DSL Fuel

Whose Line Is It, Anyway?

Compared to the dial-up realm, where thousands of ISPs still compete, the consumer DSL market doesn't offer many choices. But weighed against the local monopolies of cable, DSL seems like a wide-open bazaar. The four remaining local phone giants-BellSouth, Qwest, SBC and Verizon-have a huge advantage but now face increasing competition. Recent big gainers include national ISPs, business-class DSL providers and long-distance firms. And thanks in part to line-sharing rules issued by the FCC in late 1999, more competition is on the way. The rules force the Bells and other local telephone companies to share their phone lines with other DSL competitors so the smaller rivals don't have to install their own.

Line-sharing should have a big impact this year, says Adam Guglielmo, a DSL analyst at TeleChoice Inc. "We could see widespread $29.95 price points by the end of 2001."

As basic DSL pricing approaches dial-up levels, get ready for new services that boost the price once again. This year, we'll see "gateway" devices, sophisticated DSL modems equipped with routers that support multiline Voice-over-DSL and home networking support. Cable-modem providers are heading in the same direction but not as quickly. DSL may not have better technology, but its more competitive environment should bring lower prices and greater innovation for years to come.


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This article was originally published in the February 2001 print edition of Entrepreneur with the headline: DSL Fuel.

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