Several communications and networking equipment companies are developing technology to help local phone companies deliver high-speed Internet access to suburban homes and businesses, which have inadvertently been blocked from offering the desirable Net access lines by older network gear designed for voice connections.
Advanced Fibre Communications, a Petaluma, Calif.-based telecommunications equipment maker, this week unveiled its first products designed to circumvent the problems at the Supercomm 2000 trade show in Atlanta. Others, such as Hubbell subsidiary Pulsecom and communications equipment heavyweights Alcatel, Nortel Networks and Lucent Technologies, are testing similar systems.
AFC's new systems and similar technologies being built by other competitors can extend the range of digital subscriber line (DSL) systems by miles. Although DSL still is limited by distances of roughly three miles over the standard copper phone wires, the ability to deliver DSL beyond small technology facilities, called digital loop carriers (DLC), allows communications companies to extend fiber optic wires deep into neighborhoods.
If fiber is extended to a community, say 20 miles or more away from the phone company's central office switching facility, the distance limitations are virtually eliminated despite the ongoing three-mile copper wire limit. Carriers must simply install fiber optics and DLC systems deeper into the communities.
The technology is but one of many intended to solve the so-called last-mile issue by providing a high-speed connection into homes--a central theme of this year's Supercomm telecommunications summit. Alcatel, CopperCom, and Nokia, among a bevy of equipment makers, are showcasing new strategies and technologies intended to tackle the demand from service providers for high-speed connections to the Net.
However, phone companies often try to service suburban consumers and offices in a cost-effective manner by connecting local phone networks in faraway communities with fiber optic wires and DLCs that aggregate and regenerate voice signals. That method can deteriorate connections made over distances greater than about three miles.
Although the network design works well for voice, it prevents a significant portion of the population from being able to get increasingly popular high-speed DSL service.
"There's a significant amount of the market that's been unable to get high-speed Internet access (via DSL)," said Mike Lowe, senior industry analyst at Cahners In-Stat Group, a market research firm.
"For the user (the new equipment) means they'll finally be able to get all the good things that go with a DSL connection, such as faster Internet access and the ability to work from home," Lowe said. "From the providers' perspective, it's a whole new revenue opportunity."
DSL is one of the two leading methods of high-speed, or "broadband," Internet access, an emerging market brimming with demand, revenue opportunities and competition. But distance limitations could severely set back DSL, a technology with huge potential. If the problem isn't solved by phone companies, the issue could also draw regulatory scrutiny as federal policymakers continue to be concerned about the lack of Net access in rural and remote markets, the so-called Digital Divide.
Industry experts generally believe about 20 percent to 40 percent of all U.S. phone users are serviced by DLC systems, a particular problem for Baby Bells such as US West, BellSouth and Ameritech, which have a higher proportion of suburban customers.
"The industry has been looking for solutions to the DLC problem for at least the past year and a half, ever since the (local phone companies) got serious about DSL," said Joe Laszlo, a broadband analyst at market research firm Jupiter Communications. "It's a very good sign for the long-term prospects of the industry that several companies are coming out with (the technology)."
"The phone companies faced a situation where 50 percent to 60 percent of subscribers could get DSL, but that still left 40 percent of their customers without," Laszlo said. "That's a natural target for cable."
DLC technology combines multiple local voice calls on a few fiber optic connections or other transport lines in order to efficiently carry them back to the phone company's central office switching facility. The practice reduces the equipment needs and the cost of serving remotely located customers.
But DLC systems act as a roadblock to DSL Internet connections. To make matters worse, digital loop carrier systems frequently serve new suburban housing tracts or large office buildings in growing outlying metropolitan areas, thereby limiting service to a pool of ideal potential residential and small and medium-sized business customers.
The demographics and data demands of such customers suggest they would account for a larger percentage of the DSL market.
"It may be 40 percent of total lines, but it's probably 60 percent of the customers they want to serve," Kurt Krueger, vice president of competitive local exchange carrier (CLEC) sales at Advanced Fibre Communications (AFC).
The DSL limitations make the phone companies' potential customers ripe targets for competing cable modem service providers such as Excite@Home and Road Runner and their respective cable operator parent companies such as AT&T and Time Warner.
"If you can't serve them, who will?" Krueger said. "Not only are you leaving money on the table, but you're giving those customers up to your arch rival."
New products such as AFC's new DMAX1120 and EMAXplus gear, which integrate digital loop carrier systems with DSL technology, aim to solve the problem for carriers. Meanwhile, DSL chipset manufacturers are developing semiconductors that have lower power consumption requirements, which are expected to reduce overheating and cooling problems previously associated with DLC systems.
The industry has been waiting for the new DSL gear for some time, and is anxious to begin installing it and serving customers that carriers once couldn't reach.
Only about 45 percent of US West customers currently qualify for its primary variety of DSL, but executives believe the new DLC solutions US West is testing will increase their DSL qualification rates by 15 percent to 20 percent.
"We've had a lot of fast growth in the communities outside of our metropolitan areas. It just so happens that a lot of the newer neighborhoods are served by DLCs, and those customers are more likely to buy and spend more on data services," said Larry Yokell, director of product development for US West's Megabit Services DSL unit.
Yokell acknowledged that upper income workers may consider cable modems if DSL is not available in their upscale neighborhoods.
"We need to get in there first and make sure we get the most affluent customers as quickly as possible before they opt for competitive offerings," he said.