Despite the apparent demand for ubiquitous broadband services, DSL growth is slowing. This is blamed on economic instability , the rising cost of services and hard feelings after some broadband providers went out of business. During the past year, Telechoice Inc. has revised its predictions about DSL deployment in the United States. The consultancy's most recent projections, released in August, show there will be only 4.5 million DSL lines in service at the end of this year -- 1.2 million fewer lines than Telechoice predicted earlier in the year.
"The slowing economy has certainly had an effect on consumers, and they make up about 74 percent of the DSL lines in service. They're a lot more price-sensitive, and prices have risen from about $40 to $50," says Pat Hurley, a DSL analyst at Telechoice. "And the numbers have gone down a lot from failures of CLEC DSL providers. A lot of business users are probably feeling a bit burned and not willing to sign on with another competitive provider."
Slow downs in substantial Bell company DSL rollouts also contributed to revisions in future line counts, says Hurley.
In early 2001, SBC Communications Inc. delayed by one year the target date for completion of its DSL deployment under Project Pronto. The company has a goal of reaching 80 percent of its customers from the central office or specially equipped remote terminals. However, SBC spokesman Bill Noble says the company will not complete the project until the end of 2003 because of line-sharing issues in Illinois among other things.
At the end of the second quarter, SBC had 1,400 DSL-ready COs, and about 4,000 of its 11,000 remote terminals turned up, giving the company an addressable market of about 23 million customer locations. At mid-year, the company served 1.37 million DSL lines. Noble says the cost for its DSL service increased $10, to $49.95. He explains the company had ended a yearlong promotion.
Despite price increases and slower-than-anticipated rollouts in certain geographic areas, DSL providers are looking at other ways to boost their line counts.
Hurley believes more value-added applications - such as music or video downloads, virus protection, or gaming - need to be introduced so customers can realize the full potential of broadband connections. "Things like this need to start being offered if [providers] want to entice more people to use it. Now comes the task of making it a true mass market service," he adds.
Many regional Bell companies and competitive DSL providers, who want to provide more value to their customers, already are looking into partnerships with content and application.
Qwest Communications International Inc. announced a partnership with MSN, Microsoft Corp.'s Internet service, in which the companies jointly market Qwest's self-installable DSL service and MSN's Internet service and content. Packages range from $39.95 to $49.95 a month, says Murray Smith, Qwest's vice president of DSL.
"Our business model was predicated on making the transport and delivery of DSL a profitable business. We won't require things beyond transport to be a financially viable business," says Rich Wonders, BellSouth Corp.'s senior director of broadband marketing.
But that hasn't stopped BellSouth from looking into various ways to bring additional services, enabled by broadband, to its customers. Wonders notes that BellSouth is testing some suites of business software products in certain areas, and will continue experimenting with different offerings until it finds the mixes for its customers.
As of mid-year, BellSouth reported it had 381,000 DSL subscribers, and hopes to get 600,000 signed up by the end of this year. Service will be available to more than 15.5 million lines -- or 70 percent of households served by BellSouth -- by year's end. In June, the company raised the price of its business DSL service by $20. The cost is now $75.95-$79.95 a month. BellSouth also raised the price of one of its residential DSL packages by about $5. The cost of monthly service is now $45.95- $49.95.
SBC, too, says it's in discussions with content and application service providers. "The model is to use the Internet to provide these services, and we're looking at technologies and relationships that will allow us to provide other content. We're not going to be a content maker," says Noble.
Broadband providers also are trying to increase their line counts by making DSL easier to install and use.
Qwest says it has made significant investments in loop qualification tools that help it ascertain whether an individual line will support DSL. "We only have about a 1/2 or 1 percent of false positives. That stands head and shoulders above what I've seen in the industry and makes for a better customer experience," says Smith.
More than 80 percent of Bell company lines are self-installed, and that's impressive because last year this time very few customers were installing their own service, says Telechoice's Hurley.
BellSouth and Qwest report that at least 90 percent of their consumer customers choose the self-install option, and of those, only about 5 percent to 10 percent need additional help to get the services up and running.
Service providers are expanding the types of DSL they are able to deliver in order to attract new classes of customers, such as small and mid-sized businesses.
"We'll see some offerings from BOCs of symmetric services, probably early next year," says Hurley. "Some have said they're testing it, and they see a hole in the market they can capitalize on."
Many Bell companies, which have historically offered asymmetrical DSL geared more toward consumers, are now examining the benefits of new DSL flavors. BellSouth, for one, says it's looking at g.shdsl, which is designed to transport data at rates of between 192 kbps and 2.3 mbps. The primary use for g.shdsl is for small and mid-sized businesses that have an eye on moving toward voice over DSL and complete network convergence.
GOING DOWN CHART
DSL growth projections have declined as a variety of factors affect business and consumers decisions.
Source: Telechoice Inc. (www.telechoice.com)
| The Links |
BellSouth Corp. www.bellsouth.com Microsoft Corp www.microsoft.com Qwest Communications International Inc. www.qwest.com SBC Communications Inc. www.sbc.com Telechoice Inc. www.telechoice.com |
