Bell Atlantic’s Speed Solution: DSL

Foxcom’s Sales Target

Stehlin’s Bio

Sidebar: Why Speed Doesn’t Always Count

Letter to the Editor

Corrections or additions?

These articles by Barbara Fox were published in U.S. 1 Newspaper on August 11, 1999. All rights reserved.

New Media, Familiar Hurdle: The Last Mile

Surf the Internet at home and you will most likely

find that your connection is poky and sluggish. Even the 56k-modems

— the biggest "pipe" available to most home surfers — can’t compare to the speed you get by using T-1

lines or fat

fiber pipes at an office.

Fiber isn’t yet cost effective for residential use for what is called

"the last mile," the industry term for the distance from the

curb to the house. Therefore, the speediest service available to most

homes now is with a cable modem at 750 MHz. Consumers are finding

that this is not enough, says David Stehlin, CEO of an Israel-based

firm, Foxcom Inc. He claims that Foxcom’s broadband fiberoptic transmission

systems can deliver 2 GHz of bandwidth, three times as much bandwidth

as the cable system can offer.

"Because of the recent convergencies in the telecommunications

industry and all the things going on the Internet," Stehlin says,

"the largest market for our type of technology is here in the

United States." Foxcom planted its flag in the United States by

opening a College Road headquarters in May, and it hopes to go public

within two years. Trials are underway now, and he predicts "significant

ramp-up" next year in such markets as New York, Washington, Dallas,

and San Francisco.

But in the race to grab market share for their brands of speedy residential

connections, other telephone companies and cable companies are staking

their claims. Foxcom’s formidable competitors include its clients

and potential clients, companies like Bell Atlantic, Bell South, and

AT&T.

AT&T is testing its own neighborhood broadband system, LightWire,

in Salt Lake City, and has just announced a mass deployment next

year of combined telephony, high speed data, and video for homes

around the country. Meanwhile a trade magazine, America’s Network,

quotes Bell South saying it has already brought fiber to the curb

for 200,000 homes and expects to do 800,000 homes per year, basically

to every new housing development in its area.

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Bell Atlantic’s Speed Solution: DSL

In contrast, Bell Atlantic has not ruled out the expensive broadband

for the far future, but it is probably still smarting from its Toms

River experiment, which used first generation broadband convergence

technology that was both too expensive and too complex. For the near

future it is rolling out a tempting option, Digital Subscriber Line

technology (DSL), and will bring it to Princeton soon.

"To have fiber in every home would take 20 years, and there is

a pent-up demand for speed today," says Jeff Waldhuter, Bell

Atlantic’s director of technology and engineering. "Fiber-driven

access technology I put in the category of being revolutionary, but

you have to dig up the streets and replace copper with fiber."

"Our objective is to make fast connections as ubiquitous as touchtone

in the northeast, and we are doing that with DSL today," says Waldhuter.

"We can have them easier and sooner with DSL, which builds on

what you have in place." Marketed as Infospeed DSL, it features

one line that combines a voice or fax line with a simultaneous "always

on" Internet connection. Including the Bell Atlantic.net access,

the residential connection costs $49.95 monthly for up to 640 Kbps, $99.95

for 1.6 Mbps, or $189.95 for 7.1 Mbps. Commercial prices start at

$65.95 plus the $99 DSL modem, and coverage in the New York area started

this month (http://www.bellatlantic.net/infospeed).

The broadband solution may take longer to become popular, but Stehlin

insists it is better. With broadband, not just two but five kinds

of transmissions can be sent on one system: direct TV, cable TV, very

high speed data for the Internet, standard telephony, and wireless.

Telecommunications companies would theoretically save money on costs

of maintaining separate systems and this savings, Stehlin predicts,

will affect success. The list of telecommunication service providers

will be winnowed down — not just to those who have the most subscribers

— but also to those who have cost-effective services.

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Foxcom’s Sales Target

One of Foxcom’s competitive advantages, says Stehlin, is his choice

of his first sales target: multiple dwelling units or MDUs. MDUs present

certain problems, because sellers must work with the building owners

(such as the major real estate investment trusts) as well as with

the subscribers, but the product is more economical because users

share expenses. Stehlin says that RCN is also targeting the MDUs,

"and that’s why they are taking business away from Bell Atlantic,"

but he points out that RCN uses a different paradigm. To most clients

RCN offers separate streams of voice, video, and data, whereas all

of Foxcom’s accounts have converged those services.

Stehlin cites a second way that Foxcom distinguishes itself from competitors:

It is technology transparent. Whereas a company like Lucent Technologies

might want to promote a particular protocol to encourage universal

adoption of that protocol, a small company like Foxcom needs to make

any and all protocols work.

