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Europe's first ADSL service launches

December 10, 1998
Web posted at: 11:00 AM EST

by Jana Sanchez-Klein

LONDON (IDG) -- A local government-owned telecommunications carrier, Kingston Communications, has become the first telco in Europe to offer a commercial ADSL (asymmetric digital subscriber line) service, a company spokesman said Wednesday.

The service, launched this week, already has five business customers, said Colin Ashcroft, corporate public relations manager for the Kingston Communications, which is the dominant telco for the city of Kingston-upon-Hull, England. The telco owns and manages the city's entire business and residential network, which services 185,000 customers. British Telecommunications PLC only entered the city in June after the regulator opened the market.

The fast Internet access service is available to all business customers and carries a hefty price tag of between 200 pounds (US$330) and 1,500 pounds per month for always-on service that ranges from 128K bps to 1.2M bps. Even at that price, however, the ADSL service makes sense for some customers.

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"In terms of leased lines, it's a savings of about 50 percent," said Jonathan Levy, managing director of Pentagon Communications, a multimedia company that offers video production, radio production and interactive media production services. Right now, Pentagon is using the high-end 1.2M bps line to connect a server to its ISP. The server contains graphics that customers around the world access and view so they can order products from Pentagon.

Levy plans to move all of his Internet access to ADSL eventually. Right now the company relies on dial-up ISDN and 56K bps modems for most of its Internet access.

But some analysts question whether this service heralds a big shift in Europe, which has been very slow to adopt ADSL for Internet access. "The reason DSL hasn't been launched elsewhere in Europe is because the incumbents don't want to cannibalize their revenues and the competitive entrants don't have enough access to the network," said Gavin Parnaby, an analyst at Datamonitor, who wrote a report earlier this year on ADSL and cable modem access in Europe. Calls to ISPs, like all local calls, are typically metered and the rates can be very expensive.

"Deutsche Telekom, for example, has been very vocal about DSL, but they haven't moved beyond announcements," said Parnaby, who also believes that this is the first commercial ADSL service in Europe, although there are trials of the service in several countries.

A primary motivating factor for Kingston Communications to offer ADSL was that it was a less expensive way for the telco to upgrade its system. The entire cost for installing the ADSL equipment and upgrading the plant was 4 million pounds, said Ashcroft.

"We upgraded all our exchanges to ATM standards. We introduced more fiber to link the exchanges, and we have installed the modems (DSLAMs) into the exchanges," said Ashcroft. "It is a relatively low-cost way of upgrading your network and a way of doing it relatively quickly."

But the price being offered to the customer doesn't reflect that efficiency, said Parnaby. "There are substantial cost advantages, but it doesn't sound like the cost advantages are being given to the end users. ADSL services don't cost 1,500 pounds per month," he said.

The telco's next move, in the summer, will be to offer ADSL services, including video-on-demand, to residential customers. The price the company will charge has not yet been determined but it will be competitive with digital broadcasting, said Ashcroft.

Jana Sanchez-Klein writes for the IDG News Service.

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