extract more of the valuable deposits along that seam. Other high-speed access technologies, such as Ethernet, require new cables to be installed, which is time consuming and usually very expensive. To develop the mining metaphor, running Ethernet cabling would be similar to tapping an entirely new seam of uncertain value, or perhaps even to sinking an entirely new mine - much more expensive propositions.

Running DSL service in an MTU environment represents a significant market opportunity: DSL MTU applications are projected to reach over $1 billion with more than 3 million connections by 2002 (Access Partners report, Jan. 1999). These numbers are appealing to ISPs and VARs, who are in an excellent position to capitalize on MTU opportunities because they have the experience and technology know-how to deliver effective service offerings.

Another attractive reason for an ISP to jump into an MTU application is that, once building management has approved their presence in the building, the ISP enjoys a significant advantage over the competition with the clients in the building.

IMPLEMENTING AN MTU SOLUTION
There are two parties involved in rolling out an MTU solution: the building proprietor and the service provider. The building proprietor's role can be broken down into one of two categories: the person who rents the copper lines to the service provider, or the person who actually implements the network and leases Internet access from the service provider. The service provider's role also falls in one of two categories: the company leasing the in-building copper wiring from the building proprietor and providing Internet access, or the company from whom the building proprietor leases access to the Internet.

There are two pieces of equipment and one connection required for a DSL MTU application. First, a Customer Premise Equipment (CPE) router or bridge needs to be installed in every subscribing tenant's office. The CPE device connects (via Ethernet) the business's LAN to the copper wire. Second, the copper wire connects the CPE to the DSLAR, which is normally installed in the location where the copper terminates from the offices served (typically in the basement).

The final step for the DSL application is connecting the DSLAR to the ISP. This is easily accomplished by running a dedicated line (usually a single T1 line) between the building and the ISP.

THE INTERNET DIAMOND MINE?
There are two factors driving the growth of DSL MTU applications: the ease with which the technology can be installed, and the application's significant market opportunities. These specific issues are driving ISPs and VARs towards building proprietors nationwide. We are beginning to see this happen in 1999.

Following are three things for any operator considering a DSL MTU application to keep in mind:

• It's critical to have a consistent, well thought-out plan for approaching a building proprietor. Understandably, the plan must create a win-win business opportunity for both parties.
• ISPs and VARs must have strategies in place to market the DSL services to the building's individual businesses. You cannot assume that being endorsed by building management will automatically make the offering a success. An MTU operator has to have a focused sales effort in place.
• It is important to consider the technology used to bring DSL services to a building. As with any offering, the key is to provide a value-added service using the least amount of equipment possible. The DSLAR accomplishes this by not only enabling a cost-effective service that businesses want, but by also allowing ISPs to handle the data traffic easily. Without a DSLAR, a building would have to be equipped with multiple pieces of equipment, including a DSL access multiplexor (DSLAM) and at least a router or switch. The objective in selecting the underpinning technology is to reduce the solution's complexity and the potential points of failure.

For ISPs and VARs who have developed a complete DSL solution that address the above three points, the MTU market represents a virtually untapped vein of wealth.

Chris Whalen is Vice President of Sales and Marketing for Interspeed, Inc. Interspeed, a wholly owned subsidiary of Brooktrout Technology, develops single system remote access solutions for Local Exchange Carriers (LECs, ILECs, and CLECs) and Internet Service Providers (ISPs) who are striving to deliver greater speeds at lower costs. For more information, please visit their Web site at www.interspeed.com.

Log On America (www.loa.com) is part of the new breed of telecommunications carriers. The upstart company has quickly found success by employing a combination of aggressive marketing and leading-edge DSL technology.

Business customers of the Providence, Rhode Island-based CLEC love the DSL service because it offers "always on," high-speed Internet access. Building on this success, Log On America is aggressively targeting another lucrative market opportunity: in-building MTU DSL applications.

The company is rolling out a 155 Mbps OC-3 SONET ring in Providence. From that ring, Log On America plans to run 45 Mbps DS3 nodes into the basements of high-rise office buildings. By placing an Interspeed 500 platform in the buildings' telephone rooms, the carrier can provide high-speed DSL services to all of the buildings' tenants.

Log On America anticipates turning the buildings on later this year, but the company is already planning ahead. Its plans include:

• Work with building management to market the DSL service to their tenants.
• Have an experienced sales force ready to market the service when it goes live.
• Deploying integrated DSL Access Routers (DSLARs) in both buildings, allowing allows Log On America to provide robust DSL services while minimizing the amount of equipment required.

MTU applications represent a lucrative market because Log On America can provide the buildings' tenants with dedicated, high-speed Internet access at a fraction of the cost of T1 lines. In addition, the in-building service provides Log On America with a competitive advantage over other local ISPs and telephone companies.

Many of the buildings' tenants are already Log On America customers, purchasing services ranging from Web hosting to Internet access. When DSL is fully deployed, the company can provide these businesses with another value-added and cost-effective service. With the MTU solution in place, and with building management support, Log On America is poised to reinforce its position as the preferred supplier of Internet services to these customers.