U S West, Software Giants Team Up for High-Speed Data

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The telcos continue to get serious about competing in the
high-speed-data market.

U S West Communications last week enlisted the support of
several computer-industry giants to help develop a next-generation data-network
infrastructure that can exploit the full potential of high-speed access in the mass
market.

U S West said agreements with Sun Microsystems Inc.,
Microsoft Corp., Hewlett-Packard Co., Digital Equipment Corp., Oracle Corp. and Novell
Inc. would lead to implementation of software capabilities in the network that will foster
development of services of every description, including IP (Internet protocol) telephony,
electronic commerce and interactive multimedia.

The telco is building on its plans to offer DSL (digital
subscriber line) access rates at 256 kilobits per second and higher in more than 40 cities
by midyear.

At the same time, the company said it had expanded the
reach of its data services outside of its telephone-operating territories. U S West will
use long-haul fiber lines supplied by Qwest Inc. to connect to 25 markets, adding to 21
markets already covered in a long-line agreement with Williams Communications Inc. that
was announced last month.

The two pacts give U S West access to 24,000 fiber optic
miles for interconnecting out-of-region markets to services offered by the U S West
Interprise Networking unit, officials said.

These long-haul lines all operate beyond U S West's
territory, allowing it to avoid restrictions on entry into long-distance service.

More problematic is a request that the telco is weighing to
the Federal Communications Commission for permission to operate long-haul data networks
within its operating territory, on the grounds that this is the best way to ensure that
rural communities will have access to Internet services, said John Charters, vice
president of Internet services for the carrier.

U S West is using DSL equipment to extend high-speed-data
services into the consumer and SOHO (small-office/home-office) markets within its 14-state
operating territory, but it will stop there. The telco does not intend to exploit DSL
capabilities outside of its territories, as it could under new options that are open to
competitive local-exchange carriers, Chambers said.

'We don't believe that the folks in Florida have
the first clue about who U S West is, but businesses there and elsewhere do, and
that's where we're putting our focus,' he said.

The company is using DSL hardware from Paradyne Inc. and
NetSpeed Inc.

In many respects, what U S West is doing represents what
could become a template for the telco approach to offering data communications in the
residential market, as well as the business market. That's in contrast to the model
being developed in cable, noted Kel Jones, manager of business development for Sun.

'What we're doing here represents for the
telephone industry what the set-top initiative announced by TCI [Tele-Communications Inc.]
and Sun last month represents for cable,' he said.

The cable model focuses on the ability of the cable
industry to derive revenues as both a media developer and a transport supplier. The
infrastructure under development at U S West is aimed at drawing in as many developers as
possible to expand the range of applications and, therefore, the network's ability to
generate revenues. While U S West might get into some areas of content development itself,
that is not on the plate at this point, Charters said.

'What we're doing in data is analogous to what
we've done in voice, where we've used an array of adjunct processors in
conjunction with the 5Es and DS100s [switches] to support provisioning of all kinds of
services, including things like caller ID, three-way calling and voice mail, as well as
more specialized services,' Charters said. 'We're creating an environment
for third parties to write whatever applications they believe they can find a market for,
much as Microsoft, Sun and Oracle have done.'

While U S West's approach is typical of what can be
expected from other telcos, the carrier is well ahead of the pack at this point, Jones
said.

'We're talking to others that are in various
stages of movement toward this model, but we've been involved with U S West over a
much longer period of time, dating back to April of last year,' he said.

A wide range of consumer services tied to the use of
Sun's Java software language in a network-centric computing environment are moving
rapidly toward commercial introduction, as was evident in a Sun display at the recent
Consumer Electronics Show in Las Vegas. Products nearing rollout include Internet screen
phones from Alcatel and Nortel; Internet set-top boxes from TV/COM, The Vestel Group,
Sampo Corp., Network Computer Inc. and others; and a wide range of personal digital
assistants and palm-top computers.

'We have between 400 and 500 companies developing
applications in this space,' Jones said. 'Many of these entities are working on
services that will use subscription or pay-per-view payment models.'

DSL speeds will be too slow, at least in the near term, to
support a full venue of video-entertainment services, Jones noted. But, he said, the
Java-enabled devices now in the pipeline, in combination with the network capabilities
developed by U S West, will create a platform for video-enhanced IP services that will
complement services offered over cable.

'U S West will be able to go to the consumer and offer
many of the types of interactive products that TCI and other cable companies plan to offer
once they have their next- generation set-top boxes in place,' Jones said.

What remains to be decided is whether the telco can build
into the full-service consumer market from the interactive side sufficiently to head off
the cable companies as they go interactive, he added.

Charters said U S West chose its software partners with an
eye toward maximizing efficiency in customer use of its distributed-networking
architecture, whether those customers are businesses linking their internal-communications
networks, or businesses seeking to develop services for end-users.

'We picked our partners that have market-leading
positions in the product areas that are important to us,' Charters said.

The partners fit into different layers of the network, with
Novell supplying the fundamental directory-enabled network platform that's required
to manage the entire applications portfolio. This entails providing a single log-in
capability in such key areas as directory, domain-name server, proxy cache, secure
Internet, remote Intranet access and, with other components from other partners, site
blocking and virus scanning.

'We're taking a lot of the confusion out of
network utilization by turning to a single supplier,' Charters said. 'If newer
technologies come along that we want to exploit, we can add them later.'

DEC and H-P are key suppliers with respect to enabling the
delivery of subscription products, Charters noted. DEC will work with U S West to
integrate business customers' existing proprietary networks into the national
IP-based network and to develop virtual private-network services; H-P, through its
VeriFone subsidiary, will develop support for transactional services using smart-card,
electronic-cash and related technologies.

The agreements with Oracle, Microsoft and Sun are meant to
facilitate development of specific applications. In the case of Microsoft, it entails
Windows NT-based development of IP voice, fax, video and conferencing, as well as
e-commerce and traditional Web applications such as chat and e-mail.

The Oracle and Sun pacts are aimed at putting the
network-centric/thin-client capabilities of those companies' software products to
work across a vast array of applications, many of which are targeted toward the
development of consumer services that will directly compete with services offered by the
cable industry.

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