PDF of this tutorialCompetition in the communications services market is strong. Competitive service providers have successfully penetrated some segments of the communications services market. For example, large businesses have multiple choices for voice and data service providers. But for residential and small to medium-sized business customers, representing 88 percent of communication service access lines, service choice and service-provider choice is only recently emerging.
High-Speed Data Services for Residential and Small- to Medium-Sized Business
Although successful with large business customers, competitive service providers have had difficulty establishing profitable business models to offer services to residential and small to medium-sized business customers. Building a network from scratch is too costly and reselling incumbent local exchange carrier (ILEC) services leaves slim margins and little room for differentiation. But the Telecommunications Act of 1996 and the availability of DSL technology are changing this. Competitive local exchange carriers (CLECs) can now lease copper local-loop pairs from the ILECs. By integrating DSL technologies into the local loop, ILECs and CLECs are transforming the local loop into a network capable of delivering high-speed data services. ILECs recognize the opportunity to increase revenues by leveraging the existing copper plant to deliver cost-effective, high-speed data services to their customers. Armed with DSL and leased copper loop pairs, CLECs are rapidly expanding revenues by selling high-speed data services to residential and small- to medium-sized business customers.
Multiline Voice Services
In addition to high-speed data services, DSL is a cost-effective means of delivering multiline voice services. With voice over DSL (VoDSL), multiple voice lines can be multiplexed and delivered over a single local-loop DSL connection. Basically, the same line that traditionally supported a single voice telephony connection can now support multiple voice lines and high-speed data. Both ILECs and CLECs have discovered that VoDSL allows them to generate significant additional revenues from local-loop pairs. In some geographies, ILECs are running out of copper lines. Running new lines out to subscriber premises is expensive. With VoDSL, ILECs can run multiple phone lines over a single copper loop pair, eliminating the expense of pulling new lines to the subscriber. Voice CLECs also see a strong opportunity in VoDSL. Voice CLECs have invested heavily in voice equipment to offer service to large businesses and institutions. But as a result of the high cost of network buildout and the small margins associated with reselling ILEC services, they lack a strong business case for targeting residential and small- to medium-sized businesses. However, by deploying DSL over the copper local loop, they believe they can leverage their voice services infrastructure investments and deliver an economical voice and data service solution to a large, previously unreachable segment of the market, as well as serve their existing customers more cost effectively.
Furthermore, DSL broadband networks are not limited to delivering multiline voice and high-speed data; they provide the network foundation necessary to expand services to include enhanced voice, data, and video.
