The chosen one, Bell consortium opts for Alcatel ADSL system >BY BETH SNYDER, Associate Editor-News

The Joint Procurement Consortium-Ameritech, BellSouth, Pacific Telesis and SBC Communications-cast its collective vote for Alcatel last week after spending several months reviewing many competitive plans for asymmetrical digital subscriber line equipment. The France-based equipment giant's proposal calls for an ADSL-to-asynchronous transfer mode system and discrete multitone modulation line code.

But it was the unexpected fallout from the decision by the four Bell regional holding companies that rivaled any November election-day drama.

Westell Technologies, an equipment provider finalist, lost more than 12 points in one day, or about 27% of its stock price. Westell manufactured only carrierless amplitude/phase modulation (CAP) modems-a rival to the standards-based DMT-until a few months ago, when the company cut a deal with Motorola for DMT.

Industry speculation had favored Westell as the consortium winner. So while Alcatel celebrated, Westell scrambled for damage control.

Garrick Case, Westell's vice president of communications, admitted the company should have issued a statement before the stock market opened Monday, but he called the stock drop a "knee-jerk reaction."

"Three of the four consortium companies have made public announcements using Westell modems in trials," he said. "And we have independent relationships with each of the companies." Both he and the four RHCs emphasized that the door is still open to Westell for future deals-together and independently.

Indeed, the initial Wall Street reaction seemed harsh. Telecom industry reaction was much kinder, although insiders were surprised at the choice of just one vendor.

"Wall Street assumed this is the death knell for CAP, and that's not necessarily true," said Kieran Taylor, broadband consultant for TeleChoice Inc., Verona, N.J.

The four RHCs comprising the consortium are not the most aggressive in testing ADSL, he noted. U S West, GTE and Bell Atlantic are more likely to commercially deploy ADSL before the consortium does, so what those leaders choose may become more important, Taylor said.

Lisa Pelgrim, an analyst with Dataquest, San Jose, was surprised that the four chose one supplier after the consortium's request for proposal sought compatible technology.

"It's a very big win for Alcatel, especially this early in the game," she said. "It's also a very big win for DMT, but a lot of vendors have already said they'll go with whichever technology is chosen, like Westell and Paradyne."

Lorene Steffes, Ameritech's vice president of technology, said, "I don't think the CAP/DMT discussion is over. We didn't make the decision on CAP or DMT-Alcatel did." A more important issue for the RHCs and industry watchers is Alcatel's choice of an ADSL-to-ATM system. Some cheered while others were skeptical.

Todd Poston, Alcatel's director of ADSL and carrier product management, believes this deal would be the first significant product using ATM in the residential local loop. But using the adjustable switching and multiplexing technology is a plus, he said.

With the Alcatel system, all ATM ADSL traffic can be routed to interoffice facilities and either sent directly to the broadband network through an ATM switch or backhauled to the nearest ATM switch, he said.

Ed Reisner, regional manager of technology and product development for SBC, is also positive about ATM.

"The four [RHCs] specified interest in ATM," he said. "For SBC, our intent is building our own infrastructure with an ATM network." He admitted that will take time but claims the initial backhauling can be done with ATM edge switching.

However, both Taylor and Pelgrim question a full ATM-to-the-home deployment. "ATM is going to make it a lot more complex," Pelgrim said. "Internet protocol would be an easier way to go, especially in the short term."

"My fear is that they may be over-engineering for consumers' needs," Taylor said. "Perhaps the average consumer doesn't need ATM. If most traffic is Internet, why do you need ATM?"

The four RHCs in the consortium plan to start testing the Alcatel equipment at the end of this year or the beginning of next year, with commercial deployment by mid-1997.