Inside The Box

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For years, routing high-quality video over phone lines was the impossible dream: telecom operators could not feed the copper wires that run into offices and homes fast enough. But the dream has finally come true, thanks to a series of technical advances, most notably a piece of networking gear called a Digital Subscriber Line Access Multiplexer (DSLAM, pronounced dee slam). This refrigerator-sized box deftly flips video data from the speedy fiber-optic networks that form the backbone of the phone system to the "final mile" of copper wires. DSLAMs have been around since 1997, but until two years ago they couldn't handle high-speed, high-density video traffic. Now, thanks partly to improved and cheaper chips, they run internally about 30 times faster than in their early days. They also spit bits onto copper five times faster than in the past. That rate will soon double in Europe.

Like a pickup truck hauling a few apples, a copper wire actually has lots of empty space. The DSLAM throws in bushels of data and video. "This has been one of the single biggest enhancements to the technology," says Guido Garrone, chief technology officer of Milan-based Internet company FastWeb, which offers VOD to its subscribers.

Who gets credit? Paris-based Alcatel dominates the global $3.3 billion DSLAM market with a 38.1% share, according to Gartner Inc. (China's Huawei is second with 9.9%). Alcatel not only revved up the DSLAM but made it cheaper by deploying a technology called Ethernet that's been around for nearly 30 years in the short-haul business of local area networking. Ethernet allows telecoms to use Internet equipment like routers to direct traffic around the network, and it can cost one-tenth as much as other networking gear. "We noticed Ethernet kept getting cheaper and cheaper and cheaper, so we said we'd better take advantage of that," says Alcatel chief technology officer Niel Ransom.

Indeed, Alcatel's innovation is part of an ever-widening appreciation of what Ethernet technology can accomplish. "Ethernet continues to expand — in distance, bandwidth capacity and the ability to run voice and video — in ways people never anticipated five years ago," says John Chambers, Ceo of router maker Cisco Systems. DSLAMs themselves have plunged from over $300 for each end-user connection to under $100, according to Ransom. Alcatel hopes to ship enough DSLAMs and cards to make 22 million new connections this year, up from 7.8 million in 2002. Of course, DSLAMs are just part of the VOD story. The "video servers" — giant terabyte-sized computers that store films for viewer use — have also improved. Next in line: VOD is poised for another push forward as compression technologies like MPEG-4 and Microsoft's Windows Media 9 start to halve the amount of bandwidth required to send video. But for now, VOD's little-sung hero is the DSLAM, which may look like a fridge but is "beautiful as far as I'm concerned," says Alcatel's Ransom. Happy viewers would agree.