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ADSL: What It All Means

The big news in the Internet world the last few weeks was the announcement of the Universal ADSL Working Group (UAWG), a collection of the industry’s largest and most powerful companies, including Compaq, Intel, Microsoft, GTE, all of the regional Bell telephone companies, and a slew of networking companies. The goal of the UAWG is to promote the cause of Universal ADSL, a variant of ADSL (Asymmetric Digital Subscriber Line) that’s designed to provide high-speed Internet access for consumers at prices below $50 per month. If you were wondering, the "asymmetric" means that you see much higher throughputs coming in than going out, much like today’s 56K modems.


At the Beginning — Before anything else, let’s look briefly at current Internet connections, and why ADSL is so attractive as a technology for providing high-speed Internet access. Right now, most people connect to the Internet via modems, which operate over standard analog telephone lines (or Plain Old Telephone Service – POTS). Modems essentially turn digital information into analog – the screams you hear if you pick up an extension while a modem is connected – and then back into digital form again on the receiving end.

Modems have several problems. First, they’re slow. Although so-called "56K" modems can receive information from your ISP at speeds up to 56 Kbps, it’s almost unheard-of to reach that speed. And, they can only send information out to the Internet at speeds up to 33.6 Kbps. It’s unlikely that modems will ever provide much more throughput because of the relationship between frequency, distance, and signal strength. Current FCC limits and phone company standards allow only a certain frequency range to be transmitted at a given signal strength or voltage. This restricts POTS lines to the current top throughput because hardware vendors just can’t squeeze any more information within those proscribed limits. ADSL, as we’ll see, breaks out of those bounds entirely. (See "Speed Jockeys on the Internet: Flying at 56K" in NetBITS-008.)


Modems are also an inefficient use of the telephone network. When you use the Internet, you’re generally using it in a "bursty" fashion – you download a Web page and then read it. While you’re reading, you aren’t using the connection, but because your modem is hogging the line, it can’t be used by anyone else. This liability comes because standard analog telephone lines are circuit-switched – when you make a call, you "own" the circuit for the duration of the call. Circuit-switching makes sense for uses like voice calls, where silence has meaning, but they’re a complete waste for Internet use, where silence is just dead air.

Because modems must dial up your ISP, you have to wait every time you want to connect. People using modems don’t realize how annoying this is until they’ve used a dedicated Internet connection, which makes the Internet constantly available without delay. As an analogy, think back to when televisions took some time to warm up – "instant on" features were a major advance when they started to appear.

All of these factors have conspired to produce a strange economic model. ISPs can order phone lines cheaply because ISP phone lines never make any outgoing calls. The telephone companies hate that. Even worse, the average voice call (in California) lasts about 4 minutes and most people use the telephone for 22 minutes per day. In contrast, most modem calls last 22 minutes on average for a total of 62 minutes per day of usage. The telephone network wasn’t designed for this kind of use; in some places the additional burden placed on the telephone network has overloaded telephone company switches and resulted in a loss of dial tone for periods of time.

So what about ISDN (Integrated Services Digital Network)? ISDN solves one of the problems faced by modems – it creates a true digital connection and thus can run at a higher throughput. Basic Rate Interface (BRI) ISDN, which is what an individual or small office would have, offers throughputs of 56 Kbps, 64 Kbps, 112 Kbps, and 128 Kbps, depending on whether you use one or two B (bearer) channels and where in the country you’re located. (Some telephone companies limit ISDN throughputs to 56 Kbps per channel, because of equipment they installed at their switch.)

However, ISDN is still a dialup, circuit-switched technology, so ISDN Internet connections still waste bandwidth on the telephone network by taking up an entire connection even when no data is flowing over that connection. In addition, ISDN lines can be difficult to install and require a fair amount of work on everyone’s part. ISDN doesn’t necessarily come cheap, either, especially for home users with costs ranging from about $80 to $150 per month for the phone company and ISP charges combined. Finally, although ISDN lines dial out much more quickly than modems, no dialup technology will be as instantaneous as a connection that’s always available (of course, an ISDN connection, like a modem connection, can be pegged up permanently, but that’s more expensive on the ISP end and a tremendous waste of the voice network).

Enter ADSL — ADSL solves all of these problems, and the Universal ADSL variant (also sometimes called DSL Lite) handles many of the problems that ADSL itself has faced over the years (assume I’m talking about Universal ADSL from now on, unless I explicitly say otherwise).

  • ADSL works over the same standard copper wires that your telephone uses now. Thus, the telephone companies don’t have to install new wires or send a crew out to install anything at your house, which saves them a lot of money.

