Recent technical advances in DSL equipment have vastly transformed the prospects for telcos and other users of telco wires in the intensifying battle for broadband service customers.

Support for self-installation, including use of "splitterless" digital subscriber line systems, and new miniaturized components that make it possible to deploy DSL into remote areas which were unreachable heretofore, are the leading contributors to the improved prospects from the DSL technology side.

And on the applications side, the emergence of packet voice over DSL and new Web entertainment programming pegged to DSL access rates have expanded the range of services that providers can offer end users over the platform.

Figure I: Former RBOC territories, pre-merger mania. GTE is not depicted, as the company has holdings in numerous locations around the U.S.

One clear sign that digital subscriber line technology is now a force to be reckoned with is the expansion of telco commitments to DSL facilities deployments throughout the past year. Where the major incumbent local exchange carriers had indicated at the start of '99 that by year's end they would have about 20 million lines qualified to receive DSL services, the actual number of qualified lines, based on revised commitments as the year progressed, now stands at about 40 million, not counting the additional millions that have been equipped for DSL by the CLECs.

"With competitive local exchange carriers and cable modem operators making strides in broadband access markets, the ILECs couldn't afford to wait any longer to make their move," notes Adrianne Brandt, a consultant with The Strategis Group. "A lot of ILECs are deploying DSLAMs (DSL access multiplexers) in COs on a large scale before moving to market the services aggressively, because they don't want to be in a position of telling the customer service isn't available once they begin marketing."

One clear inducement to the stepped-up pace of ILEC DSL deployment is the growing use of the platform by ISPs, including, most notably, America Online. AOL has now worked out commitments for use of DSL facilities on a mass scale with Bell Atlantic, GTE and SBC Communications, and is said to be close to a deal with BellSouth.

Shortly after the announcement of its deal with AOL, Bell Atlantic, which hopes to complete its $52-billion merger with GTE by year's end, said it was accelerating ADSL (asymmetric DSL) deployments to where the company's Infospeed service would be available to 17 million qualified residential and business lines served by 700 central office switches by the end of the year. This marks a 100 percent increase over the revised deployment goal that was set in January.

The most dramatic expansion in DSL commitments over the past few months, however, comes from SBC, a latecomer to DSL which only got involved after it acquired Pacific Bell, one of the early leaders in the field. Now SBC has surged to the lead with plans to spend $6 billion in new capital funding for expansion of its networks to accommodate a higher speed and more pervasive version of DSL than other telcos have committed to.

Confronting the multi-service challenge of competitors head-on, the carrier said it would push fiber deep enough into its territories to ensure that by the end of 2002, 80 percent of its customer base will be within reach of ADSL platforms that can deliver full-screen video and multiple lines of packetized voice in the data stream. This translates into the availability of service at operating speeds of 1.5 megabits per second or better to about 80 million people, with about 48 million within reach of a 6 Mbps service, officials said.

SBC intends to extend its new service strategy out of territory as well with plans to become a CLEC (competitive local exchange carrier) offering voice and data over ADSL links in 30 major markets, says Ed Reisner, managing director for technology and product planning at SBC. "We'll start in mid-2000 with Boston, Miami and Seattle and proceed at a pace of one or two additional cities per month from then on," he says.

SBC will install the same ADSL gear everywhere and link all of its markets through a broadband backbone supplied by Williams Communications Inc., although, out of territory, its service data rates will be dependent on existing copper line deployments without benefiting from the deeper fiber penetration planned for in-territory expansion. "We don't have any hard plans to start laying any fiber or copper out of territory," Reisner says.

The ability to deliver ADSL services in territory at data rates of 1.5 Mbps or higher rests on use of fiber to cut the maximum copper link distance to users to 12,000 feet. At 9,000 feet, which will be the maximum distance from the fiber termination points for 60 percent of the customer base served by ADSL, the data rate is 6 Mbps, Reisner says.

Today, the carrier offers ADSL services at distances up to 17,500 feet, which means the data rate falls to as low as 384 kilobits per second, which is the baseline ADSL service rate offered throughout its territories. The carrier also offers a higher-priced ADSL service at 1.5 Mbps to customers who are within 12,000 feet of the central offices where DSLAMs are installed.

The new plans don't immediately affect ADSL deployment plans for this year, which call for installation of DSLAMs capable of delivering services via 10 million lines by year's end, Reisner says. But, in Pacific Bell territory, the company is taking a new step to extend the reach of high-speed data service beyond the 17,500-foot mark by becoming the first incumbent LEC to contract with a CLEC for supply of a DSL service, which, in this case, is something called "IDSL."

IDSL, which gets its label from the fact that it relies on the modulation technique used in ISDN (Integrated Services Digital Networks), is a packet-based system that operates at 144 kbps in both directions over line distances well beyond the 17,500-foot limitation of ADSL. Pacific Bell has contracted with NorthPoint Communications Inc. for supply of the IDSL facilities.

