Shift to DSL and Packet-Switching Technology to Create Estimated $4.4 billion Communications Equipment Market Opportunity by 2002, Says New U.S. Bancorp Piper Jaffray Report
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 10, 2000--A major new telecommunications equipment report by U.S. Bancorp Piper Jaffray asserts that the "local loop" is in the midst of a major, multi-year transition to an architecture based on digital subscriber line (DSL) transport and packet switching. From a base of 770,000 in 1999, DSLs are expected to grow to 12.9 million in the United States alone, creating an estimated $4.4 billion equipment market by 2002, says the report, "Packet Over DSL:--The New Access Paradigm."
The local loop refers to the 190 million copper pairs that connect businesses and homes to telecommunications companies' central offices. "Packet over DSL represents the most efficient, flexible platform for delivering bundled voice and data services to small businesses and customers," says U.S. Bancorp Piper Jaffray Senior Analyst Conrad Leifur, who authored the report.
DSL is rapidly replacing analog technology that has enabled communications for several decades. DSL technology expands the carrying capacity of copper pairs by 20-fold or more. The technology uses sophisticated digital signal processing techniques in order to utilize the full bandwidth of a copper pair, as opposed to the analog modem technology, which is confined to the 4 kHz audible spectrum.
Meanwhile, riding on top of the DSL layer, packet-based transport is replacing traditional circuit-switched transport, resulting in enormous gains in bandwidth utilization. In the packet-based model, communications traffic is encapsulated into variable-length packets or fixed-length cells, which are switched or routed based on information in the packet or cell header.
Leifur refers to this new access network as "packet over DSL," and says an increasingly rich variety of communications services are being delivered over this architecture. "While high speed Internet access is the 'killer application' for packet over DSL today, we expect voice and business data services to be delivered via packet over DSL this year, dramatically improving service economics and accelerating adoption of DSL," he says.
According to Leifur, the central office model will dominate packet over DSL deployment, but multi-tenant unit (MTU) and digital loop carrier (DLC) deployments will soon account for a significant portion of overall packet over DSL deployments. In a central office deployment, DSL signals run on the copper loops connecting a central office to businesses. With MTU, the DSL link is created on the in-building wiring within an office building or apartment building. MTU overcomes issues related to distance and is rapidly gaining momentum. DLCs increase the number of customers served by existing copper facilities (wire pairs) by concentrating several analog or digital lines at a remote location and then transmitting the concentrated signal via a fiber-optic line back to the central office.
"By 2002, fully one-third of packet over DSL lines will be provided by MTU or broadband DLC deployments, creating exciting new equipment opportunities," Leifur says.
Given the magnitude of the DSL opportunity, U.S. Bancorp Piper Jaffray believes equipment companies with the right technology stand to benefit. "The equipment opportunity created by the transition to packet over DSL is enormous," says Leifur. "By 2002, packet over DSL equipment purchases will dominate the overall access equipment market."
Leifur covers the following companies at U.S. Bancorp Piper Jaffray: ADC Telecommunications, Inc. (NASDAQ:ADCT, 71 13/16-(a)), ADTRAN, Inc.(NASDAQ:ADTN, 73 1/8-(a)), Advanced Fiber Communications (NASDAQ:AFCI, 54 3/4-(a)), Carrier Access Corp. (NASDAQ:CACS, 56-(a)), Copper Mountain Networks Inc. (NASDAQ:CMTN, 74 1/4-(a)), Digi International (NASDAQ:DGII, 12 5/16-(a)), E-Tek Dynamics, Inc. (NASDAQ:ETEK, 207 3/16-(a)(b)), Interspeed, Inc. (NASDAQ:ISPD, 26 1/2-(a)(b)), JDS Uniphase Corporation (NASDAQ:JDSU, 211 1/64-(a)), PairGain Technologies (NASDAQ:PAIR, 14 3/16-(a)), Premisys Communications (NASDAQ:PRMS, 9 29/32-(a)), RADWARE Ltd. (NASDAQ:RDWR, 49 1/4-(a)(b)), Redback Networks, Inc. (NASDAQ: RBAK, 209 1/8-(a)) and SDL, Inc. (NASDAQ:SDLI, 325 1/4-(a)).
How to Receive the Report
"Packet Over DSL:-- The New Access Paradigm," is available to clients of U.S. Bancorp Piper Jaffray by contacting their U.S. Bancorp Piper Jaffray representative, and to members of the media. For more information on receiving a report, call the Report Hotline: 612 342-8850. |
