Alcatel-Lucent's (NYSE: ALU) 8.6 percent gain in its fixed network unit during the first quarter was largely driven by strong VDSL2 and vectored equipment shipments at a time when traditional wireline telcos are looking for ways to enhance the speeds on their copper-based networks.
The European vendor's fixed network unit result reflects the broader growth of the VDSL segment. VDSL2 with vectoring, a Dell'Oro Group report said, grew more than 15 percent year-over-year and accounted for the majority of DSL port shipments for the first time.
What's become attractive about the mixture of VDSL2 and vectoring--two technologies that are deployed in a hybrid fiber/copper fiber to the node (FTTN) configuration--is that it provides many incumbent telephone operators a near-term method to deliver speeds of up to 100 Mbps out to consumers up to 1 km away. Vectoring can achieve these higher rates by eliminating Far End CrossTalk (FEXT) that exists between copper pairs in the same binder.
"VDSL with vectoring is an attractive alternative to PON for many service providers who want to increase the bandwidth capabilities of their access networks without the high cost of laying fiber all the way to the user," said Steve Nozik, principal analyst of access research at Dell'Oro. "Recent announcements by some large operators regarding their intent to upgrade their access networks with VDSL and vectoring should result in continued VDSL growth over the next several years."
However, Nozik added, the growth of VDSL comes at a time when overall DSL market sales continue to decline, which "will likely result in the overall DSL market continuing to trend lower, albeit at a slower rate than over the past couple of years."
Alcatel-Lucent, says Dell'Oro, maintained its lead over both Huawei and ADTRAN (Nasdaq: ADTN).
During the quarter, Alcatel-Lucent shipped its 1 millionth VDSL2 vectored line and reported that it is conducting 40 trials, including tier one operators such as China Telecom and Tunisie Telecom. The trials, in addition to seven new DSL customers, drove up overall growth in its copper business particularly in Europe and the Americas regions. In addition, Alcatel-Lucent is working with P&T Luxembourg on a trial of combined VDSL2 bonding and vectoring technologies.
ADTRAN reported that in Q1 2013 broadband access product sales were $72.2 million in Q1, while Huawei reported that fixed network equipment totaled $7.9 million in 2012.
While fiber to the premises (FTTP) will always be the end-game, the momentum for VDSL2 with vectoring remains strong.
Three major telcos, including AT&T (NYSE: T), Deutsche Telekom and Telecom Italia (NYSE: TI), have outlined large-scale build out plans that will continue through the year 2016. AT&T's Project VIP will extend U-Verse FTTN coverage by 8.5 million homes by 2015, while Deutsche Telekom will increase VDSL coverage to 65 percent by 2016. Telecom Italia will deploy fiber to the cabinet to 6.1 million homes in 100 cities by the end of 2014.
- see the release
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