New life for VDSL

For much of its early life in the market, very high bit-rate digital subscriber line (VDSL) has been an interesting experiment, gaining some traction among independent telcos but remaining only a passing interest among the large carriers.

And for all the bravado with which AT&T entered the cable telephony market, the results haven't done what was expected, namely to force telcos into the video market. The tide may be turning, though, and it has nothing to do with any cable operator finding success in the residential voice market.

Instead, a handful of vendors and a new standard have sparked interest in providing high-capacity data services and video over copper infrastructure. Moreover, the technology has been proved in the market to the point that some larger carriers are starting to look at it, according to a number of vendors. Until recently, only Qwest and a few foreign PTTs were even willing to test the technology.

“What's happening from a demand perspective is VDSL to the big carriers is more interesting,” said Pat Pachynski, senior vice president of marketing with Next Level Communications, which has VDSL supply deals with Qwest and several independent telcos in the U.S.

But perhaps the greatest indication of increased interest in VDSL is the entry of new vendors (see DSL Special Report starting on page 42). And though the market still hasn't attracted the big traditional telecom vendors, it has lured the smaller players that tend to seed a market.

“There is increased demand to bring multichannel video,” said Chris Britton, president of VDSL Systems' U.S. unit, which launched operations in March.

Founded in Finland, VDSL Systems has developed an access network system that lets carriers provide high-speed data and video services over copper. VDSL Systems is focused on a pure IP environment and does not use an ATM backbone. The company also is casting its net to carriers that want to capture the business data market by introducing symmetrical products.

VDSL Systems' platform, which includes the Ivalo family of customer premises equipment and the SpeeDSLAM access multiplexer, can offer symmetrical data rates up to 13 Mb/s over a single pair up to 2.5 miles and 26 Mb/s over a two-pair connection. On the asymmetrical side, the company offers data rates of 26 Mb/s downstream and 3 Mb/s upstream over a single-pair connection (see figure).

VDSL Systems' goal is to become an OEM vendor to a larger player. In fact, the company has tested some products in Lucent Technologies' labs, Britton added.

Currently, VDSL Systems has cut costs to about $600 per line, but that is expected to drop as volumes increase. Indeed, vendors are looking to new standards to reduce costs even further and make the business model more viable.

However, as with other forms of DSL, VDSL vendors are divided into two very familiar camps: those that support a discrete multi-tone (DMT)-based approach that would mirror other DSL technologies and those that support a quadrature amplitude modulation (QAM)-based solution that is similar to cable modems. And like the DSL battle, both sides have heavy hitters: Texas Instruments is leading the DMT charge, and Broadcom is heading up the QAM effort.

So far neither approach has gained a major advantage, but QAM likely will be first to market. The line code in QAM-based chip sets has been approved by the European Telecommunications Standards Institute and should be approved by the American National Standards Insitute in May, said Danny Gur, vice president of business development for Metalink, a semiconductor company that entered the VDSL market supporting QAM via an alliance with Centaur.

“The standards bodies are allowing the market to decide,” he said, noting that QAM is in the letter ballot stage of approval. “The major obstacle for the DMT guys is that the [DMT] standard body decided it wanted frequency division multiplexing, not time division multiplexing. There's a time to market advantage on the QAM side.”

Those in the DMT camp, however, say several questions must be answered before any single line code can be considered standardized.

“The jury is out on the details because with the current VDSL we have significant field experience,” Pachynski said. Next Level, along with about three dozen other vendors, is part of the VDSL Alliance, which is pushing for a DMT-based solution.

Regardless of approach, most vendors agree that equipment standardization will lead to lower costs and improved business cases. More important, reduced costs should draw the large incumbent carriers that have heretofore opted to stay on the sidelines. VDSL Systems said it already is in discussions with at least one incumbent local exchange carrier and that a major IXC has started trials with a large cable operator.

Next Level also sees opportunity for incumbents but is more focused on the European and Asian markets. In Europe, several PTTs were forced to shed cable assets after the opening of the local loop, so entering the video market is not foreign to them, Pachynski said. “This is a value proposition that they know.”

In the U.S., few large incumbent carriers have publicly stated a desire to enter the video business, though SBC is looking at it, said Greg Mycio, director of broadband analysis with New Paradigm Resources Group.

“My impression is [SBC] is really serious about somewhere down the road having a packet-based network to converge voice, video and data,” he said.

SBC has about 34% of the overall DSL market on a deployed lines basis and is part of a coalition of telcos including NTT and Verizon that is looking at the technology. Additionally, the ability to send everything over IP using an ATM core could be a big benefit even to large telcos, which are not yet inclined to change their core infrastructure, Mycio said.