SAN JOSE, Calif. -- With telecom demand finally on the upswing, chipmakers are reveling in carriers' demands for increased bandwidth and more sophisticated processing, as speakers discussed at Wednesday's Light Reading seminar, "Next-Gen Networking Chips."

Sure, bandwidth increases are the normal course of telecom. But today's capex plans reflect an unprecedented "urgency," said Imran Hajimusa, a senior director of broadband access for Infineon Technologies AG (NYSE/Frankfurt: IFX).

"The way to do it is to push the fiber closer" to the user, with architectures like PONs, Hajimusa said. "This is the main trend I've seen in all the capex spending from carriers around the world."

Simon Stanley, Heavy Reading analyst-at-large and moderator for the day's sessions, showed numbers indicating at least 39.3 Mbit/s is needed for realistically delivering triple-play services. (The package used as an example included HDTV and two MPEG-2 digital TV feeds, among other services; these ate up 29.2 Mbit/s of that bandwidth.)

But that's a bare minimum figure; panelists agreed service providers will want wiggle room and expansion space that bring the required bandwidth up to 50 Mbit/s. And that might not be the ceiling.

"I've given up trying to figure out what bandwidth needs are," said Matt Squire, chief technology officer of Hatteras Networks Inc. , the lone equipment vendor among the day's panelists. "Whatever bandwidth you put out, people are going to use -- and two years from now, it's not going to be enough."

Bandwidth increases might be inevitable, but the means of delivery still gets debated. On the optical side in particular, Squire bemoaned the lack of universal PON standards.

"The standards bodies are not doing their job converging," he said, noting that EPON and GPON remain disparate. A 10-Gbit/s EPON is in the works, and Squire guesses GPON will start a similar effort. "I don't think this is going to get better." (See Ethernet Reaches for 100-Gig.)

Most of those PON networks will use copper connections to cover the final span to the home or office, and that's where DSL standards are starting to compete. VDSL, originally designed for short connections within a building, is getting more play as an outdoor technology, panelists said. In that sense, it's beginning to rival ADSL, which was crafted for longer connections and traditionally has been considered more suitable for outdoor networks.

With the VDSL2 standard supporting longer loops, carriers are now using VDSL for spans of 3,000 or 4,000 feet outdoors -- one example being Verizon, which uses VDSL to take its FiOS service to the home. "Some people are even trying to do 6,000 feet, which I think is a bit extreme," Hajimusa said. But in general, he noted, "VDSL will take some of the share away from ADSL."

Regardless of standards clashes, the technology to get high-speed streams to the customer is available. For services like IPTV, deployment is hobbled by problems elsewhere in the network. "The broadband part of this is well understood," Squire said. "What we don't have is the content ready and the IPTV distribution software."

In addition to quick delivery, carriers are looking for cheaper equipment -- that's always been the case -- and speakers noted standardization will help, particularly under the Advanced Telecom Computing Architecture (AdvancedTCA) banner. MicroTCA, a standard for smaller boxes that use advanced mezzanine cards in place of ATCA blades, could be a big factor in future designs, speakers said. (See MicroTCA Looks Like a Winner.)

Stanley also expects to see Ethernet continue to dominate as an ATCA fabric interface. Gigabit Ethernet is the leader now, and 10-Gbit/s Ethernet should follow, he said. "There is going to be use of Advanced Switching and RapidIO, but 10-Gbit/s Ethernet is going to be dominant," he said.

Standards matter even down to the interfaces between chips, speakers said. That's because linecards increasingly carry a mix of ASICs, FPGAs, and merchant chips such as network processors. "If you're doing ASICs, you should try to make your interfaces standard interfaces," said Brian Alleyne, senior director of program management for Bay Microsystems Inc.

"Most of the merchant silicon vendors caught up," said Asif Hazarika, senior manager of the Networking Solutions Business Group at Fujitsu Microelectronics America Inc.

The drive toward new services is increasing the complexity of linecard chips. For example, more traffic queues and more levels of QOS hierarchy are required, because carriers want to treat users and services differently according to what they're paying. "Unless the silicon can provide the ability to bill those services, and bill separately, we won't be able to reach the next stage," Alleyne said.

On the enterprise side, chip and equipment vendors still await a surge in 10-Gbit/s Ethernet spending. The key hurdle, most agree, is the lofty price of the technology. (See Lower Prices Boosting 10-GigE.)

Not surprisingly, speakers from KeyEye Communications Inc. and Vativ Technologies Inc. , chip firms pushing 10-Gbit/s Ethernet over copper, said the availability of copper options could help kick demand into gear.

Research from Communications Industry Researchers Inc. (CIR) predicts 10-Gbit/s Ethernet could ship 1.5 million ports in 2010, but Stephen "Mike" McConnell, vice president of strategic marketing at KeyEye, challenged that, saying he's expecting the figure to be about twice that big. "I don't think this is a view that fully understands what copper can bring to the table," he said.

— Craig Matsumoto, Senior Editor, Light Reading

Interested in learning more on this topic? Then come to our upcoming conference, Ethernet Expo 2006, a conference and exhibition focused on the evolution of Ethernet as a ubiquitous enabler of next-gen services in telecom networks, targeting residential and enterprise users. To be staged in New York City on October 23-25, admission is free for attendees meeting our prequalification criteria. For more information, click here.