CAP king buys DMT pioneer

Westell Technologies Inc. and Amati Communications Corp., former foes in the struggle between carrierless amplitude-phase modulation and discrete multitone transceivers for digital subscriber line, buried the hatchet last week.

Under terms of a new merger, Amati, which owns proprietary rights to DMT, is now a wholly owned subsidiary of Westell, the recognized leader in developing CAP-based products and systems. The result is the combination of perhaps the two most powerful DSL equipment providers in the United States.

DMT won the battle for approval from the American National Standards Institute and the European Technical Standardization Institute, so it likely will become the dominant transceiver technology for DSL. Combine that with Westell's systems knowledge, and the new Westell/Amati alliance looks like a sure winner.

The move bolsters both companies' positions in the market. Westell doesn't own proprietary rights to either technology, so without the merger it would have had to pay licensing fees to both Amati and GlobeSpan, which owns the rights to CAP.

Also, Westell's CAP license expires in December 2002. Given that GlobeSpan's parent, Texas Pacific Group, also owns CAP-based DSL equipment maker Paradyne, Westell executives aren't certain they'll be able to obtain a new CAP license when theirs expires.

For Amati, the acquisition aligns it with the products and systems expertise it lacks. "We have not had as much time to work on DSLAM, modem pooling, etc.," said Jim Steenbergen, Amati's president and chief executive officer.

Gary Seamans, Westell's chairman and chief executive, said the merger shouldn't be seen as Westell abandoning CAP in favor of DMT. "We really don't care what kind of transceiver engine [customers] want.," Seamans said. "We'll provide either one."

"If Westell can get DMT to the same price point as CAP, it could lead to some interesting changes," said Kieran Taylor, broadband analyst for TeleChoice Inc.

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