SURVEY - FT TELECOMS:

Unwanted innovation - or extremely versatile solution? 

November 24th, 1999   

 Some people are rather rude about the ISDN (Integrated Services Digital Network) digital telephony system. To them, ISDN stands for an "Innovation Subscribers Don't Need," or "Internet Saves Dying Network." And the brickbats are increasing with the arrival of broadband services such as ADSL (Asymmetric Digital Subscriber Line) and cable modems.

 Critics argue that high-speed services such as these make ISDN redundant, and many would probably agree with the verdict of Nick Rosen, research director of the London-based Online Research Agency.

 He says: "ISDN is an inferior and outdated technology."

 But others within the telecoms industry are more in tune with Adrian Kennard, director of UK communications specialist company Andrews and Arnold, who says: "Reports of ISDN's death are exaggerated."

 Klaus Allion, divisional director of Bosch Telecom UK, says: "The roll-out of ISDN has been slow and so customers did not buy into it as expected. Three factors affect customer take-up: availability, marketing - and that includes pricing and promotion - and applications. ISDN now has all three."

 There are two versions of ISDN. Basic Rate ISDN (BRI) offers two 64 kilobit (64,000 bits per second) channels (known as B-Channels), which can be used to carry voice, data or a combination of both. The two B-Channels can also be combined to offer a 128 kilobits per second data connection.

 Basic Rate ISDN is primarily aimed at small-to-medium enterprises, the small office, home office sector, teleworkers and residential users, although corporate usage is not unknown. Primary Rate (PRI) ISDN offers up to 30 B-Channels in Europe (23 in North America), and is aimed at larger companies and corporates.

 The Global ISDN Industry Forum (GIFF) - which has more than 40 members involved in the ISDN market including British Telecommunications (BT), Deutsche Telekom, MCI, Ericsson, Telenor and AT&T - says that the largest ISDN markets are in Germany, France, the US, UK and Japan, although Norway has the highest penetration rate, with 41 per cent of subscribers using ISDN.

 The US National ISDN Council estimates that by December 1 1998, there were 1.5m BRI lines in service in the US, with a growth rate approaching 400,000 lines a year. During the same period, more than 100,000 PRI lines were in service, with a growth rate close to 60,000 lines a year.

 A report from the Asia ISDN Council (AIC) says that there were 5.5m ISDN channels used in Japan during the same period.

 The research company Frost & Sullivan forecasts that the 1999 European ISDN market will have 32.4m B-Channels yielding revenues of $27.8bn. In 2004, these figures will rise to 81.8m and $42.9bn respectively.

 Operators offering ISDN services report a healthy uptake. David Drysdale, ISDN manager for Cable and Wireless Communications (CWC) says: "We started selling Basic Rate ISDN around nine months ago and it's taken off like a rocket."

 France Telecom reports that ISDN represents 50 per cent of the lines taken by its medium to large enterprise customers.

 But the arrival of ADSL (which can offer much higher data speeds than ISDN) has led to some questions about the long-term future of ISDN. Mr Kennard says: "ADSL isn't rocket science - high-speed data connections have been around for years. The difference is that ADSL is being marketed at residential users. ADSL will be offered by ISPs (Internet Service Providers) as a high-speed link to the home or office, but ISDN is more than just a fast connection to the internet."

 The flexibility of ISDN is illustrated by a France Telecom survey which looked at the most popular applications for ISDN. These were: voice, internet access, LAN (Local Area Network) connectivity, e-mail, downloading software updates, back-up for a leased line, client-server applications and tele-maintenance. "ISDN is a multi-application, multi-protocol technology. It is extremely versatile," says Marc de Villepin, France Telecom's marketing director of corporate voice services.

 Steve Bigrave, BT's in-life manager for ISDN and BT Highway, adds: "ISDN gives you a lot of network services like call forwarding, call deflection and call diversion. With ISDN, you can pick up a phone and call anyone with an ISDN or POTS (analogue) connection. You can't do that yet with ADSL."

 Susan Sirmai-Feinberg, senior director of Global Transmission Service for Teleglobe Communications Corporation, says that ISDN is available to 90 per cent of US telecoms subscribers, but coverage of the new technologies is more patchy: "Some companies have ISDN links to 50 or more sites. Are they going to give up that investment for something that can't be used across the country?"

 Incumbent telecoms companies will want to make the most of their investment in ISDN, says Ian Upton, consultant at the European IT Service Group CMG: "ADSL is being introduced to counter the threat of cable modems and not because telecoms companies want to give it to their customers. ISDN is already being re-packaged as a high-speed internet connection for residential users."

 As the telecoms world moves from switch-based to packet-based technologies, investment will move towards the latter, says Gabriel Dusil, marketing director of Motorola ING (Europe, Middle East,  Africa), but he adds: "I think we'll see ISDN having a life-span of another five years or so."

 Research company Datamonitor says that ADSL services will result in a fall in ISDN prices, making the latter attractive to more cost- conscious companies. Datamonitor believes ADSL and ISDN will co-exist, and forecasts that in 2000 ISDN will account for 37 per cent of European business internet access accounts and DSL technology will account for 1 per cent. In 2004, the figures will be 31 per cent for ISDN and 21 per cent for DSL.

 Mr Allion says: "ISDN is available, is understood by customers, manufacturers and suppliers and will sell well in the near- to mid-future. There is clearly a market for ISDN."

 "Pricing, applications and availability are the key to success," says Mr Bigrave. BT has introduced a Home Highway ISDN package for residential users, and Deutsche Telekom has launched a lower-priced ISDN service in Germany, T-ISDN 300. France Telecom is launching a flat-rate ISDN service later this year.

  ISDN is addressing the threat of ADSL in other ways, too. A third ISDN channel, known as the D-Channel, is normally used to transmit small amounts of data (up to 16 kilobits per second) for call switching. There are now plans to use the D-channel as an "always on" data connection. BT has launched ISDN Connect, which allows the D-Channel to be used for telemetry applications such as credit-card verification and petrol pump monitoring.

 With developments like these, it is little wonder that some believe that ISDN now stands for: "It's Still Doing Nicely."  

 Regards

 Steve Bigrave

ISDN/BT Highway 'In Life' Product Manager

Tel 01525 380100

ISDN & Highway internet information sites