Business Installations Will Lead DSL Providers

Businesses represent only 16 percent of the installed worldwide DSL subscriber market, but business DSL services will account for 58 percent of total worldwide DSL revenue, according to a study by Cahners In-Stat.

This disparity in numbers shows that even though residential installations continue to dominate the worldwide DSL market, the business DSL market, fueled largely by the increased use of sophisticated Internet business solutions in the enterprise, will provide a substantial market for service providers.

“The rapid expansion of DSL deployments during the past two years has confirmed that DSL is a mass-market technology with substantial investment supporting it,” said Ernie Bergstrom, a senior analyst with In-Stat. “The the business market will start to take advantage of it, replacing existing T-1, and ISDN backbone networks with a high-speed DSL solution.”

According to In-Stat’s report, “Business DSL Worldwide Market: The Buck Starts Here“, total worldwide DSL installed subscribers will generate in excess of $36 billion of revenue by 2005 with $21 billion coming from business DSL subscribers. The installed base of business DSL subscribers worldwide is expected to exceed 1.8 million by the end of 2001, and reach 8.5 million by the end of 2005.

In-Stat also predicts that ADSL [definition] will be the dominant DSL technology through 2005; however, the use of VDSL [definition] will increase to more than one-fourth of total revenue through this forecast period as it is increasingly used to support the expanding DSL business market.

A survey by the Yankee Group and SBC Communications Inc., which is a DSL provider, found that three in four small businesses feel high-speed Internet service has improved business productivity and nearly two in three said it has made them more competitive.

“After upgrading to broadband, small businesses quickly recognize the return on investment from high-speed DSL Internet service across all business areas. As they begin to take advantage of new applications, the value of their high-speed service continues to increase,” said Mike Lauricella, program manager of the Yankee Group’s Small and Medium Business Communications Research and Consulting practice.

Businesses are becoming more sophisticated in their Internet usage because of their broadband connection, the study found. They are now using the Internet for online scheduling/calendaring with employees and partners, real-time collaborative document editing, distance learning, online customer support and online marketing campaigns. Eighty-nine percent are sending/receiving email with large attachments; 87 percent are conducting research and reading news online; and 74 percent are purchasing goods and services over the Internet.

Almost all of the businesses (92 percent) in the Yankee Group/SBC survey adopted a DSL Internet connection to receive higher connection speeds, followed by greater service reliability than other broadband technologies (60 percent) and an instantly available Internet connection (57 percent). Sixty-five percent like being able to use the Internet and the phone simultaneously; 63 percent like the greater capacity to upload files; 59 percent view DSL Internet as the most convenient technology to adopt; and 52 percent like the ability to use applications requiring greater bandwidth.

The Yankee Group predicts that the number of DSL Internet subscribers will reach 4.5 million by the end of 2001 and will grow more than 50 percent to 6.8 million subscribers by the end of 2002. The “killer application” for DSL will continue to be sending emails with large attachments. The Yankee Group also predicts that online procurement and customer service applications, such as customized intranets for customers and CRM tools, will be the next set of applications to see widespread market adoption.

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