DSL Prime: Often, "Fiber Speeds" Are Really VDSL

Many deployments claiming very high bandwidth to the home are using fiber to the curb, and then copper or coax to the home.

by Dave Burstein of DSL Prime and Future of TV and the Web Video Summit [July 30, 2007]

VDSL: Slight Recovery at Ikanos
Most deployments still slow
Sales Q2 were $25.7 million, slightly up from $24.7 million for Q1, and new CEO Michael Ricci expects $28 million to $30 million this quarter. The bulk of the VDSL sales were to Asia. Q2 last year was $41 million. Ricci's comments in quotes, the rest is my reporting:

"Korea is strong with 100 percent market share at KT." The Korean government is proudly telling the world they are going beyond DSL to fiber all the way home, but KT's actual deployment remains mostly to the curb, with VDSL to the home. Japan is being slightly duplicitous in reporting; almost everyone assumes the world leading Japanese "fiber" deployment is fiber to the home, but a large fraction is fiber to the basement and VDSL at 50 Mbps symmetric to each apartment.

• "Optimistic about Europe … carrier qualification is progressing well." VDSL in Europe is proceeding slowly, with Belgacom and Swisscom not amounting to large volumes. Infineon continues to do well at Deutsche Telekom, but FT's planned VDSL from the basement deployment may be not be sufficient to match the fiber home from Iliad/Free, and may be replaced by GPON. The industry is closely watching British Telecom, where the technical staff is saying "GPON" but management is holding out, looking for the regulator to offer subsidies or disadvantage competition. Paul Reynolds before he left was trying to find a way to do fiber, but told me "our shareholders won't let us make that investment." I've discussed with OFCOM Chief Ed Richards how to solve that short of a subsidy he doesn't think necessary. The easiest solution is to reduce the BT Wholesale and line rates on copper that can't support 50 megabits while only allowing BT the current rate if they upgrade to fiber. The existing BT rates have plenty of room to go down with a close audit of costs.

• "Ikanos is making excellent progress with VDSL interoperability," sounds good, but their salesmen promised interoperability problems would be solved last year. Other chipmakers made the same claim, and customers by now expect compliance, not "progress." In particular, Verizon planned a large deployment of fiber to the basement for New York apartment buildings for this year, and is very unhappy if they don't have interop. This Manhattan apartment dweller doesn't want to wait longer.

• "North America later this year or early next" is what Verizon and BellSouth planned, and I believe Verizon still hopes to do more apartment buildings soon. But the BellSouth 1.5M homes with fiber to the curb may be severely disappointed. I'm checking with AT&T about whether they will honor that promise.

Anton Wahlman's question produced clarification about the Ikanos "GPON" announcement. This is simply a partnership move to push sales of the FUSIV network processor Ikanos bought from ADI, not a new GPON chip. Dean Westman of Ikanos also expects FUSIV sales to rise working with Atheros' forthcoming 802.11n chip. 802.11n on paper is the grail of home networking, using MIMO to be fast enough to move video around the average home. Metalink and Atheros are promising to ship production chips in a few months, and everyone is hoping the results in the field match the promises.

$100 million in cash gives the company room time to turn things around, and I hope they do. They out engineered Alcatel, TI, and Broadcom to deliver DMT DSL at 100 megabits symmetric two years ago.

Bye-Bye TI
Losing any company in this industry hurts, and TI was a true pioneer. A decade of work was not enough to bring TI to the market position they sought in DSL despite an investment of hundreds of millions. DSL is no longer "strategic" to them, and they have sold the division to Infineon.

TI began DSL chip development in 1995, and in 1997 spent $395 million to purchase Amati, outbidding Westell. John Cioffi had created Amati to commercialize DMT ADSL, which came to dominate the market and still produces major royalty income. Alcatel's DSLAM division won the crucial early contract at the Bells, resulting in Alcatel Micro dominating early DSL chip sales. TI picked up market share during the boom, when their fab capacity allowed them to deliver chips when others couldn't. The following bust left TI fabs half empty, and TI used that capacity to sell DSL modem chips at prices other companies found hard to match. They won most of the U.S. DSL modem market and major contracts around the world, while Alcatel Micro/ST, Analog Devices, LSI Logic and others proved unable to compete. They invested in probably the world's best DSL interoperability testing lab, but also cut back on U.S. engineers several times. At one point TI virtually stopped research on VDSL. Their Indian design team initially filled in effectively, producing some of the most sophisticated chips to come from the subcontinent.

In 2004, they announced "Uni-DSL", an extraordinary chip that would support everything from ADSL1, to VDSL2 up to 100 Mbps. Unfortunately the project "suffered from extensive delays and did not meet its original specifications," Linley Gwennap reports, and did not support the higher VDSL speeds. Instead, they featured the UR8 chip, adding voice at the slower ADSL level. The company's strategic review included at least preliminary due diligence on purchasing Ikanos, but ultimately decided otherwise. The company instead "destaffed its DSL development team and began to seek an opportunity to sell the business." (Gwennap) The division had just over $200 million in annual sales and "roughly break-even operating margins." (Michael Masdea).

Infineon now goes from #4 is sales of DSL chips past Conexant and Broadcom to the lead in what remains a competitive industry.

Copyright 2007 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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