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Publisher's Outlook
January 2002

Rich Tehrani

New Year, New Beginnings


The broadband market has seen its fair share of doom and gloom over the past year or so. Erstwhile high-flying broadband service providers Excite@Home, Rhythms, Northpoint, and Covad can certainly attest to that. Nor has the overall malaise affecting the telecom industry spared anyones objectivity. At first glance one might assume that all the news coming from the telecom market would occasion a duck and cover mentality, but once every so often there are the rare and special nuggets of hope that appear in my inbox. For example, a recent report from Salomon Smith Barney shows that globally, broadband access trends are now, and have been for some time rather healthy. So while everyones bad-mouthing the broadband industry and jettisoning any remaining broadband providers from their portfolios, it make sense to take a closer look at the Salomon Smith Barney report and try to decipher just whats happening in the world of broadband.

In my July 2001 Publishers Outlook, I spoke of broadband as an amazingly underserved market. In fact heres what I had to say in July: Regardless of the well-publicized problems that plagued the likes of Northpoint, Rhythms, Covad, et al, the fact remains that many people do not have ready access to broadband. They want it, and theyre willing to pay for it. Now, if they could only get it.

Regardless of the fact that this market may have been over-hyped at first, and regardless of the fact that broadband may in fact be the proverbial baby being tossed out with the telecom market bathwater, the truth of the matter is (as it was in July) that people are willing to pay for broadband, either cable or DSL, if they can only get access to it. And as access to broadband technology becomes increasingly available, people are jumping at the opportunity. The Salomon Smith Barney report bears this out in its findings.

The report claims that internationally, the cable modem subscriber base grew from about 6.7 million to approximately 12.6 million subscribers last year, representing an 89-percent growth spurt. At the same time, the global ADSL market showed port-shipment growth to the tune of 165 percent, with the numbers going from nearly 5.5 million to over 14.4 million ports shipped. Combined, these number represent a very healthy 123-percent growth rate for the past 12 months (see Table 1). Quite a different story than what weve been reading in the doom-and-gloom headlines lately.

Table 1. Source:
Salomon Smith Barney
2000 2001 2002


Cable Modem 6,678 12,589 19,686 89% 56%
North America 4297 8,171 12,971 90% 59%
Europe 553 1,178 1,722 113% 46%
Japan 625 1,150 2,013 84% 75%
Asia 1,203  2,090  2,980 74%  43%
ADSL 5,449  14,436  32,574  165%  126%
North America 2,629  4,752 6,965 81%  47%
Europe 420 3,173  11,909  655%  275%
Japan 10 1,500  6,300  nm  320%
Asia 1,720  5,011  7,400 191% 48%
Cable Modem + DSL 12,127 27,025 52,260 123%  93%

The prospects for next year, while perhaps not as heady as the 2001 numbers, still show a healthy growth trend. Salomon Smith Barney predicts cable modem subscriber numbers escalating by 56 percent next year, and ADSL port shipments to maintain triple-digit growth, somewhere in the neighborhood of 126 percent.

In the absence, however, of the aforementioned service providers (Covad, Northpoint et al), the incumbents, such as SBC, Verizon, and others, have little in the way of competition and thus motivation to build out their broadband offerings at a fast clip. Still, broadband connectivity is indeed a source of revenue for these service providers, and in this economy, anything that adds to the bottom line cannot be simply overlooked. Furthermore, rather than let the cable providers run away with the U.S. market, the incumbents providing DSL will have to promote their solutions as well. The Salomon Smith Barney report makes no bones about it: They estimate that, cable modems are currently winning about 70 percent of all new broadband subscribers in North America.

So while cable is enjoying significant growth here in the U.S., at the same time the European and Asian markets tend to favor DSL deployments. Last year, the Europeans saw a tremendous increase in DSL growing over 650 percent in just 12 months!

Overall, the global trend toward increased deployment of broadband (either cable or DSL) is clear. As people gain access to this technology they will increasingly choose to deploy broadband in their homes and businesses. The applications that we will start seeing as a result of wider broadband usage will be awesome. Countless people will be able to work remotely, without the loss in connectivity speed that currently plagues many would-be teleworkers and prevents them from setting up shop away from the shop. Web-based conferencing, increased quality of service, clearer VoIP calling All of these, and scores of other productivity enhancing applications will be the fruit born of increased broadband availability.

About six months ago, I had the opportunity to share some of my thoughts on the media server market. Essentially, the media server counts among its responsibilities the carrying out of tasks like signal processing, voice recognition, text to speech, and other media processing services. Essentially, I theorized on the future of enhanced services and the role of the media server both as an element of next-generation network architecture and its role in delivering the enhanced services that will drive the increased revenue and profits that carriers hope will grow their businesses.

Cognitronics, located in Danbury, CT, has been around forever, at least when you think in terms of next-generation network elements. Cognitronics was founded in 1961 to produce automatic number announcers for Western Electric. If you have ever heard the message, The number you have called has been changed. The new number is chances are a Cognitronics system has just informed you that its time to update your Rolodex.

The company has recently released a new generation of products, the Cognitronics Exchange (CX) Series of media servers. The CX Series is designed to operate in both circuit-switched networks as well as next-generation packet-based networks, delivering voice announcements and other media services, such as IVR, conferencing, and media streaming, in either setting. The clear benefit here is that a service provider can move ahead with plans to deploy next-generation network elements while leveraging their existing investments in circuit-switching gear.

Even while we constantly look ahead to the future and showcase next-generation communications technologies in the pages of INTERNET TELEPHONY, its important to point out that legacy switches the Lucent and Nortel Class 5s, for example are still being deployed. And with the demise of so many CLECs over the course of the past 12 months, these circuit switches are appearing on the used equipment (previously owned?) market for literally pennies on the dollar. Its meaningful when companies such as Cognitronics produce solutions that can interoperate with equipment from the old guard as well as with newer network offerings such as softswitches, media gateways, and the like.

The most recent addition to the CX family is the CX4000 Network Media server. This compact (5U) box is NEBS compliant and is designed using industry standard hardware and software. The CX4000 can accommodate up to six network interface boards, including a media interface board for VoIP network interface operations; a VoIP interface board with extra IVR/DTMF processing capabilities; an ATM interface board; and a quad T1/E1/ISDN interface board featuring capacity of 96 to 120 channels.

As this issue marks the start of another year, I thought I would take advantage of this opportunity to wish you all good luck in your personal and professional lives. I believe that 2002 will see our industry lift itself out of its economic morass its my feeling that better days are indeed just round the corner. 2002 marks a banner year of sorts for Technology Marketing Corporation. Thirty years ago, our firm laid down its roots as a publisher of high-tech magazines. Twenty years ago, we launched a magazine titled Telemarketing, which has since evolved into Customer Inter@ction Solutions magazine, a magazine that has since its inception commanded the respect of a whole industry. And five years ago, we set off on our journey into the world of next-generation telecommunications with an exciting and vibrant magazine called INTERNET TELEPHONY. Weve truly enjoyed watching this industry evolve from a hobbyists plaything to a major force in the telecommunications arena, and we look forward to bringing you more of the same high-quality, cutting edge editorial coverage in the years to come. 

[ Return To The January 2002 Table Of Contents ]

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