Defining the T-Chasm

Mar 6, 2002 12:00 PM

Small to medium-sized businesses, those with between 50 and 500 customers, find themselves at an odd juncture regarding their broadband communications connections. They have growing bandwidth requirements for mission-critical applications but do not have unending financial resources to keep up with demand in a cost-effective manner. Copper-based access methods, such as T-1 and ADSL, provide businesses with limited bandwidth and flexibility, and fiber-based broadband connections, such as T-3 and newly available metro fiber services, can meet bandwidth needs but are often very expensive and not widely available. It is between these two groups of access technologies that we find the "T-Chasm," that empty space in the market--in terms of both bandwidth and price--between T-1 and T-3.

The emerging concept of multi-link G.SHDSL services stands to bridge the T-Chasm, allowing service providers and carriers to deliver small and medium businesses (SMBs) access services from 2.3 to 15 Mb/s via copper pair, while creating new revenue opportunities.

Understanding SMBs' access needs

Unlike residential and small office/home office (SOHO) DSL applications that are being well served by the global ADSL standard--G.DMT--SMBs require a symmetrical service that can deliver the same bandwidth upstream and downstream on a predictable and reliable basis, since they often send as much data as they receive.

SMBs have a wide-ranging variety of telecommunications and data applications needs, from simple voice and Internet connections to truly next-generation applications such as ASP, e-commerce and Intranets. Among the more traditional applications required by SMBs are the following:

• Voice--Although analog POTS or Centrex support is often used by SMBs, many of the businesses in this category require T-1 or equivalent bandwidth for PBXs

• Internet--Basic access for e-mail and Web surfing applications

• Video--Two-way videoconferencing (along with related data conferencing) and one-way video for training, distance learning and corporate communications

• Data networking--Broadband access for data communications applications including access to ATM/frame relay networks, financial network connectivity and CRM.

In addition to these traditional applications, newly developed applications are beginning to make bandwidth demands on SMBs, including:

• VPN/Intranet--Leveraging the economies of IP services, SMBs are moving from legacy private networks toward IP-based VPN networks, for both corporate intranets and extranets connecting a company with suppliers, customers and other organizations

• VoIP--Using voice gateways or IP-enabled PBXs, SMBs can increasingly carry their voice and data traffic over a single connection, utilizing dynamic allocation of bandwidth to use their circuits more efficiently

• Distributed computing/ASP--Outsourcing non-mission-critical applications to expert third parties and accessing them via IP networks is increasingly a viable, cost reducing option

• E-commerce--E-commerce remains a vital application to SMBs for reaching customers, at reduced expense, with better integration into back-end inventory, supply and human resources.

Today the service that attempts to fill these requirements is T-1 at 1.5 Mb/s, commonly delivered by HDSL technology. In fact, T-1 has become the workhorse of corporate America as the standard connection between remote and regional offices and the carrier's closest point of presence. New multi-link G.SHDSL services have advantages over T-1, which we'll address shortly, and business DSL services leveraging G.SHDSL stand to augment--and in some instances, even replace--T-1 as an access technology for the SMB market. It's important to first differentiate the old business DSL technology from the new.

What went wrong?

Business DSL is not new but is certainly evolving, and the business DSL of the future will look nothing like the business DSL of the past. If we turn the clock back a few years, it was the vision of CLECs that symmetrical DSL (SDSL) combined with leased unbundled network elements (UNEs) offered a much more affordable access service than could be delivered by leasing T-1s priced from a few hundred dollars to more than $1000 per month. However, SDSL had many problems that created friction between the ILECs and the CLECs. 

Although the intentions of the FCC and the Telecom Act of 1996 were noble-to create more competition and allow a new generation of telecom services to be delivered at a lower cost--implementation was hindered by an SDSL service that was never standardized. The proprietary SDSL technology that CLECs used created deployment problems for the ILECs because the noisiness of SDSL's 2B1Q modulation introduced significant cross talk between existing ADSL cable pairs running in the same cable binder group, degrading the overall performance in both deliverable data rate and reach. ILECs were already faced with a similar compatibility issue with their own T-1 services, based on HDSL technology, which were also very noisy and disruptive. ILECs can rarely put more than two T-1 services in a single binder group and can rarely have ADSL and T-1 services running in the same binder. The ILECs quickly grew tired of continuously fighting problems associated with ADSL and SDSL/HDSL services deployed in the same cable binders and sought out a new symmetrical service that allowed higher bandwidth, longer reach and less noise interference.  

Table 1: SMB ACCESS COMPARISON

Thus in 2001, the International Telecommunication Union--the standards body that set the G.DMT standard for ADSL--drafted and approved a new global standard for symmetrical business DSL--G.SHDSL in 2001. G.SHDSL offers many benefits when compared to HDSL, such as single-pair transport vs. dual-pair, higher bandwidth--2.3 Mb/s rather than 1.544 Mb/s--less noise and extended reach. Additionally, the installation cost of G.SHDSL vs. HDSL is much lower because fewer network elements are required to implement the service as illustrated in Table 2.

Table 2: THE BUSINESS CASE FOR BONDED G.SHDSL

A new solution

Bonded, or multi-link, G.SHDSL technology combines several lower-speed independent physical links to create a single logical "fat pipe". Today, SMBs resort to using several T-1 lines to meet their ever-increasing bandwidth needs. In many cases, two to eight T-1 links are needed that support in aggregate 3 Mb/s to 12 Mb/s. The problem is that these T-1 links are typically application-specific, such as local voice, long-distance voice, Internet browsing and VPN. Additionally, even though aggregate bit rate is high, maximum burst rate is limited to the highest data rate of any one physical link, or 1.5 Mb/s.

