Broadband Internet Scales Up

Although local telephone revenues have been decreasing for the US ILECs, these companies have been able to maintain fairly stable performance in terms of total revenues.  This is because they have been able to offset declining local telephone revenues with increasing revenues in long-distance and Internet markets.  The long-distance opportunity was realized as the result of regulatory changes in the US, so ILECs in other markets may not have grown revenues in this fashion.  The Internet revenues, however, have been increasing since the late 1990s as telecom carriers throughout the world have relied mainly on DSL technology to upgrade their customers from dial-up modems and establish a new line of business.  The broadband Internet market has been estimated at US$86 billion in 2006, up from US$5 billion in 2001, according to the TIA.  These figures are worldwide revenues from broadband services offered by all types of service providers, not only ILECs.  In the US, for example, CATV companies offering cable-modem service had a larger share of the 2006 broadband Internet market than telephone companies, although phone companies have been adding a larger number of new lines with DSL and fibre optic systems in recent quarters.  The US broad¬band Internet market was estimated at US$27 billion in 2006.


DSL and Other Media

Most DSL systems use ADSL (asymmetric digital subscriber line) technology with the DSLAM (DSL access multiplexer) located in the central office.  Data is transmitted entirely over twisted-pair copper cables to the customer.  In cases where the copper pair’s performance cannot support the required bandwidth, operators may situate the DSLAM between the central office and distribution areas – in a cabinet, hut, building or vault – the implementations known as fibre-to-the-node, fibre-to-the-building, etc.  At the end of 2006, there were 182 million DSL subscribers worldwide, with more than 75% of them served with central-office ADSL systems (CO-ADSL).  The remainder were served with various fibre-fed or, more recently, VDSL architectures.  In addition to fibre optics, the other technologies used to provide broadband Internet service include cable-modems, broadband over power line, ISDN, and several types of fixed wireless systems.


What is Broadband?

If the opportunity to grow revenues is associated with new broadband services, what exactly is meant by “broadband?”  The US telecom regulator, the FCC, defines broadband as more than 200 kbps in at least one direction.  Other regulators, operators, and organizations have proposed criteria ranging from 128 kbps to 1.5 Mbps, with 256 kbps being a commonly used minimum.  This definition will distinguish a broadband line from dial-up modem service for Internet access, and it is consistent with the practice of most telecom industry participants that count ADSL lines as broadband.


Video May Be the Trigger for Fibre

If broadband can be achieved with DSL, why is fibre usage increasing?  The interest in upgrading twisted-pair telecom networks with fibre is not only to provide broadband Internet service, but also to support a bundle of services that includes voice, Internet, and video.  Furthermore, it is becoming increasingly common for carriers to offer subscribers a choice of different Internet access speeds at different monthly fees.  The higher-speed services may prove attractive or cost-effective for customers who require higher data rates for telecommuting, playing games, or uploading and downloading videos.


IPTV Technology Attractive to Telcos

In addition to video programs being offered over the Internet, technology for IP (Internet Protocol) television has emerged as an alternative to the ubiquitous RF-based television, including over-the-air broadcast transmission and coaxial-based CATV service.  IPTV technology gives many telecom operators an opportunity to offer new services and to compete with CATV operators.  In the US, for example, CATV operators have been taking voice-telephony subscribers away from the phone companies by offering attractive triple-play packages.  In response, phone companies recently have begun entering the video entertainment market using FTTH or FTTN with IPTV.