Dell'Oro: VDSL2 will only partially offset declining ADSL equipment sales

VDSL2 and its emerging partnering techniques, bonding and vectoring, have been hailed as the next-gen answer for the telco copper network, but according to a new Dell'Oro report on broadband equipment growth, they won't completely make up for slowing ADSL revenues.

"For DSL, despite raising our VDSL forecast due to a more optimistic scenario for VDSL vectoring, we still expect total DSL revenues to decline albeit at a slower pace than over the past several years, with VDSL growth only partially offsetting rapidly declining ADSL sales," said Steve Nozik, principal analyst of access research at Dell'Oro Group. 

Interest in VDSL2 and vectoring amongst incumbent telcos that have a large installed copper base has continues to rise.

AT&T (NYSE: T), Deutsche Telecom and Telecom Italia have all laid out aggressive VDSL2 and vectoring plans.

Deutsche Telekom announced this January that it would spend $7.9 billion to build out a FTTC network to expand download speeds on its copper lines from 50 to 100 Mbps. 

One vendor that saw the benefit of VDSL2 and vectoring revenue was Alcatel-Lucent (NYSE: ALU).

In Q2, the Franco-American vendor reported that the growth of its VDSL2 and vectoring platforms, especially in the U.S. and Europe, drove up its fixed networks revenue 3.3 percent year-over-year to $620 million. As of the end of the quarter, the vendor's VDSL2 vectoring products had been deployed by 13 customers, including two new contracts in the second quarter, and are in 45 trials. 

The research firm forecast a slightly rosier picture for PON-based fiber to the home (FTTH) equipment.

Although China will maintain its aggressive rollout of FTTH, Nozik said they are "are forecasting Chinese growth to moderate, resulting in single-digit PON revenue growth the next five years versus the previous double-digit growth."

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