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At 32, Brendon Mills was already a millionaire veteran of two start-up technology companies when he left Silicon Valley and holed up last year in a rented office in Austin, Texas, equipped with a computer and a supply of caffeinated soda. 

A month later, Mills emerged with three plans for new businesses. He discarded two and took the third to venture capitalists, who eventually gave him $83 million. 

Mills’ Austin-based company is called General Bandwidth Inc., and it makes box-shaped devices that allow phone companies to carry voice calls over high-speed data-transmission wires called DSL, digital subscriber lines. 

It could be the future of telephone service. 

Right now, DSL is marketed as a faster alternative to tortuously slow dial-up Internet connections. Telecommunications companies are spending billions to build DSL networks. 

While faster Internet connections are spiffy, some analysts say DSL still needs to offer more to become irresistible. It needs, as the techies say, a “killer application.” 

Enter voice-over-DSL. 

In theory, and just now rolling out in practice, voice-over-DSL technology allows many voice signals to be carried over a single copper-wire loop. At a small business, several employees can be on the phone at the same time, with all their calls carried over the same line. 

Adding new lines with voice-over-DSL is cheaper than current phone-line installation because it doesn’t require an installer to come out – everything is done with switching gear at the phone carrier’s office. One drawback, however, is the possible loss of service in a power outage. 

Techies have been touting voice-over-DSL for more than a year. The Yankee Group, a respected research firm in technology circles, predicted in February that 45,000 homes and 17,500 businesses would have voice-over-DSL by year end. The real numbers, however, are closer to zero homes and 9,000 businesses, acknowledged Yankee Group analyst Matt Davis. 

“We certainly felt this market was going to emerge a little quicker,” Davis said. He is sticking to an optimistic outlook, however, predicting that once a big phone company offers voice-over-DSL service, demand will snowball. 

Yankee Group predicts 10 million voice-over-DSL subscribers in 2004. Another research firm, Dataquest, predicts 14.3 million customers in 2004. 

A handful of small companies dominate the market for “gateway” hardware, the box-shaped gadgets that allow phone companies to carry voice-over-DSL. The leaders include CopperCom, Jetstream Communications and TollBridge Technologies, all located in California’s Silicon Valley. Lucent Technologies, Cisco Systems and others are trying to break in to the business. 

General Bandwidth hopes to leapfrog over the pack by gearing its product to regional Baby Bells instead of more localized phone carriers. The Baby Bells have built about two-thirds of the existing DSL network, and Mills says contracts with them could be worth up to $400 million apiece. 

Several phone companies are testing General Bandwidth’s equipment, but the Austin company has yet to sign its first contract. It does, however, seem to have an advantage in signing up the biggest DSL provider out there, San Antonio-based SBC Communications Inc. 

That’s because SBC’s venture-capital arm owns 6 percent of privately held General Bandwidth, according to analysts — the man who oversees SBC equity investments would only say the company’s stake is less than 10 percent. Whatever the percentage, the investment gives SBC reason to use General Bandwidth equipment on its DSL network, pending trials set for next year. 

“We think there’s a great future for voice-over-DSL,” said the SBC official, Albert Hoover. “If I have DSL, I can also receive multiple phone lines in my home or small business. It’s something a lot of people will want.” 

Hoover said SBC likes the fact that General Bandwidth is working on a universal standard for voice-over-DSL while competitors are building proprietary machines that might not work with other systems. He also praised the company’s management. 

Mills, chief executive of General Bandwidth, worked at Dell Computer Corp. and took a marketing job at an Austin-based tech start-up in the mid-1990s. After the company was sold, its top officials started NetSpeed Inc., a DSL equipment maker that was sold in 1998 to networking giant Cisco Systems for $237 million. 

Mills joined Cisco as a marketing executive but left after a little more than a year. 

“I was fortunate enough to do very well in the acquisition by Cisco, and I was able to follow my own dream of starting a company,” Mills said. 

Leaving, he said, about $10 million in Cisco stock options behind, Mills retreated to the rented office with the cola cache and drew up the plans for General Bandwidth. (He is careful to state that the idea came only after he was on his own — lest Cisco lawyers claim that he developed his business plan on Cisco time.) 

Mills talked three other NetSpeed and Cisco veterans into joining his venture in May 1999. In 18 months, General Bandwidth has grown from four employees to 270. As soon as the company has a major customer, it plans to float an initial public offering of stock, which could help the founders forget about those lost Cisco options. 

“If liquidity happens, it will make us successful beyond all expectations,” Mills said.