ADSL to lead cable modems

By Cheri Paquet
IDG News Service, 12/21/98

Asynchronous digital subscriber line (ADSL) modems will net 37% of the U.S. broadband market in 2004, surpassing cable modems' projected 26% share, according to an Allied Business Intelligence (ABI) study.

Currently, ISDN technology is the primary method of broadband access, totaling almost 74% of the market. "ISDN will plummet as a total percent of the market by 2004 to 17%," says ABI Senior Analyst Andy Fuertes.

Cable modems accounted for about 16% of broadband access and ADSL modems accounted for only about 6%.

"While ADSL modems are priced slightly lower than cable modems, the real benefit of ADSL is accessibility," Fuertes says. ADSL technology can be installed easily into modems and made available to 60% of the 150 million phone lines in the U.S. without having to condition phone lines, he says.

ADSL telecommunications technology provides one-way, T-1 access to home users over single, twisted-pair telephone wiring. It requires carriers to install a switch in their local-loop network and users to install ADSL modems.

But with cable modems, operators need to upgrade their plant infrastructure and that takes time, Fuertes says.

Vendors are pricing ADSL G.Lite modems at approximately $200, slightly under the cost of cable modems, Fuertes says.

Less important than the modem's accessibility is its transmission speed. G.Lite ADSL modems transmit between 1M bit/sec and 1.5M bit/sec downstream, while cable modems transmit 30M bit/sec downstream, Fuertes explains. But various factors slow down cable modem transmission to ADSL speeds, or lower, he says.

"In reality, cable modem users are getting between 200K bit/sec and 1M bit/sec for downstream [because] the modem itself is only one of many bottlenecks out there on the World Wide Web," Fuertes says. Data transmission is slowed down at other parts of the network - at the server, or over the Internet - whether modems are cable- or ADSL-based, he adds.

"Modem suppliers are not lying about transmission speeds - the modem itself can reach those rates, but the rest of the infrastructure cannot," Fuertes says.

ADSL's growing market share is a direct result of the G.Lite initiative, Fuertes says. The International Telecommunication Union passed the G.Lite ADSL standard in October.

Previous to the G.Lite ADSL standard being passed, ADSL modem technology faced significant hurdles, including high costs and power output, Fuertes says. The high power output caused interference in adjacent bundles of wires and would disrupt ISDN services nearby. As a result, a technician would have to come out to the house to install a splitter for a $150 fee.

With the G.Lite ADSL standard there is a virtual splitter inside the modem that allows the modem to be used simultaneously for broadband and telephone communications, Fuertes says.

In the past, ADSL faced competing standards and there was a lack of interoperability. Additionally, the power consumption of the unit was too high to go inside computers, he says.

Broadband access users will begin to feel the benefits of ADSL in 1999. "Support for the G.Lite ADSL standard reads like the 'Who's Who' list of communication, including vendors such as Compaq, Intel, Microsoft, Dell and on and on," Fuertes says.

RBOCs are supporting ADSL as well, but a few are waiting until G.Lite is made fully available next year. Bell Atlantic and US WEST are aggressively upgrading DSL to G.Lite, he says.

While cable modems are aimed squarely at home users, ADSL modems are targeted at a wider audience, including home business, telecommuters and the residential market.

ADSL's wide acceptance as an industry standard will ultimately drive down the cost of modems and broadband access overall, Fuertes says.

What is most important is not which technology is the most successful, but that consumers and businesses have broadband access. "Broadband access stimulates all kinds of things-e-commerce, new business over the Internet that we have not thought about, more video conferencing, a boost to retail on the Internet," Fuertes says.

The growing acceptance of ADSL and its availability to U.S. consumers will cause the broadband access market itself to grow.

While ABI's study "Broadband Delivery in the Local Loop: 1999" focuses solely on the U.S. market, ADSL is being investigated and deployed worldwide. "Bandwidth shortage is not unique to the United States," Fuertes says.

Further information on the study will be available in January.