DSL Fuel Does DSL have enough gas to overtake cable in the broadband race?

With dropping prices and growing availability, analysts nowproject DSL to overcome cable modems in number of broadbandsubscribers. In October, for example, Cahners In-Stat Grouppredicted DSL subscriptions in North America-2.9 mil-lion atyear-end 2000-would jump past cable to 8.6 million by 2003.

One reason for the projections is that DSL lines are beginningto reach farther into the suburbs. While most lines now extend only12,000 to 14,000 feet from each central office, new line-extensiontechnology is increasing that to 18,000 to 24,000 feet.Furthermore, new equipment is making DSL compatible with thedigital loop carrier equipment used in many outer suburbs.

DSL subscriptions are also being fueled by lower prices. Overthe past year, major DSL providers have dropped the price of basicmonthly packages (typically 384Kbps to 640Kbps downstream and128Kbps up) from a minimum $49.95 down to $39.95, about the same ascable-modem service. What's more, providers typically rent therequired modems for free and run frequent promotions that reduceinstallation fees.

The lower prices are due primarily to cheaper equipment, which,in turn, stems from a more competitive vendor environment. Comparedto cable, there are more service providers, a more diverseselection of services and technologies, and a faster-growing globalmarket. In addition, over half of new DSL customers can choose thecheaper option of user installation, something the cable providersare only beginning to introduce.

"It's huge to be able to do self-installs," saysCahners In-Stat Group analyst Mike Lowe. "The fewer trucks andtechnicians, the cheaper it gets."

Eric S. Brown, a regular contributor to PCWorld.com,is a freelance writer living in the Boston area.

Whose Line Is It, Anyway?

Compared to the dial-up realm, where thousands of ISPs stillcompete, the consumer DSL market doesn't offer many choices.But weighed against the local monopolies of cable, DSL seems like awide-open bazaar. The four remaining local phone giants-BellSouth,Qwest, SBC and Verizon-have a huge advantage but now faceincreasing competition. Recent big gainers include national ISPs,business-class DSL providers and long-distance firms. And thanks inpart to line-sharing rules issued by the FCC in late 1999, morecompetition is on the way. The rules force the Bells and otherlocal telephone companies to share their phone lines with other DSLcompetitors so the smaller rivals don't have to install theirown.

Line-sharing should have a big impact this year, says AdamGuglielmo, a DSL analyst at TeleChoice Inc. "We could seewidespread $29.95 price points by the end of 2001."

As basic DSL pricing approaches dial-up levels, get ready fornew services that boost the price once again. This year, we'llsee "gateway" devices, sophisticated DSL modems equippedwith routers that support multiline Voice-over-DSL and homenetworking support. Cable-modem providers are heading in the samedirection but not as quickly. DSL may not have better technology,but its more competitive environment should bring lower prices andgreater innovation for years to come.

Contact Sources

• Cahners In-Stat Group, (480) 483-0067, www.instat.com
• TeleChoice Inc., (303) 446-0001, www.xdsl.com