  • ADSL supports simultaneous voice and data transmissions on that single pair of wires; you can make telephone calls at the same time as you’re connected to the Internet. Standard ADSL required that the telephone company install a splitter at the customer premises to split the voice and data portions of the connection – since it reportedly costs $200 to send a truck out to do the installation, removing that installation requirement in Universal ADSL was a big win.

  • Not only does ADSL support simultaneous voice and data connections, but the data connection is always available without dialing. Along with the notable convenience of a permanent connection, many expect ADSL connections to increase interest in interactive Internet services, since your computer could "ring" to announce an incoming connection, like someone wanting to send you an instant message or even start an Internet phone or video call.

  • The data portion of an ADSL connection is a true packet-switched connection. When an ADSL connection terminates in the telephone company’s central office, the voice signal is split off from the data signal. The voice signal goes into the circuit-switched network, and the data signal is routed into the telephone company’s high-speed packet-switched data network. In short, an ADSL connection not only provides additional service over the same copper pairs, it does so in a manner that uses the telephone company’s data network appropriately, rather than wasting an entire circuit in the voice network. The cost savings for the phone companies generated by this fact alone may be sufficient to account for the low prices being bandied about for ADSL connections. Additional cost savings may accrue because people could give up second phone lines being used for modem access, thus enabling the telephone companies to use that infrastructure for new service. (Elsewhere in this issue, we talk about how you could abandon your fax machine, too.) For instance, in our area, US West had to install additional infrastructure to keep up with the demand for second and third phone lines – being able to delay that infrastructure upgrade might have saved them money in the long run.

The Downside of ADSL — Although ADSL sounds absolutely fabulous, there are some negatives.

  • Universal ADSL is still essentially vaporware. The company whose technology it is based on (Aware, Inc.) has the appropriate hardware, but it has yet to be installed in any computers or in any central offices.

  • There are existing ADSL installations that may not be compatible with the Universal ADSL hardware (and vice versa). More on these in a moment.

  • ADSL is rate-adaptive – that is, the effective throughput drops as your distance from the central office increases (to a proposed maximum of 22,000 feet). Thus, if you live further from the central office, you won’t see the full throughput of the ADSL line no matter what. That’s not necessarily a problem, but it significantly affects how the telephone companies sell ADSL service. They won’t be able to promise the same throughputs for everyone, and people in more remote locations may rebel against paying the same amount as someone closer in who gets more bandwidth.

  • It remains to be seen if the local public utilities commissions will tariff ADSL service at potentially higher rates than are being talked about now. The telephone companies want to avoid tariffs entirely, since that enables to them to lower (or raise) prices as they wish. (Tariffs lock in rates at the cost of service plus an agreed-upon profit margin.) Their argument is that since Internet access isn’t a monopoly business, they should be allowed to compete as they see fit with Internet service being provided by cable modems and digital satellite broadcast (DirecPC).


  • Finally, ADSL may be the first coffin nails for smaller ISPs, who may not be able to afford to support ADSL service at rates competitive with the phone companies. Larger ISPs can probably negotiate more favorable rates, but even still, there’s no question that ADSL biases the equation in favor of the phone companies.

The ADSL Economic Model — I also fear that the economics of the bandwidth being promised simply don’t work out in the long run. Anyone who provides Internet access must buy bandwidth (or build it, if we’re talking about UUNET, MCI, or the like). In short, bandwidth costs money. ISPs take advantage of the fact that Internet usage is inherently bursty to sell more bandwidth than they buy – call this the "oversell ratio." Although ISPs generally won’t tell you what their oversell ratio is, it’s likely to be in the 5:1 range for business customers and 10:1 or more for consumers.

Let’s look at some of the numbers. T3 access at 45 Mbps to the Internet backbone from UUNET reportedly costs about $65,000 per month. That’s $1,444 per Mbps per month. If you double that cost to account for ISP overhead, profit margin, and so on, you get $2,888 per Mbps per month as the amount the ISP must make selling that amount of bandwidth. Now, there’s no question that even if someone has a 1.5 Mbps ADSL connection, they won’t be able to use all that capacity all the time, so the ISP can sell that same bandwidth to multiple people, spreading out the cost.

Now comes the question of how much you’re willing to spend for Internet access. From surveys I’ve seen done in public gatherings of computer users, almost no one is willing to pay more than $50 per month for Internet access. To drop the price to $50 per month, the ISP would have to sell the 1 Mbps of bandwidth in our example 58 times – a 58:1 ratio. At the more common charge of $20 per month, the oversell ratio would be 145:1.

