It may also be down to processing power, or lack of. Splitting the load between a modem and a router is perhaps done for performance, i.e. to increase throughput.
Tasks like packet inspection for firewalling and network address translation (re-writing packet headers) are costly in terms of clock cycles. The CPU in the VDSL2 modem is already handling the demodulation/modulation of an up-to 30MHz signal.
Once the symbols have been recovered from the QAM-modulated subcarriers by the DSP engine, they've got to be re-assembled into a bitstream. Then that bitstream has to be (re-)encapsulated into ethernet frames. Only then can it be wired out over a LAN port to the PCs in the consumer premises. By design, that is done in the most efficient way possible - in the raw, with no TCP layering.
At a guess, all that processing is already pushing the performance limits of a 400MIPS CPU (the Broadcom 6368). Expecting the CPU to also perform routing and firewalling etcetera is possibly expecting too much from such a humble beast. The MIPS32 cores in the Broadcom SoCs date to the mid-1980s, when they were used in 'top-of-the-range' Unix desktop machines. For the same purpose, the MIPS32 is basically obsolete nowadays.
Today, AT&T (a much better funded telco than BT) supplies a VDSL2 modem-router which is driven by a 400MHz dual core five issue slot Trimedia TM3260 CPU. The TriMedia is a dedicated media processor. The VDSL2 CPE supplied by AT&T is the 2Wire 3801HGV. Arguably, it is about the best VDSL2 modem router for CPE that money can buy. The big selling point of the TriMedia is its instruction level parallelism (ILM). A dual core five issue slot VLIW CPU, like the TriMedia can simultaneously execute ten primitive operations every clock cycle. And many of those operations were explicitly designed for digital signal processing needs.
With 10 ops per clock cycle (ignoring costly branches and jumps) this means that in theory, the effective processing power of the TriMedia, compared to a single pipelined CPU like the MIPS32 in the Huawei or the ECI, is boosted by a factor of ten. (In practice, however, it's very difficult to actually exploit all that parallelism to the full).
For argument's sake though.. if a MIPS32 processor, like the CPU found in the Huawei HG612, can perform one operation every clock tick, then it can crunch 400 million instructions per second (400MIPS).
By contrast, the dual-core Trimedia used in the AT&T VDSL2 modem-router, can crunch ten times that (4GIPS). That's comparable on raw processing power to a single core Intel Atom. Still pants, by desktop standards, but nevertheless ten times better than the Huawe or the ECI.
Yet AT&T's end-users are still complaining that when their modem-routers are placed under a moderate load, e.g. when routing the traffic for seven separate PCs over that single VDSL line, the 2Wire is still grinding to a halt!
IMVHO, the Martlesham egg-heads have probably done the right thing by splitting the load between a router and a modem. The Huawei will cost less than £10 in volume, perhaps as little as £5. AT&T's modem-router probably costs over £50. To install CPE that will be future-proofed for VDSL2 Profile 30 (and above) could easily cost over £100 per premises.
cheers, a