DSL strategic moves: ISPs get aggressive in provisioning high-speed access on their own

Digital subscriber line technology is spreading its influence in new ways. Its intricacies are driving Internet service providers to give up on using short-term central office circuitry and take on new identities as competitive local exchange carriers.

One need only look at the rules to underst and why. ISPs have no right to collocate their equipment in incumbent LECs' COs because they are considered information service providers-not telecom service providers-under the Telecommunications Act of 1996.

CLECs, however, can make interconnection agreements with the incumbents and use their own equipment to provide DSL.

This divergence in DSL provisioning has become a hot-button issue in U S West territory because the Bell regional holding company is the first to offer the high-speed access service commercially.

U S West stirred controversy last year when it tried to discontinue its tariffs on so-called local area data service (LADS) lines, which are private-line circuits of two unloaded copper loops. Some ISPs use LADS lines to provision DSL. Schools and government agencies also use LADS lines for less-sophisticated data transmission.

DSL connections require a modem at each end, and those two modems can be separated by no more than 15,000 feet. That means incumbent carriers can use existing telephone lines to provision DSL by connecting a modem in the telco's CO with another at the customer premises.

ISPs, on the other hand, often use LADS lines from the point of presence to the CO and from the CO to the customer premises. LADS line tariffs do not prohibit their use for high-speed data transmission, and LADS has the advantage of routing around the public network switch. But the lines have no remote test capabilities, so technicians must be dispatched to test and pinpoint problems.

U S West sought to grandfather its LADS tariffs in 12 of the 14 states within its coverage area because lab tests showed that crosstalk and interference could result if more parties tapped the LADS lines for high-speed access. The lines-a scarce commodity-were designed to carry security alarm signals.

U S West succeeded in getting the tariffs voided in three states-Idaho, Nebraska and New Mexico-and withdrew its request in three others-Washington, Oregon and Iowa (see list).

In Colorado, an administrative law judge denied U S West's request to make the LADS tariff obsolete. Judge Ken F. Kirkpatrick ruled on Jan. 9 that no other service provider offers LADS or its equivalent, as state law requires before a tariff can be repealed. Furthermore, no CLEC offers unbundled loops in a way that would duplicate LADS lines; no CLEC provides service in rural parts of Colorado; and even if unbundled loops were offered as an alternative, they would be at least 60% more expensive than LADS lines, according to Kirkpatrick's 10-page decision.

At the time, 80 customers were using 250 LADS circuits.

Greg Gum, executive director of U S West !nterprise Networking's MegaBit services, concedes that ISPs may be suspicious of the company's intent. After all, U S West's alternative to LADS lines is technically superior, although more expensive.

The carrier sought to lessen the tension by sponsoring seminars with ISPs in states where it offers DSL and maintaining an ISP channel that focuses on their needs and problems, Gum says.

U S West's retail MegaCentral service concentrates an ISP's subscribers onto one pipe and connects the traffic to the ISP's POP (Figure 1). The service is provisioned with asynchronous transfer mode. The ISP chooses the bandwidth, which ranges from a DS-1 connection for $400 a month to an OC-3 connection for as much as $4500 a month, depending on the speed the ISP selects.

Most ISPs already have a DS-1 pipe, and MegaCentral lets them bundle their own service offerings with the high-speed access, Gum says. The ISPs also can choose two MegaCentral offerings-one for highly concentrated, shared service and the other for business users, he says. The service frees ISPs from handling the extensive equipment associated with dial-up traffic, Gum notes.

U S West has resale agreements with 15 ISPs in Phoenix-its DSL debut city-and it maintains an agreement with its own ISP, U S West.net.

An uphill battle Nevertheless, at least one ISP in U S West's territory is having a difficult time pressing ahead with its DSL plans.

Lee Golter runs Western Regional Networks, headquartered in Grand Junction, Colo. He provides service through 62 telcos throughout Colorado and the eastern third of Utah. He started using LADS lines 18 months ago to provide rate- adaptive ADSL in Grand Junction. He ordered a dozen more when he heard that U S West would seek to pull its LADS tariffs.

That's when the trouble started. Those latter 12 lines wouldn't work, even though Golter paid $350 a month for them. He worked on the problem for six months, from June 1997 until January 1998, buying sophisticated test equipment and ultimately renting an office across the street from U S West's CO.

The tests showed a tremendous dB loss in the signal. "It dropped off to unusable levels very quickly," Golter says. "It was just like the bottom would drop out."

The results reflected the possibility that a low-pass filter sitting on the circuit in the CO appeared to be absorbing the frequencies the ISP tried to send. Golter says he could not confirm the filter's existence because he was never able to inspect the CO main distribution frame.