The amount you’re willing to spend very well may be tied to how fast the connection seems to run. Even if your ISP delivers full bandwidth (which they probably won’t, since documentation from US West suggests that ISPs will want to oversell just the connectivity to the phone company at a 30:1 ratio), other bottlenecks on the Internet may conspire to reduce the effective throughput you see. And, if the oversell ratio is high, the amount of bandwidth you receive is also reduced. These factors may contribute to users refusing to pay much more for ADSL access to the Internet.

I’ve spoken with some representatives of the phone companies pushing Universal ADSL, and none have yet responded to this concern. I think it would be worthwhile asking both the telephone company and the ISP what level of aggregation is going on – what are the oversell ratios for both the ADSL connection and the ISP’s Internet connection. They probably won’t answer, and it would be handy to have some sort of performance monitoring software to determine how much bandwidth you’re really getting.

It’s entirely likely that the acceptance of ADSL will be the event that drives the Internet toward tiered usage pricing, where you pay for only the amount of data you send and receive. Then, if you wanted the full bandwidth of your connection, you could have it, but you’d have to pay for it. The pricing schemes for most of the existing ADSL implementations point toward tiered pricing, with different prices for two or three different levels of throughput.

There’s already a type of service called frame relay in which you pay the phone company for a fat connection – like a full T1 – but you pay less if you agree to a smaller Committed Information Rate (CIR), the rate at which they guarantee you’ll be able to transmit data. You can get the advantage of bursts when the network has bandwidth available, and the frame relay model may be the way the phone companies structure ADSL service.

Existing ADSL Uses — Our previous notes about ADSL have drawn comments primarily from two sets of users, folks in Canada and people in Phoenix, where US West has limited DSL availability. We also heard about ADSL availability in California, and Ameritech is reportedly offering ADSL access in the Midwest as well.



The current US West DSL offering is in fact quite different from Universal ADSL. First off, US West claims to be using HDSL (High-Speed Digital Subscriber Line), which is not asymmetric – it provides full throughput in both directions. The distance limit is 12,000 feet from the central office, and US West has limited that further due to the heat in the summer in Phoenix. Unlike Universal ADSL, US West must "qualify" (check to make sure it works) your copper wires and they must install the service in your home or business (which costs $215). The pricing depends on the throughput you want, with 192 Kbps coming in at $40, 320 Kbps at $85, and 704 Kbps at $163. The pricing on the two higher bandwidth options can drop if you sign long-term contracts locking you in to a price. In addition, these prices are purely for US West; you must pay extra for Internet access from either an ISP or US West, though US West offers "unlimited" Internet access for $19.95 per month.


All that said, US West just announced that they would be installing ADSL in 40 cities in the 14-state area they serve. Although the details are still somewhat hazy, US West’s press information claims that the service will be compatible with the Universal ADSL Working Group’s final standards and that the service currently meets all the Universal ADSL goals, such as no installation, high-speed, simultaneous voice and data usage, and so on.

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At the cheapest, though, US West’s ADSL service will cost $60 per month for 256 Kbps. That’s great for those of us who rely heavily on the Internet, but will average consumers be interested in paying $720 per year to be on the Internet, even at that speed?

Most of our letters poured in from Canada, though, where ADSL seems relatively widely deployed with prices in the US$50 range as well. Many of the letters referred to Sympatico, which is an Internet service created jointly by Bell Canada and the other Canadian phone companies. The specifics seem to vary from place to place, though, which may result in some standards or equipment confusions in the future.




The Competition — There’s no question that the sudden interest in ADSL from the phone companies comes in response to cable modems. Although cable modems have low penetration (reportedly about 100,000 customers so far), cable modems are the primary communications method that could unseat the telephone companies from their position of controlling telecommunications. A spokesman for Bell Atlantic, one of the regional Bell telephone companies, admitted quite frankly in a phone interview that they were targeting cable modems, particularly in terms of pricing.


The main advantage the telephone companies have is that ADSL will probably reach more homes than cable modems (we, for instance, have two phone lines and a 56K frame relay connection, but can’t get cable at all in our current location), and it will probably be cheaper for the telephone companies to upgrade their switches to support ADSL than it will for cable companies to upgrade their networks to support two-way traffic. As it stands, some cable modems work only incoming – the outgoing end of the connection is handled by a standard modem (thus wasting an entire voice circuit for even less traffic, which I’m sure irritates the phone companies to no end).

I don’t know if the phone companies could be categorized as "running scared," but if nothing else, the threat of cable modems offers significant incentive to the telephone companies to make sure ADSL is available soon, works well, and is inexpensive.

From the consumer angle, the main concern I’ve heard voiced is that neither cable companies nor telephone companies have particularly stellar – or even good – reputations for customer service. If this battle for high-speed Internet access results in the elimination of most smaller independent ISPs, we may suffer with the results.

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