An important factor in the ability of the telephone industry to aggressively market DSL services in the year ahead is the emergence of a new generation of DSLAMs that allow telcos to reach customers served by digital loop carriers (DLCs), notes Claudia Bacco, DSL analyst for TeleChoice Inc. For example, she says, the new Lucent Technologies Inc. DSLAM "sets a new bar for DSLAM performance by doing everything a DSLAM should do in a single, compact box."

"The problem for Lucent is that other vendors who already have significant market share are producing a new generation of systems that accomplish many of the same things," Bacco adds.

This is evidenced in the ability of GTE to deploy its current vendors' latest gear to serve customers who are connected to the central office via DLCs, which are the high-speed lines that extend the reach of central office switches to remote neighborhoods. With 20 percent of its customers now served by lines connected to DLCs, the deployment of this new equipment "will significantly impact the percentage of the market that can receive ADSL services," says Skip Huster, director of wholesale marketing for ADSL products at GTE.

GTE, using the ADSL system supplied in a joint effort by Fujitsu Network Systems Inc. and Orckit Communications Ltd., is also now able to push the baseline service speed up to 768 kbps from the 256 kbps rate it has been operating at through simple software instructions, without changing out any hardware, Huster says. "We also have to raise the burst rate for our frame (relay backbone) system," he notes.

The company, which has been selling modems with installation at a promotional price of $99, has lowered its tariff rate for use of its ADSL facilities by ISPs to $32.95, a drop of 20 percent, with significant discounts offered for volume commitments. Customers purchasing the new 768 kbps Bronze Plus service with Internet access from GTE's Internetworking ISP pay $49.95.

GTE, like most other telcos at this point, has also begun deploying "splitterless" ADSL, which is to say, ADSL gear that adjusts to on-premises line conditions, including use of the line for phone calls. This avoids the need for installing a splitter at the side of the premises and running a second line to the PC.

The splitterless feature was to have been a major selling point for the new G.Lite standard ADSL systems, but the market has proceeded with the rate adaptive and modulation techniques that make splitterless connections possible without waiting for implementation of G.Lite. In fact, even though G.Lite also brings with it smaller, more integrated components based on a new generation of DSPs (digital signal processors) and ASICs (application specific integrated circuits), some telcos appear to be in no rush to move to G.Lite now that they're benefitting from the splitterless, DLC-compatibility and other features of third-generation proprietary systems.

"We'd love to be able to begin deploying G.Lite by the end of the year, but there are still standards issues to be worked out," says Jeff Bolton, director of the ADSL program at GTE Network Services. "G.Lite modems that are compatible with our vendors' DSLAMs (DSL access multiplexers) aren't interoperable with every other DSLAM provider."

Indeed, even though G.Lite is now a standard, interoperability is not guaranteed between DSLAMs of one vendor and customer premises equipment of another, owing to the absence of standards for the applications interfaces below the physical transport layer, notes Strategis analyst Brandt. Telcos are finding that, if different vendors' equipment is used at the ends of the G.Lite connection, the specified transmission distance of 18,000 feet for a 1.5 Mbps data rate is often not attainable, she says.

"The effective transmission distance is more like 12,000 feet," she notes.

As for another purported advantage for G.Lite, "it remains to be seen what G.Lite modems will cost," notes GTE's Bolton. "It doesn't look like there will be a great cost advantage over the modems we're using now, so, if we can provide a low-cost, full-rate splitterless service, the consumer probably isn't going to care whether it's G.Lite or not."

Similar thinking can be found at Bell Atlantic, where the company has already moved to Alcatel's splitterless platform in all newbuild territories and is retrofitting previously-introduced markets with the gear as well.

"We're interested in G.Lite and have done a lot of work in helping to develop the standard, but we're moving now to a splitterless platform that isn't compatible with G.Lite because we don't want to wait," says a source at Bell Atlantic, speaking on background. "We'll go to G.Lite whenever it makes sense to do so."

US West, too, has been deploying a splitterless platform and remains uncertain about the merits of moving to G.Lite in the near term, according to company officials. And at SBC Communications, an evaluation is underway, but "we haven't made any commitments," a spokesman says.

Some telcos who are using splitterless systems say they'll jump to G.Lite as soon as it becomes available. "We're absolutely embracing G.Lite," says Greg Crosby, vice president for high-speed data products at Sprint's Local Telecommunications Division.

Crosby stresses the need for widescale support in the industry to make G.Lite a mass market success. "Turning this into a mass market product means you have to generate demand to get to the right price points," he says, noting that the goal should be to achieve a retail distribution model that is akin to the consumer-friendly approach in cellular and PCS.

