Although voice and data traffic are equal in terms of network loading, voice services are estimated to command over 90 percent of telecommunications revenues. Research indicates that there are over 8 million small businesses in the United States, accounting for two-thirds of business access lines. Each of these businesses spends an average of $6,240 per year on telephone services, and 20 percent add telephone lines each year. One well-known consulting group believes VoDSL is the killer application that will cause demand for DSL to soar and predicts a $1 billion market for VoDSL services by the end of 2000 (see Figures 1 and 2).

Figure 1. U.S. Small Business Line Usage

Figure 2. Local Access Market Dynamics

In 1996, the U.S. Congress passed the Telecommunications Reform Act, which opened competition at the local level. With this legislation, the Act required the incumbent local-exchange carriers (ILECs), providers of local telephone service as we know it today, to make certain telephone network elements such as the familiar twisted copper pair wire available to competing service providers. The Act also laid the groundwork for competitive service providers to install transmission equipment in the central offices (COs) of the incumbent telephone companies and connect this equipment to the local network, also called the local loop. In Europe, similar deregulation is already in place in Denmark and Germany, with deregulation gaining momentum quickly throughout the rest of the world.