DSLAM takeup slamming, but bush still waiting

A research note released by telecommunications and broadband analyst firm Telsyte found that "the bulk of the new infrastructure [was] still failing to reach regional Australia, with metropolitan deployments currently dominating the plans of the six new infrastructure players launched last year".

However, according to Telsyte managing director, Shara Evans, several Internet providers are considering rural and regional growth as a secondary priority.

"What happens when a company is looking at where to roll-out their infrastructure, is that they review the geographical concentration of existing subscriber accounts. DSLAMs are typically deployed in areas where they have high traffic in order to increase margin and add service flexibility. Many of these locations tend to be in metropolitan areas, which is very natural given Australia's population distribution. However, some providers are looking at regional roll-outs," she said.

While Internet service providers and carriers are purchasing DSLAM (Digital Subscriber Line Access Multiplexer) network devices primarily to reduce costs (particularly some wholesale DSL service charges), they are also showing a strong interest in new ADSL technologies, such as ADSL2 and ADSL2+. These technologies -- presently under investigation by the Australian Communications Industry Forum (ACIF) -- have the potential to greatly improve ADSL capabilities, including data rate and reach performance. Both ADSL2 and ADSL2+ gear can interoperate with existing ADSL equipment, allowing carriers to roll out new high-speed services while gradually upgrading their legacy infrastructure.

"ISPs and junior carriers believe that they can take advantage of new, more capable infrastructure to launch services that combine high-speed ADSL2 and ADSL2+ services with PSTN or VoIP services, taking complete ownership of their customers and adding value through bundling," Evans said.

She added that new developments in DSLAM technology have "helped the business case, with mini-DSLAMs making more efficient use of expensive co-location real estate."

The study showed that almost one-third of the DSL infrastructure launches since the market emerged in Australia in 2000 were kicked off last year.

"While the new rollouts comprise only around 7 percent of Australia's million-plus ADSL user base, these independent ISPs and carriers could provide a bellwether for the health of the industry. Other ISPs will certainly be watching their success or failure as a guide to their own plans," Evans added.

Evans said the study was focused on the ISPs and carriers who had announced their intention to roll out their own infrastructure for the first time in the last six months.

"Since the last half of 2004, we are seeing a lot of retail-oriented companies that are putting in their own DSL infrastructure in terms of DSLAM but still primarily using Telstra copper. They are investing in their own infrastructure because they think there are a number of benefits in doing so," Evans said.

"With the new infrastructure, the ISPs have been able to offer a higher download speed, up to a theoretical download speed of 26 Mbps, that's one major area. Another major area is margin. Very much evident in this study was that the service providers that have deployed their own infrastructure expect better margin out of it and they can build better business models as a result," Evans said.

She added that the carriers and ISPs also expect to "increase infrastructure utilisation and expand the range of services and customer base primarily as a result of higher speed services."

"Our feeling is that we'll see more of this in the coming months," she said.