BellSouth, 3Com Deal May Usher In ADSL.Lite Era

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BellSouth Corp. last week became the first carrier to lock
in plans for the new consumer-oriented "ADSL.Lite" platform, saying that it will
work with 3Com Corp. to make modems widely available by sometime in the third quarter.

The regional Bell operating company reported that it has
equipped central offices serving 2 million lines in seven markets with a proprietary
version of asymmetrical-digital-subscriber-line technology, and it will expand to a base
of 5 million lines in 30 markets by year's end.

The new version of the service is based on the
"G.Lite" standard, which is currently undergoing final approval within the
International Telecommunications Union. BellSouth will introduce it via software upgrades
of existing equipment in all service areas following the final vote on the standard, which
is now slated for August, officials said.

G.Lite specs call for delivery of service downstream at up
to 1.5 megabits per second and upstream at 512 kilobits per second. The difference between
G.Lite and current ADSL systems is that the former do not require installers to extend
dedicated phone wires in the home from splitters interfacing with external drop lines.

"We structured our service from the beginning with
G.Lite in mind so that we wouldn't have to make major adjustments when the technology
became available," said Andrew Dietz, director of product marketing at BellSouth.Net,
the carrier's Internet-service-provider affiliate.

The ISP's consumer service is priced at $59.95 per
month, or $49.95 when bundled with a package of phone-service features from BellSouth
Telecommunications. It operates at the G.Lite downstream rate, but it will have to be
adjusted in the upstream from the current 256-kbps rate to 512 kbps, Dietz added.

3Com will begin selling modems linked to the current
platform in close cooperation with BellSouth.Net this spring, said Dave DeVries, spokesman
for the Chicago-based manufacturer. These units will be upgradable to G.Lite via software
downloads, he added.

Details of the marketing arrangements have yet to be
completed, but the parties anticipate that major retail chains will stock the modems in
packages that come with installation software, possibly including the initial service
costs in the package price.

The modems will also be sold through BellSouth.Net and via
3Com's online and telemarketing outlets, DeVries said.

"This is a major stake in the ground showing
commitment by a major carrier and a major manufacturer to G.Lite," DeVries said.
"We hope that it rattles some cages in the industry."

DeVries said 3Com is negotiating with other carriers, but
so far, its only other announced partnership in ADSL deployments is with nationwide ISP
Flashcom Inc. Flashcom is offering services exclusively over DSL platforms, most of which
are being provided by competitive local-exchange carriers.

So far, the major carriers have been muted in their
commitments to commercial use of G.Lite, despite strong industry backing for the
standardization effort. The Universal ADSL Working Group initiative, inspired by Microsoft
Corp. and Compaq Computer Corp. in late 1997, launched the G.Lite standards mission.

The only other carrier to publicly report on G.Lite tests
has been GTE Corp., which recently wrapped up phase two of a 47-household trial involving
employees of Intel Corp. in Hillsborough, Ore.

"We've submitted the results of the trial to the
ITU," GTE spokesman Bill Kula said. "Overall, we found that the technology was
able to meet customer expectations for ease of installation and their ability to get
online access at high speeds in a splitterless environment."

But while GTE "was very pleased" with the
results, the company is not yet ready to say when it will move to deployment of the
technology, Kula said.

In addition, he noted, the test found that 81 percent of
the homes required installation of at least one microfilter on premises wiring to overcome
the noise and interference problems associated with using one wire for both voice and data
services over existing premises wiring.

G.Lite, like most other DSL techniques, delivers
high-speed-data signals over frequencies above the 4-kilohertz baseband frequency used in
the delivery of the analog-voice signal, allowing both types of signals to ride over the
outside telephone plant.

But because inside wiring is built to less rigorous
specifications, special measures are required to allow the signals to coexist on the same
line on premises. One of those measures is a dynamically managed reduction in the data
rate when the phone is off the hook, in order to minimize interference.

GTE's test was designed to reflect the full range of
housing and types of wiring in the mass market, encompassing homes several decades old, as
well as more recent homes and brand-new construction, Kula noted.

He said consumers can easily install microfilters, so the
need for them on a fairly wide scale would not defeat the purpose of G.Lite, which is to
avoid truck rolls.

Nonetheless, sources at a number of telcos have voiced
concern that the microfilter requirement represents a potential impediment to mass-market
acceptance, leaving them uncertain over how to proceed.

"We're really concerned over what we'll gain
by going to the new platform," said an official at U S West, asking not to be named.

Along with achieving self-installation, telcos must take
another vital step in moving to mass-marketing of a consumer high-speed-data service: This
involves extending coverage to neighborhoods served by remote terminals that are linked to
central-office switches via digital-loop carriers.

To date, DSLAMs (DSL-access multiplexers) have been too
large and environmentally vulnerable to be installed at RTs, which means that residents of
many suburban and newer construction areas -- constituting some of the most attractive
market segments -- can't get the service.

In BellSouth's case, this means that 40 percent to 45
percent of the potential customer base is unreachable over the current platform, said John
Goldman, spokesman for BellSouth Telecommunications.

But Alcatel Alsthom, as well as other vendors supplying
other carriers, is promising delivery of miniaturized, environmentally hardened DSLAMs
this year, prompting BellSouth to anticipate extension of service into DLC-served areas by
midyear, if not sooner, Goldman said.

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