The number of new annual VDSL subscriber additions will grow to 60.1 million in 2014, up from just 15.6 million in 2009. A total of 23.3 million new VDSL subscribers were added in 2010.
“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).”
Meanwhile, consumers also are willing to adopt the latest technology in order to get faster access to content.
“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.”
Ikanos Faces Increased Competition
Long dominated by Ikanos Communications Inc., the VDSL semiconductor market recently has become much more competitive. While Ikanos still leads with 55 percent market share, that figure is down from 75 percent only a year ago with the trend unlikely to stop anytime soon. Lacking in intellectual property (IP) to create a single-chip gateway solution, Ikanos instead has centered its focus on advanced VDSL technology such as vectoring and bonding. Such a strategy will continue to supply the company with the most advanced technology, but without having an integration roadmap, the door also has opened for competitors Broadcom Corp. and Lantiq to grab their fair market share.
Moreover, a new competitor with a history in the ADSL market, Ralink Technology Corp.—which recently acquired ADSL maker TrendChip Technologies Corp.—will soon bring a VDSL chip to the market in the first quarter of 2011. Ralink promises to bring a new level of cost competitiveness to the VDSL market, further squeezing Ikanos.
Falling Prices Mean More Opportunities
IHS believes that VDSL chipset pricing will decline in price, thereby increasing integration of the technology among broadband suppliers and consumers. This is in direct contrast with ADSL, which is unlikely to see any further declines in the average selling price (ASP) of its chipsets.
The decline in VDSL pricing will result in rapidly decreasing ASPs and innovation among chipset features.