DSL Rules Broadband For Now

DSL Outlook
DSL is prospering. According to TI, there are 226 million subscribers worldwide as of 2006, and the latest projections claim an estimated 170 million more by 2010. New installations will be with ADSL2+ or VDSL2. Yet there are few ADSL2+/VDSL2 installations here in the U.S. Most telcos still sell and implement the original ADSL, which is good for 768 kbits/s to 1.5 Mbits/s, but that's it.

Faster systems have been implemented in some areas. But obviously, the cable runs are shorter. This means a smaller number of subscribers—those near the central office—as the only potential customers. Carriers have installed repeater boxes in neighborhoods to give some areas higher speeds. But these faster services aren't available to the bulk of the DSL customers.

With that limitation, how will the telcos offer HD, VoD, and IPTV? Some offer TV now through satellite TV deals, but what about IPTV over DSL? If the telcos can only reach a fraction of their DSL customers now with the higher-speed services, it doesn't look like a promising or profitable venture for them.

The main option for the telcos appears to be fiber to the home (FTTH). Already seeing this problem, Verizon has implemented its FiOS (fiber-optical service) to select parts of the country. Using a hybrid cable TV-like system over a passive optical network (PON), Verizon delivers super-fast data service that can easily handle IPTV. AT&T is testing its similar U-verse system in Texas using a PON to neighborhood terminals and then VDSL2 to the home over twisted pair into the home.

Fiber is the answer, but it is very expensive. When IPTV finally arrives, demand should increase, creating a bigger demand for FTTH and hybrid fiber-cable systems to deliver it. The telcos aren't likely to give up on delivering IPTV and leave that market to the cable guys. In the meantime, the DSL path is well defined if a profitable way to deliver its faster versions can be found.

Blue Sky Predictions