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Pursuit Of High-Speed Internet Access Continues

Customers clamor for DSL service amid provider bankruptcies and geographic limitations
Businesses looking to participate in the broadband revolution have experienced joy and frustration. Those that have been able to obtain the low-cost, high-speed services generally have good things to say about the technology. But many companies are frustrated because they're unable to sign up for digital subscriber line or cable modem services.

Demand for high-speed services continues to soar; the number of broadband subscribers is expected to surpass 10 million by year's end. The vast majority of those subscribers are residential customers who pay around $50 a month for either DSL or cable modem services, which let them surf the Internet at speeds higher than the 56 Kbps offered by dial-up modems. But a significant portion are businesses, which are clamoring for DSL or cable modem services to get rid of slow dial-up connections they've used to provide Internet and data connectivity to remote workers, branch offices, and retail locations.

Large and midsize businesses accounted for 1.9 million high-speed lines last year, while residential and small-business subscribers accounted for 5.2 million high-speed lines, the FCC says.

Of the two main broadband services, DSL is considered more suitable for business use, and the number of businesses that use DSL dwarfs the number that use cable modem service. That's primarily because only a small percentage of businesses are wired with the coaxial networks used to deliver cable modem service. In contrast, virtually all businesses are wired with the copper telephone circuits used for DSL.

The availability of DSL is limited for a variety of technical reasons, leaving many businesses frustrated. In most cases, basic DSL service can be provided only within 12,000 feet to 18,000 feet of a telephone company's central office; in some parts of the country, that makes nearly half of all local phone lines ineligible for DSL.

In addition, telephone companies haven't deployed DSL services to all subscribers because of the expense. The Yankee Group says it costs $600 to $800 per line to install additional equipment in switching offices, qualify and test circuits, market the service, and install equipment and implement the service at the customer's premises.

Despite the problems, businesses say DSL is an improvement over slower dial-up lines. "It's a great way to go, from an affordability standpoint, to get the speed you need," says Amy Hurley, an IT specialist at Weller Auto & Truck Inc.

The Grand Rapids, Mich., auto and truck parts company recently replaced dial-up 56-Kbps connections to its headquarters with 144-Kbps DSL lines at eight of its 10 remote loca-tions, Hurley says. The DSL circuits perform better than the dial-up links, and they're "actually less expensive than the 56 Kbps, and certainly more affordable than T1s or fractional T1s," which were the only other higher-speed alternatives available, she says.

DSL isn't available at two Weller Auto & Truck locations-Kalamazoo, Mich., and South Bend, Ind.-but Hurley says the company hopes to have DSL service in those locations within a year.

Another problem with DSL is the wait that customers must endure before service is installed. In the United States, it can take weeks or months before some DSL providers are able to install and implement service. The situation is better in Canada, where service providers are able to install most DSL circuits in just a week or so, says Paul Winterhalder, VP of product development at bitHeads Inc. in Ottawa.

The software developer has two DSL lines to connect to the Internet: a 1-Mbps upstream/ 3-Mbps downstream circuit from Magma Communications and a 768-Kbps upstream/2.2-Mbps downstream circuit from Bell Canada, Winterhalder says. The services are "an important part of our business, and we need two providers to have that connectivity always on," he says.

For companies that operate nationwide, the fact that DSL service isn't available everywhere is its biggest drawback, says Patrick Hurley, DSL analyst at TeleChoice, a market-research and consulting firm. Getting DSL service "is more difficult than anybody thought it would be and more difficult than it should be," Hurley says.

The difficulties have been compounded by the bankruptcies this year of two major DSL providers-NorthPoint Communications and Rhythms NetConnections-both of which competed with DSL services offered by local phone companies such as BellSouth, Qwest, and Verizon.

The bankruptcies present yet another concern for companies interested in DSL service: whether their provider will declare bankruptcy and leave them without service.

In NorthPoint's case, the company was forced to shut down its network in March and sell its assets to AT&T for a bargain-basement $135 million after its planned merger with Verizon fell through and it was unable to secure a financing deal with its Internet service provider partners. The fire sale and shutdown of the network left hundreds of thousands of NorthPoint DSL subscribers scrambling to find a replacement service-which, in many cases, was a slower-speed dial-up service.

The termination of NorthPoint's service left Kenny Crockrell, a telecommuter who works at Sybase Inc., without DSL service for two weeks. "It was an inconvenience," Crockrell says. "My concern was that nobody knew what was going to be worked out."

During his two weeks without DSL, Crockrell stopped telecommuting to his job as senior assistant to a Sybase VP, because he couldn't connect to the company's network reliably using a dial-up service. "I had such a hard time connecting, I ended up just not telecommuting," he says. Eventually, another DSL provider, Covad Communications Inc., provided a replacement DSL service that let Crockrell resume telecommuting.

Businesses that want to avoid similar problems should make sure they choose a reliable and financially stable company for DSL service. Customers usually don't contract directly with the underlying provider of DSL services; they sign up for service with an ISP that provides its own Internet access services to customers on top of the DSL circuits provided by a DSL carrier of the ISP's choosing, TeleChoice's Hurley says. Companies need to pick a reliable ISP that's experienced in serving business customers, he adds.

Companies also need to be prepared for spotty availability. "There are some 'gotchas' that people are going to run into if they're putting a large number of people on DSL," he says.

Companies should also realize that they won't be able to replace all of their dedicated data circuits with the lowest-cost DSL service that's available. In nearly all cases, Hurley says, DSL providers offer higher-grade, business-oriented DSL services that are better replacements for high-performance business data services such as private lines or frame relay.