DSL Market Needs Apps, Fed Support

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Despite one year of market punishment, the digital-subscriber-line market in
the United States still shows promise, according to a report issued by analyst
firm Ovum.

The California-based company estimated that an expanding list of applications
for DSL will push the market to more than 200 million lines globally in
2007.

But senior analyst Mark Main warned that DSL providers will never grab any
significant market share unless they go beyond the basic high-speed pitch.

'The consumer mass market and the SME [small/medium enterprise] sector have,
to date, been poorly supplied with content and value-added network services,
respectively,' he said.

'Consumers are now starting to show interest in on-demand and interactive
content, and SMEs now need support for other networked business applications
that will increase productivity and reduce costs,' he added. 'These are the
next-generation services.'

The study noted that the strong cable and satellite competitors that have
fielded bundled offerings have proved particularly troublesome to DSL
telcos.

Regulators, too, should take on a greater role in encouraging the DSL market,
according to the report.

'Incentives are needed to drive competition and especially to encourage other
operators to move into this market,' Main noted 'The upfront costs are high and
market entry is a risky decision to make. Left by themselves, incumbents will
throttle DSL growth, not foster it.'

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