Hellerstein & Associates logo

For Immediate Release/August 1999

Contact: Glenn Bischoff (312-559-4636; gbischoff@iec.org

Business applications, not consumer demand, to drive growth of DSL deployments

But regulatory and interoperability issues are blocking progress; "A real can of worms," says author of new IEC report on the future of digital subscriber line technologies

CHICAGO–An all-too-familiar bugaboo–regulatory issues–has jumped into the path of digital subscriber line (DSL) deployments says a leading telecommunications industry researcher.

Judith Hellerstein, president of Washington, D.C.-based Hellerstein & Associates, and author of a new International Engineering Consortium (IEC) research report entitled The Future of Digital Subscriber Line Technologies: Business Drivers, Strategies, and Markets , theorizes that DSL would be much more widely deployed at this juncture if the regulatory climate was clearer.

One of the key issues concerns line sharing. Without it, says Hellerstein, customers requesting DSL service are forced to purchase a second line for their data transmissions, driving up costs and ultimately making it harder for the CLECs to compete with the incumbents.

"It’s hard to say whether the government will mandate line sharing," explains Hellerstein. "What it has said is that if there is even one incumbent that is successfully offering line sharing, then there’s no reason why the other companies can’t do it. And there is one ILEC–PAC Bell–that is doing it. This has opened a regulatory can of worms."

Another issue concerns what Hellerstein describes as the "control over the bottleneck."

"There have been a lot of problems," she explains. "The business market has been slowed because of the difficulty of co-locating in the central offices. The ILECs own the central offices; CLECs need access to the DSLAMs and the copper wires that are attached to it.

"Even though laws are in place that allow CLECs to go into the central office, place equipment there and attach themselves to the local loop, the ILECs have been challenging them on this, which is delaying the whole process."

The good news, according to Hellerstein, is that the Supreme Court has affirmed the Federal Communications Commission’s authority on such regulatory issues. "There is a light at the end of the tunnel … the can of worms is almost empty," she says. "In about 18 months we should see an interoperability standard and a consensus on how to deploy the technology."

And seemingly not a moment too soon, as Hellerstein reports that businesses of all sizes and types are turning to DSL as the preferred means of providing the fast-access services their employees require.

"DSL offers the same productivity of a T1 line, at less than half the cost," she explains. "The technology is also a lot cheaper than an ISDN line. Where $150 a month for faster speed might be out of the ballpark for a residential user, it’s well within the realm for a business user."

That’s because the way companies do business is changing. For instance, claims Hellerstein, the number of telecommuters nationwide is rising as companies search for more attractive ways of recruiting people, and as many companies discover that it’s too expensive to have those employees on site. Government figures support this claim. According to the U.S. Department of Transportation, 11 million people telecommuted in 1997, the most recent year figures are available. Most telling, says Hellerstein, is that the Transportation Department had predicted as recently as 1995 that roughly half that figure–6 million workers–would be telecommuting in 1997.

"A lot of things that people work on in the office, such as multimedia presentations, that are fast-access in the office, take a year and a day to download when you’re away from the office and using a non-DSL, 56K ‘small pipe,’" Hellerstein explains. "With DSL, telecommuters–or business travelers for that matter–can gain access to a corporate local-area network (LAN) or other internal fast-access network. In fact, many hotels are installing digital subscriber line access multiplexers as a way of attracting business travelers.

"The bottom line is that businesses are much more willing to pay for customer service and for a guaranteed level of service. This is one of the big reasons why business demand for DSL services will eventually outstrip consumer demand."

While it seems crystal clear that the demand for DSL services will grow at a rapid pace over the next several years, what is significantly less certain is whether DSL deployments will be able to keep pace with this demand. One of the biggest reasons for this, according to Hellerstein, is a lack of consensus among service providers concerning interoperability of the various DSL technologies.

"Businesses generally require symmetric DSL (SDSL) because when you’re dealing with electronic commerce or posting things to a LAN, or maintaining web servers, you need as much bandwidth upstream as you do downstream," explains Hellerstein. "Consumers on the other hand are primarily interested in downloading things, so for them, asymmetrical DSL (ADSL) is sufficient."

The problem is that SDSL and ADSL are incompatible technologies that can and will get in each other’s way. "As DSL becomes more widely deployed, there’s going to be a problem with the binder pairs (groupings of telephone wires within a larger cable)," predicts Hellerstein. "If you put ADSL in the same binder pair as SDSL, they will interfere with each other, which will really affect speed."

Consequently, says Hellerstein, a need has developed for spectral mapping and interoperability testing of these technologies, as well as development of industry-wide standards to ensure compatibility. The work has been slow to develop, however.

"One of the issues is that technology is developing too fast for standards bodies to keep up," says Hellerstein. "Generally what happens is that businesses develop a technology, put it out on the market and then the marketplace figures out a use for it. Then standards develop around that use.

"The data CLECs are rushing DSL technologies to market because they see this as a great business opportunity. The RBOCs and other ILECs are responding to this in a big way, because they don’t want to be left behind and see the whole market go to the data CLECs. What comes into play is something I call the 'first mover advantage'–whoever gets there first gets the toe-hold."

These issues and more are addressed in the IEC’s The Future of Digital Subscriber Line Technologies: Business Drivers, Strategies, and Markets research report, available from IEC Publications. Analyzing one of today’ most important topics to the telecom and information industries, The Future of DSL provides an overview of DSL deployment and explores the forces driving the rapid growth of broadband and high-speed access in homes and businesses. The report presents the following information:

More information on the Future of Digital Subscriber Line Technologies: Business Drivers, Strategies, and Markets research report can be obtained by contacting IEC Publications (312-559-3730); publications@iec.org or by visiting www.jhellerstein.com/pubs.html .

The International Engineering Consortium (IEC) is a non-profit organization dedicated to catalyzing positive change in the information industry and its university communities. Since 1944, the Consortium has provided high-quality educational opportunities for industry professionals, academics, and students. To support a worldwide need, the IEC has developed free on-line Web-based tutorials. The IEC conducts industry-university programs that have substantial impact on curricula. It also conducts research and develops publications, conferences, and technological exhibits addressing major opportunities and challenges of the information age. More than 70 leading, high-technology universities are currently affiliated with the Consortium. Industry is represented through substantial corporate support and the involvement of many thousands of executives, managers, and professionals.

Judith Hellerstein is the president of Hellerstein & Associates, a research group specializing in market analysis, competitive intelligence, and regulatory analysis of telecommunications, broadband access, and wireless issues. She has more than 10 years experience in business and competitive analysis in the telecom and technology marketplace. Ms. Hellerstein has written extensively on telecommunications, competition policy, broadband access, and wireless issues both for clients and for trade and academic journals.


Click here to return back to the main press page