Pipe Dreams

DSL providers chasing growth

Booming demand for faster Internet access over Digital Subscriber Lines left millions of prospective customers poking along at modem speed as the year ended.

But those business and residential users awakened from their big-pipe dreams couldnt have been as disappointed as the service providers, which watched helplessly as vast potential revenue streams pooled in technological backwaters.

The Big Four regional Bell companies say they reached their new customer projections last year and are geared up to at least triple their Digital Subscriber Line (DSL) rollout in 2001.

But in 2000, they were nagged by problems ranging from provisioning and regulatory issues, to strikes, to equipment shortages and limitations, all of which conspired to keep them short of satisfying customers anxious to rev their search engines.

"True, this has not been a perfect rollout," says Verizon Communications spokeswoman Briana Gowing.

Still, Verizon met its 2000 goal of 500,000 DSL subscribers, up from 87,000 at the start of the year. Verizon was boosted in large part by subsidiary GTEs use of self-install kits. Projected growth in 2001, Gowing says, "is exponential."

BellSouths goals are more specific. Spokesman Dave Blumenthal says the company hit its year-end projections of 200,000 subscribers, adding about 66,000 customers in the fourth quarter alone.

"We expect to triple our DSL subscribers to 600,000" in 2001, he says.

SBC Communications was on track to post the top numbers for the year. By second quarter, it had exceeded 400,000 subscribers and had launched DSL initiatives outside its 13-state home region.

But SBCs rollout wasnt trouble-free, particularly on the West Coast where its Pacific Bell subsidiarys provisioning problems gummed up the works.

At least one top broadband analyst was surprised that, given the difficulties, the regional Bells were able to reach the customer numbers they did.

"I thought they were aggressive in their projections," says Matt Davis, a senior analyst for broadband access at The Yankee Group. "But in the same breath I would say they exceeded my expectations in what they have delivered."

Qwest Communications International had 250,000 DSL subscribers by years end, and expects to double that number in 2001.

Among the more difficult obstacles for regional Bells is upgrading their plant of remote terminals to include DSL equipment. The equipment upgrades expand the possible customer base for DSL to include subscribers who live outside the traditional central-office service area.

Davis says BellSouth has been the most aggressive in those upgrades. The company serves about 37 percent of its customer base from remote terminals, compared with 18 percent to 20 percent for the other regional Bells. SBC, though struggling with regulatory issues in its Ameritech territory, is moving steadily ahead with its $6 billion Project Pronto remote terminal upgrade that should allow about 85 percent of its total market to have access to DSL service.

But problems remain. The first is qualifying the customer long before any DSL equipment is shipped. Boyd Peterson, director of product marketing at broadband software firm BroadJump, says nearly 20 percent of U.S. households qualified for service still end up not being able to receive DSL because of end-user problems, such as an old PC.

"They [the Internet service provider] could find out the customer on the other end is running an Atari and the cost they just ate is considerable," Peterson says.

Internet providers are working through those issues using technology from BroadJump, Cisco Systems and others, as well as integrating operational support systems so the work flow from ISP to carrier to regional Bell is handled efficiently. Then they can get into issues such as provisioning additional services like voice- and video-over-DSL, or bandwidth on demand.

The Yankee Groups Davis is optimistic about DSL growth in 2001. "Customer premises equipment, configuration, installation and self-install equipment is all improving, and the provisioning process has become more automated. So they are taking steps forward to solve those issues." Still, he says, much depends on the "patience of the capital markets" as competitive services, including wireless broadband, gain stronger footholds.