Introduction

In its latest report on PON, FTTH, and DSL Aggregation Equipment and  Subscribers for 1Q2011, market research firm Infonetics (www.infonetics.com) states that “The overall market’s decline was led by a double-digit sequential drop in DSL infrastructure spending in all regions.”  That huge drop pulled the combined market down, even with a 20% increase in the worldwide PON market to over $1B for the first time ever.

“The major story in the broadband aggregation equipment market this quarter is the dramatic drop in DSL ports in China, which points to operators there continuing their dramatic shift away from DSL. The first quarter is typically one of the slowest for DSL, but the seasonal effect was worsened by Chinese operators’ continued shift away from traditional DSLAM deployments. Also, voice ports (DS0s) on FTTB/MXU MSAPs in Asia dropped significantly, signaling a shift away from adding voice lines to simply installing DSL ports,” notes Jeff Heynen, directing analyst for broadband access at Infonetics Research.

Analysis

Is this finding evidence that service providers throughout the world are perhaps ready to shed their copper in favor of fiber?  We don’t think so!  VZ has been the only U.S. telco that’s serious about deploying fiber to the home (for it’s FiOS triple play service offering)  China and Japan have been much more agressive in this area.  Six years ago, I visited my friend in Tokyo who had 100M b/sec Internet access via Ethernet over Fiber.

With most telcos moving at a glacial pace to deploy fiber to homes and commercial buildins, we think DSL still has a lot of life left in it.  Yet, there are other opinions:

DSL equipment spending plummets: Is DSL finally dying?   http://blog.connectedplanetonline.com/unfiltered/2011/05/24/dsl-equipment-spending-plummets-is-dsl-finally-dying/comment-page-1/#comment-37268

There are two types of DSL deployed by telcos in the U.S.:

1. ATM over ADSL or ADSL2 for Internet access and POTs
2. IP-Ethernet over VDSL2 for delivery of triple play services, especially entertainment video (e.g. ATT U-Verse)

With very few new subscriber additions (with possible exception of new buildouts in rural areas), we think ATM over ADSL is likely to see very little new telco spending. It might even be phased out, i.e. no longer offered to new subscribers by many telcos.

The second version of DSL remains commercially viable, but for how long? Will VDSL2 adequately support 3 compressed HDTV streams + high speed Internet acess? And over what distances?

Meanwhile, Comcast has become much more aggressive than U.S. telcos in providing higher speed Internet to residential customers over its HFC network.  (Comcast’s brand name for residential services is “Xfinity”). Comcast Business is extending its fiber network to commercial buildings. This is being done to attract larger business customers to Comcasts high speed Metro Ethernet service and Legacy PBX (PRI) Trunking service.

Comcast Fiber Network Buildout gives rise to Metro Ethernet and PRI trunking services for SMBs

http://viodi.com/2011/05/23/comcast-fiber-network-buildout-gives-rise-to-metro-ethernet-and-pri-trunking-services-for-smbs/

Do you think DSL is Dead?  That telcos are replacing it with FTTH and GPON?  Or that MSOs higher speed Internet access is taking market share from DSL based Internet?  And what about AT&Ts U-Verse which uses VDSL2 to deliver 3 HDTV channels + high speed Internet + VoIP (or so ATT claims)????