"It doesn't reduce the continuity, which is a direct current measurement. But if you put alternating current on this line-on the frequency above voice-it absorbs those frequencies very quickly and efficiently," Golter says.

He proposed that the parties set up a statistical multiplexer in the CO and bring subscriber lines there. The subscriber line traffic then could be moved onto a T-1 connecting to Western Regional Networks (Figure 2). But U S West nixed the idea because it was identical to the carrier's procedures in Denver, and it believed equipment allocation would be a problem, Golter says.

"They have to provide me with something that works," Golter says. The MegaCentral service would cost $5000 to $10,000 each month, depending on the number of wire centers from which Western Regional chooses to operate, Golter estimates. With that cost structure, he can't understand how U S West can offer 256 kb/s DSL service for $19.95 a month, plus the $40 monthly DSL charge.

"It puts the average ISP at a real disadvantage," he says.

A second tier of ISPs Larger ISPs report different experiences, partly because they've jumped through the costly regulatory hoops needed to become CLECs.

InterAccess, which used LADS lines to beat Ameritech to the DSL punch in September 1996, hired a lawyer, filed paperwork and received CLEC status from the Illinois Commerce Commission in February. It now is negotiating an interconnection agreement with Ameritech in Chicago.

Why? The alarm circuits, as LADS lines are called in Chicago, have no future, says Tom Simonds, president of InterAccess. "It was clear it would be a neglected, unreliable, unsupported system," he says. "But [using the LADS lines] worked."

Although ISPs can use LADS circuits to provision DSL, that's outside the scope of what the tariff filings intend, says Gary McCoy, xDSL product manager of business at Ameritech.

Ameritech offers ADSL to small businesses and consumers in Royal Oak and Ann Arbor, Mich., but it is trying to overcome technical limitations that hinder its ability to offer DSL on a resale basis. It's not technically feasible for Ameritech to deliver traffic to more than one ISP using the same piece of equipment, McCoy says. That means it can't send traffic simultaneously to America Online and Ameritech.net, for example.

Ameritech's wholesale arm, Ameritech Information Industry Services, offers ADSL-compatible unbundled loops to CLECs that want to offer their own DSL services by collocating in the CO. AIIS has sold the loops to six CLECs throughout the Midwest.

HarvardNet Inc., Portsmouth, N.H., has a similar story. The ISP-turned-CLEC claims the largest installed base of ADSL users in the U.S.

The company used some LADS circuits for DSL trials but was concerned about their engineering and whether the testing procedures ensured quality, says Bill Southworth, chairman and CEO of HarvardNet.

"Dealing with unbundled elements as a carrier, you're guaranteed a higher level of qualification of the circuit to digital standards as opposed to an analog alarm loop," he says.

Other technical problems arose because Boston's infamous "Big Dig"-the burial of an overground highway that's turned into the country's largest public works project-created spaghetti-like circuit routes and replaced copper with fiber bundles between the city's COs.

This resulted in LADS circuits that start in one CO and end in another, limiting the signal frequency and ruining any chances for DSL provisioning. "For telecom, it's a mess," Southworth says.

The New England area also has the other extreme-old copper circuits, some still wrapped in paper. "You can still see a tag with an installer's initials, and it's 'A. Bell,'" Southworth jokes. The records also are old. The company has run into two instances in which the copper at a building within eyesight of a CO runs 16,000 feet and is patched together with cross-connects. No record of the routes exists.

Hassles also are part of the process of changing from an ISP to a CLEC, and the rule of thumb is that it costs $500,000 per state, Southworth says. But Bell Atlantic was "extraordinarily cooperative," he says. HarvardNet is licensed as a CLEC in Maine, Massachusetts and New Hampshire and is seeking the certification in Vermont and Rhode Island.

HarvardNet takes advantage of its ISP/CLEC status by offering region-wide local dial access and SuperPOP capabilities for other ISPs and large corporations.

Such examples reinforce the notion that only the largest and best-financed ISPs can achieve CLEC status. "It's not a solution for every small-business ISP in the U.S.," says Barbara Dooley, executive director of the Commercial Internet eXchange, an ISP trade association based in Herndon, Va.

Indeed, CIX disputes the idea that most ISPs are becoming CLECs. More than 6300 ISPs operate in the U.S., and CIX sees no evidence that a significant proportion is taking advantage of the telecom act's local competition provisions. Smaller ISPs, including those serving rural areas where no CLECs operate, need a more effective way to provide high-speed Internet access, CIX argues.

