Reality Walks In
DSLcon highlights challenges facing competitive providers
By Evan Blackwell
from the April 16, 2001 issue of Broadband Week
Caught in the middle of a savage market beating, DSL professionals continue looking to new services and more focused business plans as potential keys to their survival. More than 3,000 attendees descended upon Denver and the Rocky Mountains last week for the spring 2001 version of DSLcon, trying to shake off the hangover of a series of high-profile business failures, continuing sales slowdowns for major vendors and an ongoing shakeout among smaller service providers.
In one twinge of irony, show attendees were greeted on the first day of the conference activities with a sunny spring day. By mid-week, a blizzard temporarily had knocked out power one morning at the show's official downtown hotel and left the DSL pros metaphorically and literally trudging through the storm.
Clearly gone are the days of easy money and confidence; the show's organizers even packed a hip flask along with the bag of promotional materials given out to show patrons, a self-deprecating jibe at the notion that the days of pain--exemplified by the bankruptcy of NorthPoint Communications--haven't ended yet.
"There was too much easy money ... and that amount of money leads to irrational business plans," said Rick Tinsley, president & CEO of vendor Turnstone Systems Inc., pointing to NorthPoint as an example of how too many businesses were offering the same services with undifferentiated business plans.
"CLECs are counting lines, not profits," he continued. "Right now DSL is not profitable for any of the carriers, Bells or others ... $40 per month isn't working and that's why the prices are going up."
Whether it was analysts, equipment vendors, or the few service providers that showed up, one theme was clear. Despite the folding or recent financial woes of the CLECs, there's a consensus growing that there was nothing wrong with DSL as a promising access technology, only the national DLEC business model. Demand is greater than ever, even if the ILECs seem to be the only ones in position to profit from it in the near future.
"We didn't expect the DSL wholesale model to survive a year and a half ago," said Matt Davis, a senior analyst with The Yankee Group who addressed one panel session. "We certainly don't expect it to survive now. We're going to see if guys like Covad can re-adjust."
Among the CLECS that are surviving with DSL, the business plan has been more conservative.
Tollbridge Technologies does business with 10 to 15 of the "super-regional" carriers such as McLeod, Mpower and Focal. These carriers have been more successful than the nationwide players because, in addition to being able to offer voice services, when the capital markets began softening those companies focused on adding subscribers instead of expanding their networks.
Instead of continuing their nationwide strategies, they scaled their networks down to about one-half the original planned size. These players now have solid funding and have more subscribers per DSLAM than the large, nationwide players.
"National DSL is something that doesn't exist," says Gary Tauss, Tollbridge's president, CEO and founder. "DSL providers need to look at how many subscribers they have per DSLAM, instead of now many businesses and residences their network passes."
At the same time, analysts such as Davis are forecasting that overall DSL growth will continue on the backs of the ILECs and the IXCs such as Sprint and AT&T that are looking to boost their DSL offerings significantly.
Of course, the specific application that got more play than any other at DSLcon was one that telcos understand better than anybody--voice. VoDSL was a hot topic, as it had been at the past several DSL shows. But this time, many were saying that the talk will finally lead to some VoDSL action in the next year.
"In the second half of 2001, you're going to see some movement with VoDSL," said Jason Marcheck, a DSL analyst with The Strategis Group. "You're going to see some rollouts and some success stories."
Many of the equipment companies creating solutions for enabling VoDSL rolled out a significant presence at DSLcon, all of them spreading the word that the voice technology was ready whenever the service providers are.
Lucent Technologies unveiled its newest software upgrade for the PacketStar PSAX GR-303 media gateway. The new software enables end-to-end voice solutions over DSL networks by integrating multiple services, including VoDSL and voice over frame relay.
Lucent also announced at the show that it was doubling the ADSL port density of its line of Stinger DSLAMs. Lucent's new 48-port ADSL line card enables up to 672 subscribers in a single chassis and up to 2,016 subscribers in a single central office rack.
Not only is VoDSL going to be huge, according to Lucent, but also there will be some notable service provider deployment announcements coming soon.
"The service providers still left out there need to look at a vendor like Lucent, and the products we're delivering," said Gary Monetti, the vice president of business development for Lucent's access technologies group. "There's definitely some value to be gained by sitting with Lucent at your side. There's a lot of value in using an end-to-end solution like ours."
The folks at VoB gateway company CopperCom brought a bit of levity to their demonstration of carrier-class redundancy. Visitors to the CopperCom booth were asked to pull any card out of the gateway, and then listen in on the phone line set up next to the gateway. Most participants were impressed that there was no loss in voice quality. The whole process was then memorialized with a Polaroid and placed up on the wall next to the demo, complete with the signature of each guest.
The quality of VoDSL service also was touted at the Open VoB's VoDSL interoperability booth. Dozens of equipment and chip vendors put their wares on display to demonstrate that standards-based VoDSL is a reality. Gateway and IAD vendors that participated in the Open VoB booth included Ishoni Networks, Polycom, Texas Instruments, General Bandwidth, Efficient Networks, Accelerated Networks and Avail Networks.
"This is a technology, from a service provider's point of view, that makes sense," said Dushyant Desai, vice president of marketing at Ishoni.
That was one point about which many at DSLcon seemed to agree.
Contributing editor Sue Marek also provided material for this story.
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