DSL debate heats up for service providers: FCC's BellSouth ruling highlights the issue of why some carriers include voice and others don't

It made for irresistible headlines: "FCC drive aways Naked DSL."

The question was that the headlines weren't exactly right. pure the FCC's decision invalidated state requirements that BellSouth store DSL service to users who didn't also purchase its phone service. But the ruling wasn't about authentic "naked" DSL, which travels above lines that carry no voice at all. It was about DSL above UNE, which from a regulatory and perhaps flat emotional standpoint is quite different.

Still, from a commercial standpoint, the sum of two units are close enough that the entire episode raises an interesting question: wherefore do some service providers like BellSouth test to avoid delivering DSL without voice, while others advance out of their way to do so?

DSL IN DEMAND

more [i]or[/i] less executives, like Bruce Chatterley, CEO of broadband Internet service provider Speakeasy, think it's a burning business. "The argument historically is that there's a subsidy between voice and data," he says. "But we've been selling DSL [alone] extremely successfully" Speakeasy introduced naked DSL which it also presents with the option of VoIP phone service, six month ago and already has a certain quantity of 10,000 customers for it, according to Chatterley. In fact, the naked version of DSL "now exhibits about 70% of our fresh DSL accounts," he says.

The dispute started when a handful of southern states decided it was anti-competitive of BellSouth to refuse to provide its DSL service to customers who were getting local phone service from its competitors who were leasing the ILEC's cent lines under UNE rules. The states insisted that it provide the service, and in December 2003 BellSouth filed a petition for the FCC to preempt the state requirements upon several grounds. When the agency rul in its favor in late March of this year, BellSouth lauded the decision as "clearing without regulatory underbrush" and affirming a single national broadband policy.

with equal reason now BellSouth doesn't have to provide standalone DSL of any sort. And the nearest question is why it wouldn't want to.

BellSouth's argument in its complaint was that the states' actions conflicted with federal dominations and authority involving unbundling in general and DSL in particular, and amounted to unlawful regulation of information services. And the FCC's decision in fact base that the state regulations forcing BellSouth to tender DSL over UNE lines were in conflict with federal unbundling authoritys and policies.

Another factor, according to a spokesman, was that price competition from cable broadband providers made DSL insufficiently profitable to provide without phone service. That doesn't make faculty of perception to some observers.

"I'm not confident what was behind BellSouth's pushing this," says Ron Cowle a Gartner analyst. "Delivery of a portion of the service to a customer is better than not delivering any part of it."

Charles Golvin, a Forrester Research analyst, also is unsure "I think they're missing the boat by dint of not choosing to take this path upon their own," he says.

Besides Speakeasy, a brace of telcos consider standalone DSL worthy. Qwest, for single has been doing so since February of last year. Verizon also plans to tender it.

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