One solution would be to give ISPs the same collocation rights that CLECs have. Collocation rights are critical with DSL because the technology only can be offered to users within a wired radius of the incumbent's CO. Because a Bell company's affiliated ISP can collocate, ADSL deployment gives that ISP a competitive advantage, CIX argues in comments filed with the FCC in March.

If an independent ISP's office is 5000 feet away from the CO, only the incumbent LEC's ISP can serve end users located between 10,000 and 15,000 feet from the CO (Figure 3). Because collocation space in most COs is tight, CIX proposes that the Bell companies set up a neutral space close to their COs where ISPs could physically collocate-a "collocation motel," in CIX's words.

CIX is urging the FCC to adopt a flexible approach to unbundling network elements so that ISPs can obtain access to unbundled broadband packet-switched services from incumbent carriers. The association also seeks expanded interconnection rules to let ISPs obtain aggregated data traffic at the Bell companies' COs.

Two companies-NorthPoint Communications and Covad Communications-are bridging the gap that the telecom act created between incumbent carriers and independent ISPs, at least for business users. A critical business decision that many ISPs ignore is the price sensitivity inherent in the distance between an end user and a CO, says Ann Zeichner, vice president of sales and marketing at NorthPoint, San Francisco. It determines the speed at which DSL can be offered and whether toll charges apply to dial-up POPs.

NorthPoint enters wholesale agreements with ISPs, CLECs and other data service providers that serve the business market.

It then aggregates the COs in which it leases space, carries the output from the DSL access multiplexers over a DS-3 pipe and runs the pipes back to a single switch. The ISPs get a DS-3 connection from the switch to their routers, and they gain access to any end user served by the CO.

Covad, which bills itself as a packet CLEC, installs DSL equipment in local COs and installs modems in employees' homes and offices.

The connection from the CO to the corporation or ISP is made through Covad's regional data network, a private, secure Layer 2 packet network. The company recently expanded beyond its Bay area roots to offer DSL services in Boston, Los Angeles, New York, Seattle and Washington.

DSL takes on its own flavors Local incumbents, meanwhile, are rolling out their own DSL plans with a variety of pricing options (Table 1).

BellSouth expects to provide tariffed DSL services before the year is out and will focus on being a wholesaler. "ISPs are the ones familiar with the PC, and they should be the first-tier support," says Jim Johnson, director of product implementation at BellSouth Telecommunications, Atlanta.

SBC Communications Corp. plans to expand its DSL service eventually, but for the time being, more than a dozen CLECs are using unbundled ISDN loops to provide high-speed service. The carrier doesn't offer loops with guaranteed DSL throughput and availability.

Bell Atlantic plans to start commercial ADSL deployment later this year using the carrierless amplitude/phase (CAP) modulation scheme. The nature of CAP is more prone to cause interference than is discrete multitone, but that problem is a short-term one, a Bell Atlantic spokesman says. The carrier plans to switch to a DMT solution when a splitterless version becomes available.

Three GTE Corp. divisions are involved in deploying different types of DSL-GTE Communications as the reseller and CLEC; OnSite, a CLEC service that offers ADSL to multidwelling units; and GTE Internetworking, which provides Internet access.

GTE Network Services is planning ADSL service offerings in 300 COs in parts of 16 states starting in June (Figure 4). A unique aspect of its rollout is the decision to use Fujitsu Network Communications-notable for its DMT-based system-as the ADSL equipment provider.

GTE intends to use frame relay networks as its primary traffic aggregation points for ISPs. "We expect to migrate to an ATM network over time," says Jeff Bolton, senior group product manager of advanced switched services at GTE Network Services.

The carrier's CLEC arm, GTE Communications Corp., is providing Internet access to a 900-unit high rise in Marina del Ray, Calif., through the OnSite offering. The rollout requires no interconnection agreement and pushes the DSL equipment to the customer premises (Figure 5).

"It's not the answer to DSL in total because it applies to a limited audience," says Claudia Bacco, group marketing manager of advanced data services at GTE Communications Corp. "We're at the mercy of the [incumbent] LECs to launch their products."

Arizona No filing made to withdraw LADS tariff

Colorado Filing denied (may be appealed)

Idaho LADS circuits no longer a tariffed offering

Iowa Filing withdrawn

Minnesota No filing made to withdraw LADS tariff

Montana LADS do not require tariff

Nebraska LADS circuits no longer a tariffed offering

New Mexico LADS circuits no longer a tariffed offering

North Dakota LADS do not require tariff

Oregon Filing withdrawn

South Dakota LADS do not require tariff

Utah Filing pending (suspended)

Washington Filing withdrawn

Wyoming Successfully withdrew tariff

The hype surrounding new offerings of digital subscriber line technology makes incredible claims of speeds that will revolutionize the Internet, remote access and other high-speed data access applications.

