Early Adopters Saving with Voice over DSL

BOSTON (06/05/2000) - It's easy to see why James Knudson likes voice over DSL. His Covina, California, law firm buys voice-over-DSL service from mPower Communications that supports four phones and Internet access on a 768K-bps DSL connection for about US$300 per month.

That's roughly what he paid just for individual phone lines, one of which he used dialing up his ISP.

Now the DSL service uses a single set of phone wires, and Knudson gets a faster Internet connection compared to the pokey 56K-bps modem access he used to buy.

"The way I look at it, I pay the same amount as I did before for the phones and get this DSL Internet access for nothing," Knudson says.

Knudson is the kind of customer voice-over-DSL service providers are looking for. He wants better Internet access and comparable phone service, and is willing to take a chance on this new technology in exchange for what he perceives as a bargain.

While upstart carriers are jumping on voice-over-DSL technology, established players are interested as well. SBC Communications Inc. has bet a $6 billion network upgrade that provides voice over DSL to more than 80 percent of its customers. AT&T Corp., which also wants to provide customers with multiple voice channels and broadband data access links, will use DSL to back up primary access technology cable modems.

Voice over DSL holds three other advantages. First, it streamlines services.

Voice, data and Internet access travel over a single regular phone line and customers deal with one service provider.

Second, customers can order as few as one or as many as 14 voice channels on the DSL circuit. Carriers can easily supply customers with just a few channels, such as what Knudson buys. If customers want to add phones, service providers can add more voice channels without sending a technician to the customer site because the new connections can be turned on remotely over the same wires.

And third, such a package could potentially cost less than the same services bought separately from different providers and delivered over separate wires.

For instance, mPower offers a package of eight phone channels, up to 1.5M-bps Internet access, 1,000 minutes of long-distance, free local phone calls, 10 e-mail accounts and a Web page for $400 to $650 per month, depending on the city. Prices vary because the company sets the rates to slightly undercut the other local options, says Rolla Huff, CEO of mPower.

Later, when Knudson and other customers are satisfied with these services, mPower will add to its service options. For example, mPower will offer access to applications such as payroll processing, Huff says.

This service roadmap follows the direction vendors are taking with the equipment that supports voice over DSL, which requires different equipment from traditional phone services. DSL lines become the access loop to the telephone network rather than regular, analog phone lines. DSL carries multiple voice channels as packets on a single circuit; traditional analog voice uses an entire circuit for each voice channel.

For voice over DSL to work, customer sites need to be equipped with gear that converts regular analog phone calls to ATM or IP. Such packetized voice uses some of the bandwidth on the DSL line to carry phone calls to and from customer locations.

At the carrier end of DSL lines, DSL Access Multiplexers (DSLAM) aggregate traffic from many customers and feed it into a switch or router that peels off the packets carrying voice and diverts them to a voice gateway. The gateway transfers phone traffic to the traditional circuit-switched public telephone network.

This configuration could lead to even cheaper long-distance prices. Long-haul carriers today have to pay access charges to the regional Bell operating companies that account for three cents per minute of charges. Competitive carriers selling voice-over-DSL services don't have to charge those fees, so using voice-over-DSL access could mean lower charges.

At the same time, this configuration of hardware means carriers need to pair DSLAMs with ATM switches to sort voice from data traffic, and vendors are already making more complex gear that integrates the functions of separate equipment. For example, Accelerated Networks has integrated support for ATM switched virtual circuits in its voice gateway, eliminating the need for an ATM access switch.

Startup Integral Access has taken this a step further. Unlike DSLAM makers, Integral is not converting a DSL box into something else. Its PurePacket access device handles traditional voice and data, as well as DSL.

Three major makers of DSL voice gateways - CopperCom, Jetstream and Tollbridge - are also morphing their equipment. Jetstream this week at SuperComm 2000 will announce new features in its gateway, such as the ability to set up phone calls and interoperate with a softswitch, a new type of carrier voice equipment.

CopperCom says it also plans to announce a roadmap for how its gateway will change as telephone access networks evolve.

These new features are preparing for the day when long-haul networks are also based on packets, which will make delivery of phone service more efficient, says Ray Keneipp, an analyst with the Burton Group.

In the meantime, customers can look forward to voice, data and Internet-access packages from DSL suppliers, with a host of new services to come. Managed security and VPN services will emerge as customer premise equipment develops, says Erick Klein, an analyst with the Yankee Group in Boston. Voice over DSL will lose its prominence and become one piece of a larger set of options, he says.

"DSL is the distribution vehicle for multiple services, and [voice over DSL] will just be a part of that," Klein says.

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