The carrier-led Home Gateway Initiative (HGI) is close to releasing specifications that, it hopes, will enable vendors to deliver targeted and affordable products that match service providers' needs.

According to the group's CTO, Telecom Italia SpA (NYSE: TI) executive Paolo Pastorino, a full set of technical specs will be ready by the end of this year. The HGI's members are holding a plenary meeting later this week in Bordeaux, France, to review draft proposals that were issued in October (and perhaps drink some wine as well).

The home gateway is seen by carriers as a way of extending their reach, reducing churn, and more easily delivering an increasing range of revenue-generating services, such as IPTV and interactive gaming. To do that effectively and efficiently, operators are interested in the HGI initiative because of its promise to standarize and define the technology, which could promote interoperability and drive down manufacturing costs. (See BB Forum: Gateway Goals for Carriers).

The HGI's 59 members, which include major chip and systems vendors as well as some of the world's biggest carriers, will get privileged access to the specifications before they become more widely available.

The specifications are set to cover a wide range of technology requirements and guidelines, including:

The market is fragmented at present, and while there are a number of products available from trusted suppliers, the carriers can't necessarily get exactly what they need, when they need it, and at a suitable price. (See Oki Unveils Home Gateway, Amedia Plans Gateway, Conexant Adds Chipset , ZTE Unveils Home System, Jungo Intros ADSL2+ Platform, 2Wire Bolsters Home Gateways, Huawei Delivers Home Gateway, and Telco Systems Intros IP Media Gateway.)

It's too early to tell whether the group's work will result in a common, open gateway, says Heavy Reading senior analyst Graham Finnie, who is currently compiling a report on the home gateway market.

"It's an ambitious idea that, politically, the vendors have felt compelled to sign up for because the gateway is such an integral part of the triple-play plans of their major customers," says Finnie, who adds that the DSL Forum has already done a lot of standards work in this area. (See DSL Forum Goes Home.)

And the analyst isn't sure it makes sense for all the major vendors to throw their hat into the home gateway ring. "It's very important for the carriers, so the vendors need to address their needs, but it doesn't always make sense to try and do everything yourself. It might make more sense to create a strong partnership with home gateway specialists," reckons Finnie, citing Alcatel (NYSE: ALA; Paris: CGEP:PA) as an existing example. (See Alcatel Buys Into 2Wire and AT&T Selects 2Wire.)

Some major players are already committed to the market, though, and intend to deliver on the HGI's specifications. Lutz Neubauer, head of product development at Siemens Communications Group's home devices business unit, says the initiative will make it easier for carriers and vendors alike, as it's difficult to meet the varied and uncoordinated needs of service providers at present.

Neubauer says he has seen the working drafts of the specifications, and believes it'll be possible to launch some early models in 2006 that will meet some of the basic specifications.

But what of the thorny issue of cost? The carriers want to pay significantly less than €100 ($119) per unit for a multifunctional gateway, but doubts have already been raised about what can be achieved at that price point. (See Telcos, Vendors Battle Over Gateway.)

Neubauer says the draft requirements he has seen "suggest products that are much closer to €100 than €1,000. A product that can be supplied to carriers at less than €100 seems feasible in the short-term future, depending on the detail of the final specifications."

And not only does Neubauer believe that price point is possible, he believes Siemens can deliver with its profit targets intact. "At Siemens Communications we have an operating profit margin target of between 8 percent and 11 percent, and we'll be aiming for this with our home gateways," says Neubauer. (See Siemens Spawns a Problem Child.)

— Ray Le Maistre, International News Editor, Light Reading