DSL still hot after all these years

Kamalini Ganguly, analyst, Ovum.

DSL still a battleground for major broadband access vendors
AUSTRALIA: In Ovum’s 2Q10 broadband access market share spreadsheet, we estimate quarterly global DSL revenues to be $848 million (not including DSL CPE), a little higher than FTTB/FTTH revenues of $796 million, even when FTTB/FTTH CPE – ONUs and ONTs – are included.

Indeed, over the past two years, even as FTTB/FTTH subscribers and associated equipment revenues have grown steadily worldwide, DSL revenues have been slightly higher each quarter.

Ovum believes the DSL equipment market will not wither away anytime soon. While it is certainly true that DSL subscriber growth is slowing in many countries and that DSL subscribers, in places like Japan and Korea, are being replaced by FTTH/FTTB subscribers, DSL equipment will still be used in many hybrid fiber-copper architectures.

In fact, Ovum forecasts that even in 2015, 63 million DSL ports will be shipped globally (down from 82 million ports in 2009). However, the great majority of these, if not all, will be in conjunction with growth in FTTx subscribers, not DSL.

In announcements, vendors have highlighted 400–500m as the distance where they demonstrated their breakthroughs. The assumption here is that the length of the copper loop (supporting VDSL2 or ADSL2+ to the customer) will be approximately that long, the rest being fiber to the central office as part of an FTTN, FTTC, or FTTB architecture.

The reason not to deploy FTTH all the way to the customer residence will be primarily economic, but technology and regulatory constraints will also play a part. As a result, we believe DSL network equipment will still be a $2 billion market in 2015, hence the scramble by major vendors to continue innovation in DSL.

Several DSL innovations targeting cross-talk in multiple copper pairs
The number of multiple pairs has varied in vendor demonstrations (six for Ericsson; two for Alcatel-Lucent, plus one phantom pair created by the two real pairs; and four for Huawei). The one constant has been the vendors’ claims of ever-higher speeds due to the combined bandwidth of the multiple pairs. Bonding of these multiple pairs is a common theme and soon to be a reality with AT&T’s recent announcement. Cross-talk, however, has long been the DSL problem child, especially with multiple pairs.

Over the past two years, several vendors have announced technical breakthroughs in cancelling or reducing cross-talk, which in combination with bonding, boost the bandwidth capacity that can be supported by each copper pair, drawing ever closer to the theoretical maximum. Of course, these solutions are relevant only where there are multiple pairs. They are rare in developing countries and few developed countries have more than two copper pairs to each home.

Also, it must be borne in mind that Cat-6 and Cat-7 cables have comparable bandwidth capacity due to similar technical breakthroughs, though Cat-6 cables can only be 100m long.

Ultimately fiber will prevail
When commercially launched, these DSL solutions should be cheaper than FTTH, but ultimately the cost comparison and adoption timeline will depend on how these technologies are incorporated in DSL line cards and CPE. In addition, evolution of DSL equipment will be a challenge. How easy will it be to incorporate such technology into MSAP/MSAN platforms and those DSLAMs that are PON fed and deployed in basements of large buildings?

Few in the industry doubt that fiber, with its lower opex burden compared to copper and far higher natural bandwidth capacity, will eventually prevail. Globally, Ovum forecasts that until 2015 at least, FTTH/FTTB subscribers will grow faster than that of DSL and cable, while equipment revenues will overtake that of DSL in 2012.

But, in many countries, completion of FTTH may take up to a few decades. In the meantime, DSL continues to evolve as a viable alternative as part of different architectures. This is particularly relevant for those countries where carriers facing competition plan to launch new services like IPTV, but cannot find the economic justification or the capital to roll out FTTH just yet.