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Net bottleneck spurs lawmakers

A California State Senate committee is meeting with Silicon Valley firms and phone carriers to hear their ideas for increasing Internet bandwidth.

California lawmakers are catching on that Internet access could be much faster.

The Senate Committee on Energy, Utilities, and Communications is meeting today with Silicon Valley companies and phone carriers to hear their ideas for increasing Net bandwidth for the state's consumers, schools, government agencies, enterprises, and health care providers.

The hearing comes on the heels of major announcement that promises to push the deployment of one high-speed solution, DSL (digital subscriber line). This technology maximizes the potential of regular copper phone lines by essentially splitting one line into three pipes: one for voice and the other two for sending and receiving huge packets of data at speeds roughly 30 times faster than 56-kbps modems.

Last month, Intel, Microsoft, and Compaq said they would team up with US West and SBC Communications to make DSL a widespread reality. (See related story)

SBC is the parent of California's main phone carrier, Pacific Bell, which has invested heavily to roll out a different technology, ISDN (integrated services digital network) . Pac Bell also has fought regulatory battles to raise rates for its ISDN service, which was plagued by customer complaints last year, although the telco insists service is improving. Both DSL and ISDN promise faster data transmission than modems. However, DSL is faster and doesn't require the complicated installation of additional equipment at the user's location, as ISDN does.

And DSL is taking center stage at the hearing, which is charged with investigating how the state can help speed up the delivery of graphics-rich Web pages, for example, or telemedicine applications.

Despite the DSL consortium's launch, state Senate members are expected to hear arguments from PC chipmakers and cable Net access providers that telephone carriers have stifled the growth of DSL by not upgrading their local switch centers to handle increased data traffic--thus making those industries' advances less useful. However, telcos have argued that the costs are too high for them to do it alone. The committee will listen to all sides in the hopes of finding common ground.

"The slow pace of improvement may have a variety of causes: the telephone companies may not perceive sufficient demand, technical challenges may be too tough, economic hurdles too high," the committee said in a statement. "Addressing the gap between the demand for faster speeds by users and the capabilities of the telecommunications network is the subject of [this] hearing."

Computer industry trade groups, local phone and long distance providers, and city officials also are testifying about either their need for more bandwidth or what they are doing to solve the problem. Some are asking for state action.

"While the phone companies have been pretty innovative, the rapid deployment of technology hasn't paid huge dividends," Ted Jenkins, chairman of the California Manufacturers Association and a vice president of corporate licensing at Intel, said yesterday.

"I would hope we could find some alternatives such as more regulatory rollbacks in return for competition that will help roll out technology at good price points," he added. "Or legislation that would provide better certainty that the service providers that step up to do this would be able to get a better return. We're interested in a solution that delivers the technology at a price that most Californians would be interested in."

Others say regulation is not the answer. Pacific Bell has a "monopoly" on the local loop, so it should have to upgrade it or let others compete to do the job, said Regina Costa, telecommunications research director for TURN (The Utilities Reform Network).

She said TURN's representative will try to deter lawmakers from going with any plan that calls for taxpayers to foot the bill. "In this case, a market-based approach is best. If competitors had a fair chance get into the DSL market, they probably would," she said. "The worst thing would be for Pacific Bell to get government funding to help them--then Californians will have to pay for it."

Pac Bell is arguing today that it is "bullish" on DSL technology.

"We are testing it in a limited trial as we speak. It obviously requires a substantial investment. In order for us to do that responsibly, we have to do it cautiously," Michael Heenan, a spokesman for Pac Bell, said today.

Pac Bell still has to study DSL, he added: "We have to learn what demand the marketplace will generate, and a price point that will sustain the technology. We've also got to realize a return on the investment."

But breaking down the barriers to quick deployment of DSL in California could be in the hands of the state Public Utilities Commission, according to Pac Bell. Last week the telco filed a motion with the commission asking that it throw out regulations adopted before the telco industry was deregulated in 1996.

One such rule requires that Pac Bell split its earnings with customers after hitting a certain profit margin. Pac Bell would like the green light to keep its profits, which it says could be invested in new technologies such as, say, DSL.

"These regulations are designed as substitutes for competition," Heenan said. "But now there are 128 companies authorized to provide telecommunications services."