Cable Remains Broadband of Choice in U.S.

Three-quarters of U.S. households will have the ability to receive high-speed Internet access by the end of 2001, up from the 60 percent that were able to get broadband at the end of 2000, according to the Yankee Group.

Cable modem service will continue to be more broadly available, reaching 66 percent of U.S. homes by year-end 2001, compared to 45 percent of U.S. homes with DSL available.

“Building out the network to make broadband available is only half the battle,” said Michael Goodman, a senior analyst with the Yankee Group’s Media & Entertainment Strategies research and consulting practice. “Success will increasingly be driven by the network operators’ ability to lower the cost of hooking up individual households for broadband service.”

Cable operators now spend an average of $360 installing equipment to support a new broadband subscriber, but that cost can drop significantly as cable companies encourage more new users to self-install cable modems purchased from retail outlets. Some cable operators, such as Comcast now sees more than one-third of their new broadband customers installing their own cable modems. Other factors, such as the cross-training of cable service technicians to install video or broadband services, will also make installation efforts more efficient.

Cable modem access will remain the broadband access technology with the most subscribers in the United States until late 2004, according to a report by Cahners In-Stat Group. As for the other popular broadband technology among U.S. households, In-Stat expects the market for DSL residential service will bottom out in late 2001, but will be positioned for considerable growth in the next five years.

The U.S. DSL residential installed base of broadband subscribers will reach 3.6 million by the end of 2001, and exceed 13.5 million by the end of 2005. DSL services in the United States will produce in excess of $7 billion in revenue by 2005.

“Even though the residential DSL market slowed significantly after the first quarter of 2000, residential DSL broadband access services are becoming increasingly available in the home as providers are able to extend their services to the edge of the network,” said Ernie Bergstrom, a senior analyst with In-Stat. “Price drops will have to take place soon to foster customers as cable and DSL access begin to experience more pricing parity leaving value added offerings, as the only differentiator between the big two residential broadband access services. DSL price wars have already started in Asia and are certain to reach our shores in the near future, forcing DSL and cable service providers to rethink their marketing strategy.”

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