Global shipments of DSL equipment in the first quarter increased 5 percent sequentially to a record 25 million ports, according to market research firm Dittberner.

The strong growth was mainly due to:

-- Over 12 million new DSL subscribers worldwide, including 4.1 million in China;

-- A large increase in Fiber-to-the-Building/VDSL subscribers in Japan;

-- And the movement of 2 million ports in Western Europe to unbundled loops, which gave a temporary boost in shipments as incumbents retired the replaced equipment.

North American shipments declined for the third quarter in a row and will continue to decline due to the slowdown in AT&T's buildout, Verizon's shift to Fiber-to-the-Home and the absence of alternative service providers, according to Dittberner.

Alcatel-Lucent, the market leading vendor, saw its share drop from 36 percent in the fourth quarter of 2006 to 29 percent in the first quarter of 2007. And for the first time ever, the combined shipments of the second and third place vendors -- Huawei and ZTE -- exceeded Alcatel-Lucent's, Dittberner found.

Huawei, ZTE and Siemens all reported record shipments, the firm said. The top three suppliers all reported strong shipments into China and to Western Europe's alternative service providers; the only vendor to record growth in North America was Adtran, the firm found.

Dittberner expects the growth of DSL on unbundled loops to continue at the expense of Western Europe's incumbents' wholesale DSL business. This should result in Huawei and ZTE increasing market share, the firm says.

The growth in IP DSLAMs accelerated during the quarter and now comprises 72 percent of all DSLAMs shipped, the firm says. Huawei remained the leader with 28 percent of the market share. Alcatel-Lucent, ZTE, Siemens and ZyXel round out the top 5 suppliers.

The number of IP DSLAMs shipped grew by 16 percent in the first quarter, while the number of ATM DSLAMs declined 13 percent. IP DSLAMs shipped have become the major driver in the growth of the edge router and Carrier Ethernet markets, Dittberner notes.

One main driver of IP DSLAM growth, VDSL and VDSL2, grew to 2 million ports shipped, according to the firm. ZyXel remained the market leader in this segment with a 40 percent share, Dittberner found.

Regional growth varied in the quarter. Even with the strong subscriber growth in China and the alternative service provider buildouts of Western Europe, Asia-Pacific and Europe/Middle East/Africa grew at or slightly less than the global market, Dittberner found. Shipments to Central and Latin America were up 45 percent to 2.3 million ports, almost as much as North America.

Market consolidation continues and will likely speed up if DSL subscriber growth slows, as the firm expects.