Speed Alone Won’t Win This Race

For the last two years, speed has been the only mantra needed to sell consumers broadband Internet service. But many companies acknowledge that one day--maybe even sometime next year--speed will not be enough.

Once customers grow used to fast access to the Internet, they will want multiple computer lines, music and video services and a host of other offerings built especially for household broadband connections.

The race between cable and DSL to provide these new expanded services already has begun.

The competition between the two high-speed contenders, combined with the need to boost broadband revenue beyond today’s paltry $40 a month, has convinced many DSL providers to begin experimenting with specialized voice and video offerings.

“DSL as we know it today is going to disappear,” said John Navas, who owns the Navas Group, a Dublin, Calif.-based communications consulting firm. “Long-term, we’ll see a bundled set of services over DSL, and DSL itself will become the mundane, under-the-sink transport for the cool stuff.”

While most of the cool stuff won’t be widely available for two years or so, analysts say a steady trickle of new services will begin in 2001 and pick up steam as more households plug into broadband.

Blockbuster Inc., for example, announced in July that it will sell movies-on-demand via DSL “in multiple U.S. cities” before the end of the year, though the company appears to be behind schedule. The company’s new entertainment venture is a partnership with fiber-network owner Enron Broadband Services and uses DSL service from SBC Communications, Verizon Communications, Qwest, Covad and others.

The company, known for its video-rental stores, said its movies-on-demand service would give customers VCR-like control over video transmissions. Blockbuster also plans to provide games and other entertainment offerings through DSL that could be delivered to televisions or home computers.

Texas-based SBC, the nation’s largest DSL provider and the parent company of Pacific Bell, said it will begin tests with Blockbuster in 2001 as part of its own push into specialty broadband services.

“2001 will still be about acquiring customers and getting the message out about DSL, but we are also going to do the same thing that we do with our telephone network, which is to layer value-added services on DSL,” said Jason Few, SBC’s vice president for DSL.

“You will see us doing deals with content providers, like music, videoconferencing and video chat, because [today’s] textual chat will become video chat,” Few said.

The company is investing $6 billion in its network, bringing fiber lines into neighborhood hubs and extending the reach of DSL technology beyond its current limit of about 18,000 feet from a phone company equipment office.

SBC and other companies are also pursuing voice-over-DSL, a digital variant of traditional phone service that allows several voice “lines” to be carried on a single copper phone wire.

Sprint already uses the technology as part of its higher-end Sprint ION service, which includes either two or four residential phone lines with a suite of add-on features, a DSL connection and EarthLink Internet service, plus software that allows customers to start and stop various phone services and features using their home computers.

A smaller Internet service provider, Telocity Inc. of Cupertino, Calif., has begun offering its DSL customers a new “Connect and Protect” service, which for an extra $9.95 a month automatically networks multiple home computers and provides protection from computer viruses and spam through Telocity’s equipment.

Telocity already is testing video-on-demand technology, and early next year the company will start selling an advanced messaging service using DSL, according to Dave Finley, Telocity’s chief operating officer.

“Broadband is not a desktop computer experience. . . . There will be more and more uses for that connection, and very few of them will involve the desktop,” Finley said. “In the future, companies only providing a broadband service to a single computer are going to be limited in their ability to deliver the emerging lifestyle services.”