The mind-numbing amount of time it takes to download photos or graphics from the Internet onto a home computer is a continuing irritant to millions of users and an irksome obstacle to the development of cyberspace as a commercial marketplace.
But this electronic bottleneck stirs excitement, even joy, in Gary Seamans, who sees it as a huge opportunity to market technology that raises the speed limits on the information superhighway.
Seamans, chief executive of Oswego-based Westell Technologies Inc., is selling a new technology that can boost Internet access speed on regular phone lines by a factor of 50. Nearly all major phone companies are testing the technology, known by the arcane engineering term ADSL–asymmetrical digital subscriber line–and most plan to offer it to customers next year.
Westell is a high-profile player among several companies that aspire to provide the same high-speed Internet access to homes as users might have at the office. Experts agree that ADSL–and a competing technology using cable TV systems–will work, but both face serious obstacles: high cost and a lack of standardization of equipment.
In fact, price was a major reason Westell lost out last week when four Baby Bell companies–Ameritech Corp., BellSouth Corp., Pacific Telesis Group and SBC Communications Inc.–placed a commercial order for ADSL equipment with Alcatel Network Systems Inc. of France.
That stumble sent Westell stock plunging 27 percent last Monday, illustrating the uncertainties of any high-tech venture. Westell stock hit a high of $56 a share in June. Since then, it has plunged by over half, closing Friday at $26.62 in trading on the Nasdaq market. Last week alone, the shares lost nearly 43 percent.
Still, there is much enthusiasm for Westell and ADSL, fueled by the growing frustration of Internet users who find their connections through home modems to be agonizingly slow.
“Today, when someone sees that a graphic is coming in over the Internet, they’ll probably decide it’s time to go get a cup of coffee,” said Lorene Steffes, vice president of technology development at Chicago-based Ameritech. “If you have ADSL, it paints a graphic as quickly as pulling down a window shade. This will make the Internet’s usefulness much higher than it is today.”
Ameritech and International Business Machines Corp. plan to launch a previously announced test of ADSL Internet access in Wheaton soon, using equipment supplied by Westell, and Ameritech expects to roll out the service commercially sometime next summer.
“This is a concept trial more than a technology trial,” Steffes said. “We want to test what kind of services people use, what is most popular.”
Ameritech won’t be the first to offer ADSL to Chicago-area customers. InterAccess, a large Chicago-based Internet provider, already offers limited ADSL connections at a premium price.
People within three miles of the InterAccess office at Clinton and Lake streets in Chicago can receive ADSL Internet connections for $1,500 for the equipment and $200 a month for the service. Although that may not appeal to the average residential Net surfer–who probably bought a modem for a couple hundred dollars and pays no more than $25 a month in fees–some dedicated Webheads jump at it, said InterAccess President Tom Simonds.
The company also plans to expand to suburban locations.
“We have customers who are on-line 16 hours a day,” Simonds said. “We have people already paying $400 to $1,000 a month for high-speed lines.”
Simonds’ firm uses Westell’s equipment, and he said it is the most aggressive marketer among some 30 firms in the ADSL field.
“We haven’t made a significant investment in this,” he said. “Our philosophy is to be pulled by demand rather than be supply-pushed. We make a service available at the price we need, and if people want it, they buy it.”
Ameritech is seeking a wider audience and would prefer to offer ADSL service with a lower price tag, perhaps $500 for the equipment and less than $50 a month for the service.
Richard Notebaert, Ameritech’s chief executive, said price was a major reason Westell lost last week’s phone contract. But, he added, “We think they’re a good company, and they still have a chance to be a supplier.”
Westell, with annual sales of $83 million, provides a line of traditional telecommunications network transmission products, but it has devoted most of its resources lately to developing ADSL technology.
The price of ADSL equipment has been a problem from the start. When Westell became interested in the technology five years ago, the goal was to enable phone companies to deliver video-on-demand service to customers over phone lines for no more than a few hundred dollars per home to compete with cable television.
Video-on-demand faded from view without catching on–beset by high cost and performance problems–and has been replaced by high-speed Internet access as the application ADSL backers hope to ride into the nation’s living rooms.
“When telephone companies see their Internet business threatened by cable TV systems,” Seamans said, “they have no way to defend their market share except ADSL.”
The technology was developed several years ago by Bell Communications Research, known as Bellcore, the software and consulting firm owned by the seven regional Bell operating companies. It relies on heavy use of signal processing chips to send data through the part of a copper phone line that isn’t used for voice communications.
ADSL is essentially an advanced version–five times faster–of an earlier technology that Bell engineers called ISDN, for integrated services digital network. With both technologies, the copper telephone line that carries conversations also can be used for high-speed data transmission.
The inventors of ADSL never envisioned it being limited to any single use, such as video-on-demand or Internet access, said David Waring, a Bellcore engineering executive.
“We see it as a powerful data-transport platform that may have many different uses,” he said, such as transmitting “CD-ROM services from a central library to homes. It’s just a good way to send bits of data through a pipe at very high speeds.”
ADSL’s major advantage is that it uses the phone network already in place and doesn’t rely on expensive upgrades, such as connecting optical fiber or coaxial cable to houses.
But price is a vexing problem. It requires placing very sophisticated, expensive signal processing equipment in homes, and equipment from various manufacturers may not be compatible.
These problems plagued ISDN service for a decade and haunt ADSL now. The big difference is that in the new, deregulated world of telecommunications, phone companies have much more incentive to market the new technology.
“ISDN was created by the old monopoly Bell System,” said Robert Rosenberg, president of Insight Research, a consultancy based in Livingston, N.J. “After the breakup of that system, it was never marketed properly. Only in the last 18 months or so, with the takeoff of the Internet, has there been a market for ISDN.
“ADSL was developed in the new era of competition. So maybe they’ll get the marketing right this time.”
Rosenberg said that times are ripe for phone companies to exploit this technology because cable TV operators are facing their own problems rolling out Internet service and are dealing with competition from the growing popularity of direct broadcast satellite TV services.
“There are plenty of advertisers who desperately want to use the Internet to reach customers in new ways,” Rosenberg said. “They need a high-speed pipe into the home. ADSL offers that pipe. The problem is how to pay for it. The customer certainly doesn’t want to pay.”
The answer, he said, may be found in the same model phone companies have used to make cellular phones a mass-market hit.
“You could sign someone up for a 24-month Internet service contract and then bury the equipment costs in the monthly fees,” he said. “The market is demanding a high-speed pipe into the home, and some clever soul is going to figure out a way to provide that pipe in return for a half-cent or a quarter-cent on every electronic transaction that takes place because of it.”
