Fast Net News, DSL Prime, DOCSIS Report

Lee Ratliff of iSuppli/IHS estimates new VDSL subscriptions were up 7.9M in 2010 to 23.3M. That figure strikes me as high but not impossible. The total net  DSL subscriptions were only about 30M, but a reasonable number of current subscribers at AT&T, DT, and BT were upgraded from ADSL to VDSL. In addition, as many as half the "fiber" subscribers in Japan are fiber to the basement and VDSL to the apartment.

    The trend is clear, as nearly all new builds today are "VDSL."  Ikanos is the lead vendor, with Lantiq and Broadcom finding market. Now, the remarkable RALINK/Trendchip has announced a VDSL chip. They've been the price leaders in the huge Chinese market,  building what they estimate is a 23% share of the worldwide market. Ratliff expects "a new level of cost competitiveness to the VDSL market," removing one of the obstacles to using VDSL. 

   Builds such as the 25M ports of AT&T U-Verse were VDSL from the start. Qwest, Century, Bell Canada, BT and others now are moving to VDSL from field cabinets at 25-50 megabits down. They need the speed for IPTV.  AT&T has startled everyone by proving that Microsoft IPTV + 6-10 meg data is competing well against the overpriced U.S. cablecos. The other carriers are hoping that works for them as well. 

     VDSL2 by design falls back to ADSL over longer distances or when connected to an ADSL modem. That now works with only a minor performance penalty. Back around 2005, industry leaders like Behrooz Rezvani believed the industry would rapidly shift from ADSL to VDSL. It would work fine with existing ADSL modems and offer improved performance with VDSL modems at short reaches. I had that wrong as well. All the early VDSL2 modems had serious performance shortfalls at the longer ADSL distances. When Deutsche Telecom tried VDSL2 DSLAMs, the homes with ADSL modem saw an unacceptable drop in performance. Since VDSL2 DSLAMs ran hot and had fewer ports per rack, few converted, especially with a large price gap. 

    Since I had an error five years ago on this, I don't want to endorse any forecast. But VDSL is certainly looking up. Here's the press release from Ratliff and the latest financial report from Ralink/Trendchip.

New VDSL Subscribers to Quadruple by 2014

February 23, 2011

LEE RATLIFF

New subscribers to very-high-bitrate digital subscriber line (VDSL) service are set to nearly quadruple by 2014 as more competitors begin to ramp up their support for the technology, according to new IHS iSuppli research.

The number of new annual VDSL subscriber additions will grow to 60.1 million in 2014, up from just 15.6 million in 2009.  A total of 23.3 million new VDSL subscribers were added in 2010.

“The telco broadband market is undergoing a seismic shift,” said Lee Ratliff, senior analyst for broadband and digital home at IHS. “Newer technologies such as VDSL and fiber-to-the-home (FTTH) have begun to emerge, while interest is waning within the industry for traditional broadband technologies like cable and asymmetric digital subscriber line (ADSL).”

Meanwhile, consumers also are willing to adopt the latest technology in order to get faster access to content.

“As the broadband market switches from a focus on data to stressing wideband multi-service and multimedia, fatter pipes to receive content are becoming more desired,” Ratliff said. “Broadband rates of 1 to 5 megabits per second (Mbps) were adequate when people were only surfing the Internet, but peer-to-peer file sharing, online gaming, streaming audio, voice over Internet protocol (VoIP) and Internet protocol television (IPTV) now all could be operating within one home. Such heavy activity points likely to a future in which 50 to 100Mbps will be standard—which fits exactly with VDSL’s capabilities.”

Ikanos Faces Increased Competition

Moreover, a new competitor with a history in the ADSL market, Ralink Technology Corp.—which recently acquired ADSL maker TrendChip Technologies Corp.—will soon bring a VDSL chip to the market in the first quarter of 2011. Ralink promises to bring a new level of cost competitiveness to the VDSL market, further squeezing Ikanos.

The decline in VDSL pricing will result in rapidly decreasing ASPs and innovation among chipset features.

4Q10 Investor Confernece

Ralink Technology (TAIEX: 3534) Reports Fourth Quarter 2010 Results

Hsinchu, Taiwan, February 15, 2011 – Ralink Technology Corp. (TAIEX: 3534) today held its fourth quarter investor conference and reported that 25.8 million units, including Wi-Fi and ADSL chips, were shipped in the fourth quarter, representing a 15.2% growth in shipments compared to the third quarter of 2010, and a 49.3% shipment growth compared to the same period of last year. The retail market accounted for 29% of the total unit shipments while broadband accounted for 50%, PC/NB for 15% and Consumer Electronics for 6%. The share for ADSL and Wi-Fi were respectively 70% and 30%. Total shipments in 2010 reached 88.4 million units, representing a 67.7% increase.

The company also announced unaudited consolidated financial results for the fourth quarter ending December 31, 2010 with a revenue of NT$1,814.7 million, a net income of NT$58.9 million, and an EPS of NT$0.42. Total revenue in 2010 was NT$7,360.9 million, with a net income of NT$911.0 million, and an EPS of NT$6.5. All figures were prepared in accordance with R.O.C. GAAP.

The gross margin for the fourth quarter was 37.1%, down 720 basis points sequentially, while the gross margin for 2010 was 42.4%, up 390 basis points compared to 2009.

This is the first time that the company announced its quarterly financial results after merging with TrendChip Technology. Due to the organic gross margin difference between Wi-Fi and ADSL chips, with the change in product mix and appreciation of the New Taiwan dollar, the combined gross margin for the fourth quarter was 37.1%.

Since the Chinese New Year the company has begun to see a clear trend for customers towards rebuilding their inventory, thus raising expectations of single digit unit shipment growth in the first quarter of 2011. Despite pricing competition, the company still expects that gross margin will remain steady in the first quarter.

About Ralink Technology

Ralink Technology Corporation is a leading innovator and developer in the wireless home networking and broadband access semiconductor markets. Ralink products are recognized for their superior throughput, extended range, low-power consumption, and reliability. Ralink’s patented Optilink™ technology extends Wi-Fi applications from traditional PC networking to a range of digital multimedia and handheld devices including PDAs, cameras, print servers, HDTV, video game players, and xDSL gateways. Ralink Technology was founded in 2001 with headquarters in HsinChu, Taiwan, R&D centers in Cupertino, California and Suzhou, China, and sales offices in China, Europe, Japan.