Full, Lite DSL Vendors Eye Wide Deployments

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Leading suppliers of full-rate and "Lite"
digital-subscriber-line platforms have set the stage for wide-scale retail availability of
their modems this year, using the recent Consumer Electronics Show as a forum for the most
extensive demonstration of interoperability they have conducted to date.

"We're now at the one-to-many phase of
interoperability among suppliers of "G.Lite" DSL equipment, and by the end of
the year, we'll be in the any-to-any phase," said Matt Rotter, executive director for
"MegaBit" services at U S West.

Translated, this means a telco must use a single vendor's
central-office G.Lite equipment in order to assure customers that any G.Lite modem they
purchase will work with the carrier's service.

The any-to-any phase means telcos will be able to use
multiple vendors' DSLAMs (DSL-access multiplexers) and be assured of interoperability with
all modems bought at retail.

Now that the industry has reached this phase, the chip sets
supporting DSL are moving rapidly into the modem-production stream, including modems that
come embedded in PCs, said Walt Rivera, marketing manager for DSL products at Lucent
Technologies' microelectronics division.

"We've come a long way, which is the message we were
trying to put across at the CES," Rivera said. "Our company demonstrated
interoperability among 13 vendors that are using our 'WildWire' chip sets, which is
technically a tough thing to do."

Now PC and modem manufacturers like Hewlett-Packard Co. --
which just announced that it would include WildWire-based modems in some of its new
"Pavilion" PCs -- can move to nationwide shipments confident that the expanding
base of standardized DSL lines is large enough to justify the costs, Rivera noted.

"Vendors don't have to minimize their production and
distribution efforts to certain regions, as they did previously," he added.

A driving force behind moves by H-P and other computer
manufacturers in this direction is market demand for high-speed downloading of music,
noted Rob Wait, worldwide product-marketing manager for H-P's home-products division.

"We're building in technology that people are looking
for today, whether it's making music CDs with a CD-RW drive, navigating the Internet with
a one-touch Internet keyboard or tapping into high-speed Internet services through a
digital modem," he said.

Pavilion PCs that come with the WildWire modem start at
$1,899 retail. All units with the DSL modem run on Intel Corp.'s "Pentium III"
processor and come with H-P's CD writer, which supports "burning" downloaded or
offline music into CDs, as well as with "MusicMatch Jukebox" software, which
supports MP3 downloads.

Many other deals involving the new WildWire chip set are in
the offing for stand-alone universal serial bus- and Ethernet-based modems, as well as
embedded units, Rivera said.

The chip set is compatible with full-rate asymmetrical DSL
based on the "G.DMT" standard, as well as with G.Lite and T-1 data links, but it
is tailored to operate at a maximum speed of 1.5 megabits per second, he added.

"This is the sweet spot that everyone is looking for
to serve the mass consumer market," Rivera said. He noted that the multiple-platform
compatibility of the modem means that it can be sold now and that it will work with widely
deployed G.DMT full-rate systems and G.Lite systems later on.

There are now about 200,000 G.Lite-compatible modems in the
distribution channels nationwide, said Mark Peden, director of technical standards at
NorthPoint Communications Inc., a leading DSL competitive local-exchange carrier.
"This year, you'll be seeing DSL technology popping up on retail shelves and
available through a number of other channels, as well," Peden said.

Not to be outdone, Nortel Networks expanded its push into
DSL by acquiring Promatory Communications Inc., a manufacturer of what Nortel officials
referred to as "third-generation" DSLAMs.

"We believe this is another disruptive technology that
will change the speed, reliability and economics of services offered by our carrier
customers," Nortel Access Networks president Steve Schilling said.

While Nortel has supplied standards-compliant DSLAMs as an
OEM (original equipment manufacturer) along with its own proprietary "One-Meg"
DSL system, the Promatory acquisition gives the company a more sound footing in its
efforts to compete with the third-generation DSLAMs Lucent is marketing under the
"Stinger" brand.

"Stinger is one of the closest we've seen to what
Promatory offers, but we think the Promatory system has advantages because it was
developed at a later date in the processor-evolution cycle, which makes it much more
compact than other products," Schilling said.

"One of the big advantages to compactness is that
carriers can deploy the DSLAMs right in the central office, avoiding the cost and hassles
of finding colocation space," he added.

As a third-generation DSLAM, the Promatory system
integrates ATM (asynchronous transfer mode) into the provisioning gear at the network
edge, affording carriers the ability to assign highly varied levels of quality of service
on a per-line basis over the DSL links, Schilling noted.

In Promatory's case, the system supports eight to 16 lines
of packet voice, along with high-speed Internet, over a single copper pair, allowing each
of those "virtual circuits" to be assigned features and performance requirements
as needed by users, he said.

Estimates varied as to how many lines are provisioned with
DSL nationwide and how many customers there are.

Offering a conservative view in comparison with the numbers
compiled by many analysts, Rotter said that at year-end 1999, approximately 20 million
people had access to DSL services, and that number could be expected to double by the end
of this year.

The number of actual customers at this point is about
610,000, officials said, noting that this compares with about 1.5 million cable-modem
customers.

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