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PC, Phone Firms Teaming Up to Offer Faster Internet Access

Telecom: Plan to boost downloading speed and cut costs could alter competitive landscape. But hurdles abound.

January 21, 1998|GREG MILLER and JUBE SHIVER Jr. | TIMES STAFF WRITERS

In a bold effort to turn ordinary phone lines into high-speed Internet pipelines, giants of the personal computer industry are teaming up with the nation's largest telephone companies to hasten the arrival of cheap, high-bandwidth communications.

Intel Corp., Microsoft Corp., Compaq Computer Corp. and others are planning to unveil the joint effort with telecommunications companies next week at a trade show in Washington, computer and telecommunications executives confirmed Tuesday. The plan was first reported in the New York Times.

The executives cautioned that the effort is fraught with technical and legal obstacles.

Still, the venture could mark the beginning of a new era in telecommunications if it succeeds in delivering high-speed Internet access to the masses at prices expected to be about $40 a month, a fraction of what such services now cost.

It could also dramatically alter a competitive landscape in which phone companies and their antiquated copper lines seemed to be losing out to cable TV, wireless and satellite services in the race to become the primary conduit of the Information Age.

"Phone companies that had been counted out now have a chance to leapfrog cable to deliver a new category of services," said Rick Doherty, director of Envisioneering, a Seaford, N.Y., research firm.

The technology at the heart of the effort is known as "digital subscriber line" service, and it enables computer users to download Web pages or other information up to 30 times faster than today's fastest standard modems are capable of--while allowing ordinary phone calls to continue uninterrupted.

The technology was developed in the 1980s, and versions have been commercially available for several years. But DSL or T1 service, as it is widely known, typically costs from $1,000 to $2,200 a month, largely because installation is labor-intensive.

Devices needed to boost the capacity of copper lines had to be installed at the phone company's central office and at the subscriber's home or business. And different networks sometimes used incompatible varieties of the technology.

The computer industry, impatient with the telephone industry's deployment of DSL, aims to remove those barriers.

Intel, Microsoft and others plan to use their considerable muscle to help set standards so the technology works the same in any telephone network. More important, they plan to build the technology into PCs and modems so they are equipped for DSL service right out of the box, eliminating the need for a visit from a phone company technician.

The incentive for computer companies is clear. The Internet has emerged as one of the most important drivers of PC sales, even though many consumers bemoan the time it takes to download images and data from the Web.

"We're interested in anything that gets bits in and out of the home faster," said Tom Waldrop, an Intel spokesman.

But Intel and others stressed that they still support other platforms for high-speed access, including cable modems, which are currently available to only about 10% of U.S. households.

Phone companies hope the PC heavyweights can help them overtake their cable industry rivals.

US West Communications says it plans to make the technology available throughout its 14-state service area in the next six months. Similarly, SBC Communications, the parent of Pacific Bell, said it is testing DSL in 13 locations in California and hopes to make the technology widely available by the end of the year.

But experts say DSL is no panacea. For one thing, subscribers must live within 12,000 feet of a telephone switch. In California, only about 60% of homes meet that criterion, said PacBell spokesman John Britton. The remaining 40%, mostly in rural areas, won't be able to get high-speed access.

There are other questions about the alliance. Federal law, for instance, prevents regional Bell telephone companies from joining to set standards in the first place. And while Microsoft, Intel and Compaq are big names in the computer industry, their track record for getting competitors to embrace new standards is checkered.

Last year, the three companies were rebuffed by the nation's broadcasters when they attempted to cobble together a new digital television standard favorable to computer users.

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