Ideally these physical links could be combined together with applications shared across the new logical "fat pipe." An example of how bonded G.SHDSL works is found in the Access Inverse Multiplexing diagram. G.SHDSL subscriber links, one UNE or wire pair is needed for each G.SHDSL physical link, connects the carrier's central office to the subscriber remote location. Algorithms in the access equipment combine the physical links to provide 4.6 Mb/s with two pairs, and 9.2 Mb/s with four pairs. In the case of a voice and data integrated access device, eight pairs may be combined to provide 15 Mb/s data, several T-1 data ports and T-1 voice PBX connections. High-speed circuits operating at the highest aggregate data rate of the combined physical links are created on an end-to-end basis using permanent virtual circuits. Carrier-class quality is maintained using ATM transport with different service level assignment based upon real time requirements--voice and video--or other applications, such as VPN and Internet browsing, that are much more forgiving to additional delays and packet loss.

Why consider bonded G.SHDSL?

For the service provider, bonded G.SHDSL provides:

• An easy-to-provision service that competes with metro fiber services, without the need to sink capital expenditures into new outside plant facilities. Bonded G.SHDSL takes advantage of the installed base of copper plant

• A service that can be provided anywhere in the service provider's network. Unlike fiber-based systems, the copper-based telephone network is already in place and connected to just about every potential SMB customer, allowing a ubiquitous service offering

• Ability to leverage existing capital equipment (such as DSLAMs) without a "forklift" upgrade. Most existing DSLAM and other central office equipment can be upgraded to support G.SHDSL with inexpensive, incremental upgrades

• Limited effect on existing network services. Because Bonded G.SHDSL uses an international standard line code designed for low interference, it has very little impact on currently provisioned services such as voice, T-1 and ADSL. So a service provider can begin service introduction without worrying about service degradation or interruption to existing customers

• Support for the migration to a fully integrated network. By offering a native speed 10BaseT data interface and support for dynamic allocation of voice bandwidth, Bonded G.SHDSL solves the last-mile issue for service providers and allows them to offer truly integrated services over a single connection.

For SMBs, Bonded G.SHDSL allows:

• Affordable bandwidth to bridge the T-1 to T-3 gap. Services requiring higher bandwidths (like e-commerce and videoconferencing) are no longer out of reach for SMBs, with speeds up to 10 times faster than T-1 available for less than twice the price of T-1 and up to fifteen times less than price of T-3

• A scalable solution. Bonded G.SHDSL services can be offered at bandwidths between 2.3 and 15 Mb/s, and can easily be upgraded within that range by provisioning additional copper pairs

• Ubiquitous access. Because Bonded G.SHDSL uses ubiquitous copper pairs and provides longer range than most SDSL and T-1 solutions, it is available to a wider number of SMBs than T-3 or metro fiber services.

Market implications

It is interesting to note that corporate America depends on Sprint, AT&T and WorldCom for much of their telecom services. Additionally, approximately 40% of the cost of providing corporate networks for these major IXCs is the cost of the T-1 leased lines provided by the ILEC. Could these IXCs be planning to cut costs by using existing colos with DSLAM equipment to provide business-class DSL services similar to what the original, but now failed, CLECs had envisioned?

If so, what will be the response from ILECs? T-1 services will continue to grow, from an estimated 2.3 million current lines to about 3 million by the end of next year, according to Morgan Stanley. It is anticipated that ILECs will continue current pricing policies in regards to providing a premium T-1 service, with pricing that may fall a little because of competition but, for the most part, will remain relatively flat. Multi-link G.SHDSL services operating from 2.3 to 15 Mb/s provides ILECs an opportunity to deliver new access services operating above the T-1 data rates, and an alternative offering to the growing number of metro fiber players. 

A market taking shape

Business DSL--today primarily ADSL to the SOHO market--currently accounts for about 32% of the DSL links in the United States. Cahners In-Stat Group forecasts that worldwide there are currently 1.8 million business DSL links, a number that may grow to 8.6 million by the end of 2005. G.SHDSL is expected to account for more than 1.3 million business DSL connections over the next three years. G.SHDSL is currently in evaluation labs around the world--primarily in Europe--and expectations of major deployment by U.S. based ILECs, IXCs and CLECs starting in mid-summer 2002. 

Through G.SHDSL, both CLECs and IXCs will have the opportunity to build high-bandwidth access services to compete for business customers. ILECs will be able to deliver 5, 10 and 15 Mb/s access services that complement their exiting T-1 offerings, and SMBs will get their "fat pipes" via copper facilities. Many SMBs have outgrown their existing T-1 and DSL connections, and fiber services are either overkill at 45 Mb/s or are not affordable. Fiber-based Ethernet services would provide the perfect solution for many of these businesses, if only they were available ubiquitously. Using G.SHDSL to deliver speeds from 2.3 to 15 Mb/s, service providers can bridge the T-Chasm, create new, revenue-generating services by leveraging their existing copper-based networks to connect to the fiber backbone, and meet present and future communications needs of business customers.

Donald B. Skipwith is Vice President of Business Development for Symmetricom Inc.

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