How DSL Pricing and Services Must Be Structured to Survive in the Next Round of High-Speed Access Technologies

Way back in 1998, offering high-speed Internet access to every home and business seemed to make sense. Lower the price enough and every kid, mom, dad, and at-home grandma day-trader will want DSL. A service company offering DSL will quickly get enough market share to become profitable, or close to it. Once a DSL company has amassed customers, it can raise prices a few dollars and make a killing.
    It all sounded good, but the financial troubles of companies like Northpoint and Covad ended that business myth. The PacBells and Ameritechs could afford to sell DSL for $49.99 per month as an add-on service, a loss leader. The start-up companies like Covad could not.
    Now, three years and a whole generation later in 2001, the market is ready to reload for round two. Only this time, the target audience is business; those companies paying too much for T1 and T3 access. And, the service will be in the hundreds, if not thousands per month.
    "For the business customer who needs high-speed access between .5 Megabit per second and 100 Megabits per second, two technology breakthroughs show the most promise and opportunity over the next two to three years: 1) fiber deployments in the access network, and 2) mesh configured broadband fixed wireless networks," said Roland Van der Meer, a partner with ComVentures, a venture firm that invests only in communications. "But, I guarantee when the next iteration of technology appears, the new access industry will not target the bandwidth void between dial-up (56 Kb/s) and T1 speeds. Businesses will be the target with a T1 or T3 plus.

Roland Van der Meer

"Plus, the industry will not drastically under-price legacy services as in DSL which only forced service providers offering such capabilities into bankruptcy," Van der Meer said. "Look for feature-rich breakthrough access technologies to use existing infrastructure in new, economical ways, and perhaps most importantly, be operationally deployed. If they don't meet those requirements, I guarantee that the VC community will not fund them. The old business models will prevail for these new services," he concluded.

ComVentures

ComVentures is a venture capital firm whose partners all have hands-on experience in the communications industry. ComVentures has consistently uncovered groundbreaking communications technologies, helped lead and grow its portfolio companies, and assisted these companies in deploying new technologies in an ever-changing marketplace.
The firm's partners, Cliff Higgerson, Roland Van der Meer, David Helfrich, Michael Rolnick, and Jim McLean, impart deep technical knowledge into the three sectors of communications in which ComVentures invests: network infrastructure, communications and IP services, and Internet applications and services. Cliff Higgerson's first investment in Tellabs in 1974 began partner investments and involvement in every aspect of communications technology.
ComVentures invests exclusively in early-stage communications and Internet companies. In the next ten years, the world will experience an unprecedented expansion in the infrastructure of communication networks and the way people use them. ComVentures invests in the pioneering companies that will capitalize on the ever-increasing drive to build next-generation networks and services. For more information, please visit www.comven.com.