PC giants work with telcos on DSL

The effort by Compaq, Microsoft, and Intel to push higher bandwidth isn't surprising, given that the Internet is seen as the growth engine for the industry.

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The largest and most influential companies in personal computing are reportedly working with four of five regional Bell telephone operators to develop hardware and software for high-speed connections to the Internet.

The New York Times cited executives involved in the venture, which it said is slated to be unveiled next week at a communications conference in Washington.

Yet the news that Compaq (CPQ), Microsoft (MSFT), and Intel (INTC) How real is DSL? want to push higher bandwidth over existing phone lines isn't much of a surprise, given that delivery of more Internet information is widely seen as the engine for future growth in the computer industry.

In addition, industry watchers point to several hurdles to the rapid deployment of the technology--the various flavors of which are known as DSL, or digital subscriber lines.

Skeptics wonder if the phone companies--also known as regional Bell operating companies (rBOCs)--that control the infrastructure will have the incentive or the nimbleness to step up and serve high-bandwidth customers.

"Given the miserable track record that rBOCs have had with advanced services in the past, especially with ISDN, I can't imagine they'll do better with DSL," said Barry Fraser, staff attorney with consumer watchdog Utility Consumers' Action Network, which has been a vocal critic of Pacific Bell. "We've got a dinosaur maintaining the phone lines, and the question is if that dinosaur can move quickly."

But the rBOCs have been around this block before, at least according to one former Pacific Bell employee who now works as an analyst.

"The providers have learned a lot of lessons from ISDN," said Paula Reinman, senior broadband consultant at TeleChoice, about the telcos' laggard efforts in that service. "DSL is a complex data service that needs to be packaged for telecommuters, small businesses, and the work-at-home market."

The high-speed service needs to be bundled with Internet service and equipment, and company staff need to be trained to maintain, market, and answer questions about the new technology, Reinman added.

Another stumbling block involves the lack of standardization on the DSL front, which has resulted in various flavors of the technology currently rolling out in different regions.

A meeting of the United Nations' International Telecommunication Union next month in Geneva, Switzerland, should help clarify where the standards areSpecial Report: DSL: New kid on the block going, according to one observer who plans to attend. A December white paper that recommends the development of an easy-to-install DSL service obtained by CNET's NEWS.COM today is signed by the three PC heavyweights, as well as all five Baby Bells, Sprint, GTE, and Bell Canada.

But agreement upon a common hardware-handshake protocol to users of different DSL flavors communicate with each other might not come until this fall. That timetable would make a goal of widespread DSL service by Christmas this year a bit farfetched, said Ken Krechmer, technical editor of Communications Standards Review.

Once a handshaking protocol is decided, manufacturers are likely to offer equipment that "speaks" all different flavors of DSL, noted Krechmer.

"There will certainly be manufacturers who give you all the options," he said. "[This protocol] is extremely important from the customers' viewpoint. I'm hopeful it will be determined out of the October meeting, which means that the Christmas deadline is more [about] public relations than technically sensible."

To wit, the timing of the news on the DSL effort couldn't be better, as cable modem services have gained considerable momentum and also are meeting at a New Orleans trade show this week to discuss their strategies for the Internet.

Cable providers competing with the nascent DSL services have aimed to rebut many of the claims made about the high-speed phone connection. For example, @Home says that DSL is generally four to eight times as expensive and that it doesn't deliver nearly the amount of bandwidth as its own cable modem service.

All parties do agree that DSL, which sends high-bandwidth signals over existing copper phone lines, is indeed viable. There are certain limitations, however. As it stands, subscribers need to be within two or three miles of a central switch, and the line needs to be clear of certain electronic devices that boost voice transmission but impede data transmission. Given these conditions, about 60 percent of existing customers can use DSL with the first generation of equipment, estimated TeleChoice's Reinman.

The phone companies will also have to install special equipment on their networks, something that worries Krechmer.

"They'll have to make changes at their end, and that puts us back to the fact that they've shown themselves to be the world's worst entrepreneurial organizations when it comes to deciding which technologies to use to enhance their customers' communications," he said.

But if the rBOCs involved all sign off on the Compaq-Microsoft-Intel plan, at least it reflects their interest right before the Geneva ITU meetings, Krechmer said.

Texas Instruments (TXN), one of the largest suppliers of DSL chipsets, is expected to make an announcement next week regarding its work on "lite" DSL technologies and may also join forces with Microsoft, Compaq, and Intel in promoting the technology. In November, TI purchased Amati Communications, which has significant intellectual property rights in building-block technology used by DSL modems.

In addition, 3Com (COMS), the largest worldwide vendor of modems in the retail market, may also to join forces with the PC-telco group.

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