Carriers weigh SDSL services - Goldman Sachs, London report - Industry Trend or Event - )

CommunicationsWeek International, August 13, 2001 by Michelle Donegan

A report claims carriers are protecting leased line revenues by delaying services.

Are incumbent operators protecting their leased line revenues by not offering symmetrical digital subscriber line services (SDSL) to businesses?

Since business DSL services offered by incumbent operators primarily use asymmetric DSL (ADSL), some analysts have suggested that incumbents are sheltering their leased line revenues from deterioration by not rolling out symmetrical DSL services, namely the ITU's G.SHDSL standard.

This conclusion was drawn in a report last month by investment bank Goldman Sachs, London, which noted that not one European incumbent offers symmetrical DSL business services. A recent research note from the bank claimed: "Operators are clearly being careful to avoid cannibalization of short-haul leased-line revenues."

But others in the industry contest this premise, "I think [this claim] should be knocked on the head because there is no way the telcos are that stupid," said Tim Johnson, director of Ovum's Access@Ovum service, based in London. "If there is one thing the telcos could do to give their competition a really good opportunity, it would be to ignore the importance of G.SHDSL."

Many in the industry do not believe incumbents will ignore G.SHDSL services or other new technologies to save legacy revenues. BT Ignite, for example, is known to be conducting a G.SHDSL trial with plans to launch a wholesale product, while BTopenworld is trialing the technology for business services.

In contrast, however, Deutsche Telekom has no plans for symmetrical DSL services and does not offer a wholesale product.

"Most incumbents have plans to offer G.SHDSL by the end of this year or the beginning of next year," said Rami Houbby, business development manager at 3Com Corp.'s Hemel Hempstead, England office, which will supply G.SHDSL customer premises equipment worldwide.

Limited coverage, initially

Houbby does not believe operators will have immediate concerns with diminishing leased line revenues. "The coverage of G.SHDSL will be limited initially, so the leased line business will continue to exist," said Houbby. "But where G.SHDSL is available you won't see leased lines anymore."

And the assumption that incumbents are stalling on G.SHDSL misses the fact that it has been delayed getting to market (CWI, 19 February 2001). The standard was only finalized in February this year.

"G.SHDSL has been fairly slow coming to market, but it is potentially cheaper, more compact...and has longer range than ADSL, so I am sure it will be widely used, probably for residential services as well," said Ovum's Johnson.

Current DSL business offerings across Europe
Operator            Country      Product            Connection
                                                  fee ([euro])
TDC (Tele Danmark)  Denmark      TDK Bredband              134
Elisa               Finland      Elisa ADSL                172
France Telecom      France       Netissimo 1               277
Deutsche Telecom    Germany      T-DSL                      52
Telecom Italia      Italy        Teleconomy ADSL           217
KPN                 Netherlands  Mxstream                  247
Telenor             Norway       Nextra DSL                568
Telefonica          Spain        Estandar                  514
Telia               Sweden       Telia Bredband            128
BT                  UK           Home 500                  431
Operator                    Monthly   Bandwith       Monthly rental
                    rental ([euro])  (down/up)  per mbit/s ([euro])
TDC (Tele Danmark)              127   2048/512                   62
Elisa                           144    200/512                   72
France Telecom                  183   1000/256                  183
Deutsche Telecom                 61    768/128                   79
Telecom Italia                   43    256/128                  167
KPN                             117   1024/256                  114
Telenor                         498   2048/448                  243
Telefonica                      164   2000/300                   82
Telia                           184   2000/500                   92
BT                              265   2000/250                  133
Notes: France Telecom monthly charge includes ISP access fee of
[euro]76.22 per month. KPN monthly charge includes ISP access fee of
[euro]92.45 per month. Elisa monthly charge includes ISP access fee of
[euro]72.55 per month
Source: Operator price lists, Goldman Sachs Research estimates.