"We're trying to get there as fast as we can," Crosby adds. "We have a distribution agreement with Radio Shack in Charlottesville and Las Vegas, where people can come in and test drive the service before they purchase the modems."

BellSouth, with plans to go to G.Lite as soon as the equipment comes on the market this fall, hasn't even bothered with moving to a non-G.Lite splitterless platform, notes John Goldman, a company spokesman. "We'll download software to the switch and, voila!, we'll have G.Lite," he says. "There's no sense spending money on something else."

While the disparities in telco agendas could affect the cost curve on G.Lite, Goldman and other telco executives note that because carriers, unlike cable companies, typically serve entire states, they will have a large enough distribution base to ensure there's a supply of modems compatible with their vendors' G.Lite implementations.

Even where G.Lite isn't in use, there is broad compatibility at the physical layer among telcos' DSLAMs, owing to the fact that most are now using the standardized modulation system known as DMT (discrete multitone), which is also used in G.Lite. This is making it possible for major system vendors like Nortel Networks to supply versatile aggregation systems for deployment at the edges of networks, so that carriers can tightly integrate their DSLAMs with their switches and backbone transport components.

Nortel's Universal Edge module, which can be positioned right on the company's class 5 DMS switch shelf, can be used as a DSLAM that supports not only any DMT-based ADSL system, but other types of systems as well, including G.Lite, SDSL (symmetric DSL) and One Meg, the company's proprietary DSL system, notes Scott Bell, director of product marketing for carrier packet solutions at Nortel Networks.

"Standardization has opened a path to much more efficient, integrated approaches to introducing ADSL, which lowers costs and gives carriers the options to offer multiple service types within a given market area," Bell says. This means there's no reason to anticipate that uncertainties about G.Lite will slow the accelerating pace of DSL deployments in the telephone industry, he adds.

Figure 2: The new landscape, reflecting recent mergers. Note: The BA/GTE merger is still pending.

One of the strongest cases for G.Lite has to do with miniaturization of components. For example, DSL system supplier Copper Mountain Networks Inc., which Dataquest says is the leader in DSLAM deployments for business use, is introducing line cards designed to support the G.Lite DSL standard that employ G.Lite-specific chipsets supplied by Centillium Communications Corp.

"We're able to support 24 ports per line card using these chipsets vs. the four to eight ports that you can do on line cards that are designed for rate-adaptive ADSL (asymmetric DSL)," says Richard Sekar, director of product marketing for Copper Mountain. Copper Mountain, which by year's end will begin shipping G.Lite line cards that can be inserted into its currently-installed DSLAMs, has worked out an interoperability agreement with 3Com Corp., ensuring that all of 3Com's G.Lite customer modems will work with Copper Mountain DSLAMs.

Whether through use of G.Lite or the new generation of proprietary gear, by the second quarter of next year, the introduction of self-installing capabilities will make it much easier for the ILECs to proceed with more aggressive marketing efforts, Brandt says. Already, she adds, there's a significant increase in the marketing efforts, buttressed in part by the fact that more advanced means of qualifying local loop are now available, and in part by self-installation capabilities introduced into vendor modems over the past few months.

Many suppliers have introduced USB (universal serial bus) modems that users can plug into their computers as they would any other modem. "We've seen a tremendous improvement in the percentage of self installations," Brandt says, noting that at US West the figure is now at about 92 percent.

Retail stores are part of the DSL distribution chain, because many suppliers are offering modems that can be directly plugged into computers that conform to the local DSL system supported by the ILEC, Brandt notes. The current approach to marketing and connectivity, where early adopters comprise the overwhelming majority of customers, is no measure of what the approach will look like a year hence, when self-installing technology will be widely available, she says.

"The technology exists to solve the G.Lite problems, and there's a tremendous amount of focus by these big companies on doing that," Brandt says. "I don't believe you can underestimate the power of the ILECs once they've set their minds on accomplishing something."

The telco DSL profile
CarrierData rates (downstream/upstream)Monthly price (transport/telco ISP service)No. of lines provisioned (projected by 12/99)
Ameritech1.5 Mbps/128 kbps$59.9545,000
Bell Atlantic640 kbps/90 kbps49.9517,000,000
1.6 Mbps/90 kbps109.95
7.1 Mbps/680 kbps189.95
BellSouth1.5 Mbps/256 kbps59.955,000,000
GTE768 kbps/128 kbps49.956,100,000
384 kbps/384 kbps99.00
768 kbps/768 kbps135.00
1.5 Mbps/768 kbps210.00
SBC/Pacific Bell384 kbps/128 kbps/49.959,800,000
384 kbps/384 kbps199.00
1.5 Mbps/384 kbps339.00
US West256 kbps/256 kbps49.952,200,000
512 kbps/90 kbps84.95
768 kbps/384 kbps99.95
1 Mbps/384 kbps139.95
7 Mbps/768 kbps859.95
Total: 40,145,000