The number of people subscribing to to very high-bit rate digital subscriber line, or VDSL, service will quadruple by 2014 to reach 60.1 million from 15.6 million in 2009. Ongoing growth in demand for multimedia and interactive Web services along with telecompetitors‘ plans to ramp up use of VDSL will drive growth, according to a forecast from IHS iSuppli Market Research.
“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).”
Bandwidth that’s been sufficient for Web browsing and text communications just won’t cut it in a world where the masses are downloading and streaming music and video and carrying on voice and multimedia telecommunications, he added.
“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.”
Furthermore, the anticipated high growth rate is attracting new competitors to VDSL chip development and manufacturing and threatening the market share and profit margins of leading providers, according to IHS. Leading VDSL semiconductor manufacturer Ikanos Communications’ market share has dropped from 75% to 55% in one year as competitors such as Broadcomm and Lantiq have entered the market, putting pressure on margins as well as grabbing market share, a trend IHS believes “is unlikely to stop anytime soon.”
Falling VDSL chipset prices will result in “increasing integration of the technology among broadband suppliers and consumers,” IHS says, “in direct contrast with ADSL, which is unlikely to see any further declines in the average selling price (ASP) of its chipsets.”