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Alcatel Adds to DSL Dominance

Light Reading
News Analysis
Light Reading
10/28/2002

Alcatel SA (NYSE: ALA; Paris: CGEP:PA) today announced two new developments in its DSL business, including product upgrades to make its gear easier to install. The company also says it has shipped more than 20 million DSL ports, giving it a 37 percent worldwide market share.

Alcatel's aim for its upgrades is to make DSL more cost-effective in rural areas and to use less manpower to set up new DSL accounts, according to Jay Fausch, senior director of marketing at Alcatel's Broadband Networking Division.

One enhancement is a new "low profile" version of its 7300 Advanced Services Access Manager (ASAM), its DSLAM product. The new box can support up to 216 DSL lines per shelf (roughly 648 lines in a 7-foot telco rack) and is designed for outside plant use.

Alcatel's previous densest player at that position supported 144 lines per shelf or about 432 lines per rack. "You don't have a consistent remote terminal size, so you need a variety of options to address this," says Fausch.

A new software upgrade causes the 7300, in the service provider's central office, to automatically configure itself to the DSL modems or other new equipment installed at a customer location.

This upgrade theoretically means DSL installations should take less time, but the DSL modem makers have to update their software as well or the whole scheme doesn't work.

Alcatel's competitors acknowledge the company's DSL dominance, but thumb their nose at its technical chops. "We covet Alcatel's market share, but they have never maintained best-of-class in performance or density," writes David Markowitz, VP of marketing at Zhone Technologies Inc., in an email to Light Reading.

"I believe that we have made inroads into Alcatel's market share, as evidenced by the growth in our sales to the largest domestic carriers," writes Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI) president and CEO John Schofield, in an email to Light Reading. "Our AccessMAX offering can easily scale from six to over 1,400 lines in our Sierra 1000 cabinet."

Separately, Alcatel announced that it has extended its contract with Zhejiang Telecom for another 100,000 DSL lines, bringing its total contract with that carrier to about 180,000. Through its Alcatel Shanghai Bell Co. Ltd. subsidiary, Alcatel says it has supplied a total of 360,000 DSL lines in Zhejiang Province, giving it a 60 percent market share.

The company also announced a contract extension with Telstra Corp. in Australia. Financial terms were not disclosed for either deal.

Market research shows that there's still plenty of DSL upside in the world, despite Alcatel's dominance. According to data that Wachovia Securities Inc. recently collected from 42 service providers, the number of DSL subscribers has grown rapidly around the world, but 88 percent of Internet users are still connecting at dialup speeds.

The market research firm Dell'Oro Group confirms Alcatel's leadership in worldwide DSL ports shipped, which suggests that more than 54 million ports have been shipped worldwide by all vendors.

"An awful lot of those ports were shipped to service providers that are no longer in business," says Fausch.

— Phil Harvey, Senior Editor, Light Reading
www.lightreading.com

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