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Voice-over-DSL getting new lease on life

One of the technological casualties of the telecommunications collapse is gaining a second wind as companies look for cheap ways to offer voice services over the high-speed Net.

One of the technological casualties of the telecommunications collapse is gaining a second wind as companies again look for cheap ways to offer voice services over high-speed Net connections.

Voice-over-DSL (VoDSL), which uses a single regular phone wire to offer the equivalent of many phone lines, once teetered on the edge of mainstream technology before falling back into obscurity. At a time when finding investment capital was easy, start-up phone companies touted it as a way to break into the local phone companies' business cheaply and easily.

That never happened. The bottom dropped out of the telecommunications market, and the start-up network companies found themselves too busy trying to stay alive to test and offer new technology. In addition, the technology did not work quite as well as advertised, analysts say.

But the voice technology appears to be on the cusp of a renaissance. Northeastern phone and data company Broadview Networks is starting to offer the service Monday, with business customers already signed up. AT&T is signaling that it is ready to throw its weight behind the technology as it seeks a new way to connect directly to consumers.

"I believe we are entering phase two of voice-over-DSL," said Teresa Mastrangelo, an analyst with RHK, a communications research and consulting firm. "This year has been where carriers have gone back to vendors asking for (changes in the equipment). Now we're starting to see the vendors deliver."

A resurgence of the voice-over-broadband technology could boost local phone competition, which has been one of the hardest-hit sectors in the telecommunications meltdown. AT&T and smaller phone companies able to pull together a bundle of voice and Net services could revive pressure on the big local phone companies, which have seen their competition diminish, and provide new options for consumers.

VoDSL technology allows the bandwidth of a high-speed Internet connection to be split into multiple "virtual" phone lines, making a single physical copper phone wire capable of carrying several simultaneous calls. Thus, a small business could have many phone lines, plus enough remaining bandwidth for Net access.

Under this scenario, a business might call Broadview for its local phone service instead of Verizon Communications. The single phone line could be sliced the way the customer wanted, with four phone lines and a fast data connection, or with 10 phone lines and less bandwidth available for surfing the Net.

The technology is attractive to business customers, at least in theory, because it allows them to have Web access and a few phone lines at relatively low cost. Broadview's prices, for example, range between 11 percent and 30 percent lower than comparable offers from Verizon, depending on how many phone lines are ordered. The technology also reduces costs for carriers.

Making it happen
But actual installations, beyond trial projects, have failed to materialize. Analyst firm TeleChoice estimates that fewer than 10,000 DSL lines in the United States carry voice signals--a far cry from some predictions that estimated the technology would reach several hundred thousand lines by the end of last year.

Several companies manufacture the hardware required to split a DSL connection into voice lines, including Jetstream Communications, TollBridge Technologies, CopperCom, General Bandwidth and Accelerated Networks.

Lacking demand from carriers, some of these VoDSL gear makers have shifted their strategy to include new technologies. For example, CopperCom last year embraced so-called softswitch technology, or software that is capable of routing phone calls and other voice features typically handled by massive and expensive hardware. Others have tried to kick-start the VoDSL market with newer versions of their hardware.

Most, analysts say, have been responsive to carrier concerns about reliability and features and have spent the past year working on these concerns.

"Technically it has worked now for some time," said Ron Nash, vice president of marketing for CopperCom, one of the companies Broadview is using to supply the technology. "But it has taken some additional work to get it ready" for the carriers' needs, he added.

In New York, Broadview says the technology has finally reached the point where it's ready for customers. Broadview is a company with more than 100,000 customers across four states in the northeastern United States. It's been testing the VoDSL service for several months and already has 30 business customers, representing several thousand phone lines, signed up to use the service in New York, the company says.

"We think the first real 'killer app' on DSL is voice," said George Holland, Broadview's executive vice president of marketing. "This is what people have been asking for for two years, and we're finally able to deliver."

Passing the test?
Although it's still early, Broadview's first test customers say the technology is doing the trick.

"We're very happy with it," said Charles Seideman, the owner of Done Deal, a wholesale distributor in New York that has used the new VoDSL service for about six weeks. The company had no particular desire to experiment with new technology, but Broadview was able to set up the system quickly after another phone company went out of business, he said. "We needed faster access, and they were there at the right place at the right time."

AT&T isn't quite to that point of delivering. But the consumer phone division has said it will use the DSL network it recently bought from bankrupt NorthPoint Communications to offer voice services, as it loses access to the cable network it originally bought for this purpose.

Analysts say some of the big local phone companies have also experimented with the technology in recent months and are expected to announce some vendor choices relatively soon.

Not everyone in the industry is as sanguine about the technology's return, however.

TeleChoice's Adam Guglielmo, who has watched the hype evaporate during the past few years, says he's not convinced the equipment makers have satisfied carriers' technical concerns. Moreover, it will take a big backer such as AT&T to push the technology to the mainstream, and it's not yet clear how strong AT&T's support will be, he added.

The alternative phone carriers still will have to deal with resistance from the big local phone companies, from which they still must lease the basic phone lines to offer DSL services. Many of the competing phone and DSL companies have said that the Bell companies' resistance had proved to be one of the biggest hurdles slowing their business progress. Some have even filed suits against companies such as BellSouth and SBC Communications.

"I think the opportunity is there. The business case for the services, if you can get them to work, is definitely there," Guglielmo said. "But it's been slow going."