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From: Subject: IHT Article Print Page Date: Mon, 2 Feb 2004 11:14:36 +0100 MIME-Version: 1.0 Content-Type: multipart/related; boundary="----=_NextPart_000_00E0_01C3E97D.BE3935B0"; type="text/html" X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2800.1165 This is a multi-part message in MIME format. ------=_NextPart_000_00E0_01C3E97D.BE3935B0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.iht.com/cgi-bin/generic.cgi?template=articleprint.tmplh&ArticleId=89815 IHT Article Print Page

A=20 digital dinosaur refuses to die

John Schmid and = Victoria=20 Shannon IHT
Saturday, March 15, 2003 =

Telekom = sells more=20 old-tech ISDN lines than new DSL ones

FRANKFURT If there is anything in = the=20 digital-phone world that seems just so 20th century, it is = an ISDN=20 connection.

Born in the 1980s, which is roughly an = eternity=20 ago in telecom time, ISDN arrived in an era of slow modems. = It was a=20 broadband Internet connection before there was broadband. = And like=20 so much else from those early years, ISDN seemed poised to = disappear=20 in the 1990s along with 24 kilobits per second modems. But = not in=20 Germany.

"ISDN is one of our success stories," a = Deutsche=20 Telekom AG spokesman, Hans Ehnert, said about the integrated = services digital network. Last year, Europe's biggest=20 telecommunications company sold twice as many ISDN = connections as it=20 did DSL broadband lines, even though Telekom's 1.5=20 megabit-per-second DSL lines typically gush data 10 times or = more=20 quicker than the standard ISDN link.

In 2002, Telekom = added=20 nearly 1 million of these new digital subscriber lines, = bringing the=20 total for the three-year-old service to 3.1 million. The = number of=20 ISDN lines, despite 13 years of marketing, surged to 22.4 = million=20 from 20.4 million in 2001. Deutsche Telekom, Germany's = former=20 monopoly telephone company, which helped develop ISDN = technology in=20 the mid-1980s, always felt duty-bound to promote it. When = the Berlin=20 Wall fell in 1989, the government began to rewire the = defunct=20 1930s-era networks in the east with glistening ISDN in hopes = that an=20 ultra-modern fixed-line network would help the eastern=20 economy.

Today, Germany lays claim to more than half = of all=20 ISDN connections in Europe and one-third of the world's ISDN = total.

In the European Union, Italy is a far distant = second,=20 while the United States has about one-tenth as many ISDN = lines as=20 Germany, or about 2 million in 2001, according to the = International=20 Telecommunication Union.

"In spite of the very high=20 penetration already achieved, demand for T-ISDN continues to = grow,"=20 Deutsche Telekom said in its most recent report. Michael = Minges, an=20 analyst at the ITU, cites three reasons ISDN is still = growing in=20 Europe: It's usually cheaper than broadband; broadband is = not always=20 available nationwide; and awareness.

"You would be = amazed at=20 how many people still do not know about or understand = broadband," he=20 said.

But it no longer suffices for Telekom to pitch = the=20 now-quaint ISDN solely as a high-speed service, since DSL is = even=20 faster. Telekom now markets ISDN as a stepping stone to=20 broadband.

With surgical pricing precision, ISDN is = slightly=20 more costly than a single analog line, which costs E13.72 = ($15.09)=20 per month, and less expensive than a basic DSL connection, = which=20 costs about E34.36 a month without additional Internet = provider=20 fees. Telekom sells ISDN, which itself is E23.60 per month, = under=20 the motto "add on, add up."

"They push ISDN in = conjunction=20 with DSL," said Werner Staeblein, analyst in Frankfurt at = the=20 ING-BHF Bank. "It cannot be separated from all the other=20 fixed-network products that it offers. Customers have been=20 incentivized to elevate themselves to ISDN." Europe's former = telephone monopolies are seizing any advantage to win = fixed-network=20 subscribers after markets were opened to competition in = 1998,=20 triggering price wars and lost customers.

"We cannot = expect=20 huge growth rates in the fixed-line business in Europe," = Staeblein=20 said.

T-Com, which is Telekom's fixed-line division, = has=20 traditionally been its parent company's cash cow. But in = 2002,=20 revenue from its domestic business in Germany rose a meager = 1.6=20 percent to E25.4 billion. For Telekom, ISDN revenue helps = stabilize=20 the whole fixed-line operation and keeps customers in its=20 fold.

Without needing to buy more phone lines, each = ISDN=20 connection can hold two lines open at once, allowing someone = to fax=20 or surf the Internet while taking phone calls. At the heart = of=20 Telekom's ISDN strategy is a package called "T-ISDN xxl," = which=20 bundles ISDN with DSL. This feature allows customers to = dedicate one=20 of their ISDN lines for DSL services. Telekom has made ISDN=20 literally into a household word in the Rhineland. Families = in remote=20 farming villages often have ISDN, allowing children to use = the=20 Internet while their parents can keep the family phone lines = free.=20 Or, they can route calls internally, from Mama in the = kitchen to the=20 kids in the basement.

Originally, Telekom targeted = businesses=20 as the ideal ISDN users. But since 1997, residential users = are the=20 big new market and now businesses hold only 30 percent of = the total=20 lines.

"Without two lines," said Ehnert, the Telekom=20 spokesman, "a modern family can hardly make do anymore."=20

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