Pipe Dreams

It's superfast, and it's always on. The broadband revolution will change the way you do business

Imagine being hooked up to the Internet 24-7, with e-mail and information zipping back and forth without delays. Just like the big corporations, with their superfast--and superexpensive--T1 lines. Fat chance that you'd ever get access to such a fat pipe, right?

Well, stand by. Affordable alternatives to T1 are available for small companies--or soon will be. Prices are dropping, and the areas covered by dueling technologies are growing daily. Sure, the broadband revolution has focused on consumers so far. But that's not stopping some small businesses from jumping on the broadband wagon.

Take Meg Nigro of Corporate Dynamics Inc., a 13-employee consulting firm that helps clients improve their sales and customer service. Due to problems with both Nigro's server and ISP connection, the firm's e-mail was reaching clients sporadically, sometimes days after it was sent. Now, for $195 a month, the company's network is connected to the Internet by a digital subscriber line (DSL) that's on all the time. Plus, DSL's top speed of 1.5 megabytes per second is 25 times that of a standard modem. "When you're asking for comments and feedback with deadlines, prompt reply becomes critical," says Nigro.

Things are moving faster for Nigro largely because of the Telecommunications Act of 1996, which is making these broadband technologies more widely available. The law obliged phone companies to open their lines to competitive DSL suppliers, while cable-television companies were freed to provide high-speed data access over their wires. Meanwhile, newly licensed frequencies let some upstarts provide broadband over the airwaves.

Even with all the advertising hype from the likes of Concentric Network, Infospeed, and Red Connect, small companies are just getting their feet wet. At the end of 1999, International Data Corp. estimates only 530,000 small businesses--just 12.3% of those already online--used any form of high-speed Internet access, and most of those were on antiquated ISDN lines. They are now facing a bewildering array of services and competing claims for today's lower-cost broadband options. Here's how your choices sort out right now and in the not-so-distant future:

DSL: From New York to San Francisco, DSL has become the darling of the big-city digerati. About 48,000 small businesses now have DSL connections, according to IDC. With DSL, you get a choice of providers without having to rewire your office. The competition is leading DSL vendors to differentiate themselves with multiple levels of service and varying fees. You can, for example, get so-called asymmetrical DSL (ADSL)--with higher speeds for downloads than uploads--or you can order symmetrical DSL (SDSL) to send files as fast as you receive them, key if you host your own Web site. Speeds can range from Bell Atlantic Corp.'s entry-level 640-Kbps ADSL service for $49.95 per month to Concentric Network's 1.5-Mbps SDSL service at $499, which includes unlimited network use. For a price, minimum speed can even be guaranteed by most providers.

That's if you can find one. For starters, service is available only within about three miles of a phone company's central office, where the Baby Bells' competitors are allowed to install their equipment. And despite the rapid spread, it's not clear how widely available DSL really is. Dave Burstein, editor of the online industry newsletter, DSL Prime, estimates that 60% of the country's phone lines were capable of providing DSL at the end of 1999. Justin Beech, editor of another newsletter, DSLReports.com, says only 24% of potential DSL subscribers have access in their area.

Promise aside, customer service is still spotty. Horror stories abound on online bulletin boards about missed service appointments, complicated installation routines, and underperforming connections. Market research firm TeleChoice Inc. conducted a study that found 30% to 40% of DSL installations had at least one technical problem.

Cable: After juicing up their networks to support two-way data transfers, such cable companies as Time Warner, Media One, and Tele-Communications Inc. are starting to pitch their service to small business. But proximity is a problem here, too: Only 20% of U.S. businesses are in areas that now have access to cable, says market research firm Access Media International. And only a small percentage of those companies are served by systems that have been upgraded to provide Internet access. Price can be another drawback, particularly if you want a hookup to service your local-area network. Although cable companies bill about $39.95 per month for one PC, they'll charge up to $600 per month to connect a company LAN. The extra cost, however, buys guaranteed speed--avoiding the slowdowns consumers experience when traffic increases--and capacity well beyond DSL's top offerings. Which to choose? DSL is more popular right now, but small companies often choose whatever becomes available first, says Kathie Hackler, an analyst at Dataquest.

Prewired buildings: A hot trend in commercial real estate is to offer broadband connections as a building service. Some property managers have brought in companies such as OnSite Access to retrofit their buildings. Others have even brought in ISPs as tenants to anchor their buildings. For Net junkies, it's a great deal. In St. Paul, Minn., for example, ISP Go Fast strung a 10-Mbps Ethernet connection to one of its neighboring tenants, BWBR Architects. Because Ethernet is a relatively simple technology, the wiring was inexpensive, and, as part of the deal, Go Fast sold BWBR 10-Mbps service for about the same price a DSL provider would charge for 1.5 Mbps.

Fixed wireless: This emerging option has the potential to serve businesses that lie beyond the reach of DSL or cable. But it's still hard to find, and prices vary widely. Providers include both ISPs and cable companies, which are partnering with wireless experts, such as High Speed Access Corp. in Denver, Colo. HSA installs a high-frequency antenna at the customer's office, which transmits Internet signals to and from a similar antenna at a cable company. Early adopters are already singing the praises of fixed wireless, which runs at variable speeds as high as 25 Mbps--about 470 times faster than the speed of a standard 56K modem. That's fine with Ray Elsey, owner of Tradeshop Inc. in Portland, Ore., an eight-person jewelry-design company. It means his customers can quickly send huge picture files of designs they want to commission--without bogging down his Net connection. He says it's well worth the $300-a-month charge.

Whichever route you choose, keep security in mind. An always-on connection means that your network is always vulnerable to hackers--and yes, they're interested in small companies, too. Some broadband providers include firewalls as part of the deal. If they don't, consider buying your own security system. Prices start at under $1,000, but expect to spend more for serious protection which includes live support, a must.

Beyond that, your location often determines what kind of service you get. Until all the options are more widely available, many business owners may find that broadband is still a pipe dream.

Sort out the broadband providers and learn more about security. Click Online Extras at frontier.businessweek.com

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