Universal Edge QAM Market Poised for Take Off

(Top News, 17 Sep 2008)

The market for Universal Edge Quadrature Amplitude Modulators (u-edgeQAMs) will start to take off in earnest in 2009, and will achieve strong growth over the following four years, reaching a market size of about 1.5 million channels in 2013—a seven-fold increase over 2007 shipments. ("Channels" are used as the industry's standard unit of measurement because each QAM may provide variable numbers of them.)

QAMs reside at the edge of a fiber network; they turn the outgoing digital information carried by the network into RF signals distributed to individual households. "Universal" designs can handle a variety of different services.

In fact 2008 shipments are slightly lower than those for 2007. According to ABI Research principal analyst Robert Clark, cable operators faced with growing competition from IPTV seek inexpensive ways to increase bandwidth. While QAMs are more cost-effective than other ways of doing this, many operators have decided to focus in the short term on reclaiming bandwidth by riding on the coattails of the analog-to-digital television switchover. After that transition, operators will move to edgeQAMs as a next step."

The first wave of QAM deployment is likely to occur in markets where competition from IPTV is particularly strong, countries such as South Korea, Japan, and France. Other markets will follow more slowly.

QAM deployment is nonetheless a significant capital expenditure. "There's a limit to the amount that financial markets will let operators spend," notes Clark. "Cable operators have to find the right balance between deploying enough edgeQAMs and overextending their resources, or they risk financial analysts' judgments that they are over-building. And, with softness in consumer demand, some cable operators already loaded with debt may have to focus on maintaining debt covenants instead of expanding."

Fortunately for operators, there is a strong trend towards standardization of QAM designs, which will exert a downward pressure on prices. And vendors? "Vendors understand and expect falling prices," says Clark, "yet they still want to try and ride the market wave."

Click here for more information on ABI Research