AT&Ts Other High-Speed Agenda

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Mike Armstrong is covering all of his bases.

AT&T Broadband & Internet Services -- which runs
high-speed data through cable-TV facilities -- is slowly taking shape. At the same time,
AT&T is moving quickly -- well, as fast as a behemoth can hustle -- on its other
high-speed initiative: digital-subscriber-line service.

Like some latter-day Alka-Seltzer anthropomorph, CEO C.
Michael Armstrong is trying to earn the name "Speedy" -- everywhere.

In cities like Boston; Washington, D.C.; Seattle; and San
Francisco, by this fall, customers will be able to get DSL service either directly from
AT&T Business Services or indirectly (for residential and business users) from local
Internet-service providers reselling it through AT&T's new wholesale operation.

This sets up serious competition as cable-modem services
roll out in those and six other markets (New York; Philadelphia; and Sacramento, Los
Angeles, Santa Cruz and San Diego, Calif.) where AT&T has cast its DSL lot.

Moreover, AT&T plans to deploy 1,200 DSL
points-of-presence within the next 12 months, spread across AT&T local service
facilities and those of other DSL providers.

AT&T's services will offer bandwidths ranging from 144
kilobits per second to 1.5 megabits per second (IDSL, ADSL and SDSL speeds). Some of the
services will run over the facilities of the IBM Global Network, which AT&T is
acquiring.

Although AT&T hasn't tipped its hand about DSL pricing,
it will surely match or beat the monthly fees of its reviled Bell competitors in those
markets -- usually under $60 per month for the simplest residential installations.

Speaking of which: AT&T actually has installers!

Details about DSL installation are still sketchy, but the
third-party setup process that has plagued many cable-modem ventures may be just another
day's work for AT&T installers. Customer support and service -- another pride of
AT&T -- is likely to become a selling point, too.

AT&T admits that its ubiquitous agenda (including
future wireless-data offerings) stems from its objective to be "the only ISP that has
a comprehensive portfolio of cable modems, DSL and wireless access." AT&T
Broadband also insists that it "is fully committed to be a key supplier to both the
DSL marketplace and the overall 'dot.com' marketplace."

For cable operators, this means the glacial Bell-company
DSL ventures and the selected rollouts of independent DSL providers such as Covad and
NorthPoint (and their ISP resellers) are not the only high-speed competitors they'll face.

Meanwhile, AT&T's new $5 billion best friend,
Microsoft, is also floating its DSL dreams.

Microsoft Network Internet-access DSL -- now being tested
in Seattle, Atlanta, Chicago and San Diego -- offers downstream speeds of 8 mbps. The MSN
pilot DSL projects were developed using UUNet's national backbone, but Microsoft admitted
(even before its AT&T investment) that it would look elsewhere for connectivity as it
expands DSL capability.

You get the feeling MSN won't be looking very far nowadays.

As the appetite for high-speed services accelerates --
especially among residential users -- you can expect more bundling, packaging deals and
price wars that could trip up the already stumbling cable-modem long march.

So far, it seems like cable and telephone companies have
been seeing who could lose the high-speed-data race. AT&T's entrance allows the
biggest company to compete against itself to deliver service. How would you like your
bonus to be based on that equation?

Moreover, AT&T is not alone among so-called
long-distance carriers in pushing DSL.

Sprint (through its local-exchange subsidiaries) launched
its first DSL network in Charlottesville, Va., last month, in conjunction with EarthLink,
its ISP ally. Sprint plans to set up DSL operations later this year in Las Vegas and in
the areas where it offers telephone service around Orlando, Fla., and Kansas City.

The company calls DSL "one of the cornerstone
technologies" for enabling Sprint ION (Integrated On-Demand Network) around the
country. ION is its multimedia package -- mainly for business, but with significant
consumer implications in video, data and voice.

For the local services, Sprint and EarthLink are developing
and supporting local content to accompany their DSL high-speed services, thus adding
another competitive dimension to the cable-modem ventures. Monthly DSL in Charlottesville
starts at $52.99, including Sprint network access and premium EarthLink services.

MCI WorldCom is still struggling to polish its DSL agenda,
which is expected to materialize later this year.

AT&T's intensive drive into DSL at the same time it is
building cable-modem infrastructure opens a variety of intriguing ideas -- including how
it may push business to one or another platform.

Regulators (or what's left of them) might eventually question how that balancing act
works. But for the time being, the Armstrong team seems to be covering its bases very
precisely.

I-Way Patrol columnist Gary Arlen always enjoys watching a
utility fielder.

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