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The gloves are off!

The fight between cable and DSL intensifies. 01/077/09 Newsletter hed: dek: by James Mathewson

As I begin to edit our September issue–an annual look at the state of Internet infrastructure–I am struck by how little things have changed since I went through this exercise last year at this time. After merging into a few huge conglomerates, the incumbent local exchange carriers (ILECs or “Baby Bells”) have continued to squash the competitive local exchange carriers (CLECs), with predictable results. Most of the CLECs are gone, and their third-party DSL partners–NorthPoint, Flashcom, et al.–have bitten the dust. Only Covad clings tenuously to the precipice, but it too will fall later this year. So DSL choice is effectively gone, and prices have risen while service has declined.

The only real competition for Baby Bells is cable–which also has consolidated into four main players and is dominated by two. AT&T Broadband and Time Warner Cable are investing in infrastructure and adjusting prices accordingly. High-speed access at this time last year could be had for around $30 per month. Now we’re lucky to get it for less than $50. And the cable service too has suffered as the consolidated players struggle to throw bodies at their customer service problems.

But cable technology has an inherent advantage over DSL–it is not limited by range. Whereas DSL signals degrade the farther you get from the local switching station (I was on the fringe and it simply would not work without excessive phone noise), cable’s fiber/coaxial hybrid can go anywhere. Still, the cost of the build-out is greater than DSL, so DSL has had the advantage so far. This will soon change unless DSL providers can find a way to respond to cable’s inherent strength.

Having dispatched with the CLECs and their third-party partners, some Baby Bells–especially SBC and Qwest–are directing their assaults on cable competition by improving the range of their systems with DSL access multiplexers (DSLAMs) from central offices to small, climate-controlled units located closer to outlying businesses and homes. While this will enhance DSL’s long-term competitiveness, it also is driving up the costs of broadband on the DSL side. SBC routinely charges $50 a month for megabit service, whereas $40 was the going rate at this time last year. What DSL providers have done is to sell their services with routers and other necessary equipment, which effectively locks consumers into their choice.

I jumped ship to cable early enough to return my router after several bad experiences with Qwest DSL. (Qwest still has not acknowledged my router return, and is threatening to disconnect basic phone service if I don’t pay for the returned unit. The saga continues. Sigh.) Few consumers will be so bold. The Baby Bells hope that consumers will hold on long enough for their DSLAMs to have a noticeable affect on connection quality. The main advantage for DSL has been open access–consumers have a choice of ISPs. That will soon change, as nearly every cable company will give users some choice (though not full choice).

Sprint and AT&T (formerly parent of AT&T Broadband) will also challenge Baby Bells on DSL, as long as they can get fair access to co-located infrastructure. But I would not count on DSL in any form approaching the technical strength of cable for at least the next year. For this reason, I advise everyone who has cable broadband choice to go that route, except in rural areas, where fixed wireless is the best choice (where available) and satellite is often the only choice.

If you already are a DSL customer, though, it is worth the wait for your network to speed up, if only because a router investment is equal to four months of service, on average. And there are millions of DSL customers who are so fortunate to be close enough to local infrastructure to get fast network connections now. For these folks, it makes no sense to switch. I don’t expect the landscape to change much before I do this assessment again next year. Current trends should be all but settled in 2002, when most residents of the top 100 cities in the United States will have some semblance of choice between cable and DSL providers. At that point, I guess I’ll have to rethink assessing broadband every year.

James Mathewson is editorial director of ComputerUser magazine and ComputerUser.com.

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