Peripherals Special: Modems

Modems: Uncertain future for dial-up

V.92, the one-year-old dial-up standard, has not been widely adopted. This shows that dial-up modem technology has almost reached saturation point. Simultaneously, technologies like DSL, leased line and cable modems have begun to look more promising. Gaurav Patra reports

Dial-up modem technology has reached saturation level. The latest technology, V.92, which is in existence for the past one year, has still not been adopted widely, says Sujit Singh

Modems are not having a good time. But, according to MAIT’s half-yearly industry performance review, in the networking market, sales of modems registered a healthy growth of 67 percent. In H1 2002-03 the total number of modems sold was 2,05,399, whereas in H1 2003-04 it stood at 3,42,191. Consumption of modems in the household segment grew by 47 percent, accounting for 66 percent of the total modem market. However, consumption in the business segment grew by only 5 percent, which is causing worry and even alarm.

Industry pundits opine that in India dial-up technology still accounts for more than 65 percent of the total market, so one can expect that for some time dial-up modems will remain the primary means to get connected to the Internet. “Dial-up still holds the majority of market share, and is followed by DSL and cable technologies for access,” says C S Ramakrishnan, vice-president, marketing. MRO-TEK.

Nevertheless, according to Sujit Singh, country manager, Dax Networks, the total dial-up segment earned revenue of Rs 179 crore in 2002-03, down from Rs 252 crore in 2001-02. This negative impact of 29.9 percent was largely owing to a decline in per-unit price. Singh says that a total of 29,000 leased line modems were sold during 2002-2003. Most of these went to banking and financial institution customers, who took lines from BSNL, MTNL and private ISPs.

The statistics for the cable industry are overwhelming. There are 45 million cable homes in the country. This has come about in a span of just 12 years. If only 20 percent of these cable users adopt ‘data-over-cable,’ it translates into a phenomenal nine million data connections using cable modems. “The cable companies would do everything possible to leverage their existing network to get more revenue. They are expecting a definite value addition to their existing video revenues,” says Krishnan Kannan, marketing manager, broadband communications sector, Motorola India. In reality, the sale of cable modems has suffered due to the stagnant cable Internet business.

The DSL modem market also remained static with hardly any activity except for the launch of DSL services, including DSL broadband. “2003-04 might well see an increase in demand for DSL modems given the aggressive roll-out of Internet services by Reliance, Tata and Bharti,” says Singh. Agrees Raj Jadhav, general manager, pre-sales/tech support, D-Link India, “Cable modems might lose their charm and lose out to DSL modems since DSL would be the prevalent and popular technology, and DSL modems would show significant growth. Also, the dropping cost of leased lines will drive the growth of the leased line modem market.” But Kannan feels otherwise: “In the near future DSL will not be able to generate as much business as the cable modem.”

Market trends

In the dial-up market one significant trend is towards internal/built-in modems. Says Jadhav, “External modems have turned out to be more for the comfort of interface developers. The sale of external modems has decreased drastically because of cost-effective internal modems.” Today, almost all laptops and home PCs are equipped with internal or soft modems. Internal modems are able to function and perform like external modems, and customers have slowly but surely started relying on and believing in them. No ISP or traditional carrier company is ready to throw away the existing PSTN-based Internet infrastructure just because of the unprecedented boom in the broadband market. Last year, almost all modem manufacturers predicted that there would be a dive in the modem market. However, unit sales increased since dial-up is still the most prevalent, convenient and popular method to connect to the Internet, partly because prices have come down substantially. Although broadband is the rage right now as far as concept and desire are concerned, in reality most users have access only to analogue phone lines. In addition, broadband has not yet become the default choice. “If service providers aggressively promote data and voice-over-cable then it would truly be a convergent platform. Cable, at the moment, is the only proven last-mile wireline access method to give video, voice and data,” says Kannan. It is expected that dial-up modems will remain the primary means to get on to the Internet for the next couple of years.

Since dial-up technology still enjoys a majority market share, the question is whether there is a real need for improvement in dial-up modem technology in today’s broadband world. “More than in dial-up modem technology, the place for improvement should be in telephone lines and backbone connectivity. Also, the latest standard of modem technology has touched its extreme level,” says Ramakrishnan. Singh says that dial-up modem technology has reached saturation level. The latest technology, V.92, which is in existence for the past one year, has still not been adopted widely. He adds, “The dominance of broadband is increasing worldwide, and chipset vendors and manufacturers are not looking at enhanced performance levels. Developments are only in fabrication of the modems to further reduce costs, so worldwide the direction has been on cutting costs rather than technology advancements.”

Although broadband technologies (DSL and cable) are being aggressively promoted, most people around the world have access only to analogue phone lines, which explains why dial-up technology is still the market leader. The only debate therefore is whether these modems will remain the primary means to get on the Internet. “It will, especially when it comes to B and C class cities. In metros and class A cities, thanks to increased ISP deployments, most of the SOHOs (small offices, home offices) and SMEs (small and medium enterprises) are increasingly shifting their access to Ethernet. In another three years the market for dial-up will certainly get reduced to one-fourth,” declares Singh.

Some say the US market will see the end of dial-up by 2007. Though this may or may not happen by then, others see a definite decline. “Dial-up as an access option has reached its end of life. Broadband has replaced dial-up simply because of its high speed, low competitive costs and always-on capability,” says Kannan. Additionally, service providers of cable are getting more aggressive and are doing everything possible to promote data and even voice-over-cable using their existing cable infrastructure. Not only the US and Europe, but countries like South Korea are extensively on broadband.

