June 20 -- Alcatel and 3Com both announced last week that they are exiting the consumer DSL modem market. Alcatel is divesting its DSL customer premise equipment (CPE) product line to Thompson Multimedia, and 3Com is dumping its consumer DSL CPE program. Both companies had similar reasons for exiting the market, which point to the same underlying problem that currently plagues the consumer DSL CPE market: low profit margins.
    RHK, and industry market research and consulting firm specializing in the analysis of advanced technologies for the public telecommunications network, considers this news significant because Alcatel is walking away from a leadership position in the DSL modem business. Both companies stated that they would continue developing DSL integrated access devices that address the business and small office/home office markets.
    Despite the announcements by Alcatel and 3Com, RHK believes that consumer demand for DSL services is still very robust, and that the actions of Alcatel and 3Com should not be interpreted as a sign of weakening demand for DSL broadband services.