Heavy Reading Research

Could VOIP Boost DLC Market?

Earlier this year, it looked as though so-called third-generation digital loop carriers (DLCs) were having a tough time making a case for themselves (see DLCs: The Downside). But as carriers find that DLCs can be used to help upgrade to packetized voice services, they may be rediscovered as a component in the access network (see New DSL Network Architectures).

"Next-Generation DSL Equipment: The Path to Profitability," the November report by Heavy Reading, pinpoints a key area where 3G DLCs have the potential to shine in carrier networks during 2004. The new crop of devices allows carriers to roll out DSL at close to the cost of POTS (plain old telephone service) lines -- and that's very important. But the feature with the most carrier interest is the introduction of a VOIP media gateway into the remote terminal, according to Graham Beniston, the report's author.

"Carriers see this as a potential vehicle for the graceful migration of POTS service from TDM Class 5 switches to VOIP softswitches," he writes. "It is graceful in that the remote lines can be moved over singly and automatically by changing the POTS lines to POTS + DSL."

Your typical POTS lines can be upgraded to offer DSL services with any number of remote DSLAM solutions. They perform an important service in closing the distance gap between the subscriber and the central office. But if the carrier is trying to move to Class 5 softswitching on a line-by-line basis at the same time, they need to upgrade to a DLC with a VOIP media gateways. This allows carriers to ease over to VOIP switches as gradually as they wish.

Heavy Reading names Catena Networks Inc. as one of the few 3G DLC vendors with a platform that supports TDM protocols (including TR-08 and GR-303) and packet voice protocols (including MGCP and Megaco, an enhanced version of MGCP).

Not only are a couple of RBOCs reportedly interested in Catena's capabilities, but so are Asian carriers looking to use VOIP to compete with wireline incumbents, and IOCs looking for ways to consolidate the number of voice switches in their wire centers, according to Steve Bauer Catena's VP of corporate marketing.

Catena competitor Occam Networks Inc. (OTC: OCCM.OB) was recently able to raise additional funding partly because of its potential value to carriers wanting to take advantage of having a VOIP gateway in the remote terminal (see Occam Raises More Cash).

But, like most up-an-comers in the decades-old DLC space, Catena is struggling to establish itself in the minds of carriers.

Table 1: 3G DLC Survey Results
Vendor Recognition Price Performance Quality and Reliability Service and Support
(number of responses) (56) (33) (36) (36) (34)
Occam Networks Inc. 26.80% 12.10% 11.10% 11.10% 8.80%
Calix Networks Inc. 25.00% 3.00% 2.80% 0.00% 0.00%
Catena Networks Inc. 26.80% 0.00% 2.80% 0.00% 0.00%
Source: Heavy Reading

In its survey of 770 service provider and carrier employees, Heavy Reading found that Catena had some name recognition among the respondents in the 3G DLC space, but it had yet to establish itself in other categories, as there aren't that many systems deployed yet.

Regardless, the rising interest in VOIP services may put DLC startups back on the radar. And in the case of Catena, partnering with a larger equipment provider to market such upgrades may be the solution to its marketing challenges.

— Phil Harvey, Senior Editor, Light Reading

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technonerd 12/5/2012 | 2:46:51 AM
re: Could VOIP Boost DLC Market? This is the same b.s. that the vendors were handing out during the bubble. All these done is taken the same Powerpoint slides and relabeled the years. The economics of VoIP are preposterous, which is why it's just not going to happen. One CLEC already tried this junk and found out the hardway. Check out MPower Communications sometime. Who knows, maybe they'll even tell you the truth about what they went through.
sevenbrooks 12/5/2012 | 2:46:07 AM
re: Could VOIP Boost DLC Market?
Well, whatever else is said reality has to set in. From what I understand of the ILEC market here there are exactly 0 (thats right 0) VoIP class 5 switches in use. There are a number (100) that COULD turn on VoIP but 0 that do turn it on.

So, when you tout these products do you ask, so can you give me some customers that are doing this?

technonerd 12/5/2012 | 2:46:05 AM
re: Could VOIP Boost DLC Market? From what I understand of the ILEC market here there are exactly 0 (thats right 0) VoIP class 5 switches in use. There are a number (100) that COULD turn on VoIP but 0 that do turn it on.
And if it's going through a Class 5 and aggregated on a SONET pipe, then "VoIP" is truly a distinction without a difference. I could imagine the carriers ballyhooing "VoIP" for the purpose of establishing it as a service that can't be unbundled.

This would be accomplished by using DSL lines as the access transport, running through DLCs in the RTs. The FCC has decided that none of that stuff has to be unbundled. Then the RBOCs could start retiring home run loops and claiming that voice is an information service running on top of DSL.

And now for the kicker: They probably still wouldn;t use VoIP. They'll use channelized voice, which runs a PCM tunnel through the low frequencies. Which means it will be POTS. But no one will know about it; the trade press exists to reprint press releases, the general press does what Wall Street and the government tell them to do, and the government is controlled by the monopolies.

Still, though, the underlying issue remains. How much will the ILEC be able to charge for voice if there are effective wireless workarounds? I think they've essentially secured their residential wireline monopoly, but I really doubt it will wind up being anything other than a pair of concrete shoes.
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