These lightning access speeds may happen eventually, but many still are asking the question popularized by that famous hamburger commercial: "Where's the beef?"

ISDN digital subscriber line (IDSL) appears to be the one flavor of DSL-although slower than the others-that is ready for widespread deployment by competitive local exchange carriers and Bell regional holding companies.

IDSL uses existing 2B1Q (two binary, one quaternary) technology, which has been used for basic rate ISDN service for years. More than 1 million 2B1Q lines are installed in the U.S. At the regional Bell companies' central office switches, ISDN line cards supporting 2B1Q are widely available. The technology also has no issues with T-1 bundle groups.

In addition, channel banks and the necessary networking equipment to support the standard DS-0 64 kb/s time slot are likewise ubiquitous in COs. And because vendors of ISDN customer premises equipment have been pushing their terminal adapters and routers for years, dozens of manufacturers make low-cost products that are capable of interoperating via point-to-point protocol.

With the groundwork laid, IDSL could emerge as an entry point for many subscribers to the Internet and remote access services who are itching to get beyond the "World Wide Wait" of the analog world.

Asymmetrical DSL (ADSL) delivers up to 8 Mb/s of data downstream and 800 kb/s upstream. It is the darling of the DSL world because it has so much promise in consumer-oriented applications such as Internet access. However, ADSL cannot traverse readily through an area that has digital loop carriers, and it requires special equipment at the remote site.

ADSL also may require OC-3 asynchronous transfer mode, which further balloons the cost of entering the market. And the standards controversy over carrierless amplitude/phase (CAP) modulation and discrete multitone (DMT) drags on, although it appears that DMT will prevail as the preferred ADSL flavor.

In the meantime, IDSL might make economic sense for incumbent LECs and CLECs willing to provision it at an attractive price.

The real question often overlooked is: "How much bandwidth is really needed at any given time?"

In reality, few users require nonstop multimegabit downloads to get through their business day. That is, even Internet or remote access power users who may require several high-speed file transfers or videoconferencing spend much of their time in low-speed applications such as e-mail and Web browsing (see figure on page 84). Many of these power users are really screaming for an alternative that avoids the busy signals and the 30 seconds or more training time to log onto the Internet with an analog modem.

First, the industry needs to develop a constant connection that does not limit the end user by forcing him or her to log on and off the network. It must be a simple process to access and to stay connected to the service.

Second, the service must have enough bandwidth to handle the majority of applications today. Naturally, users want as much speed as they can get, but most people will be satisfied with 144 kb/s-especially if they can get it any time they want.

Last, but certainly not least, the service must be offered at an attractive entry-level price, and this should be a good place for end users to be introduced to DSL until standards and other issues are resolved in the higher-speed flavors.

So the steps are straightforward:

* Use existing data backbone networks-especially frame relay-to lower costs at the central site. A frame relay T-1 multiplexer has the ability to optimize the network's performance. Because of frame relay's ability to uplink unchannelized T-1 and concentrate the data, cost is lower not only at the T-1 facility, but also the cost per port is lower. Users of corporate intranets or Internet service providers are provisioned with frame relay permanent virtual circuits (PVCs) with many PVCs per user available. Users then have multiple destinations available simultaneously.

* Use a standard D-4 channel bank with IDSL multiplexing capabilities at the CO.

* Add the IDSL channel cards to the channel bank that give up to four 144 kb/s IDSL channels per DS-0. This will allow up to 96 ports per D-4 channel bank.

The IDSL customer premises equipment can be preconfigured and the end user can have either an external or internal PC adapter card as a terminal adapter. The cost of the CPE installation and support is reduced dramatically.

In fact, these terminal adapters are easier to install than ISDN adapters because there are no service profile identifiers to deal with, and most end users can install their own if they choose. Also, network management can be accomplished in-band over the frame relay cloud from one central point of presence, avoiding a more expensive network management system (see figure).

The early results are in. One San Francisco Bay area CLEC that is aggressively rolling out both IDSL and other DSL services reports that IDSL is capturing 50% or more of all new installations-and is doing so despite the fact that it has been pushing the higher speed services first.

When standards and provisioning issues are resolved, there is no doubt that higher-speed flavors of DSL will find a strong position in the market. But for the immediate future, IDSL makes sense as a service offering capable of being installed very quickly, and it does so at a price that attracts both power users and the mass market.