Byline: Jon Van
CHICAGO _ Perhaps the best thing about the latest advance in telephone technology is that nobody notices it.
"People here don't realize they're using it, and I didn't tell them," said Steve Loria, controller at a Crystal Lake, Ill., firm that has been using new technology to make phone calls for half a year now. "The calls sound just the same as our other lines.
"I like it so much, I'd like to get it at home."
Loria's firm _ Big Beam Emergency Systems Inc., which makes emergency lighting equipment _ is among several dozen in the Chicago area that since last year have been testing new technology that carries voice and high-speed data on the same copper lines. Most find that it works flawlessly and is cheaper than the traditional phone service people have used for decades.
The key to the new technology _ broadly known as packetized voice _ is that it digitizes voice conversations and handles them just like digital computer data, putting them into discrete packets for transmission.
This is in vivid contrast to traditional circuit phone technology that works on the same principle as two tin cans connected by a string. When someone dials a number, the traditional phone network sets up a connection that is dedicated solely to that call until the talkers hang up. This is simple in concept, but it means that most lines are tied up carrying only a small fraction of their capacity.
Packetized technology works more like the postal service, where people toss envelopes into a system that moves them in great bunches all around the country, dropping each envelope off at its intended location.
Chicago's first commercial packetized voice rollout has been launched by Focal Communications Corp., a Chicago-based competitive local phone company that integrates voice with its high-speed data service called DSL, for digital subscriber line.
Voice-over-DSL is intended to make maximum use of the copper wire that runs between a customer's premises and the phone company's central office, said Carl Steen, a Focal data marketing executive.
Focal's service provides an always-on data connection to a customer that also supplies voice connections as needed.
In a customer's office equipped with the service, the copper line carries 1.5 million bits of data per second to feed the computers, Steen said. When one worker picks up his phone to make a call, the system diverts less than 5 percent of that capacity to carry the call, devoting the other 95 percent to the data traffic.
If two people use their phones, about 10 percent of the capacity goes for voice, while the rest carries data, and so on.
Voice-over-DSL technology can deliver up to 16 separate voice phone lines over a single copper connection, Steen said, although most customers prefer to get the product that combines some voice lines with high-speed data. Most customers find that combining their computer and voice service on a single line is cheaper than traditional service.
"We're looking at different pricing plans," Steen said. "We may offer it as a voice service with data thrown in free."
Focal sells its service directly to some larger businesses, but many of its customers are Internet service providers or other resellers who deal with smaller customers. A major business in this category is Cimco Communications Inc., based in Oakbrook Terrace, Ill.
Cimco is a competitive carrier that buys phone service at wholesale and resells it at retail to its customers. Its core business is providing expertise to manage its customers' telecommunications, said Bill Capraro Jr., Cimco's chief executive.
Because Capraro's greatest fear is providing a customer with a service that doesn't work, he's been conservative about embracing new technology, especially DSL.
"Early on we decided that DSL, by itself, wasn't a good solution for Internet access, and we haven't sold that for six to eight months," said Capraro. "But voice-over-DSL, now that's a different scenario. I'm a believer in that."
Capraro was won over by the new technology after extensive testing. For more than a year at some 50 locations, Cimco has been working with customers to test voice-over-DSL supplied by Focal. The customers knew this was new technology that might have glitches, so they avoided using it for vital phone service.
Typical of the testers is market researcher Kevin Smith of Smith Research Inc. Instead of using voice-over-DSL at his company's Deerfield, Ill., headquarters, Smith opted to put it into his satellite office in downtown Chicago.
"We're willing to accept some risks to be the first kids on the block with something new, but I don't want to put our clients at risk," he said. "If we lost phone service for a few hours in our Chicago office, we wouldn't be out of business, but if we lost it in Deerfield, we would be."
After about a year of testing, Smith finds the service very stable and now is looking at using voice-over-DSL for some phone service in Deerfield, although he plans to keep some traditional circuit lines as a backup.
Cimco's Capraro said that considerable test experience has convinced him that the voice-over-DSL technology is both high quality and reliable.
"All technical aspects have passed our tests with flying colors," he said. "We're very confident this product works. But I don't know yet how the product will fit into the market."
For an end user, the point of boosting copper line capacity and using fewer lines is saving money, and voice-over-DSL will clearly do that for some customers, but just how broad its reach will be isn't clear to Capraro.
Larger customers with lots of phone lines and computers can buy traditional service at volume discounts and may not save much with voice-over-DSL, he said. Smaller customers may save money with it, but if their businesses aren't in areas where Focal or others can reach them with DSL service, it won't do much good.
Ameritech, which owns most of the copper lines between customer premises and central offices, has upgraded its network to increase the reach of DSL technology. But Ameritech also has balked at sharing its new DSL technology with rivals such as Focal. Rather than comply with orders by the Illinois Commerce Commission to share DSL technology, Ameritech has chosen to not deploy it.
Since many price benefits offered by voice-over-DSL come at the expense of Ameritech's existing service, the company understandably is reluctant to help its rivals steal some of its most lucrative business.
In fact, if voice-over-DSL became widely used, dominant carriers like Ameritech would see earnings fall, predicts Will Gordon, a vice president with Adventis, a Boston-based information technology consultancy.
"It's a wonderful tool for an Internet service provider," said Gordon. "You offer a customer phone service and high-speed Internet all on one line. But it's a real threat to the incumbent phone company because some of their best profits in residential service come from providing second and third lines. If that starts to go away, it will hurt them."
Since last year's dot-com market meltdown, financial markets have turned off the cash supply needed by rival phone companies to keep expanding. Some observers believe the Bell companies are counting on the cash crunch to flatten their competitors.
"The investment community has turned its back on the competitive carriers," said Robert Rosenberg, president of Insight Research Corp., a telecommunications consultant based in Parsippany, N.J. "There's a real question now how many can survive. The monopoly carriers will do whatever they can to keep competitors from getting access to DSL lines."
But despite the difficulties facing voice-over-DSL, there's little doubt that it can be a boon to customers with the right needs who are located where they can get it. This often means in places of high business concentration like downtown Chicago, Oak Brook and the area around O'Hare International Airport, where Focal and other competitive carriers can reach customers without using Ameritech's lines.
Henry Schlessinger, a vice president of System Parking, has ordered voice-over-DSL for 66 locations where a single line will provide data and voice service to parking attendants, replacing two lines.
Schlessinger, who had been using DSL data service from a provider that went bankrupt, said that by dropping his phone-line charges, the new service will be almost as cheap as what he had been getting.
"I had a three-year contract for a very attractive rate before," he said. "But that doesn't do much good when the company is out of business."
Another business that's been testing voice-over-DSL is Prime Appraisal in Chicago. Chris Crowley, a partner in the firm, said that going to a single provider for voice and data is saving him a lot of money.
"We were concerned that for the price, it would be a low-end service," said Crowley. "But their installation was quick and trouble-free, and the voice sounds as good as if it came through AT&T or Ameritech, so we're dumping our other carrier."
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