In the Fast Lane

Broadband providers are racing to get your business-but in the end, you're the real winner.
Magazine Contributor
6 min read

This story appears in the November 2003 issue of Entrepreneur. Subscribe »

Broadband is back, and it's just in time for an upswing in the economy which, hopefully, will be mirrored by an upswing in your online revenues. Consumers and small enterprises are responding to price cuts and innovative service combinations being spawned by a free-for-all among telecom providers. Broadband is just one of many voice and data services whose prices are falling because you now have the freedom to choose which combination of local, long distance, wireless and broadband you buy from whom. (I read somewhere competition does that-oh, yeah, Econ 101).

If anything, your customers have even more service choices, which certainly doesn't hurt your business. Network traffic monitors have found that broadband shoppers stay online longer and buy more stuff than dial-up surfers. Stands to reason. Broadband is like getting a new six-lane highway in town while gas prices are falling: The shopping mall just seems a whole lot closer.

Reluctance during the dotcom boom/bust has turned into an eagerness among consumers to widen their personal on-ramps to the Net. According to regular FCC audits, the United States started this year with about 20 million high-speed Internet connections to homes and businesses, seven times the 2.8 million in place two years earlier. Counting heads instead, Nielsen/NetRatingsfound more than 39 million Americans cruising the virtual fast lane this summer, a 49 percent jump from last summer.

It's all about cheap new voice/data bundles, says Mark Kersey, senior broadband analyst for research firm Current Analysisin La Jolla, California. After years of legislative jawboning, hearings and court battles, the regulatory lid has slipped off telecommunications. Competition and innovation are pouring forth. In many cases, local Bells are using DSL broadband as a sweetener-or a loss leader-to fend off market incursions by long-distance companies, start-ups like Covad Broadband Solutionsand Inc., even fellow Bells. "As soon as a Bell loses a local phone customer, it becomes impossible for it to sell that person anything else," says Kersey.

The biggest threat? Cable monopolies, which have had unimpeded access to new broadband customers while the Bells were in court fighting with other telecoms over the local loop. Cable providers have started mixing local and long-distance phone calls with their broadband/TV bundles.

It's not quite all-out war; cable companies aren't willing to sacrifice their monopoly-fattened margins to match Bell price cuts, reports Kersey. But telecoms don't have that luxury and are cutting deals. Example: BellSouth Corp. is pairing with cable competitor DirecTV to offer discounted satellite TV and DSL in a bundle with local, long-distance and wireless phone services. The Bells are even asking the Covads and DSL.nets to help them get new customers.

Flavor of the Month
We've got powerful new broadband flavors, discounted service bundles, signing bonuses for changing carriers-have you reviewed your communication bills lately? Are you paying more than you should under an old T1 contract just to get a service level agreement guaranteeing your bandwidth? Conversely, do you need to swap out consumer-quality asymmetric DSL for more reliable symmetric DSL (same speed both ways) or T1? Is there a new service package out there that could save you dough on voice as well as data services?

Geography is an issue, since cable doesn't reach many business districts, and your DSL options decline as you move away from a Bell operations center. But few companies are still out of reach of all broadband alternatives. Be it cable, SDSL or satellite, online clearinghouse says it can find you broadband with enough speed for a 20-person company (192Kbps to 1.5Mbps) for $70 to $350 monthly.

Prices are falling, adds Kersey, with the average price of the popular 384Kbps SDSL down 20 bucks to $156 monthly this summer. That's about what Covad and charge, and Verizon has recently introduced a full-duplex SDSL that gives network priority to small to midsize enterprises for a few bucks more.

Ray Allieri, senior vice president of sales and marketing for in New Haven, Connecticut, says the key question is, How crucial is the Internet to your enterprise? Do you use, say, an online HR or payroll program or have a lot of Web traffic? Growth in ASP use and VPN-secured connections to remote workers are the forces driving businesses to broadband, agrees Pat Bennett, executive vice president and general manager of Covad Broadband Solutions in Santa Clara, California.

Covad and are building out their own national networks to better guarantee SDSL throughput and uptime. But companies with high transaction volumes or in-house Internet servers may want the still-higher service levels of T1, says Allieri.'s $589 price tag for 1.54Mbps is a couple hundred more than SDSL-far cheaper than traditional Bell T1 prices.

But Bell T1 prices are falling, too. As Verizon's business DSL demonstrates, the Bells are willing to sacrifice that cash cow to keep customers. They also are the best place to find really high- bandwidth connections like 3Mbps T3 or fiber- optic solutions delivering gigabits per second.

What's the outlook? More and better for less as new technology comes online to challenge traditional solutions. We can't guess the impact that totally unregulated wireless broadband will have, but it's coming. We haven't yet felt the full impact of similarly unregulated IP-based voice services from companies like Vonage. But every month, thousands of people discover that they prefer phone calls over broadband to calls over analog circuits.

As good as things are now, it's only going to get better. Communications will be the next big thing in office productivity.


Here are some of the best broadband options for small and midsize businesses:

  • Online systems integrator will bring you cable, satellite, ADSL, SDSL, T1 and higher-bandwidth quotes from multiple carriers.

  • Covad Broadband Solutions: Consumer ADSL, 144Kbps to 1.5Mbps SDSL, and 768Kbps to 1.54Mbps T1 over its own nationwide network.

  • Five SDSL flavors from 192Kbps to 1.5Mbps, and three types of T1 from 384Kbps to 1.54Mbps over its own nationwide network.

  • Verizon Business SHDSL: Business-quality SDSL at speeds of 192Kbps to 1.5Mbps both ways, with transmission priority to small to midsize enterprises in select Eastern cities.

Mike Hogan is Entrepreneur's technology editor. Write to him at

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