|DSL: Coming Soon To Your Local Loop
Our industry thrives on hype. Remember video on demand the telco vision of a
virtual video store offering an entire library of movies, ready to be delivered direct to
your TV 24 hours a day, seven days a week, simply by clicking on your remote? Im
still waiting for someone to pass me the remote on this one. How about network computers,
the anti-Windows holy grail of Larry Ellison and Scott McNealy? Have you fired up your
diskless, Java-based workstation recently?
These and other ballyhooed technologies seem to have imploded under the weight of their
own hype, leaving behind only stranded investments (not to mention well-compensated
consultants, lawyers, and accountants). But failed technology concepts dont
automatically die. Sometimes markets change, new applications emerge, and vendors become
more aggressive causing yesterdays failure to mutate into tomorrows
So it is with digital subscriber line (DSL) technology. Originally conceived of as a
way for the telcos to compete with cable companies in video, DSL has now found its place
as a high-speed technology for Internet access. But thats not all. Using some of the
latest DSL technology, you can offer multiple voice channels on top of the data. The buzz
on DSL was already strong. Now, with voice services, it threatens to go off the charts.
The difference is, this time there really is substance underneath the hype.
APPROACHING CRITICAL MASS
Im bullish on DSL for several reasons. First, a critical mass of vendors and service
providers back it. Also, DSL can address real market needs. And even Wall Street and
Washington regulators are promoting it in their own ways. None of this could have been
said about, for example, video dial tone in the mid-90s, or ISDN in the
Consider the service providers. Huge incumbent local exchange carriers (ILECs)
including Bell Atlantic, SBC, and GTE have announced
aggressive rollout plans for DSL. The word plans is key. The ILECs are great
at announcing ambitious plans; follow-through is another story. The numbers show that
actual ILEC deployment is quite low, roughly 220,000 lines according to the most recent
data from Telechoice. Is this another ILEC head fake? Is DSL d�ja vu all over again? To
use my favorite example, is this another video dial tone?
I think not. For one thing, there are too many other forces at work. For example,
regardless of what the ILECs do, the new DSL providers like Covad,
NorthPoint, and Rhythms are quickly moving forward. Also, they are being
aided and abetted by the FCC, which desperately wants real competition in broadband, and
by Wall Street, which sees a tremendous upside to the entire broadband market. The recent
FCC ruling on line sharing (The
Advanced Services Third Report and Order, November 18, 1999) may have an even more
dramatic pro-competitive impact, going beyond unbundling local loops to unbundling the
spectrum in those loops. Consider this scenario envisioned under the FCC ruling: An ILEC
providing baseband POTS, with competitive carriers offering other services on the higher
frequencies all over a single twisted-pair loop.
And lets not forget the cable companies who already have a lead in the
residential broadband market. With AT&T making a huge
play here, the ILECs have to be hearing threatening footsteps. Put it all together and
its clear that this time, the ILECs must actually make good on their plans. For the
first time, they have real competition and their market is at risk. I can tell you,
customers arent going to wait. You dont need a market survey to know that
everyone wants higher-speed Internet access. I dont know about you, but Im not
going to wait for my local telco to offer DSL; Im going to the first guy who gives
me a good deal. (In my case, it was the cable company. So far, the service is great!)
VOICE OVER DSL: THE KILLER APP
You would think that the demand for high-speed Internet access would be enough to spur
rapid DSL deployment. This is partially true, but it is increasingly difficult for CLECs
to get enough margin on data services when they have to lease circuits from the ILECs at
or near the roughly $39.99 price the market demands. Enter Voice over DSL (VoDSL).
Innovative startups like Jetstream, CopperCom, and TollBridge
have developed technology that allows a single DSL circuit to carry up to 16 voice
channels in addition to providing high-speed Internet access.
The service relies on an integrated access device (IAD) at the customer premises and a
VoDSL gateway in the network. At the customer site, the IAD combines voice and data
traffic into a stream of ATM cells that are sent to the CLECs ATM switch. The switch
sends the data traffic out over the Internet and the voice traffic to a VoDSL gateway. The
gateway connects to the circuit-switched public network infrastructure using a standard
GR303 interface to the Class 5 switch.
Notice I said nothing about IP. This is not voice over IP. The voice traffic goes out
over the regular old circuit-switched network. The customer has full access to standard
Class 5 switch services such as CLASS, Centrex, and caller ID. The only funny stuff occurs
between the subscriber premises and the VoDSL gateway. You can see why the industry is
salivating over VoDSL, and why it can be a revolutionary service for the SMB market. VoDSL
is another reason to be bullish on DSL.
HURDLES TO JUMP
But the road isnt all smooth. Although there are two standardized versions of
asynchronous DSL (ADSL) G.DMT and G.lite carriers and vendors are pursuing a
bewildering array of standard and non-standard versions for different markets and
geographies. At a recent DSL conference, one of the experts noted there were 17 different
flavors of DSL currently in the marketplace. Voice over DSL is not standardized at all.
The result is market confusion, lack of interoperability, and delays in achieving scale
economies, volume pricing, and widescale deployment.
I havent even mentioned the fact that significant segments of the population may
not be able to get DSL under any circumstances because they are too far from the central
office (CO), or because of line impairments, digital loop carrier systems, or other loop
issues. Then there is the issue of pricing. DSL prices vary widely from provider to
provider, with no consistency in the cost elements such as installation, monthly service,
CPE rental or purchase, and other aspects of the service. Again, this means more market
Lets take a reality check. Today, the DSL market in the US is miniscule, as
you can see from the chart. But Im confident the hurdles will be crossed and we will
see a rapid growth in the service. Who wins? First, the consumer, who gets to trade in
busy signals and V.90 connections for always-on broadband access. The small business owner
also wins, getting a big-company, T1-quality pipe for a fraction of the cost. Another
winner is the service provider, for whom DSL is genuine alchemy, turning copper into gold.
And dont forget all those investors who have managed to place bets on the
high-flying broadband startups.
The bottom line? There are only 274,755 DSL lines in service today but
thats 274,755 more than video dial tone ever reached. DSL is for real. Now pass me
the popcorn and the remote.
Jim Machi is director of product marketing, Internet Telephony, for Dialogic
Corporation (an Intel company). Dialogic is a leading manufacturer of high-performance,
standards-based computer telephony components. Dialogic products are used in fax, data,
voice recognition, speech synthesis, and call center management CT applications. The
company is headquartered in Parsippany, New Jersey, with regional headquarters in Tokyo
and Brussels, and sales offices worldwide. For more information, visit the Dialogic Web
site at www.dialogic.com.