Flip on the TV, and chances are you'll see an ad for Covad Communications
Co. Tune in to National Public Radio, and you'll hear a show sponsored by
Rhythms NetConnections Inc. Open your newspaper and something called Flashcom
Inc. will vie for your eyes in the business section. They're all touting
broadband Internet access using Digital Subscriber Lines (DSL), the high-speed
Net service available through your phone lines.
But who are these guys? Can you trust them with your company's always-on
connection to the Net?
You can blame the confusing hype on the clunky nature of our regulated
phone system. Deciphering who does what in this landscape takes a little
concentration, but once the smoke clears, it's not all that complicated.
Broadly speaking, these companies fall into two categories. First up
are companies known by the unwieldy phrase "data competitive local exchange
carrier." These are the true DSL vendors such as Covad, NorthPoint Communications Group Inc., Rhythms, and several regional companies (including DSL.net Inc., New Edge Networks, and Telocity Inc.) These firms place what is known as a DSL access multiplier (or DSLAM) in the central office of your local
phone company. This piece of hardware, which acts like a switch, transfers
the data coming over the phone wires from your high-speed DSL modem, onto
their private networks and then to the Internet's backbone. In effect, they're
wholesalers: They're so busy installing DSL equipment in the thousands
of central offices around the country that they don't have time to market
or service DSL to retail customers.
So why do you even see their pitch? "Covad's ads are like the 'Intel
Inside' campaign," says Justin Beech, editor of DSL Reports. "They're branding
their service and encouraging you to buy service from one of their partners."
The partners are part two of the DSL equation: Internet service providers.
These DSL-savvy ISPs contract with companies like Covad for the right to
hook customers up to the DSLAM. In effect, the ISPs are resellers. Because
a technician at the phone company has to hook the phone line to the DSLAM,
the ISPs also act as a go-between that ensures everything happens on schedule.
Then there's a third player -- your local phone company. It acts as both
DSL vendor and ISP, selling service to individual customers under names
like Infospeed (Bell Atlantic) and FastAcces (Bell South). The Baby Bells
jumped into the DSL market at about the same time as the lesser-known brands,
and are now aggressively pushing their services, too. But you know who
Which ISP should you pick? Go to Covad or Northpoint's Web site.
They list all the ISPs that are currently coordinating DSL service with
their equipment in your area.(Where you are determines what's available.)
The database is silent on which has the best installation or service reputation.
Don't count on seeing the names of many national ISPs such as AT&T
and MCI. These big players are mostly dabbling in DSL, unsure they want
to cannibalize other more profitable high-speed connections. They don't
tend to own their own DSLAMs and have limited relationships with the Covads
of the world -- which explains why you haven't seen many MCI ads pushing broadband DSL.
That leaves most businesses evaluating smaller ISPs or their local phone
company for their broadband needs. But, honestly, how many people had ever
heard of national ISPs such as Flashcom, Concentric Network Corp., and
Zyan Communications before seeing an ad? Or such regional services as Red
(run by the obscure Prism Communications Services)?
Underneath the marketing pushes lie serious customer-service problems.
Customers rate their ISPs and rant about the service at Beech's Consumer
Reports-like Web site. Very few of those pushing lots of ads come out well-especially Flashcom, which has become something of a flash point of subscriber anger.
"A lot of folks are growing so fast that they can't keep up," says Dave
Burstein, editor of DSL Prime. In a lot of ways, many of these ISPs are
suffering from the same problems that beset America Online when it switched
to flat-rate pricing. Customer demand is outstripping their capacity: The
resellers haven't contracted for enough DSLAM capacity. Also, customer
support has been unable to handle the large volume of consumer interest.
Companies say they're responding as fast as possible to customer concerns
amid a fast-growing market. Flashcom, for instance, recently added a new
management team and invested millions on back-office support systems. "We're
seeing the first signs of a real turnaround in the customer experience," says
President Richard Rasmus, who joined the company in January. He says the
raw number of complaints about the company simply reflects the fact that
it has the largest number of customers.
With DSL ISPs acting as middlemen, you might be tempted to heed your
phone company's ads and sign up with them. After all, they own DSLAMs and
act as ISPs. They also employ the technicians who hook up your phone
wires. A quick browse through Beech's site might change your mind. Only Southwestern Bell fares well in customer opinion.
Will one of these ISPs ride out the competitive clash to dominate the
DSL broadband market? Only time will tell. For now, Beech points to several
ISPs that are receiving good notice on his site. Among the best, he cites
Phoenix Networks, Speakeasy Network, and MegaPath Networks Inc. They've
tended to avoid hyping their service and focus on customer needs instead.
If they stick to that formula, these upstarts may end up with the best
advertising of all: good word of mouth.
Table: Related Links
Companies mentioned in the story:
Covad Communications Co.
Rhythms NetConnections Inc.
NorthPoint Communications Group Inc.
New Edge Networks
Concentric Network Corp.
MegaPath Networks Inc.