NEW YORK -- With cable operators and wireless services eroding their core customer and revenue bases, local phone companies now have little choice but to add video services to their product lines – and Digital Subscriber Line (DSL) is the key technology to enable rapid rollout of video, according to a major new study released today by Heavy Reading (www.heavyreading.com), the market research division of Light Reading Inc.

The report, "Telco Triple Play: The DSL Imperative," analyzes the business and technology case for using DSL over existing copper phone lines to deliver the "triple play" of voice, data, and video service to residential and small-business customers.

The report is based on interviews with more than two dozen service providers and equipment manufacturers, as well as an exclusive survey of more than 300 service provider management, engineering, and operations staffers, pinpointing their company's attitudes and strategies regarding triple play. Participating companies include Verizon Communications (NYSE: VZ), SBC Communications (NYSE: SBC), Alcatel (NYSE: ALA), and Nortel Networks (NYSE: NT).

Although fiber to the premises (FTTP) may yet emerge as the long-term choice for telcos, it's clear that to deliver triple-play services now, telcos must make use of their existing copper networks using advanced DSL technologies, notes Scott Clavenna, Heavy Reading's Chief Analyst and author of the report.

"Higher-speed versions of DSL, such as ADSL2+ to VDSL2, now support over 20 Mbit/s to each subscriber, which is sufficient for advanced video services to multiple TV sets per home," Clavenna says.

Other key findings in the 47-page report include:

Telcos must devise a video strategy in the coming year. The ability of cable operators to quickly add voice to their service mix is a major threat to local telcos. With competition for core voice services coming from multiple fronts, telcos already face real prospects of accelerated revenue erosion.

Smaller, independent telcos are taking the lead in deploying IP-based video services. Smaller telcos are moving quickly to embrace switched digital video based on IP, exploiting the technology's ability to better support unicast and interactive video services. This strategy will put smaller telcos in a better position to compete against satellite and cable providers.

Second to competition, the ability to increase ARPU by 100 percent is driving renewed interest in video. No other service can offer this effect on top-line growth for a local service provider. Broadband data service for the consumer market, for example, has already fallen to commodity status.

"Telco Triple Play: The DSL Imperative" is published in PDF format and priced at $3,495. Purchasers gain full access to the database of results from the service provider survey conducted for this report.

Heavy Reading