News

HSA Latest to Add DSL To Broadband-Data Menu

10/24/1999 8:00 PM Eastern

High Speed Access Corp. is racing to grab more
broadband-data customers by offering digital-subscriber-line service to complement its
cornerstone cable-modem networks.

Similar alternative broadband-service strategies are
increasingly being pursued by cable high-speed-data providers like HSA, as its
cable-operator customers want to penetrate nontraditional markets such as businesses
without cable access -- businesses that telcos are courting aggressively with DSL.

"It's not the best solution -- the best solution
is the cable plant," HSA president Ron Pitcock said. "This will keep us
competitive with other technologies, like DSL players coming into the cable market."

Under its new strategic partnership with wholesale DSL
provider NorthPoint Communications Inc., Denver-based HSA will sell symmetrical DSL,
providing bandwidth of up to 1.5 megabits per second over existing copper phone lines in
markets where it provides cable-modem infrastructure and services to local system
operators.

Primarily, that will be where customers are outside of
franchised areas or are in locations not yet reached by two-way cable plant, Pitcock said.

HSA will use its existing sales and engineering forces to
handle the service, which will be branded by its cable-operator customers.

NorthPoint already provides DSL service in 28 major U.S.
markets, with plans to pass 4 million businesses and 50 million homes by early 2000.

HSA has focused on "exurban" areas, catering to
small and midsized cable operators outside of or on the fringes of major markets. Pitcock
said that strategy would not change, although it remained subject to customer needs and
demands.

"We won't be offering DSL in areas where we do
not have a cable agreement," Pitcock said. "If there's an overbuild
situation and we can help a cable operator with DSL, we'll talk to them about
it."

Pitcock noted that HSA already used noncable access
platforms where necessary -- dial-up Internet access, for example -- and it was exploring
others such as satellite-backbone connectivity and, in international markets, wireless
"last-mile" access.

Already pursuing similar strategies to penetrate
underserved-by-cable business areas are AT&T Broadband & Internet Services, which
will use DSL where customers want it and where it has no cable presence, as well as cable
Internet-service provider Excite@Home Corp., which offers DSL Internet services through
its @Work business-oriented division.

At the same time, the Road Runner cable-modem system has no
DSL connectivity plans for now, according to spokeswoman Sandy Colony. "We've
got so much business to deploy, DSL is really the competition," she said.
"We're deploying as fast as we can, so we're focusing on today's
business."

But Jonathan Atkin, an analyst at investment firm Ferris,
Baker, Watts Inc., said he expected other cable-oriented Internet providers to reach deals
with DSL-service operators because of the time-to-market advantage it provides.

"Copper already exists and covers all homes and
businesses, unlike HFC [hybrid fiber-coaxial]," Atkin said. "It's a good
kind of filling option for people like High Speed Access or whoever wants to supplement
their service offerings and go after a broader market."

There has been speculation that such hybrid cable-DSL
strategies could lead to cable operators essentially offering "overbuilt"
broadband-data services in markets where they don't have franchises for their HFC
plant.

That idea gained some currency with Paul Allen's
recent investment in cable overbuilder and DSL provider RCN Corp. The question arose again
with the HSA-NorthPoint relationship: Allen's Vulcan Ventures Inc. is a significant
investor in both companies.

But HSA said it has no interest in using DSL to go
head-to-head with other cable ISPs in NorthPoint's major markets, which already
include the central business districts of New York, Atlanta, Seattle and other cities
where incumbent MSOs offer cable-modem services.

NorthPoint chief development officer Whitey Bluestein said
that while Vulcan encouraged his company to talk with HSA, the pair found their own
synergies in the process of due diligence, as well as demand from some HSA customers that
could only be fulfilled by adding another access platform.

"We don't view the world as DSL versus
cable," Bluestein said. "We view this as all of the competitive providers
competing with the phone company, the incumbent, for broadband services."

Pitcock said that besides its footprint, NorthPoint
provides DSL skill sets to HSA that would have taken six months or a year for the company
to develop on its own, such as deployment and provisioning of service. NorthPoint will
also provide Internet-backbone connectivity, which is essential for helping HSA to
efficiently cluster its markets.

Pitcock said having DSL capabilities will help to cement
deals with some fence-sitting cable operators with plant that might not be ready for
full-blown cable-modem service. He added that HSA would probably announce such new
customers in the next several weeks.

"Cable operators are the ones that pushed us to do
this," Pitcock said. "We would not have gotten the franchise with these [new]
cable operators had we not had the ability to provide DSL."

Bluestein said NorthPoint was seeing the same
technology-agnostic approach from other customers, which were concerned primarily about
competing for broadband customers.

"As a wholesale provider, there will be a lot of ISPs
that offer our services in areas that are covered either by High Speed Access or their
cable partners," Bluestein said. "Customers are going to have to make choices.
They're going to make the best choice to meet their requirements."

NorthPoint's other alliances include a deal with
Microsoft Corp. to market NorthPoint DSL service, plus an alliance with Tandy Corp. as the
preferred DSL provider for that company's 1,400 RadioShack electronics stores.

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