(FORTUNE Magazine) – In a windowless room of a Pacific Bell office in San Francisco, inside a locked, 100-square-foot chicken-wire cage, hums a device called a CopperEdge 200 Multi-Speed DSL Concentrator. That's a mouthful, but investors might want to become acquainted with this machine and its manufacturer, three-year-old Copper Mountain Networks of Palo Alto.

The machine delivers high-speed, or broadband, access to the Internet over existing copper telephone wires, using digital subscriber line (DSL) technology--part of a technological revolution that is upgrading the Net's infrastructure to provide faster, cheaper, and broader access to data networks. "DSL is going to unlock a lot of interesting stuff on the Web, because once you and I have high-speed access, Web designers will design larger and more complex applications," predicts Tench Coxe, a managing director of the Silicon Valley venture capital firm Sutter Hill Ventures (and a Copper Mountain board member). Copper Mountain is also the No. 1 provider of broadband gear for small to midsized businesses.

For investors wary of Internet stocks, companies that have chiseled out an early lead in the DSL market, like Copper Mountain, offer a more straight-ahead play than is likely to be found on the Website side of cyberspace. Indeed, Copper Mountain even boasts profits: It recorded $2.3 million in earnings, or 9 cents per share, on $23 million in sales in the second quarter, surprising analysts, who had expected only 1 cent. For the year, the company predicts $100 million in sales, vs. $22 million in 1998. That's a big chunk of the total DSL market, which Morgan Stanley Dean Witter estimates at $400 million now--zooming to $8 billion by 2002. How does all this work? Start with the Telecommunications Act of 1996, which opened the door to broadband by forcing the Baby Bells to provide that 100-square-foot space (yes, it's always 100 square feet, with chicken wire) and access to lines in their central offices for broadband gear like Copper Mountain's. Access providers such as North Point Communications, Covad Communications, and Rhythm NetConnections buy the gear, install it at the phone offices, and market high-speed access to businesses and consumers using the machines and DSL technology.

There are at least five different versions of DSL. Copper Mountain specializes in a type called Symmetrical DSL (SDSL), used mainly by businesses, which enables customers to both transmit and receive data at high speed. (The one-way version, called Asymmetrical DSL, is better for Net surfers who simply want to download data from the Web.) In an interview at Copper Mountain's spartan, campus-style office, founder and Chairman Joseph Markee and CEO Rick Gilbert said they chose SDSL because they wanted to cater to the huge and largely untapped business-to-business market. "From the beginning we believed the sweet spot in DSL would be in the business segment, and then there would be a migration toward consumers," says Gilbert.

Not that it's all smooth going. The summer Net selloff sent Copper Mountain's stock down to around $85 in mid-August, some 31% off its high of $124 on July 29. (It opened May 13 at $68.) But as FORTUNE went to press on August 13, the stock made a huge move upward, closing above $108.

Copper Mountain hardly has the field to itself. There's Paradyne, based in Largo, Fla., and Finnish giant Nokia's high-speed-access products division--not to mention networking and telecom heavyweights Cisco, Alcatel, Nortel, and Lucent, which are moving aggressively into the ADSL market and could easily tackle SDSL. Copper Mountain's answer: It is branching beyond SDSL and the business market. For starters, it's developing a product that will enable its existing hardware to offer G.Lite, a form of ADSL that Intel and Microsoft, among others, want to establish as a subscriber-line standard for consumers.

--Edward Robinson