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While broadband gateways -- a device designed for home networking that contains both a modem and a router -- are generally open to either DSL or cable standards, the apparent strategies of DSL and cable service providers are having a significant effect on gateway distribution, reports ABI Research. Many cable service providers have discouraged the use of gateways, preferring instead to increase the number of wired installations in a subscriber's home, the research firm says. Alternatively, DSL service providers have embraced the retail model, giving the burden and the choice of CPE (customer premise equipment) to the consumer. Such practices by DSL providers are predominant in regions other than North America, observes ABI Research.
Though the DSL provider model may remove CPE control from the service provider (as is commonly done in both Europe and Asia), it has the positive effect of driving volumes and choice for consumers, leading to better awareness and product innovation. ABI Research believes that, long term, the failure of cable service providers to successfully embrace the retail model will hurt their penetration rates, enabling DSL broadband subscriptions to overtake broadband cable subscriptions.
"That DSL-compatible gateways are available through retail channels makes the equipment -- and the service provider -- more attractive," notes Vamsi Sistla, ABI's director of Broadband. "In the same way that the TV tuner will be migrating to the TV itself and, thus, the retail space over the next several years, the same may prove true of the cable modem, as pressure mounts to migrate this functionality to consumer CPE as well. The cable companies need to decide if they are in the equipment business or the content business. The game here is going to be one of retail access and consumer choice."
According to ABI, sales of broadband gateways, at more than U.S. $290 million in 2003, are expected to climb to more than $1.53 billion by 2008 worldwide.
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