Verizon Communications' midsummer announcement that it is conducting a technical trial of voice-over-Digital Subscriber Line technology marks the first time a large incumbent telephone company has publicly stated interest in offering voice service over a data access network.
Voice-over-Digital Subscriber Line (VoDSL) technology lets a network operator deliver as many as 16 lines of voice service over a single copper wire, and would seem to be an ideal solution where copper lines are exhausted and heavy demand exists for additional lines for homes and small businesses.
The fact that incumbents aren't trumpeting their interest in VoDSL is prompting a bit of disagreement as to whether this new technology will primarily benefit new competitors.
"We haven't seen any real interest from the Bell companies at all," says Agnes Imregh, vice president of marketing at TollBridge Technologies, one of the three primary suppliers of VoDSL network gateways. TollBridge has sold its equipment to integrated communications providers (ICPs), a new breed of competitor, and is working with Adelphia Communications for a voice-over-cable trial. "I think it's just too big a change for them to make quickly."
Industry analyst Beth Gage at TeleChoice says incumbent telephone company interest in VoDSL varies, with one primary factor being a company's success in deploying DSL for data services. "The companies that have been successful in deploying DSL are more interested in VoDSL, which makes sense," she says. "But there are a lot of operations issues these companies have to address when they make this kind of a change."
In addition, says Stephen Gleave, vice president of marketing at VoDSL gear maker Jetstream Communications, incumbents may face a regulatory struggle over moving voice services onto a new technology platform. "Every RBOC [regional Bell operating company] in the country is looking at VoDSL, whether they are public about their plans or not," he says.
The Verizon trial, being conducted in Dallas using Verizon employees as trial subjects, will use VoDSL gear from CopperCom and other equipment from Lucent Technologies. It is actually an outgrowth of longstanding research at GTE, before the merger with Bell Atlantic to create Verizon.
GTE, which was also early to trial Asymmetric DSL, originally explored VoDSL as a means of making its Centrex offering more cost effective for small businesses, says Ed Sandlin, assistant vice president for Business Product Management. Centrex is a longstanding telephone company voice service for businesses that includes features such as four-digit dialing, call forwarding and call waiting as part of a network-based service.
"We had a very successful Centrex product for small businesses, but the economics of it were not particularly attractive to us, so we stopped marketing it," Sandlin says. "The problem was that each line to a business required an individual copper loop, and those aren't free. We needed something that would dramatically improve the loop costs."
At the same time, Sandlin says, GTE became concerned about how its new competitors would use VoDSL to cannibalise its small and midsized business customer base. "If someone else gets the customer using this service, it will be hard to win them back," he told the DSL ComForum in Chicago in late July.
New competitors, called ICPs, are using VoDSL as the underlying platform for offering multiple lines of local and long-distance voice, as well as high-speed data, over one or two traditional phone lines.
Companies such as Mpower Communications, Picus Communications and TelePacific Communications are up and running with VoDSL gear. Those companies don't have the legacy operations issues that incumbents face, but they start by buying DSL lines from the incumbent phone company or another competitive local exchange carrier that wholesales DSL service.
"If you look at VoDSL, it requires a DSL line," says Jennifer Stagnaro, chief marketing officer at CopperCom. "And who's deploying most of the DSL today? The incumbents."
General Bandwidth expects the incumbents to become very active by 2001, says Brendan Mills, the company's president, chief executive and co-founder. Its system is designed so that if local electrical power fails, the access device that sits at the customer's site is able to support an analog phone line, which would receive its power from the telephone network and thus provide lifeline service. Otherwise, the integrated access devices that are part of a VoDSL network would require battery backup to avoid going down when commercial power fails, just as today's cordless phones do.
Where VoDSL becomes most attractive, TeleChoice's Gage says, is as the large incumbent telephone companies look to move out of their current franchise regions -- as SBC Communications promised to do when acquiring Ameritech -- to compete with each other.
"For an out-of-region play, VoDSL makes tremendous economic sense," Gage says.
