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DSL Takes Its Hits

Like WAP, DSL has picked up a few nom de plumes of its own. Disappointing Subscriber Line and Digital Slow Line have shown up in letters to the editor of several industry magazines. But then, DSL—it actually stands for digital subscriber line and provides a high-speed connection to the Internet and corporate intranets—has been a big disappointment to millions who can't get DSL service, as well as to the millions who are getting it.

One consumer watchdog group, the New Networks Institute, estimates that as many as 75% of the DSLs have run into installation or service problems in some areas. But love it or hate it, DSL is the primary way most people get broadband access at home or in small offices. A survey of 150 readers of Network Magazine in 2001 indicated that most people hated it, with 55% reporting problems during installation and 35% declaring it a "major headache." Was the service delivered on time? Forty-seven percent said no. Thirty-two percent of the survey's respondents also said the speed of the service was less than advertised. The top rumor coming out of 2001 DSLcon, the industry's own trade show, reported Telephony magazine, was that "Technology has fallen victim to the hype machine." DSL even has its own Web sites to register complaints about DSL providers around the country—http://www.dslreports.com and http://www.2wire.com.

Despite the horror stories about installation problems, lack of access, and articles in the business press about independent DSL providers struggling to stay alive, market research continues to be generally positive, projecting that by 2003, DSL will exceed installations of all other broadband Internet access technologies combined, including leased lines, frame relay, ATM, cable modem, satellite, and wireless.

Others aren't so sure. DSL is a remote access technology that uses the existing telephone copper wiring infrastructure. It promises high bandwidth (meaning it's fast, at least 10 times faster than dial-up modems while leaving the phone line free for regular calls) and low cost—down to $20–$30 a month in some areas. It has another advantage to the user in that it is "always on," so there is no waiting for a modem to dial and connect before sending or receiving data. And there are no delays when a network connection is made, enabling DSL providers to use new Internet "push" technologies to send information to the subscriber's computer as soon as the information is available.

So, what's the problem? For one thing, customers must be within 10,000 to 18,000 feet of a central office to get the service. There are also aging copper networks to contend with. Industry estimates of the percentage of phone lines that can handle DSL range from 30% to 60%, which means the service may not be reliable. Installations often fail or simply won't work with some subscribers' wiring.

Another big hangup is that installation often requires working with at least three companies. It usually starts with buying the service from an Internet Service Provider, or ISP, which contracts with a DSP technology company to make the connection. The DSL specialist then must work with the local telephone company to handle some elements of the installation. DSL subscribers complain that when something doesn't work, these companies pass the blame and it can take weeks to fix the problem, if then. It's all about money. Several independent DSL providers have cancelled their expansion plans, revised earnings estimates, cut staff, or simply gone bankrupt.

One of the bankruptcy group, NorthPoint Communications, believes it was blindsided when Verizon Communications decided not to merge with NorthPoint, a deal that would have pumped $800 million into NorthPoint and kept its service intact. Another DSL provider, Rhythms NetConnections, was rumored to be making a bid for NorthPoint's customer base at approximately the same time that Rhythms hired investment banker Lazard Frere & Co. to look into its financial options, including the sale of the company. NorthPoint couldn't wait; it sold its equipment to AT&T. At about the same time, Excite At Home Corp., Microsoft, and Nippon Telegraph & Telephone's Verio business unit, which bought DSL access from NorthPoint, announced they were ending their DSL service, at least for the time being.

The big U.S. carriers, like SBC, the nation's leading DSL provider, Verizon, and some ISPs continue to push DSL as the best way to get homes and businesses connected. SBC hopes to hook up 80% of its customers to DSL by the end of 2002 through so-called neighborhood gateways—sort of subcentral telecom stations—to extend the currently limited reach of their central offices. Even technology hounds such as Stephen H. Wildstrom, BusinessWeek's technology columnist, are frustrated. "I'm disappointed," he wrote in December 2000, "but not surprised, to be stuck among the 95% or so of Americans without high-speed Internet service. Despite all the hype and talk of broadcast-type video and CD-quality audio over the Net, we are a dial-up nation, and we are likely to remain that way for a long time to come."

Still, DSL continues to sell well among consumers who need a high-speed alternative to their current dial-up service and are not price conscious. And it's strong internationally. Most analysts believe that DSL will continue to do well, particularly among consumers whose choice is between DSL and cable modems. They're competitively priced, and cable modems use the same type of wire that brings cable TV into the home; cable providers usually require that cable modem subscribers also sign up for the cable TV program service.

The cable guys also want to be your home network. CableLabs, mentioned earlier, has published several documents outlining specifications for quality of service and network architecture to be used when networking a cable connection in the home. The specs are part of the industry's effort to lay a technical groundwork to support home networking for the growing list of applications for the home and small offices, such as multimedia. It's also a clear attempt to better compete with DSL service providers. (Curiously, a study by the Strategis Group found that a greater percentage of cable modem users than DSL users are satisfied with their service based on several measures, including overall quality, access speed, and "always on" connectivity. The group also found that potential churn among DSL users—the rate at which people change or cancel their service—is nearly twice as high as that of cable modem users, 15% versus 8%. "Therefore," it says, "while DSL providers may acquire more customers due to their superior marketing efforts, they may eventually lose a higher percentage of customers to other DSL providers or to other access technologies than their cable modem counterparts."

When you can get it, and when it works, DSL can offer some interesting applications, like voice-over-DSL, high-speed Internet access, online gaming, video streaming, and conferencing. With more than 400 members, the DSL Forum is busily hyping cooperation among hardware and software vendors and service providers to enhance interoperability between different network's equipment, a move that will improve installation and cost effectiveness.

To help ease the pain of installation, DSL providers are pushing something called self-provisioning. That is, customers will be able to plug the DSL modem into an outlet and a phone line will configure itself by connecting and talking to the central office. The three-mile barrier is another problem, but the DSL camp thinks it may even have a way around that, with potential deployment of service up to five miles from a central office, possible in many areas. Meanwhile, new and emerging higher-speed versions of DSL, with longer range and improved performance, are in the works and may mean writing new technical standards. And at least five industry organizations, the DSL Forum, the Institute of Electrical and Electronics Engineers (IEEE), the Geneva-based International Telecommunications Union, the ATM Forum, and the American National Standards Institute (ANSI), are working the DSL standards issue.

The bigger problem is selling broadband, no matter what the technology, to consumers, particularly in a weakened economy and in an environment where most people use the Internet mainly to check their e-mail. Lower prices will help. So will an improved product and service.

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