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Jetstream offers voice-by-DSL option

A new Silicon Valley company wants to help boost competition in the local phone markets by using technology most associate with high-speed Net access.

A new Silicon Valley company wants to help boost competition in the local phone markets by using technology most associate with high-speed Internet access.

Jetstream Communications, based in San Jose, California, is rolling out a system for voice and data communications that it is marketing to small alternative phone companies trying to break into the local markets.

These companies have already done a fair job of competing for big business accounts in metropolitan areas, where they can recoup the cost of installing new equipment with large accounts and tightly clustered subscribers.

But the smaller local phone companies have had a difficult time edging into areas where customers are more spread out. This is where Jetstream wants to make its entry.

Voice over DSL allows a small phone company to offer a dozen or so lines, as well as an always-on high-speed Net connection, using just the single copper line that already links a building to the local phone network. This is far cheaper than installing a fiber network into buildings or neighborhoods--the other alternative that many companies are using in densely populated areas.

"This reduction enables [competing local phone companies] to rewrite the rules of local telephone service delivery, and enables small businesses to benefit from the same competitive local environment as large enterprises," said David Frankel, Jetstream's cofounder and chief technology officer, in a statement.

Jetstream will provide the architecture for the system, linking components from several other vendors with hardware of its own that will combine voice lines and data streams from an internal business network. Another Jetstream component will then separate the voice and data streams once they reach the central phone company's switching office.

Depending on what pieces customers choose, the system will be able to handle from 2 to 16 phone lines over a single copper pair wire. Startup costs will range around $3,100 for an 8-subscriber line, with costs per phone line then averaging about $45 dollars, company executives said.

Analysts said the company was making the right moves in a market that is just beginning to be tapped by hardware vendors.

"They're an early adopter of this strategy," said Achmad Chadran, senior telecommunications analyst with the Aberdeen Group. "This is part of the business model that really is part of the next generation platform. This decreases the dependence of local carriers on the incumbent carriers."

Jetstream is likely to have more competitors as the DSL market heats up, Chadran added, but is positioning itself at the early stages of a market that is bound to grow quickly.

The Jetstream architecture, dubbed the "Unity" system, is in testing phases now, company executives said. The hardware components are scheduled for deployment in the second quarter of 1999.