(IDG) -- DSL and cable modems still too slow for you? Fiber-optic technology could be the answer, offering super-high-speed Internet access and easily variable bandwidth at a fraction of the cost of service on traditional copper lines. Once affordable and attainable only by large enterprises, fiber-optic technology is beginning to attract small businesses and even a handful of consumers. But some major financial and technical roadblocks remain.

Companies such as InSors, an 18-employee videoconferencing firm in Illinois, are discovering that fiber-optic connections make an economical alternative to T1 and T3 Internet lines. InSors pays a $1000 monthly fee to Cogent Communications for network speeds of 100 megabits per second. By comparison, a T1 line with just 1.5 mbps of bandwidth can cost $600 to $1500 a month. And upgrading a T1 to a fractional T3 can take a month, with the resulting 3-mbps service costing $2000 a month or more.

"We've got an enterprise-class network at a small-business price," says Brian Gleason, InSors vice president of business development.

John Holland is director of business development at NxTier Technologies, a logistics management firm for the trucking industry in Worcester, Massachusetts. His company gets fast 10-mbps access for $4000 a month. Better still, on 3 hours' notice, NxTier can up its bandwidth tenfold without having to pay its provider, Yipes Communications, for additional line installations. "Our network can grow as fast as we need it," Holland says.

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Unlike current high-speed broadband technology that transmits data over copper and coaxial cable lines, fiber-optic technology can easily handle massive data traffic, along with voice and video, on a single hair-thin line composed of glass.

And prices for fiber-optic access have fallen, thanks to advances in the technology and to a glut of capacity born of a 1990s construction boom. During that decade, firms like Level 3 and Quest Communications spent billions of dollars in a race to build cross-country fiber optic networks in advance of demand. Burdened with debt, these and other firms went from Wall Street's darlings to dogs.

Meanwhile, a number of relatively small and nimble companies -- including Cogent, Telseon, and Yipes -- have begun to find customers for "gigabit ethernet" services. These newcomers focus on building hookups from underground cables to their customers (which are mostly small and medium-size businesses) in the United States' 20 largest metropolitan areas.

Even so, mass adoption of fiber-optic broadband is by no means imminent.

One complication: Building a network's "last mile" -- the line that branches to a single customer -- is costly, says analyst Sterling Perrin of market research firm IDC.

Today in the United States, copper telephone line touches about 200 million businesses and homes, while fiber reaches only about 40,000 businesses and far fewer residences, says Dave Schaeffer, Cogent's chief executive officer.

Still, some lucky folks are already getting a taste of fiber-optic life. SBC Communications is serving 150 businesses in Texas with fiber-optic lines. It expects to serve about 6000 more with fiber optics by the end of next year, at speeds of 1.5 mbps and up.

That is speed to burn. www.cnn.com (http://www.cnn.com)
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That si all fine and dandy, but what abotu jsut plain old copper wire boradband! I can't get ANY boradband service at my parents place and we live 30 miles from Los Angeles!

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Manu Narayan

California DSL Fight Gets Nasty
Internet Service Providers Fight for Fair Digital Subscriber Line Access

By James Hamilton

Aug. 14 — ISPs in California are accusing SBC Communications of trying to run them out of the broadband business.


The California Internet Service Provider Association (CISPA), which represents more than 100 independent ISPs, will meet with SBC on Wednesday in the San Francisco Bay Area to discuss a last-ditch settlement before the industry group presses government regulators to take action.
The industry group filed a complaint with the California Public Utilities Commission on July 26 that charges SBC's Pacific Bell with favoring its own broadband service over competitors' services and trying to make ISPs sign an unfair contract that limits their rights to phone lines they lease.

The Texas Internet Service Providers Association is watching the talks closely, and has indicated it may take similar legal action against SBC.


Pricing Disparities

SBC, which owns almost all of California's local telephone networks, leases its phone lines to DSL service providers. Under the controversial Telecommunications Act of 1996, local telephone companies are mandated to open their networks to outside companies in a fair and competitive manner.

ISP firms say that SBC isn't complying with the act.

One long-term gripe of ISPs is the unfair price advantage that Pacific Bell Internet, SBC's own DSL service, enjoys.

The high price of leasing lines from SBC means that independent ISPs have to charge subscribers at least $60 per month just to break even, the ISPs claim. The high overhead costs make it difficult for ISPs to compete with Pacific Bell, which is able to offer DSL service for much less.

"Most Internet service provider partners sell DSL service over Pac Bell lines for about $60, and at that price point it's difficult to compete with Pac Bell Internet selling for $39.95," said Dane Jasper, president and co-founder of DSL service provider Sonic.net.


New Contract Unfair?

Making matters worse, SBC asked ISPs to sign a new contract earlier this year, aggravating the already touchy situation.

The contract mandated that ISPs share the leased phone lines with SBC's forthcoming broadband services, which include video on demand, music subscription services, and interactive gaming. The contract stated that ISPs could have their bandwidth reduced to accommodate these new services, without any right to compensation.

In a letter accompanying the contract, SBC said that ISPs that didn't sign the contract would have their high-speed access turned off, according to CISPA.

Furthermore, the contract states that ISPs would have to pay for the infrastructure upgrades that would allow both SBC and ISPs to offer their respective services over the same lines. This added provision, Sonic.net's Jasper said, is the final insult.

"If SBC would like to market additional lucrative value-added services to our customers that compete with what we already sell today, they need to share the revenue in those products," said Jasper. "And if they'd like us to bear the cost of migrating 100 percent of our customers over to a protocol that allows that, we certainly need a share in that product and technology."


Not the Enemy

Pacific Bell, not surprisingly, sees the situation differently. According to Pacific Bell spokesman John Britton, SBC's high-speed services aren't Internet-based and therefore are distinct from what ISPs currently offer.

"ISPs will continue to be the access point to the Web, but there are going to be emerging, non-Internet broadband applications, such as entertainment offerings like movies on demand and interactive games," Britton said. "The DSL customer will not just have the Web Channel One, but they'll have Channel Two movies on demand, Channel Three interactive games, and who knows where it will all grow from there."

The real enemy that ISPs should be worrying about, Britton said, is the cable industry. Cable Internet access has a decisive market share advantage over DSL in the high-speed arena. Instead of fighting, ISPs should work with telecommunications companies, Britton said, to increase the adoption of DSL, creating more business for everyone.

"These skirmishes between telcos and ISPs is missing the real point against the war of the cable companies, who are dominating the broadband market with 70 percent of the market share and marching forward totally unregulated," Britton said.
www.abcnews.com (http://www.abcnews.com)

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Manu Narayan