Providers add business-class DSL options

Residential customers still buy the majority of DSL connections, but providers are enhancing their DSL offerings to make the technology more appealing to business users.

The criticism against DSL as a business tool is that it's not suitable for mission-critical applications.

"It's really still best-effort," says Matthew Davis, an analyst with The Yankee Group. "It doesn't offer you the service guarantees of something like frame relay."

Business-class DSL has been growing steadily, but providers say they hope to boost sales further through new technology, hybrid services and enterprise administration tools. Even the incumbent local exchange carriers, whose customer base consists overwhelmingly of residential users, are taking steps to attract more business customers.

Verizon, which offers static IP addresses in the former GTE territory, but has no similar service in the former Bell Atlantic territory, plans to begin offering static IP addresses in the latter territory in April, says Linda White, senior product manager for business DSL. Static IP addresses appeal to businesses running their own Web sites and those considering setting up point-to-point VPNs.

In the fall, Verizon plans to take an even bigger step by rolling out equipment based on single-pair, high speed DSL (G.SHDSL). Verizon offers no service-level agreement (SLA) guarantees now, but will introduce some with its G.SHDSL services. Moreover, G.SHDSL will let Verizon extend its reach up to 20% farther than its current DSL offerings. Verizon's asymmetrical DSL has a maximum reach of about 17,500 feet.

BellSouth also has plans to beef up its business-class offerings. The provider says it hopes to introduce later this quarter a symmetrical DSL service that will include quality-of-service (QoS) and SLA guarantees.

"A service like this would let a business get a more predictive view of its bandwidth upstream and downstream," says Rich Wonders, BellSouth's senior director of broadband marketing and product development.

BellSouth already offers business customers a telecommuter product that includes software administration tools that let network administrators see an employee's service and how much the company is being billed. The tools also let administrators make adds and removes on their own.

"There's no need to pick up the phone at all," Wonders says.

Interexchange carriers WorldCom and AT&T offer DSL Internet services and DSL access to frame relay and ATM VPNs for more demanding business customers.

AT&T's DSL to frame or ATM has been limited in availability, but the provider says it plans to expand the service this year.

DSL to frame or ATM is designed largely as a replacement for dial-up service - not a less-expensive alternative to high-speed connections, says Alan Benway, a director with AT&T.

So users who pay less for a last-mile DSL connection shouldn't expect to get the quality that a dedicated circuit provides.

"DSL is targeted at a lower price point and it's designed that way," Benway says. "You need to be careful about managing customer expectations."

The mean time to repair on an unbundled DSL loop is 24 to 48 hours - nowhere near the four-hour repair time for traditional access services, Benway says.

Customers using a DSL to frame or ATM service can get committed information rates (CIR), which regular DSL subscribers won't get. But the cost is also a lot more than a traditional DSL service.

WorldCom charges about $200 per month for a DSL to frame service with a 128K bit/sec CIR and about $1,300 per month for a 1.5M bit/sec CIR offering.

Ultimately, DSL should replace frame relay circuits, The Yankee Group's Davis says. But availability is still an issue, and the investment climate isn't good for companies making an aggressive DSL push.

"Any DSL initiative has likely fallen so far out of favor on Wall Street that even if you think it would be profitable, you'd have to hide what you're doing because Wall Street wouldn't like it," he says.

QoS also needs to improve, Davis says. For DSL to really take off as an business option, DSL providers need to offer DSL-based IP VPNs with solid SLA guarantees.

"What you need to see is VPN boxes housed right alongside the DSL access multiplexers in the central offices," he says.