Broadband Technology Boom Predicted

Broadband Internet technologies such as cable, ADSL, and DSL will skyrocket in the next few years according to research by Forrester. Currently, Forrester estimates that consumer broadband usage penetrates only 310,000 US households (that’s 1.3 percent of online households).

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By the year 2002, Forrester expects 15.6 million households in the US (30 percent of the expected online population) will log onto the Internet via broadband technologies. Broadband enables high-speed, continuous access to the Internet, and the current users of the technology are wealthy, Net-savvy individuals who are likely to participate in e-commerce.

The broadband market is currently a story of haves and have-nots. Broadband is expensive, but as with most technologies, as it improves the price should fall, making it more attractive to those who cannot afford the current prices (see table). The supply of broadband technologies is currently concentrated in affluent markets. The median salary of broadband users is $56,300, whereas the average salary of dial-up users is $34,200, Forrester reports.

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Forrester predicts that as high-speed Internet access reaches the lower-income communities, its benefits of continuous access and speeds of up to 25 times faster than traditional connections will win over dial-up users.

This migration to broadband does not mean the future of dial-up services such as America Online looks dim. Forrester predicts that dial-up services will continue to attract Web neophytes. But as they gain experience with the Internet, Forrester says users will switch to broadband technologies as speed and functionality take precedence over hand-holding.

Profile of the High-Speed User

As mentioned earlier, broadband users are a very technology-savvy group. Forrester finds they are 19 percent more likely than dial-up users to have multiple phone lines; 16 percent more likely to have a cell phone; and 10 percent more likely to have a pager. They also access the Net more often than dial-up customers, 19.2 days/month versus 16.8 for dialers.

In the ever-important online shopping arena, Forrester estimates that 25 percent of all broadband users have made a purchase online, compared to 19 percent of dial-up customers. High-speed users are 10 percent more likely to perform pre-purchase activities such as research than their dial-up counterparts.

Broadband users are more likely to trust Internet security. Cable modem users are 7 percent more likely than dial-up users to give out their credit card information online. Given their love for technology, Forrester reports that software is the No. 1 online purchase for broadband users. Because they have money, they are more likely to bank, track portfolios, and trade stocks and mutual funds over the Net, according to Forrester.

Broadband technology, recognized as the future of Internet access, has been a popular subject of research lately. A study by The Stratgeis Group has predicted the emergence of DSL as a price-competitive market by the year 2002. In a study of nine leading high-speed Internet access technologies, Datacomm found that cable will defeat DSL because cable operators across the country are feverishly upgrading their infrastructure. Forrester, for its part, predicts that by the end of 2002, 80 percent of the high-speed subscribers in the US will use cable modems, and the remaining 20 percent will use ADSL.

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