We were never really convinced that VDSL was going to have a big impact in the North American (particularly the U.S.) marketplace. Until now.
We’ve written about virtual DSL in this space before – in fact we’ve been following some of the ins and outs of the VDSL world for many years. We’ve always been bullish on the technology – in certain markets, in certain countries, and for certain applications.
But we – like many observers of the broadband market (and most probably – like you) – were never really convinced that VDSL was going to have a big impact in the North American (particularly the U.S.) marketplace. The reasons, of course, were many, but they all revolved around the expense of moving infrastructure close enough to customers to make VDSL work. Fiber needed to be extended, remote terminal access concentrators installed, and short “clean” copper loops were required.
None of the major Telcos in the U.S. seemed very willing to do these things, or spend this money. Until now. The impetus? Well, competition from cable multiple system operators (MSO) is always a motivating factor for telcos these days. But what seems to be equally motivating is the actions of other telcos (like Verizon) who are making fiber-to-the-premise a priority. And don’t forget municipalities, utilities and others who are doing the same (except, perhaps, in Pennsylvania – where that bit of competition has disappeared).
Obviously, telcos like SBC and Verizon don’t compete head-to-head in the consumer access space – but their actions do influence each other. Whether it’s Wall Street, the FCC or just general industry “bragging rights,” big moves by one tend to lead to big moves by peers. So Verizon’s FTTH buildouts have been very closely followed by SBC’s plans for tens of millions of lines of fiber extension – plans that rely in large part on VDSL.
We’ve spent a lot of time in this column discussing why higher bandwidths are needed – telcos who want to compete with MSOs need to be able to support voice, video and data services that are at least as good as (preferably better than) those offered by MSOs. That means multiple voice “lines,” it means high-speed data suitable for interactive, 2-way conferencing, file exchange and the like, and it means multiple channels of video, including HDTV. And that means fiber to the “x” – either to the home itself, or very close with a high speed copper last 100 feet. VDSL in other words.
And VDSL itself – in the form of soon to be codified VDSL2 – seems to be ready for the challenge. The VDSL2 standard is still going through the last bit of committee polishing but most of the features that are being considered for the final standard are known. What remains is making the final decisions for inclusion.
This situation has allowed chip vendors to launch (or soon launch) VDSL2 chipsets ahead of the final standard. For example, we recently spoke to our friends at Ikanos (who’ve been selling VDSL chips by the millions in the Asian market) and they’re quite bullish on U.S. VDSL2 plans. In fact they’re so bullish that they announced their VDSL2 chipsets for both CPE and CO/RT equipment.
We think Ikanos’ announcement is significant not only because they’re fast becoming the 800 lb. gorilla of VDSL chips, but because of the nature of the chips themselves. Jumping in ahead of a standard can be a risky move, but Ikanos has been able to hedge their bets with a highly programmable chip. In addition to VDSL and VDSL2, the chips support ADSL and ADSL2+, and have basically been built to accommodate all of the features being discussed in the standards bodies. So a hardware customer needs simply “turn on” or off desired features in software.
Ikanos’ approach also lets them handle different International band plan requirements and like functions in software – allowing vendors to stock a single chip rather than multiple variants.
Ikanos is being joined by several other chip vendors eager to move beyond commodity ADSL chips. The net effect is hardware that will be ready when the service providers (like SBC) turn their plans into reality. All the market needs now is a few more providers to commit to giving their customers the bandwidth they need – that’s what we’re wishing for Christmas!
