GTE and Microsoft launch new high-speed modem technology trial to provide faster Internet access

GTE calls its industry-first, data Asymmetrical Digital Subscriber Line (ADSL) trial in Texas a success

REDMOND, Wash. -- August 14, 1996  -- GTE (NYSE: GTE) today announced that it will conduct a six-month trial of Asymmetrical Digital Subscriber Line (ADSL) high-speed modem technology here, involving Microsoft Corporation, the University of Washington and local businesses. This test builds on the success of GTE's industry-first data ADSL trial, which was launched in February in Texas.

The first phase of the Redmond trial, which is up and running today, involves approximately 40 Microsoft and GTE employees using ADSL technology to test high-speed access to the Internet and private data networks using Microsoft's Windows NT-based servers. Applications include corporate Remote Access Services (RAS), Internet access and local hosting of Web content.

The second phase of the trial, scheduled to begin in the fourth quarter of 1996, will be broadened to include additional Microsoft and GTE employees, and the University of Washington, as well as up to 60 selected businesses in the area.

The second phase will also incorporate multiple types of ADSL modems and will include test integration of other Microsoft products, including electronic mail, news and chat services, conferencing and electronic commerce. The applications include both traditional business and work-at-home scenarios.

ADSL Performs Well in Texas Technology Trial

"We are very pleased with the results of our pioneering ADSL trial in Texas, and we are proud to have ignited the spark that rejuvenated serious study of ADSL for data purposes," said Lew Wilks, president-business markets for GTE. "From an operational perspective, we've proved that ADSL performs well in a public network. From a marketing perspective, we confirmed our belief that there is an overwhelming demand for easy-to-install, easy-to-use, lightning-fast Internet access.

"The Texas trial taught us about the basics of putting a physical ADSL network in place. Working closely with Microsoft, we will now take it to the next logical step and test the ability of the ADSL network to deliver 'work from home,' electronic commerce and more efficient Internet access to homes and businesses," added Wilks.

"With this trial, Microsoft is addressing customer needs for faster, more efficient Internet access," said Craig Mundie, senior vice president of Microsoft. "The combination of Windows NT servers and services in the GTE central office, Microsoft's Internet Explorer, ActiveX Controls, and workgroup applications at the client side, and Point to Point Tunneling Protocols (PPTP) over ADSL will provide us with a rich environment for delivering the full gamut of secure Internet and Intranet services from Microsoft, from communications to commerce. It will allow us to test Internet-based, high-speed solutions for telecommuting and for connecting remote corporate offices. We are very excited to be working with GTE to explore the potential of ADSL modems as a mass-market technology."

ADSL service works by connecting a pair of modems to each end of a telephone line, with one modem being located in the telephone company's central office and the other at the home or office of the user. ADSL also maximizes the use of existing technology because it operates over twisted-pair copper telephone lines, streamlining installation and controlling expenses.

DSL services are also significant in that they provide continuous Internet access rather than traditional dial-up modem connections. This enables many new types of services that benefit from the "always connected" nature of these DSL offerings. These applications (e.g. multicasting) historically could only be offered in the Local Area Network (LAN) environments of corporate networks, but can now be extended to residences and remote offices.

ADSL Transmits at 10 Times the Speed of ISDN

Using ADSL, customers can transmit information to and from the Internet or to and from remote offices securely though the Internet at 10 times the speed of Integrated Services Digital Network (ISDN), which operates at 128 kbps, and about 50 times faster than a 28.8 kpbs dial-up modem. For comparison, a 2 megabit (Mb) file -- or the equivalent of 100 pages of text -- can be downloaded in 1.5 seconds using ADSL; 15.5 seconds using ISDN, and 70 seconds using a dial-up 28.8 kbps modem. In contrast to cable modems, which require multiple users to share bandwidth, ADSL provides dedicated bandwidth for high-speed local access.

Comparing ADSL to "ISDN on steroids," Wilks said the high-speed digital service can help revolutionize the way people work in the future. "Increased competition in today's workforce requires people to do more work in less time. As a result of its raw speed, ADSL gives back time to people by helping them to more quickly and efficiently complete assignments that require interaction with the Internet."

In the first phase of the trial, the Microsoft and GTE employees will use Westell Technologies' (Oswego, Ill.) FlexCap ADSL modems that transmit data at 1.5 megabits per second (Mbps) downstream to the user, and 64 kbps upstream to the central office.

During the second phase, GTE plans to begin testing Amati Communications Corporation's (San Jose, Calif.) Overture 8 modem that carries data at speeds of up to 6 Mbps downstream, and 640 kpbs upstream. Both the Westell and Amati modems were used in GTE's Texas trial. In addition, the trial may include the evaluation of single-pair High-Speed Digital Subscriber Line (HDSL) modems that deliver up to 768 kpbs upstream speed, beneficial for real-time video conferencing.

The trial will also use routers provided by Bay Networks (Billerica, Mass.) and Internet access provided by GTE Internet Solutions, the company's own Internet access service launched nationwide in July. (Editor's Note: A network diagram depicting the network structure of the trial can be obtained by calling 214/718-4981.)

During the trial, a prototype network response center and help desk will be jointly maintained by GTE and Microsoft employees to monitor equipment and system status.

Company to Consider Conducting Additional ADSL Trials

Although ADSL is not commercially available today, GTE officials said the Redmond trial, plus others that it may conduct throughout the country later this year, will help position the company to consider offering the service in selected markets during the first half of 1997.

Until more trials are completed, and makers of ADSL modems begin mass producing the hardware, the cost of ubiquitously delivering ADSL to the general public remains steep: today, a pair of ADSL modems costs approximately $2,500.

GTE officials, however, predict that the cost of an ADSL modem pair will drop to approximately $500 over the next 18 to 24 months, meaning that customers could purchase a single ADSL modem for their home or office for $250, the cost of a 28.8 kbps modem. GTE has not stated what it believes should be the monthly cost for using ADSL, if and when, it is commercially deployed.

With revenues of $20 billion in 1995, GTE is one of the largest publicly held telecommunications companies in the world. GTE is also the largest U.S.- based local telephone company and a leading cellular-service provider -- with wireline and wireless operations that form a market area covering about one-third of the country's population.