US broadband market reaches critical mass, say analysts

April 9, 2004 Scottsdale, AZ -- With close to 27 million US business and residential subscribers at the end of 2003, broadband is now clearly a mainstream service, contends a new report from high-tech market research firm In-Stat/MDR. The mainstreaming of broadband will be huge, as the existence of a significant subscriber base opens up markets for other services that are looking to take advantage of the broadband connection, say analysts.

Apr 9th, 2004

April 9, 2004 Scottsdale, AZ -- With close to 27 million US business and residential subscribers at the end of 2003, broadband is now clearly a mainstream service, contends a new report from high-tech market research firm In-Stat/MDR. The mainstreaming of broadband will be huge, as the existence of a significant subscriber base opens up markets for other services that are looking to take advantage of the broadband connection, such as home entertainment/networking, Voice over IP (VoIP) and online gaming, say analysts.

"This starts a cycle where growth in both broadband and applications feed the growth of each other," explains Daryl Schoolar, senior analyst with In-Stat/MDR. "This applies equally to the business subscriber. Broadband growth should also improve service provider operations as well."

The one major challenge that faces the future provisioning of broadband may come from a less tech-savvy subscriber. "As broadband moves into mass adoption, newer subscribers will be less experienced with computers and the Internet," admits Schoolar. "They will expect all of the benefits of the Internet but will have less patience for dealing with its technical issues. When their service goes down they are going to be less likely than early adopters to perform self-diagnosis and more likely to just pick up the phone and call customer service." While their lower level of technical knowledge will make communicating with these subscribers more difficult, Schoolar believes the opportunities will outweigh the challenges.

The report also finds that:
• At the end of 2003, one in every five US household subscribed to a broadband service.
• In the US, cable modem continues to be the most common broadband access technology, with DSL remaining second.
• After years of discussion, Broadband over Power Line is finally moving out of the lab and into actual homes.
• Fiber-to-the-Home (FTTH) continues to be hindered by cost and regulatory concerns.
• Fixed Wireless Broadband (FWB) is now the third most common broadband access technology in the US.
• While cable modem may be the broadband technology of choice in the US, DSL dominates worldwide due to lack of cable data service and greater housing density outside of the US.
• At the end of 2003, Comcast and Time Warner accounted for the majority of all cable modem subscribers. Overall, six cable operators had 91% of the US cable modem market at end-of-year 2003.
• SBC and Verizon accounted the majority of US DSL subscribers at the end of 2003. Overall, five providers accounted for 94% of the US DSL market.

For more information about the report, "Reaching Critical Mass: The US Broadband Market," visit www.instat.com.

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