DSL Line Sharing: No Real Problems

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Buoyed by a successful field trial, data competitive
local-exchange carriers said there are no major technical issues hindering their provision
of broadband-data services over shared incumbent phone-company lines.

As a result, the Federal Communications Commission's Nov.
18 order mandating "line sharing" for digital-subscriber-line services could
mean a boom for DSL providers that compete with cable systems for high-speed-data
customers.

"We believe broadband Internet access will be as vital
to businesses as telephone access, and we look at the new, emerging DSL carriers as the
key enablers of broadband, outpacing growth of cable modems primarily due to a larger
footprint," said Brent Bracelin, DSL-carrier analyst at Portland, Ore.-based Pacific
Crest Securities.

"Additionally, we expect that a favorable ruling on
line sharing will facilitate low-cost residential DSL services that could further
accelerate DSL deployment above our current forecasts," he added.

Bracelin estimated that during the last quarter, data CLECs
NorthPoint Communications Inc. and Covad Communications Group Inc. each had footprints
surpassing that of the largest cable-modem-service provider, Excite@Home Corp., which, he
said, passes about 21 million marketable cable homes.

Competitive local data carriers said line sharing lets them
penetrate markets more rapidly than they can via the current method, which requires them
to install a new, second copper line for each new customer.

Sharing an existing line eliminates the need for an
installation truck roll by the local incumbent LEC, thus cutting the concurrent
provisioning delay from an average of 30-plus days to 15 or fewer.

Incumbent carriers such as SBC Communications Inc. and GTE
Corp. may also benefit from the change as they seek DSL business in markets outside of
their incumbent domains.

A number of procedural and policy issues -- such as pricing
the unbundled line and customer-care protocols -- must be resolved to implement the FCC's
line-sharing order, details of which were not available for review by ILECs and CLECs at
press time.

But carriers and analysts said that while ILECs and data
CLECs still have a variety of technical points to hammer out, technology should not be a
significant impediment.

One big reason: ILECs already employ line sharing to offer
their own DSL services, providing voice and high-speed data over a single copper twisted
pair. Bracelin estimated that two-thirds of the roughly 300,000 North American DSL
subscribers were ILEC customers served by lines sharing voice and data.

"We've not been hearing anything that leads us to
believe there will be significant spectral-interference issues," said Jon Atkin,
telecommunications analyst for investment firm Ferris, Baker Watts Inc. "There's so
much momentum built up into the process now, political and otherwise, that the time has
passed for the RBOCs [regional Bell operating companies] to be raising red flags on
technology issues."

The FCC's order essentially requires telcos to let
competitive DSL carriers provide asymmetrical DSL service over the high-frequency portion
of existing copper analog phone lines, which carry their voice traffic on a lower
frequency of the same line. Incumbent carriers are required to share the line with only
one other carrier, and they are not required to unbundle the voice portion of the line.

Steve Hensley, chief technology officer and cofounder of
Vancouver, Wash.-based New Edge Networks, said that in order to share the line, a data
CLEC must simply install in the central office serving a particular customer a
band-splitting filter that directs the voice traffic to the analog circuit switch and the
data traffic to the CLEC's DSL-access multiplexer.

At the customer premises is another splitter that performs
the same function, along with standard access equipment, such as a DSL modem or router.

"If you use something like this, it's kind of a
plug-and-chug in the consumer's home," said Hensley, whose company plans to offer DSL
service in markets of 250,000 or fewer nationwide in the next two years. "The
technical issues on this are trivial."

That assessment was apparently borne out in lab and field
trials conducted in October and November over U S West's local phone plant in Minnesota,
at the request of the state's Public Utilities Commission, to determine whether
third-party line sharing would degrade voice-service quality.

Covad director of network engineering Anjali Joshi said the
testing by Covad, NorthPoint and Rhythms NetConnections Inc. found no significant
problems, which she considered unsurprising given the fact that the trial technically was
no different from how U S West and other ILECs have been offering their own brands of DSL
service.

"This was not rocket science. It wasn't even
kindergarten," she said. "There's a minor degree of degradation, which you would
expect. Things are not going to be the same as they were before, but the differences are
inconsequential."

The reaction of ILECs to the FCC's order was generally
muted -- in contrast to the flurry of joyous statements by the data CLEC community --
although some voiced caution that the commission and carriers needed to create standards
for line-sharing implementation in order to prevent voice degradation.

Bill McNamara, research director for BellSouth Corp.'s
science and technology department, said that although he assumed that the ILEC would have
to provide a splitter in the central office, there had been no discussion of the
equipment's characteristics.

BellSouth was confident that its own shared-line DSL
implementation would not cause data interference with the voice spectrum because it
specifically designed its system to minimize that risk, he added.

"In this particular case, we only have immediate
responsibility for the POTS [plain old telephone service] channel, and a third party might
have very little concern about interference. We intend to provide true high-pass, low-pass
filters to minimize that risk," McNamara said.

Of course, if the ILEC has to install the filters at the
customer premises to protect its voice channel, it requires a small capital expense, plus
a truck roll, he noted, adding, "A truck roll and a couple of hours of labor …
it's not insignificant."

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