Thousands of SMEs are expected to move to DSL broadband by the end of the year. ZDNet Australia examines the industry and shows how to navigate this competitive and confusing market.

Broadband technologies will be the roads and railways of the 21st century, generating the next wave of economic expansion. So says the Broadband Advisory Group (BAG) in its recent report to the Federal Government. However, facing a current adoption rate of only two percent of the nation's population, the group warns that Australia is at risk of being left behind. Currently we are struggling to match our global colleagues in both adoption rates and bandwidth.

According to research conducted by the OECD (Organisation for Economic Co-operation and Development), in December 2001 Australia ranked 18th in the world for broadband adoption, with only 0.9 percent of the population connected--trailing behind countries such as Norway, Spain, and Portugal.

While that figure has more than doubled in the past 12 months and is expected to further increase to 3.75 percent adoption by the end of the year, it is still well behind South Korea, which is leading the world with more than 17 percent of its population connected to broadband technologies.

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Telstra, accused by industry groups and commentators of holding the country back in broadband adoption, recently announced it estimates there will be one million broadband customers--around five percent of the population--by 2005. However that estimation still leaves Australia well behind the world leaders.

Growth of DSL
To meet growth expectations, the industry is counting on more residential users and small-to-medium-size businesses to upgrade to DSL (digital subscriber line), which is the broadband technology showing the highest user growth rate in Australia, in particular ADSL (asymmetrical DSL).

According to the Australian Competition and Consumer Commission (ACCC), more than 70,000 local businesses are using broadband, and of those, around 45,000 are connected to ADSL--another 5000 businesses are connected to a DSL variant such as SDSL (symmetrical DSL) or HDSL (high-bit rate DSL).

DSL is highlighted as the popular choice for most SMEs because it is much faster than dial-up, and both faster and cheaper than ISDN.

"Companies are currently using clunky old technologies like ISDN which is becoming expensive now," says Gartner analyst Geoff Johnson.

He predicts DSL will have a wide appeal for a range of corporations and individuals. "At the heavy end of town large corporations will use it for their branch offices and for telecommuters, and SME Australia will use it in their operations because it is cheaper than alternatives," he explains.

Need for speed
While cable is popular with the residential market, Johnson does not recommend it for businesses because it is a shared line--this means it can offer unreliable speeds. For example, if all the businesses sharing the cable used the connection at once, the speed can dramatically slow down as the system tries to service all users.

Broadband is typically defined as offering 200Kbps (kilobits per second) or more. Dial-up connections operate at a maximum speed of 56Kbps. ISDN, known as a narrowband service, offers speeds of either 64Kbps or 128Kbps, but its main advantage is its reliability. Leased-line services offer speeds ranging from 64Kbps to 100Mbps.

By comparison, ADSL is typically offered at a downstream speed of 256Kbps and 64Kbps upstream or 512Kbps downstream and 128Kbps upstream. HDSL and SDSL can reach speeds of 2Mbps in CBD areas, and direct fibre connections--typically used by large companies--offer bandwidth rates between 2Mbps and 100Mbps.

Convincing the customer
However, SMEs have so far been slow to adopt broadband. Previously the barriers to businesses included reliability and price, but Telstra--who owns the fixed-line phone backbone over which DSL operates--has improved the quality of the service over the last 12 months making reliability not so much of an issue anymore, and increased competition and adoption has seen the prices start to fall.

Kylie Hutchison, product manager at Pacific Internet, says while the quality of the DSL network is still not the best, it has improved enough that the service provider now offers a service level guarantee on it.

"We know there have been concerns [about the reliability of DSL] so we want people to know that it is a lot better," says Hutchison. "Price shouldn't be an object to change to DSL--they have come down so much. It is more an issue of education."

Phil Singleton, Chairman of SPAN (Service Providers Industry Association) spoke to Technology & Business  earlier in the year. He predicts the barriers to broadband uptake will be broken down this year as telco and IT industry groups join forces to promote broadband "not only to big business but to the neglected small to medium business segment".

"Misperceptions in this market around the price, technical complexity, and other usability issues are barriers that will be further broken down with education," he says.

