I think ADSL/VDSL have a bright & rosy future. I offer the following:
Prospects for Growth
ADSL will experience significant growth in the next 5 years. Consumer trials have been and are continuing to be conducted with excellent results. Key factors influencing its growth are:
· Deployment of high bandwidth alternatives (Fiber or Coax) to the home are many years and much $$ away. ADSL is a step technology that gets us from "here to there" without major infrastructure change.
· Consumers have been primed to expect the next generation of communication services such as Videophones & Interactive TV
· Internet access has exploded with the wide-spread use of the World Wide Web - and everybody is screaming for faster speeds
· Local telephone operators are beginning to offer Internet access to consumers - as a result, they will feel the demand first-hand for faster access
· The services already exist - all we need is faster access! For example:
a- Video Conferencing
b· Video on Demand
c· Interactive TV
d· Virtual Reality
· Combined revenue from new services could exceed $350 billion by the year 2000, according to TeleChoice of Verona, NJ. This demand will be a major push for Telco’s to jump aboard.
On the CAP issue:
The key risk is the technology competing with DMT called CAP (Carrierless Amplitude/Phase modulation). This technology was developed by AT&T Paradyne with financial support from Bell Atlantic. Recently, AT&T Paradyne and Bell Atlantic requested that ANSI approve CAP as a standard in addition to the existing DMT standard.
The problem with CAP is price/performance. First of all, CAP does not have the proven performance like DMT. In addition, whereas DMT has multiple vendors developing chipsets to reduce the price, CAP has only one. The primary factor influencing a Telco’s decision will be price/performance. Therefore, it is reasonable to expect a wider deployment of DMT. I would expect many of the Bell’s who have a vested interest in CAP to choose CAP in their early rollout. However, they do not represent the entire market (i.e., Europe, Asia & Private Networks) and in the long run, DMT will become too attractive to pass up.
The Infrastructure issue:
This problem is not of ADSL per se. But, what if all internet users were sucking 8Mbits? I don't think there are enough fiber trunks running across the country to handle that demand. That is the key problem. But, it is a lot more economical for the Communication giants to be running these fiber lines instead of digging up our neighborhoods. ADSL provides an excellent alternative to fiber to the curb!
By the way, my feelings about the future of ADSL do not necessarily reflect my opinion on the stock of these companies. Like the market in general these days, market caps have a tendancy to get ahead of themselves. |
