The last time we met, I was dangling precariously 12 stories above the corner of 15th and G St. in Washington, D.C. posing as a window washer attempting to gather juicy material for my column. Over the course of the past two months, three thoughts have dominated my consciousness, as I lay in my hospital bed recovering from the fall precipitated by a "defect" in the rope I was using to secure myself.

1) Apparently, some companies aren't receptive to the idea of analysts posing as building maintenance in order to gain insights.
2) Thank God for that awning.
3) I forgot how hellish it was to be subjected to the limit of only seven television channels (Such as I was during my stay at the hospital.)

Now, although I feel that I have some great insights pertaining to the survival of falls from high places (for those please feel free to see my column in Soldier of Fortune), I think it would be most appropriate, in this forum, to direct my commentary toward the third point.
During my last trip to the P&WB soapbox, I appeared to sound off against companies that were attempting to enable their customers with (props to Qwest for providing me with material) "The Bandwidth To Change Everything". While I still feel that the practice of running fiber throughout the building prior to providing service offers significant ROI challenges, I do feel that the ability to offer high bandwidth services will be paramount on a going forward basis. Thus, I stand here before you today to ponder the future of VDSL as a means for service providers to offer high-end video services in the MDUs that they serve.
The delivery of cable TV service (either analog or digital) requires the presence of HFC cable that runs, at minimum, from some central demarcation point on the outside of the building, to each unit of the building. Thus, for any company that is not either 1) the MSO or 2) an overbuilder, VDSL has some serious upsides.

With asymmetrical transmission rates of up to 52Mbps (down)/6Mbps (up) and symmetrical rates of 26Mbps, VDSL offers providers a single medium by which to offer voice, data and multi-channel, digital video services. In my estimation, this currently offers the best solution for a provider to use existing copper to offer a full suite of services (including Video on Demand) that compete with the cable company.

The buzz around VDSL is so hot right now, even rural telephone companies are jumping on the bandwagon. I have seen recently where several rural telcos are building out VDSL networks to offer digital video services in order to compete with the local cable company. In fact, I have seen it published where one provider says that building a network equipped to offer VDSL can run around $1000 per home passed compared to $1200-$1300 per home when attempting to build an overbuild network.

Now, I understand that comparing rural telephony to the MDU market is apples to oranges. However, I wanted to point out that if VDSL is considered a viable, if not attractive alternative in rural areas where loop lengths may be measured in terms of "As the crow flies", a compelling argument can certainly be made for it in the in-building market.

There are of course, drawbacks. Two that I hear come up quite often are:
1) The lack of standards associated with VDSL equipment.
2) The lack of fiber at the metro level, which would be required to backhaul the amount traffic that VDSL would generate.

In terms of standards, I will say that the manufacturers of VDSL equipment have recognized the need to establish some common ground. In fact, an international VDSL standard was recently ratified by the European Telecommunications Standards Institute (ETSI), with the North American Standards Institute (ANSI) expected to follow suit in mid-2001.

As far as the build-out of metro fiber rings goes, well, that is another matter. I will not deny the challenge faced by an in-building provider who would gladly install VDSL equipment if the local ILEC would just lay out for a shiny new fiber ring. However, I will say that the interest in metro fiber is at an all-time high, and that the construction of such networks is taking place.
Despite its challenges, VDSL may truly be the answer to many providers' prayers. If I may leave you with a few thoughts concerning MDUs and VDSL they are: As a LEC or even as a non-certified provider of data only services to the MDU marketplace there are a few truths that I hold to be self-evident. First, data (high-speed Internet) is a quick, relatively painless and fairly effective way to gain a foothold in a building. Second, high-speed Internet alone will ultimately not provide enough revenue to sustain a business. Moving beyond these, I feel that now is the time for providers to begin to phase in services that were previously referred to primarily in the vague context of "Eventually we plan to integrate...". At present, the golden calf in terms of revenue generation is voice. As VoDSL is adopted, more MDU providers will see the value in establishing themselves as CLECs. However, on a going forward basis, I see video services as being the key to competing in this area. As IP telephony comes online, CLECs will find it imperative to offer digital video services in order to compete with cable operators. VDSL will provide the means for this competition to flourish.

About the Author
In reality, Jason Marcheck is not the Dirk Pitt of telecom analysts and has never even read an issue of Soldier of Fortune magazine. He is, however, an analyst with The Strategis Group. The Strategis Group is a market research publications and consulting firm headquartered in Washington, DC with offices in London, Singapore and Sao Paulo. The author welcomes and encourages any questions or comments on VDSL via email at jmarcheck@strategisgroup.com