Navigating the market
If all of these predictions prove to be true, this means there will be thousands of SMEs attempting to navigate the highly competitive and confusing broadband market. There are many different types of broadband technologies on offer, even when only looking at DSL (ADSL, SDSL, HDSL, and many more). Add to this a variety of service providers all offering different plans, and you pity the person who ends up having to wade through the options.

If you happen to be that person, following are some tips to help you find the right provider for your business.

Gartner's Johnson says the first step is to check what types of broadband connections are available in your area. ADSL, for instance, is only available if you are within five kilometres of an exchange that has suitable equipment installed. Gartner says DSL coverage currently is "patchy, but improving". If you are based in a regional area, you may need to look at satellite.

Once you have determined what is available to you, Johnson advises to look at the speed and reliability. He says you shouldn't look at price until you have figured out the coverage and reliability. The last step, he says, is to figure out what price you want to pay for the level of service you have chosen.

Hutchison takes a slightly different tack. Her advice is to first determine what the needs are that you must meet. You may perhaps have to work within a certain budget, or require a certain rate of bandwidth. Whatever it is, she says, you need to figure it out first and then find someone to fit those needs.

"It is a very competitive market--there is a provider that can fill their needs," says Hutchison.

If it looks like a donkey...
But she warns about shopping on price: "You get what you pay for, if it is cheap then you will be missing out on something."

Glen Noble, general manager of hosted solutions at Macquarie Corporate, says there are hidden traps and a lot of users have wound up disappointed. Like Hutchison and Johnson, he says price is not a differentiator--you get what you pay for.

"Buying ignorance and shopping on price alone is dangerous," says Noble. "Any user should understand the difference in service levels and identify the minimum requirements for their business before signing with a supplier."

He advises to do your homework, look for a reputable supplier, and pay attention to what different service level guarantee's (SLGs) are being offered. He also says businesses should check the fine print of the contract and be on the lookout for additional download costs.

"Paying for additional downloads can be very expensive," warns Noble. "A business may go over its limit early in the month, without notification from the supplier, only to incur hefty additional charges at month end."

Some of the hidden traps he is referring to include residential services masquerading as a business offering, which he says is common among the DSL offerings aimed at the SOHO market; and guaranteeing throughput as well as the commonly quoted burst speed, ie, not what the technology is capable of, but what is the most likely level of constant performance.

Noble also advises to check the level of uptime guarantees. "Businesses typically need more than 99.7 percent update," he says. "In contrast, a major carrier's uptime rate for the home user is around 99 percent which is not suitable for basic business functions."

Noble also says it's important to understand the difference between a target and a service guarantee--the latter is what you want.

Pacific Internet's Hutchison offers a last piece of advice--ensure your business receives 24x7 support. This is especially important for smaller companies, she says, who will most likely have very few dedicated IT staff. Noble says to be clear on your needs. If you want to speak to an operator within 10 seconds of picking up the phone, make sure it is in your contract.

"Identify when you want support, how it is delivered, and within what timeframe," advises Noble.

Wireless connectivity is much talked about lately. Optus has been concentrating on rolling out more hot spots around the country, Intel has released its Centrino family of processors which focus on wireless communication, and it seems every month another telco is expanding its wireless network.

Gartner's Johnson says wireless won't displace DSL broadband, instead it will be complementary.

"Wireless will end up supporting DSL--it will be an extension of an existing relationship with your broadband provider," explains Johnson. "If I have DSL when I am out and about it would be really handy to be able to access my network via WLAN portable broadband and 2.3/3G mobile broadband."

Hutchison also sees a place for both DSL and wireless, but says wireless hasn't arrived yet.

"Wireless will revolutionise the broadband industry, but not yet. We are still waiting on 3G," she says.

So other than wireless, what else can we look out for? Johnson predicts rate adaptive DSL (RADSL) will be popular. RADSL is similar to ADSL, except that is capable of longer transmitter distances, which according to Johnson, is especially relevant for Australian users because we have some of the biggest exchange distances in the world. It will also offer a variety of speeds and prices, he says, predicting speeds of up to 1.5Mbps a second.

"Globally the ultimate technology in DSL is RADSL," he says.

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