Faceoff at 56K, Even as a standard gets closer, the battle for ISPs heats up

K56flex backers of 56 kb/s technology gathered in New York and San Francisco two weeks ago to tout new Internet service providers turning on service and generate new talk about their chosen technology. Earlier in the week, the other side—U.S. Robotics—held a press conference to announce a customer incentive program of its x2 56 kb/s technology, including free upgrades for the emerging standard and up to a $25 ISP access charge rebate.

Not to be outdone, the K56flex supporters at the New York meeting—including Diamond Multimedia, Ascend Communications and Motorola—said they would also offer a free standards upgrade.

"All K56 modems are software upgradable," said David Mayes, director of business development at Ascend, in response to the U.S. Robotics announcement. "To me, that's like a used car salesman saying he'll give me free tires with a car."

This newest bout of renewed competition comes in the face of an emerging standard from both the U.S. Telecommunications Industry Association and the International Telecommunication Union. An interim U.S. standard is expected to be ready for a draft ballot by August, and a stable draft is expected from the ITU by September with final approvals by January.

So why the mine's-better-than-yours debate—assuming that both 56 kb/s standards are software upgradable—if it will be voided when standards are set within the year? One of the biggest reasons may be a desire to grab early market share.

"For Robotics, they want to get as much sales as possible before the standard and so does the K56 group," said Lisa Pelgrim, analyst with Dataquest in San Jose.

Much of the latest marketing war, then, would seem to be directed at the ISPs. U.S. Robotics' rebate program is an incentive for consumers to use x2 ISPs, while the K56 group showed off its latest ISP wins.

"It's all marketing—x2 is being advertised on national television, so the other side has to gear up and show where they are," Pelgrim said.

William Schroeder, president and chief executive officer of Diamond Multimedia, said the K56flex port deployment will be rapid. "We believe there will be over 1 million K56flex ISP ports by the end of September able to support more than 10 million users [in a 10 user to one port ratio]," he said. Mayes added that those are simply Ascend numbers and cumulative projections suggest up to 90% ISP coverage by the end of September in central site servers.

The K56flex vendors at the New York meeting also stressed the importance of digital connections. "The ISP or carrier server must be digitally connected for a 56 kb/s connection to occur," Mayes said. In that regard, the K56 community has a significant advantage, he said. In fact, according to a December 1996 study by Del' Oro market research, Rockwell and Lucent have a 94% share of the ISP digital access concentrator T-1/primary rate ISDN installed base.

AT&T ATM REACHES JAPAN'S SHORES AT&T has begun a global rollout of asynchronous transfer mode service now available in Japan through Kokusai Denshin Denwa. AT&T already offers ATM service in the U.S. and plans to continue its international rollout expected in Canada by September, the United Kingdom in December and the rest of Europe after that through AT&T/Unisource.

MGC EXPANDS VIA NORTEL SWITCHES Competitive local exchange carrier MGC Communications, which currently serves the Las Vegas area, plans to use Northern Telecom switching equipment for its nationwide expansion. MGC plans to deploy Nortel DMS-500 switching and AccessNode systems in the Atlanta, Southern California, Chicago and Boston areas.