GTE Wants FCC to Speed ADSL Service Nationally

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GTE Corp., moving sooner than expected toward announcing
its wide-scale rollout of ADSL technology, is pursuing a new, federal regulatory strategy
aimed at speeding up access for its high-speed-data service faster than the locally based
telco initiatives seen so far.

The company said last week that it would introduce
asymmetrical-digital-subscriber-line services from approximately 300 central offices
across some 34 market clusters in 16 states by year's end, with several markets
getting under way as early as June.

"This is the largest application of ADSL technology in
the nation," said John Appel, president of GTE Network Services, the company's
local-exchange-carrier operating unit.

Rather than applying for individual tariffs at the various
state regulatory agencies, GTE said it will submit a blanket-tariff proposal at the
Federal Communications Commission later this month that would give it authorization to
provide services in all of the targeted markets without further action at the state level.

"The rationale for filing under federal jurisdiction
is that our implementation of ADSL supports interstate service," said Jeff Bolton,
senior product manager for advanced switched services.

GTE said its June launches will include, but not be limited
to, markets where it has been testing the service.

The markets include: in and around Kirkland and Redmond,
Wash.; Durham, N.C.; Beaverton, Ore.; Irving, Texas; Lexington, Ky.; Fort Wayne, Ind.;
Bloomington, Ill.; Tampa and Sarasota, Fla.; Hilo, Hawaii; and much of GTE's Southern
California base. Markets in Michigan, Missouri, Ohio, Pennsylvania, Virginia and Wisconsin
will launch from July through October, the company said.

GTE, like other telcos announcing rollouts this year, will
offer several speeds, starting with a 256-kilobit-per-second downstream/64-kbps return
rate and ranging up to 1.5 megabits per second/768 kbps. "Target monthly prices"
will range from $30 to $120, plus a $250 cost for multiple users on a local-area network
connected to a high-speed DSL line.

Those rates don't include installation, modem costs,
Internet access and other services, officials said.

GTE Network Services will market ADSL directly to
customers, but it will also encourage participation by Internet-service providers,
including its own Internetworking Services unit. The company will offer volume discounts
both for local end-to-end connections and for local-access links that are interconnected
via long-haul data routes to other local ADSL-access links that might not be in GTE
territories, officials said.

For example, company spokesman Bill Kula said, the 256-kbps
access cost -- $40 per month for an individual user -- would be discounted to $30 for a
three-year volume purchase involving 1,500 lines or more, and the $80-per-month rate for a
symmetrical 768-kbps service would be discounted to $60 for a similar volume purchase.

"We're very confident that our tariff plan will
be approved on submission at the FCC," Kula said, noting that the company has had
"very good" discussions with the commission about the proposal. He added that
GTE has informed state agencies of the plan, as well, and it expects approval at the
federal level to take only 15 to 20 days, versus 90 days or more at the state level.

The GTE tariff filing contrasts markedly with other
telcos' approaches, which have been tied to state processes, often going through
extensive market-trial phases before tariffs are officially submitted. For example, SBC
Communications Inc. subsidiary Pacific Bell has been offering ADSL services commercially
on a market-trial basis in the San Francisco Bay area since November, but it doesn't
plan to file a tariff until sometime this summer.

U S West Inc., which has promised to have 256 central
offices in 40 markets equipped to deliver ADSL services by June, has taken a
state-by-state approach, as well, although without the intervening trial phase for each of
those markets. But the carrier encountered a snag in Washington state two weeks ago, when
the Utilities and Transportation Commission expressed concern that its strategy might
favor its own ISP unit, U S West Interprises, over other ISPs. The agency deferred a
decision on the ADSL tariff until this week, pending clarifications from the carrier.

"We're proactively seeking relationships with
other ISPs," Kula said, noting that discussions with several firms are under way,
although no deals have been struck yet.

"We don't know what the pricing strategies of
these entities will be, but you could see radically different pricing among them,
depending on the types of markets that they serve and the value-added components," he
added.

GTE will initially focus on delivery of service connections
to businesses, schools and other institutions, moving to marketing to residential
customers later in the year, Appel said. He estimated that ADSL could be made available
over 65 percent to 70 percent of all GTE lines nationwide.

Kula said the percentages would be much higher in many
areas, including those targeted for initial deployment, although he declined to estimate
what the coverage would average out to in the initial rollouts.

"This average [given by Appel] includes all of our
service territories in 28 states, including some markets that are quite rural," Kula
said. Less-populated areas include disproportionately long loop lengths that go beyond the
service limits of ADSL, which typically runs to about two miles, he noted.

GTE is also looking at what is known as "IDSL,"
which is a 128-kbps technology that uses the modulation technique employed in ISDN
(integrated services digital network) to support delivery of higher-speed access over much
longer distances.

"This isn't part of the '98 plan, but
we're considering it," Kula said.

IDSL is seen by many telcos as a fallback service that can
be offered to customers whose lines don't qualify for full ADSL.

GTE's suppliers for the 1998 ADSL rollouts are Fujitsu
Network Communications and its DSL-technology partner, Orckit Communications Ltd. The
system, based on the DMT (discrete-multitone) modulation standard, will require on-site
installations, with one-time installation fees pegged at $60 to $140, depending on whether
the end-user already has a separate inside-wire connection to the personal computer in
place.

Appel said GTE anticipates eventually moving to the
"splitterless" version of ADSL being developed through the Universal ADSL
Working Group, which will support plug-and- play uses of the technology without requiring
installation of a second on-premises wire.

Telcos hope to be able to move to this
"ADSL.Lite" system when it becomes available sometime next year by simply adding
line cards to the ADSL systems that they're deploying this year, but whether that can
be done depends on how the standard evolves, said George Chase, executive vice president
of sales and marketing for Fujitsu.

GTE expects to fulfill ADSL-installation orders within
seven days of receiving them, Appel said. It will charge $12 per month for modems, or
offer them for purchase at "about $300," he added.

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