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A revolutionary software-based modem promises to speed DSL deployment while reducing hardware costs by as much as 40 percent and driving DSL modem costs down from the current $200 range to a little more than $100.
But experts say that DSL's complex supply chain may be standing in the way of the innovative technology and it could be at least 12 months to 18 months before software-based DSL modems make their way into end users' personal computers.
The logic behind software modems is simple. By removing the modem hardware and leveraging the host processing power of the PC, software modems offer flexibility to service providers because they can be easily reconfigured and upgraded to accommodate different DSL standards. In addition, by incorporating the software modem into the PC, service providers can insure that the modem is installed and configured correctly, eliminating costly service calls and possibly reducing truck rolls.
"The cost savings is one benefit of this technology, but another is that it offers flexibility to DSL providers," says Mike Tramontano, marketing director for Motorola Software Products Division, maker of the SoftDSL software-based DSL modem. "It significantly reduces the number of times you have to open up the PC."
Soft modems certainly have made their mark in the analog (dial-up) arena. According to VisionQuest 2000, there were 42 million software-based analog modems at year-end, up from a mere 5 million in 1997. "Traditional analog soft modems have been highly successful," says Ernie Rapiere, senior market analyst at VisionQuest 2000. "I would expect soft DSL modems to have the potential of duplicating the analog market."
That's certainly good news for such soft DSL modem proponents as Motorola Inc. and PC-Tel, both of which have developed soft modems and are anxious to get OEMs to incorporate them into desktop and portable personal computers.
But most of the soft modem players say that scenario is at least a year from reality. According to Tramontano, Motorola is working with various telco DSL providers and the company hopes to trial its SoftDSL technology in the next six months with commercial deployment by year-end.
Likewise, PC-Tel spokesman Shawn Owens says his company is in "wait" mode with its soft DSL modem gear. "The technology is here but the market is the gating factor," Owens says. At issue: ownership of the customer. Although DSL providers say they are anxious to get out of the DSL modem business, they aren't necessarily ready to give up ownership of the customer, a situation that may occur if PC OEM makers begin incorporating soft modems into their computers.
"The telcos don't want to be in the modem business, but if you start bundling the modem into the PC, what service provider will consumers sign up with?" asked Owens. "The PC manufacturers say that they will capture the consumer."
The answer to this power struggle, according to VisionQuest 2000's Rapiere, is for the service providers and OEMs to form alliances and bundle their broadband offerings. "Up to this point, the industry has still been in the startup phase...there has to be a sufficiently good base of infrastructure established to the point where people will start integrating soft modems into their systems."
Both Motorola and PC-Tel hope to be instrumental in bringing the service providers and OEM manufacturers together to help speed these types of alliances. Motorola plans to leverage its existing dial-up modem relationships with OEMs such as Gateway, Intel and Sharp. "We would like to tie the knot between the PC OEMs and the service providers," Tramontano says. "We know communications and have a natural kinship with the telcos and service providers. In addition we have relationships with OEMs. That makes us well-suited for the matchmaker role."
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