ISPs Stake Broadband Claim

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Baltimore -- Developments on several fronts last week
combined to serve notice that from now on, ISPs will be a force to be reckoned with on
cable's residential broadband turf.

The annual Internet-Service Provider Convention here was
the focal point for a wave of new products and ISP initiatives that promise to combine the
high-speed connectivity of digital-subscriber-line technology with the integrated voice
and data capabilities of Internet protocol-based services.

Even the smallest ISPs would be able to break into the
residential and SoHo (small-office/home-office) broadband markets.

At the heart of the sea change in ISP prospects is the
maturing of DSL technology, and especially the completion of the G.Lite standard for
residential applications, noted Jim Donedero, director for service-provider marketing at
Nortel's public-data-networks unit.

"We're going to see much heavier investment,
particularly by the telcos, in DSL as a result of the completion of G.Lite," Donedero
said.

Wholesale availability of G.Lite transport from telcos and
competitive local-exchange carriers will quickly open a 1.5-megabit-per-second path to
consumers for ISPs, he added.

The Universal ADSL Working Group, which spearheaded the
G.Lite initiative, plans to disband in June, Donedero noted, in recognition that "the
standards issue is largely off the table."

At that time, in conjunction with the Supercomm convention,
the industry will report on telco trial results and conduct an interoperability
demonstration to officially launch the move to commercial deployments of G.Lite, he added.

Nortel has been supplying Bell Canada a proprietary
"One Meg" DSL solution that employs some of the same techniques used in G.Lite
to support longer reach for DSL and the use of one line in the home for voice and DSL
service, Donedero noted.

"We've demonstrated the viability of splitterless
DSL [the one-line-in-the-home approach], and [we've shown] that you can deploy the
technology in a very rapid time frame," he added.

Within seven weeks from the start of deployment, Donedero
said, Bell Canada has extended service to more than 100 central offices in Toronto, Quebec
and Ottawa, representing more than 2 million local lines, with prices pegged at $C39.95
($US26.75) per month, including Internet access and transport components. "The bottom
line is that demand has been surprisingly strong for this consumer-based service," he
added.

Sensing that a consumer-friendly, easy-to-deploy DSL option
is at hand, the leading CLEC wholesalers of DSL connections to ISPs are quickly moving to
install DSL facilities in central offices that serve residential neighborhoods.

Covad Communications Group Inc., for example, announced
plans to deploy consumer-oriented DSL nationwide. The other leaders -- NorthPoint
Communications and Rhythm NetConnections Inc. -- are beginning to expand their deployments
to include residential COs.

NorthPoint enhanced its consumer orientation in an
agreement with Enron Communications Inc., a new supplier of national backbone support for
delivery of broadband multimedia content in the IP format.

NorthPoint -- which is now in 17 markets and 36 cities,
with plans to be in 28 markets and 68 cities by year's end -- will draw on
Enron's ability to consolidate multimedia streams from a wide array of content
aggregators and single-site suppliers. That way, it can provide outsourcing support for
ISPs that want to deliver consumer packages of high-speed multimedia.

"NorthPoint started out with a business plan built on
the outsourcing model, so that we would be able to offer whatever support [was necessary],
in addition to the basic DSL transport that ISPs need," NorthPoint chief technical
officer Bill Euske said. "That applies to back-office, customer care and marketing of
consumer services, as well as business services."

NorthPoint also entered into a deal with Microsoft Corp.,
which will invest $30 million in NorthPoint's initial public offering, with plans to
purchase wholesale provisioning of approximately 100,000 NorthPoint DSL lines over the
next two years.

The alliance will focus on developing specifications for
standards-based content-delivery interfaces for next-generation broadband services,
officials said.

"Our work on the analysis of end-user broadband
requirements and the specifications of a content-delivery interface will make these new
services more applicable and accessible to consumers and businesses," said Thomas
Koll, vice president of Microsoft's Internet-customer unit.

Koll noted that the deal includes plans by NorthPoint to
make available customized, co-branded versions of the MSN (Microsoft Network) portal to
NorthPoint's ISP customers, currently totaling more than 85 nationwide.

MSN, through its DSL-services unit, recently began trials
of DSL services in four markets, preparing to introduce broadband-enhanced content over
the portal.

Microsoft plans to introduce a series of new products for
ISPs over the next year. Officials did not disclose specifics, but they said the new
products would build on the integration programs already introduced for Windows NT-based
applications in order to embrace broadband applications to homes and small businesses.

For example, the company plans to use the new XML
(Extensible Markup Language) protocol designed for creating multimedia Web pages, along
with other software, to make it easier to manage "Web farms" that deliver
multiple types of services in different market niches.

ISPs are also getting new support from Lucent Technologies,
which chose the ISP Convention to unveil what one official termed "the most
revolutionary set of products that Lucent has introduced since its creation."

These include a new "call-feature server," the
"7R/E," to be shipped starting in the fourth quarter. It will allow ISPs and
other service providers to deliver over packet networks virtually every service and
feature available on Lucent's public-network class-5 switches.

"We're merging the reliability and features of
the 5ESS switch with the efficacy of data networking," said Frank D'Amelio, vice
president of product management and marketing for Lucent's switching and
access-solutions group.

The server will make more than 3,000 calling features --
including such popular components as call forwarding, three-way calling, caller ID and
911, which are now are supported by the 5ESS -- available to anyone who connects an
IP-telephony network to the switch, D'Amelio said.

The 7R/E includes packet gateways that provide a direct
interface between IP-telephony networks and the public switched networks in conformance
with the H.323 gateway standard, allowing service providers to combine the functions of
intelligent networking and gateway support in a single rack-mounted unit, he noted.

The system supports interfaces with any type of narrowband
or broadband packet-access network, including DSL and cable, he added.

At the same time, Lucent focused new energy on the ISP
market by introducing a new class of Internet products tied to its "PathStar Business
Service Exchange" -- a customer-premises unit that supports voice and data switching
and routing; integrated access; and services such as IP telephony, Internet virtual
private networks and remote-access outsourcing.

The new product line fits the groundswell of activity in
the ISP domain, where hosted applications for small businesses have become a hot source of
new revenues.

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