Retail Model For Broadband Gateways Seen As Boon To DSL Providers Over Cable Companies, Says ABI Res

Though the DSL provider model may remove CPE control from the service provider (as is commonly done in both Europe and Asia), it has the positive effect of driving volumes and choice for consumers, leading to better awareness and product innovation.

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Retail Model For Broadband Gateways Seen As Boon To DSL Providers Over Cable Companies, Says ABI Research

OYSTER BAY, N.Y. - - March 24, 2004 - - While broadband gateways (a device designed for home networking that contains both a modem and a router) are generally open to either DSL or cable standards, the apparent strategies of DSL and cable service providers are having a significant effect on gateway distribution. Many cable service providers have discouraged the use of gateways, preferring instead to increase the number of wired installations in a subscriber's home. Alternatively, DSL service providers have embraced the retail model, giving the burden and the choice of CPE (customer premise equipment) to the consumer. Such practices by DSL providers are predominant in regions other than North America, observes ABI Research.

Though the DSL provider model may remove CPE control from the service provider (as is commonly done in both Europe and Asia), it has the positive effect of driving volumes and choice for consumers, leading to better awareness and product innovation. ABI Research believes that, long term, the failure of cable service providers to successfully embrace the retail model will hurt their penetration rates, enabling DSL broadband subscriptions to overtake broadband cable subscriptions.

"That DSL -compatible gateways are available through retail channels makes the equipment - and the service provider - more attractive," says Vamsi Sistla, ABI Research's Director of Broadband, "In the same way that the TV tuner will be migrating to the TV itself and thus the retail space over the next several years, the same may prove true of the cable modem, as pressure mounts to migrate this functionality to consumer CPE as well. The cable companies need to decide if they are in the equipment business or the content business. The game here is going to be one of retail access and consumer choice."

The cable operators in the US would be wise to learn a lesson taught them by the satellite providers: retail is key. In fact, the satellite service providers have publicly stated that the adoption of a retail distribution strategy was critical to their success. So it begs the question: what are the cable companies afraid of?

Sales of broadband gateways, at over $290 million in 2003, are expected to climb to over $1.53 billion by 2008 worldwide, according to ABI Research's new study, "Broadband Residential Gateways: Opportunities in Home Networking for Semiconductor & CPE Vendors." The study addresses leading broadband gateway solutions offered by IC and CPE vendors. Regional growth patterns are discussed in light of leading broadband technologies, subscriber penetration and current and future market dynamics. Regional market forecast information is provided for cable and DSL broadband gateway shipments and revenue.

About ABI
Founded in 1990 and headquartered in New York, ABI Research maintains global operations that support annual research programs, quarterly intelligence services and market reports in wireless, automotive, semiconductors, broadband, and energy. Their market research products can be found on the web at www.abiresearch.com, or by calling 516.624.3113.

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