DSL VENDORS READY TO PUT ON THE GLITZ

With early adopters already committed, the next challenge for DSL and cable modem providers will be convincing the mass market to part with $40 to $50 per month for something more than high-speed Internet access. For vendors on the DSL side of the equation, the answer lies squarely in developing entertainment applications.

Don't expect Supercomm to resemble a cable show anytime soon, but do expect to see lots of video and entertainment applications flowing from the booth of any vendor with a piece of DSL equipment. What's fueling the technology's comeback — asymmetrical DSL originally was developed for video almost 10 years ago — is a pervasive conviction among vendors and carriers that high-speed access is peaking and the mass consumer market will respond much better to entertainment-oriented packages.

“We are being pushed to put out mass-consumer applications, and that translates very well into broadband entertainment,” said Jay Fausch, senior director of marketing for Alcatel's broadband division.

Numerous vendors are now looking to Asian carriers as the model for large U.S. DSL providers, as well as a source of revenue to sustain them in the current capex environment. In the most recent survey of DSL port shipments, In-Stat/MDR claimed that 21.9 million DSL access multiplexer ports were shipped worldwide last year, with the Asia-Pacific region taking up the largest share.

The challenge is for vendors in the U.S. market is to make video/entertainment appealing in a market where penetration rates are still in the teens and the geography makes widescale coverage significantly more difficult than Asia. “The technology isn't a question anymore,” said Fausch.

That's partly because vendors are developing broadband network equipment that gives carriers greater reach. One of the big trends likely to pervade the show floor in Atlanta is the proliferation of small DSL access multiplexers that can go into remote terminals or digital loop carriers.

Also expect to see plenty of broadband solutions geared toward small telcos, particularly those based around new versions of DSL such as ADSL2plus as well as platforms that let carriers jump into video-on-demand (VOD).

“What we're seeing in DSL is this huge explosion in bandwidth demand, but video-on-demand is the really sexy stuff,” said Matthew Byrd, vice president of marketing for Net to Net, which will have multiple video demonstrations in Atlanta.

Minerva Networks also has already announced it that will be showcasing its iTVManger, version 1.5, focusing on the platform's ability to increase VOD revenue.

“The consumer really wants to control the media forms,” Chris Coles, CEO of Myrio, said during April's FastNet Futures show. “We think the consumer has unambiguously voiced their preference for the choice model.”

However, in the current environment where carriers have reduced their ranks to essential personnel, vendors are being asked not only to develop the equipment but also to prove the business case — and in some cases develop the content strategy. Though the company hasn't made any official announcements, Alcatel has started talking openly about resurrecting the idea of “walled gardens.” In the walled garden concept, broadband carriers would offer users exclusive content but would either restrict them from exploring other Internet sites or charge a premium for the privilege.

UTStarcom, which will be making its first big splash at Supercomm after its purchase of 3Com's carrier group, is broaching the same idea.

“In Asia, everyone is talking about content, content, content,” said Hong Lu, CEO of UTStarcom. “In the U.S., the carriers aren't there just yet, but ADSL simply won't take off without it.”