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It was clear that Digital Subscriber Line (DSL) technology would start catching on at some point with small and medium-size business users as a way to speed up bandwidth in PC networks.

This technology uses traditional copper phone lines to provide dedicated, always-on access to the Internet. It's ideal for remote workers and telecommuters who want to send e-mail or browse the Web at speeds comparable to those available to workers at corporate headquarters, says Brett Sheppard, an analyst at Telechoice Inc. in Denver.

While there might be a business case for using DSL in a corporate headquarters, it would probably be limited to supplementing T1 service when another T1 line isn't needed, Sheppard says.

But DSL's main market play will be as a way to give fast connections to telecommuters and branch and small offices, Sheppard and other analysts say. Still, because DSL depends on phone lines, it will be more natural for a business to consider than a cable modem connection, simply because coaxial cable has been installed principally in residential areas.

DSL vs. Cable Modems

The installed market for cable modem lines in the U.S. and Canada was 1.4 million in October. That's more than four times the number for DSL, which runs to 307,000 homes or businesses, according to Sheppard and cable modem analyst Michael Harris at Kinetic Strategies Inc. in Phoenix.

Sheppard says he expects the DSL rate of growth in the U.S. to be faster than that of cable, adding that he expects the two to even out in 2002.

But Harris says he believes cable modems will win out in 2002 by 20% (see chart). He adds that his figures are conservative because American Online Inc.'s recent purchase of Time Warner Inc. could accelerate interest in cable modems.

Sheppard and Harris say the size of the market for both technologies should matter to information technology managers who want plenty of reliable service providers throughout the U.S. to choose from when setting up service for telecommuters. Despite all the buzz about the popularity of fast Internet connections, DSL and cable modems are currently available to only about one-third of U.S. users.

Still, DSL is offered in every large urban area, with multiple providers, Sheppard says. About a third of the users are businesses, not counting those in homes, whereas cable is almost completely restricted to residential neighborhoods, including home-based businesses and telecommuters, Sheppard and Harris say.

Among the factors that IT shops must consider in arranging DSL service is whether it can actually reach a telecommuter -- the end user probably needs to be within about 3 miles of a service provider's central office. Sheppard also says some DSL service can create static problems for voice calls running over the same copper line, and data calls can experience a dropped signal or reduced speed. Service providers can run a check, and IT shops should weigh the results of those checks.