What future for ISDN and leased lines?

ISDN could have been a contender. It had conquered countries such as Germany in no time, but was held back in the UK because of BT's reluctance to let go of its leased line and analogue revenue. But a new heavyweight - asymmetric digital subscriber line (ADSL) - is on the scene, promising to force both ISDN and leased line technologies into a corner.

Clive Longbottom, senior analyst at Strategy Partners, believes that ISDN, at least, has a fight on its hand. "If we consider what BT has done in the past, ISDN stands very little chance," he says. "BT kept ISDN prices extremely high to save the analogue market. It threatened to do the same with ADSL, but in the end it priced it at under £40 a month. Unless ISDN is now made a lot cheaper, it will die."

However, not everyone believes that ISDN is doomed. Nick Craddock, marketing manager at ISDN vendor BinTec, says: "Although in the long term new technologies such as ADSL could well threaten the future of ISDN. There are two factors that will ensure ISDN will be around for a while yet.

"First, the infrastructure investment from BT for the 'last mile' means that it will be very reluctant to let go of it and, as a result, the company is not falling over itself to offer DSL services. The second reason is that many companies have an existing investment in ISDN. They too will be reluctant to move to a different technology."

What ISDN had to put up with in its early days, ADSL technology may well be facing now. BT stunted the growth of ISDN to reap the rewards from other areas of its business. Although the pricing structure for ADSL isn't quite as blatant as it was with ISDN, it is still expensive. "I do believe that BT is doing that," said Craddock. "I think that they have far too much to lose if people bypass their investment. The BT Highway initiative is proof of that."

Voice over IP
Everyone is talking about voice over IP. It is continually quoted as the panacea for future business and, as such, any technology that does not fully support it could struggle until the problem is addressed.

The fact is that ADSL - whenever it arrives - does not have full voice support. The voice support that ISDN offers could be what maintains its position for a few years yet.

Martin Charlton, sales manager at SAS Distribution, a company that deals with many ISDN products, says: "ISDN is perfect for the PBX (private branch exchange). Because you can't get full voice out of ADSL, ISDN may be under threat from the newer technology, but it certainly isn't dead."

He points out that you also can't run videoconferencing over ADSL because it is a point-to-point technology. ISDN is point-to-multipoint and as a result is inherently suited to this type of application.

Not everyone agrees with Charlton's views, however, and many believe that voice over DSL is not that far away. While this may be true as far as pure technology goes, BT does not have the necessary equipment installed in its exchanges.

When BT eventually begins to roll out an ADSL service, there is one thing that will drive the technology on more than any other - virtual private networks (VPNs).

"ADSL makes VPNs far easier, and there is a lot of talk about it. As an overall solution it is an extremely viable technology," says Craddock.

Plan for the future
While it may be too early to sign the death warrant for ISDN, vendors will have to be aware and plan for the future.

Craddock explains how BinTec will have to look into new areas to move the business forward. "Although we are already involved in the ADSL market to some extent - we supply equipment to Deutsche Telecom - we find the whole convergence thing very interesting," he says. "It has made it a lot easier to move into the telephony market. This is a good opportunity, and technologies such as unified messaging allow us to integrate voice and data in software, before true voice over IP comes along."

Another interesting point is whether or not the ADSL revolution will affect the carriers leased line business. With an always-open connection available for as little as £40 that offers theoretical speeds of up to 5Mbps or 6Mbps, who would pay for a leased line?

"In the short term ADSL may have a lot more impact on the leased line business than ISDN," says Craddock. "People might make the mistake of thinking that ADSL is a leased line due to its 'always-on' nature. But the fact that it is asymmetric will make it unsuitable for many business users."

BT feels the pressure
There's still a fair amount of confusion over exactly how the ADSL service will be structured and deployed. Obviously BT holds most of the cards, but much of its power was taken away when telecoms regulator Oftel ordered the telco to unbundle the local loop by the summer of next year.

When that eventually happens the race will be well and truly on. But how do other service providers, such as Demon Internet, fit into the deal?

BT will sell ADSL services wholesale to ISPs, and by the spring of next year an estimated six million UK households will have access to the service. To its business users Demon offers a top-of-the-range ADSL service, known as Demon Express Gold. For an initial set-up cost of £250 and a monthly rate of £290 you would get 2Mbps downstream bandwidth and 256Kbps upstream.

You would also get a managed internet server, with DHCP, NAT and DNS to support up to 150 users. In short, quite a comprehensive package.

ISDN simply cannot compete with that. Although the installed base and the amount of investment that has been poured into the technology over the last couple of years make for a reasonable argument, the advantages that can be gained from ADSL can't be ignored.

On top of that, the hot topics of the Networks Telecom show last week were outsourcing and ASP services. ADSL will provide the necessary bandwidth and 'always-on' status to drive this technology.

Currently very few, if any, ASPs offer end-to-end service-level agreements unless the connection is over a leased line. Connections over the internet - and even over ISDN and low-bandwidth leased lines - will struggle to offer the wide a variety of applications that go hand in hand with ADSL.

Come July of next year, when the local loop is due to have been unbundled and ADSL is well and truly unleashed on the UK market, ISDN will have its work cut out. It seems that the only way the technology will survive is if its cost is slashed significantly enough to interest far more home users. As for the leased line, its future seems far more assured.