The consumers’ preference for wireless phones could also contribute

to Foxcom’s success, because it is patenting ways to integrate wireless

voice with wireline data and video. "The great majority of users

are going to a wireless product," says Stehlin. The Foxcom solution

would integrate the wireline pipe going to the home with a wireless

base station that can transmit to the handset no matter where the

user is.

Stehlin was hired to grow the company, replacing company founder Howard

Loboda, who is now the chief technical officer, based in Israel. The

firm has more than doubled in size, growing from 3 to 18 employees

since May. It will be hiring in the areas of sales, marketing, finance, and technical support over the next year. The

Jerusalem office handles

research and development, but advanced R&D and testing operations

are here in the 6,000-foot office and laboratory at 600 College Road.

Foxcom has more than 50,000 subscribers in more than half of the states,

and its client list includes GTE, Midatlantic, Hughes, DualStar, and

Pan Am Sat, plus the pairing of Southwest Bell with PacTel that is

now known as SBC. The second round of funding has been led by CIBC

Capital Partners, the venture capital arm of Canadian Imperial Bank

of Commerce, the second largest bank in Canada, says CIBC’s Teddy

Rosenberg.

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Stehlin’s Bio

Stehlin grew up in Cranford, where his father managed an insurance

company, and his mother was a reporter for a daily newspaper. He won

an appointment to the U.S. Naval Academy partly based on his achievements

in track. "When I was a kid I was always small and thin, my confidence

was internal not external," says Stehlin. "The academy taught

me to expect more out of myself. I realized I could do anything I

wanted to do and go as far as I wanted to go. I got exposed to high

quality people; you realize it’s a big world out there and there are

a zillion options. I used academy time to reinvent myself."

He did well. Upon graduation in 1979, and as the only Marine officer

sent to the Infantry’s rigorous Ranger training, noted for

its sleep deprivation component, he graduated first in his class.

After five years of traveling around the world, he retired from active

duty but stayed in the reserves. He worked for various fiberoptic

companies and just when he had landed a job as CEO at a New Jersey-based

fiber optics company, Keptel, he was called back to serve for six

months in Desert Storm. In nine years at Keptel he dramatically increased

the company’s revenues through product line growth and customer expansion.

He and his wife live in East Amwell where she home-schools their four

children.

The Marines, maybe more than other services, try to do more with less,

says Stehlin. "They get what’s leftover. As CEO of a startup I

have to do so much that big company CEOs don’t do. My biggest challenge

is hiring great people and I am very excited about that."

The name choice? "We wanted to be fast, nimble, and clever. Fast,

by quickly understanding what the market wants. Nimble, because we

focus on concurrent engineering, not one step at a time, since technology

is moving so fast. And clever — by not going head to head with

big competitors but by going where they are not."

Foxcom Inc., 600 College Road East, Princeton 08540.

David S. Stehlin, CEO. 609-514-1800; fax, 609-514-1881. Home page:

http://www.foxcom.com.

— Barbara Fox

Top Of Page
Sidebar: Why Speed Doesn’t Always Count

A new, fast connection to the Internet may not be the

answer after all. The "old standby" speedy links, the T-1

lines, have been available for a decade, but many good-sized companies

don’t have one.

"There is a reason why companies who can afford it haven’t bought

infinitely large capacity," says Steve Sashihara, founder of

Princeton

Consultants, an information technology management consulting firm

on Research Way (http://www.princeton.com). His company was

an early user of shared T-1 lines and has had a dedicated 1.5 megabit

T-1 for

two years, yet he has had some very slow connections to popular

business

magazine sites. "It is sort of like having the only video phone.

When you move to a dedicated T-1 line you realize you are waiting

for the remote server to cough up the goods."

Full motion video, Sashihara predicts, will be what is ushered in

by broadband. Current alternatives include cable modems (up to 1.28

Mbps),

integrated service digital lines (ISDN, 128 Kbps), and digital

subscriber lines

(DSL, up to 7.1 Mbps).

Cable is a better deal for homeowners, says Sashihara, who can get

cable modems for $40 per month, whereas Comcast would charge his

business $1,000 for the same modem. In comparison, his dedicated T-1

line costs $1,400 per month, including the Internet connection and all

voice telephone charges.

Cable has a security problem, and both cable and ISDN lines are

subject

to delays when too many users log on.

As for DSL, its speed varies according to how far your building is

from the central station. "We will wait to see what comes to our

building cheap," says Sashihara. Because his firm is hosting web

servers, he has real concerns about reliability. Therefore, if he

bought DSL he would keep the T-1 line until DSL proved itself. Says

Sashihara: "If it is not reliable it’s not worth anything."

Top Of Page
Letter to the Editor

Thanks for the article! One BIG mistake is you basically characterize Foxcom as a competitor to companies such as Bell

Atlantic when in fact they are a customer of ours. Foxcom is a manufacturer of product not a =

service provider. Other than that we appreciate the story.

Dave Stehlin


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