Coming Soon: Speed

Coming Soon: Speed

Coming Soon: Speed

Moneybox
Commentary about business and finance.
May 19 1999 6:33 PM

Coming Soon: Speed

At long last, it's DSL time. Or at least that's what I'd like to think.

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DSL (which stands for digital subscriber line, a singularly uninformative name) is a technology that allows data to be transmitted over normal copper phone lines at speeds significantly faster than those offered by conventional modems or even by ISDN (I don't know what ISDN stands for). As a result, it offers both a dramatic improvement on the speed at which most people currently access the Internet and a meaningful competitor to the cable-modem systems offered by companies like @Home and Roadrunner. DSL speeds are nowhere near as fast as cable modems, but they're fast enough to satisfy many users, and they have the great virtue of working over existing telephone lines. In theory, you should be able to order DSL the way you order call waiting.

Unfortunately, transforming that theory into practice has been a remarkably arduous process, and one that sheds a great deal of light on just how slow the rollout of new technologies can be. That may be a counterintuitive idea, given the fact that we supposedly live in a period of boundless technological improvement in which we're all on the verge of having houses that obey our voice commands, cars that will drive themselves, and computers that we can wear. But the reality of technology is that it generally takes a long time to develop and an even longer time to diffuse, even when the benefits of that technology seem unquestionable.

Everyone agrees that bandwidth is the central force limiting the upside of the Internet. Until people have true broadband access, the range of things they'll want to do on the Internet will remain confined to things like e-mail, chat, shopping, news, and perhaps reading the occasional Internet magazine (like, say, Slate). With broadband access, of the sort that many people now have only at work, that range expands dramatically. Things like full-motion video and true multimedia become possible. More mundanely, the Net starts to be integrated more fully into people's lives, since both DSL and cable modems allow your connection to the Net to remain constantly open.

DSL is not the perfect solution to the bandwidth problem, but it is a very good one, and it is especially good because it makes existing technologies--i.e., copper wires and phone-company switching stations--better, rather than requiring entirely new infrastructures. That's why in the past few months a number of independent DSL providers have gone public and watched their stocks soar, most notably Northpoint Communications, which now has a market cap of $5 billion. (Thus the idea that it's now DSL time.) The market understands, in that sense, the future value of DSL access. What's odd, though, is that the Regional Bell Operating Companies (RBOCs) never really seemed to understand it.

It'd be logical, after all, that you'd get DSL from your local phone company. But the RBOCs have dragged their feet on this technology for so long that its new standard-bearers are mostly independent companies like Northpoint and CAIS Internet (which is scheduled to go public this week). Bell Atlantic has said that it plans to roll out DSL to many homes by the end of this year, and America Online has smartly partnered with Bell Atlantic to ensure that its customers don't abandon it when they move to the new system. But Bell Atlantic's first test project on DSL was back in 1993. Could it really have taken six years for them to recognize its value?

In part, the answer is no. The RBOCs dragged their feet on DSL because they didn't want to wreck the lucrative business they have selling high-speed Internet access to businesses, and because they decided--for incomprehensible reasons--that ISDN was what they'd try to pawn off on consumers. But in part, the answer is also yes. Consider that right now there are only 50,000 people with DSL in the entire United States. Consider also that in the world at large, 65 percent of households are without phones of any kind, and that half the world has no cellular coverage. In other words, technology takes time. Cyberpunk author William Gibson, when asked what he'd gotten wrong about the future, said, "Technology breaks down a lot." He might well have added: "And it can take a long time to get to the place where breaking down matters."