DSL - FISHOOKS FIRST, FISH LATER
posted 22th Nov

As in most things computer, the US tends to lead the way and DSL (Digital Subscriber Line) is another example of that. DSL provides up to 500k/sec over an ordinary pair of copper wires formerly used for phone calls. The US also has lead the way on anti-monopoly legislation, breaking up the US Oil Cartel pre-WWII, then breaking up the Telecommunications Oligopoly dominated by Bell Corp creating `Baby Bells' and now attempts at breaking up Microsoft, a computer software monopoly that has expanded its dominant and dominational mode of business world-wide. How does DSL relate to market dominance? In the US it doesn't, in New Zealand where Telecom has - and is striving mightily to maintain - a stanglehold on the telecommunications industry the dominance of Telecom is not matched by strong government. Telecom controls the DSL scene and is exploiting that position without opposition. Compare and contrast the US and NZ. First, the US.

In the US local phone companies are being forced to open up their lines to competitive data carriers, which means end-customers could pay less for high-speed access. The Federal Communications Commission (FCC) ruled phone companies like Bell Atlantic and SBC Communications must share their phone lines with rival digital subscriber line (DSL) companies like NorthPoint and Covad. Current rules require DSL companies to install a second line into the home before offering service. But the new ruling mandates line-sharing of existing phone lines. It's good news for consumers, but; a) telcos are masters at evading laws and edicts and dragging their heels b) there are still some technical issues with DSL. Standards need to be worked out and homes that are too far from a central switch station still can't get fast access. It's a step in the right direction and even though technical hurdles remain the USA is creating a business environment conjucive to technical problem solving.

In NZ Telecom has offered DSL directly to end-users in a trial in restricted parts of Wellington and Auckland. This trial involved substantial installation fees, rental of the DSL `modem' plus a monthly set fee plus data charges for over 300Meg/month (a trifling amount able to be exceed in one day's use). The old cynical tactic employed by dominant companies of making innovative trial-users (cf Microsoft and its software `beta versions') pay for testing and hardware setup costs has been used here. While Telecom maintains a monopoly over DSL it charges like a raging bull to cover its investment in new hardware, switching and testing. Thereafter the new clients pay a lot less leaving the most loyal first-in clients with a sick feeling in the pit of their stomach.

ISP's like PlaNet can, in theory, supply DSL by renting DSL services off Telecom for supply to our end-users. The reality is the fees Telecom demand for DSL are horrendous and make the whole thing uneconomic. For example; first a specialised ATM (Asynchronous Transfer Mode carried by fibre-optic 155meg/sec circuits) capable router has to be bought ($50k plus) then the second step; router installed on Telecoms fibre optic loop in restricted parts of the CBD of Auckland or Wellington either directly housed in a Telecom exchange or payment made for ATM circuits installed; thirdly the fees for ATM have to be paid (gulp) and then fourth; data charges loom out of the mist like the Maree Celeste to scare away those who have got as far as step three, finally, the real clincher, if half a dozen users - who will each not pay more than a net $80 to an ISP - hit the international network with 500k capable DSL modems, where in heavens name is the 4 Meg/sec of international bandwidth just for them going to come from (at $1200 per 64k/sec).

A moments reflection makes one wonder how DSL can ever work in a country like NZ which has a Telecom monopoly over digital services and a country which has to supply data links to and from the USA to its Internet users. The distance from the US is hard to change at anything other than tectonic pace, so is Telecom really supplying the full international bandwidth that its DSL customers are capable of using and think they are getting? I very very strongly suspect not. Are those non-Telecom ISPs that advertise DSL really on an ATM circuit (or are they using an ordinary and way inferiour DDS tail-circuit)? I very very strongly suspect they are not on ATM. Is any ISP advertising DSL and its high speed supplying the international bandwidth which DSL is technically capable of using and which customers think they are paying for? I very very strongly suspect not. Proof I have not, but the commercial realities of DSL are so bad that I rest my case.

Unless the NZ government gets some backbone of its own and breaks Telecom's monopoly over DSL, ISDN and DDS circuits in this country, we will never have telecommunications services at anything like the low cost and technical quality of an urban US citizen. Meantime PlaNet will bite the bullet and supply DSL next year, not because we can make money but because we want to continue to do what our users have come to expect, supply high quality Internet services at a fair price.