Phone Firms Do an About-Face
In the razzle-dazzle world of high-tech trade shows, Supercomm--the telephone industry’s annual convention--has long stood out as a comparatively staid event even though the $200-billion phone industry is growing fast and reaches nearly every home and business in America.
That’s partly because telephone equipment buyers and network managers are a conservative lot who are wary of embracing fancy new technology. Upgrading the nation’s telephone software and switches would bring faster Internet surfing and data transmission, but it would also be expensive, pose compatibility issues and might harbor software and hardware bugs that could trigger a network outage.
“It’s a tough sell” getting phone companies to buy new technology, said David Scheibenhoffer, a senior account manager at Dallas-based WindRiver Systems, a fast-growing start-up that sells telecommunications and networking software.
But this year--under siege from new telephone upstarts and facing a federal mandate to begin a multibillion overhaul of the phone system--the industry did an about-face.
The Supercomm convention in Atlanta this year attracted everyone from Microsoft Corp. and Lucent Technologies to Kohler Power Systems, a Wisconsin company better known for its plumbing fixtures. And Supercomm was marked by a slew of new product and technology announcements, capped by Bell Atlantic Corp.’s pledge to spend more than $200 million to construct a high-speed data network throughout its Northeast regional market.
“Bell Atlantic’s . . . [new] network will provide a solid platform for advanced data services, including managed Internet protocol networks,” said Stew Verge, president of Bell Atlantic Global Networks Inc., which was created to build and manage Bell Atlantic’s new data network.
A number of other carriers, including AT&T; Corp., Level 3 Communications Inc., Frontier Corp. and Qwest Communications Inc., said they also plan to deploy new high-speed data transmission technologies that can more efficiently carry telephone conversations and data over copper and fiber-optic cable.
“I think the [incumbent] telephone companies now realize that if they don’t innovate, somebody else will,” said Ed Ely, general manger of access networks at Siemens Corp., a unit of the big German telecommunications equipment maker. “The start-ups are certainly beginning to offer this new technology, so other companies are going to have to get it out there too or close shop.”
“I’d say the conservative attitude is a thing of the past,” added Paul Nevill, director of wireless marketing switch products for DSC Communications, a leading telephone equipment maker based in Plano, Texas. “There is competition out here now, big time. The problem is that the Bell system has 100 years of wires in the ground, and it’s a lot harder to upgrade that than to change the PC on your desk.”
The planned network overhauls are all aimed at capitalizing on a sea change in the way the nation’s phone system is used in the Information Age: The market for sending data communications such as e-mail, faxes and Web pages is growing far faster than the market for ordinary voice phone calls.
Many phone executives now openly acknowledge they must quickly find a more efficient way to transmit voice and data communications over copper wire or risk overloading the current network.
Sprint, which recently said it will shift all of its voice traffic onto a newly constructed data network, says its new integrated network is 70% cheaper than maintaining a separate network for voice traffic. That kind of arithmetic is striking a chord with many carriers.
“I saw incredible support for” high-speed communications technologies at Supercomm, said William Smith, vice president of network strategic planning and support at BellSouth Corp. Smith said carriers seem to be particularly taken with asymmetric digital subscriber line--a service that speeds data transfers by transmitting them digitally instead of via analog waves like regular phone conversations.
“It’s substantially faster than what we have today, and I think there’s real demand out in the market for the technology,” Smith said, adding that his company is working with Sprint to roll out the technology this year in several markets.
But some critics say the recent slew of network upgrade announcements is mostly just talk.
“I don’t think the [ADSL] technology has even a remote chance” at market acceptance, said Dan Posner, chief executive officer at Technology Management Solutions, a Boca Raton, Fla.-based reseller.
Posner said although the technology offers a faster data pathway to the home, the return path is often slower. Therefore, computer users will be able to surf the Internet and download files faster, but business users who need to upload files to update their Web pages will still face slower transmission speeds.
ADSL is just one of many technologies, including cable modems and satellite dish receivers, vying to become the high-speed technology of choice in the Information Age.
None of the products is expected to be widely available until the end of this year. And as equipment engineers and software developers continue to come up with new ways to stuff more data into copper telephone wires, experts say the market for high-speed access is likely to remain in flux for months.
“A lot can happen” by the end of the year, Posner said.