Still, Ramakrishnan feels that the analog modem would remain the primary technology and means to access the Internet either from work or home. Though different access technologies are available for the enterprise segment, the analogue modem would be the primary means for the Indian home space.

The V.92 story

The International Telecommunications Union (ITU) has come up with the V.92 modem specification, which has phased out the previously popular V.90 technology. This new standard introduces three new features that will add convenience and performance for the modem user: Quick-Connect, Modem-on-Hold (MOH) and PCM Upstream. The user uses the same phone line for both voice call and data (Internet), so when he is browsing the Internet an incoming call cannot get through. MOH allows the user to receive an incoming call and stay connected to the Internet—call-waiting service from the phone company is all that is required. It also works in reverse so one can initiate a voice call while connected and keep the modem connection. “This has surely increased Internet usage since the problem of disconnecting and reconnecting again does not deter a user from using the Internet any longer,” says Jadhav. Historically, new communication standards are made available in client modems before ISPs upgrade to V.92. “Almost all vendors have started shipping modems with V.92 specifications as the current de facto modem standard. Many ISPs are planning to adopt some ports with V.92 specifications to avail of the new features,” Jadhav adds. But Ramakrishnan differs: “Although many external modems are available with the V.92 standard, no service provider has adopted this new standard in their central office equipment.”

Standards

There may be mixed opinions about the V.92 standard, but it is the latest standard for dial-up modems. For the DSL space a range of standards are there in the marketplace. However, ADSL remains the DSL technology for the mass market. G.SHDSL is yet another symmetric DSL standard, and the standard for the ADSL is ITU G. 992.1.

In the case of cable modems, the latest standards are the DOCSIS 1.1 and DOCSIS 2. These are standards released by Cable Labs in the US. In addition, packet cable standards are getting defined for delivering voice-over-IP using cable as the last-mile connection to the home.

Conclusion

According to industry pundits, technology in modems has more or less stabilised and no major innovations are coming in the near future. Innovations that are driven by low-cost chipsets from chipset vendors will drive growth in the dial-up, leased line, cable and DSL modem market. It is expected that dial-up modems will not show substantial growth in the future. It is also expected that cable modems will not grow substantially. But DSL modems will enjoy good growth since DSL will be the prevalent and popular technology. Another interesting trend is the integration of other technologies like wireless /firewall-VPN into ADSL. Service providers will start providing more value-added services rather than just the traditional Internet access services. Applications over the Internet (like VoIP and enterprise access) will fuel the growth of value-added services in the DSL segment. The dropping cost of leased lines will drive growth in the leased line modem market.

D-Link: In every market segment

D-Link’s product range has a substantial market share in India, which is why it ranks among the leaders. The biggest strength of the company is its nationwide network infrastructure with 21 territory distributors. These distributors have exclusive territories in which they alone sell D-Link products. The channel has remained unchanged and stable for over five years now. Also, these distributors have 300 dealers and 3,000 resellers, thus expanding reach. In addition, the company holds promotional schemes to keep its channel partners interested. It already has four support centres across the country (Delhi, Mumbai, Goa and Bangalore) and will soon be starting four more support centres in Kolkata, Hyderabad, Chennai and Ahmedabad. The technology that it is focusing on is the broadband arena. The company offers a range of modems catering to different segments. For the broadband space it has the ADSL modem, leased Line and interface convertor. D-Link recently introduced some new leased line modems: DLM-128V+, DLM-128G+, V and G. As far as the dial-up segment is concerned, the company has USB modems, internal modems and external modems. Apart from this, D-Link also offers ISDN TA, ADSL routers, ISDN routers, Cable/DSL routers and wireless DSL/cable routers. The company considers its high-speed G.SHDSL router for SOHO to be one of its hot products.

Motorola: Focus on cable

Motorola is one of the leading modem vendors in the broadband communication sector. The company has already shipped over 10 million modems. Cable is now a major focus area for Motorola. Its rich experience of video- over-cable is considered to be its strong point. The multinational feels India is showing tremendous potential for the roll-out of data- and voice-over-cable. The company will be focusing on this roll-out and working with service providers to introduce this technology to Indian consumers. It already has a range of cable modems, voice-enabled cable modems and set-tops. Some of its set-tops even have built-in modems, and the highest-end set-top can provide video, data and voice simultaneously.

Modem trends

Internal modems widely accepted for both PCs and laptops. Internal modem demand is primarily from the reseller/channel segment. The dial-up segment has seen an increase in the availability of low-cost internal modems (PCI cards) for desktops and built-in modems for laptops. Service providers might aggressively promote data and voice-over-cable to provide a convergent platform. Because of increased ISP deployments, most SOHOs and SMEs in the region are increasingly shifting their access through Ethernet. Fewer users will use dial-up Net access in metros. ADSL modems are getting popular in India, and are mostly provided by the service provider as a package to the end user.

Dax: Single-window source

Dax’s modem offerings include dial-up, ISDN, IDSL and leased line modems. The company’s range is quite comprehensive, and vendors today look at Dax as a single-window source. The company’s marketing model complements its thrust across various segments. Dax makes available its products through ISPs, who bundle the modems with their bandwidth; OEMs who ship these modems along with PCs; and its distribution channel, which caters to over 4,000 resellers in the country. All Dax modems, except for the internal dial- up modem, carry a three-year comprehensive warranty, which adequately protects the customer’s investment during the respective technology’s life-cycle. The company’s technology and R&D roadmap are in sync with international/national market trends.

gaurav@expresscomputeronline.com