Six Million Consumers Go Broadband in 2000

Six million US customers will sign up for high-speed Internet access in the year 2000 and that number is expected to grow to more than 28 million subscribers by 2004, according to Gartner Group’s Dataquest Inc.

Cable modems will be the dominant technology through 2004, Dataquest found, with the number of cable modem subscribers in the US projected to grow from more than 3.3 million subscribers in 2000 to 14 million in 2004. The winning residential broadband strategy over the next year will capture the customers with high-speed access and then layer additional “sticky” service features/applications. The long-term demand for broadband will be significantly affected by the deployment of content-driven applications.

“Content that is compelling, entertaining, and relevant to the wants and needs of each customer segment and easy to use will be the pull necessary for households to desire and pay for the ‘always-on’, high-speed broadband connection,” said Patti Reali, senior analyst for Gartner Dataquest’s e-Remote Access Worldwide Program. “The value of broadband will not be in the access itself, which will be commoditized over time, but in the delivery of multimedia, voice and other useful and time-saving applications and services that these connections enable.”

DSL growth is expected to increase as carriers expand their service in major metropolitan areas. In the US, DSL growth is expected to grow from 1.4 million subscribers this year, to 9.8 million in 2004.

“One of the key factors to DSL growth and success will be the ability to provide compelling, easy-to-use, turnkey product bundles customized for each level of delivered bandwidth and requirements of the target market,” said Charles Carr, senior analyst for Gartner Dataquest’s e-ISP Strategies Worldwide program. “A major technology leap driving the uptake in DSL in 2000 is the widespread introduction of ‘splitterless’ technology allowing most end users to self-install, configure and provision.”

The broadband applications with the most potential in the residential community will be nonpay TV-based video applications such as streaming video and audio services. According to Dataquest, service providers must expand the capabilities of their networks to support video and multimedia applications if they intend to effectively differentiate their service portfolio and compete with cable modem services over the next three years.

Cahners In-Stat predicts that the number of consumer cable modem and DSL access subscribers will grow 77 percent between 1999 and 2004. Subscriber revenues from these two services will also grow from just over $1 billion in 1999 to $13.3 billion by 2004.

“The biggest broadband consumer application is home networking, with 33 percent of broadband users using that function,” said Daryl Schoolar, industry analyst for In-Stat’s ISP service. “Streaming media has not yet emerged as a major broadband application. That’s due to the high cost of delivering content per user — only 5 percent of US households currently access broadband — and technical hurdles such as the time to download large media files, quality of picture and small size of the picture on the monitor.”

Other findings from In-Stat’s research include:

  • 65 percent of broadband consumers are between the ages of 25 and 44 and have a four-year degree or post-graduate education
  • Nearly 40 percent of broadband consumers are single
  • More than 50 percent of broadband have a yearly household income of $50,000 or more.

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