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DSL To Bring DTV To 46M Homes

If broadcasters think they are in a dysfunctional family when it comes to moving forward on digital TV (DTV) implementation, they can take heart that the phone companies, long vaunted as having the power to take over the market for digital program delivery, are also experiencing some turbulence. And it wasn't so long ago that cable and DSL were going to supplant the nation's over-the-air networks as core digital program suppliers.

Even in light of Comcast's successful bid for AT&T's cable business and the rebounding of network television viewing, proponents of DSL still believe it has the potential to grab some of the market. They admit, however, that there are challenges.

For example, though Strategy Analytics predicts in a report that 46 million homes worldwide will be watching DTV delivered over phone lines by 2008, it also acknowledges that telephone companies must overcome a number of financial and cultural hurdles before they can compete with established players.

Commercial services have been available for some time from operators such as Qwest in the U.S., and Kingston Communications and Video Networks in the U.K. Strategy Analytics predicts that xDSL will account for 11 percent of worldwide DTV services by 2008, up from less than one percent today.

To come anywhere near the numbers stated above, telco players will also have to maximize the opportunity to bundle digital television with such services as telephony and messaging, broadband Internet and home network management÷all of which were widely touted as viable growth areas in the recent Comcast/AT&T cable leviathan lovefest. If the telcos are successful in such marketing efforts, it will position them for the long-term battle with cable, satellite, and other emerging players. The report also predicts that annual sales of DSL DTV set-top boxes will rise to 10.7 million units by 2008, a substantial increase from 1 million in 2002.

To make matters more confusing, Cahners In-Stat Group says the market for DSL residential service bottomed out in late 2001 and will be positioned for considerable growth in the next five years. The high-tech market research firm reports that slowing in 2001, characterized by the dramatic collapse of key Competitive Local Exchange Carriers (CLECs), appears to be stabilizing.

Other high points of the report indicate the U.S. DSL residential installed base reached 3.6 million by the end of 2001, and will exceed 13.5 million by the end of 2005. It is reported that DSL services in the U.S. will produce in excess of 7 billion dollars of revenue by 2005 and that, also in the U.S., cable modem access will remain the broadband access technology with the most subscribers until late 2004.