Cable Modem Revenue to Grow

During the next five years, cable modem service will dramatically expand to meet the demand of residential high-speed access to the Internet in most countries, according to a report by The Strategis Group.

The report, “World Cable & Satellite Markets,” forecasts $17 billion global cumulative cable modem service revenues for 1998-2003, and 20 million cable modem users in 2003. The exponential growth of high-speed Internet access has important implications for Internet commerce, advertising, and content because high-speed access allows for larger files to be downloaded faster.

According to an earlier Strategis report, 90 percent of high-speed residential Internet access in the US comes courtesy of cable modems. A report by Pioneer Consulting also predicted 20 million cable-modem users by 2003. Pioneer also predicts $2 billion in total service revenue in 2000, and $16.4 billion in 2007.

“High-speed Internet access is the best new revenue opportunity for cable operators,” said Strategis consultant Neil Rochlani. “Countries that have taken the lead in deployment are beginning to experience rapid subscriber growth. Over the next five years, cable high-speed Internet access will account for half or more of new revenues in aggressive markets.”

In some countries, Strategis reports, cable modem revenue is catching up to cable television revenue. Cumulative cable modem service revenue will nearly equal or exceed new cable television revenue in Germany, The Netherlands, and Poland, among other countries, in the next five years. In the US and Canada, five-year cumulative cable modem service revenue will equal 40-50 percent of cable television revenue.

Computer Economics has predicted that there will be 24.3 million cable modem units installed in 2004, up from 2.5 million in 1999. It also forecasts that the average monthly service fee will fall to $24 per month, and the price of a cable modem will fall to $50 per unit in 2004 from $215 in 1999.

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