Quest for Broadband Usually Ends at Cable

The decline in the telecom industry has not influenced the demand for broadband Internet access, and it hasn’t changed the fact that cable leads the broadband market over DSL and up-and-coming satellite access.

According to a report by the Yankee Group, cable will continue to dominate the U.S. residential broadband market over the next four years. This is because cable operators are uniquely placed to drive broadband penetration. Cable has greater availability, lower prices and quicker provisioning.

But that doesn’t mean cable has a monopoly on the residential broadband market. Competing technologies, such as satellite and fixed wireless, will slowly gain market share. By year-end 2005, approximately 15.7 million households in the United States will subscribe to cable modem service. In comparison, DSL will grow to 10.5 million households; satellite, 4.5 million households; and multichannel multipoint distribution system (MMDS)-based and other fixed wireless access, approximately 359,000 households.

The Yankee Group report highlights several that should have an impact on the growth of high-speed access, such as the widespread availability of broadband cable to U.S. homes, continued slow DSL provisioning times, tiered pricing and bundled content packages, in addition to bundled voice, video and data packages offered by satellite and other providers. The report points out that as service and price packages are standardized across multiple platforms, the type of broadband access will become secondary to the value-added services and content that the provider offers its customers.

Broadband Access in 2005
U.S., Year-End 2005
Technology Subscribers
Cable 15.7 million
DSL 10.5 million
Satellite 4.5 million
Fixed wireless 359,000
Source: Yankee Group

Despite dramatically reduced investment in data competitive local exchange carriers (DLECs), and the overall decline in the telecom market, the Yankee Group’s 2001 DSL Subscriber Forecast found that DSL deployment continues to forge ahead. The cost of equipment and new operational efficiencies have created a much more cost-effective business model in the DSL space than was present 12 months ago.

Satellite broadband access has shown sufficient growth to be included along with “mainstream” technologies like DSL and cable. According to research by Frost & Sullivan, the total worldwide satellite market reached $300 million in 2000 and is expected to reach $1.6 billion in 2007.

Although broadband satellite technologies offer advantages over many land-based network solutions, they still face competition from emerging solutions — especially wireless.

“Broadband wireless has penetrated the marketplace,” said Frost & Sullivan industry analyst Jose del Rosario. “With the lower costs associated with deploying a broadband wireless network, this technology poses a serious threat to the satellite platform.”

As competition intensifies among satellite providers, market participants must tap new markets to stay alive, according to del Rosario. The presence of large rural populations in the globe offers important opportunities for broadband satellite providers if companies can overcome challenges inherent to those markets.

Related reading