Broadband's Reach Gets Broader

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The gap between broadband and narrowband is closing, as Internet users disband dial-up for high-speed. Strategy Analytics found that global sales of broadband modems in 2002 increased by 52 percent to 26.3 million units, and the firm further predicts annual sales of 60 million units a year by 2008, representing an average growth rate of 15 percent.

Strategy Analytics estimates that 27 percent of all U.S. Internet homes presently use broadband connections, with expectations of more than 70 percent by 2008 — that’s approximately 64 million subscribers or 59 percent of all U.S. homes.

The number of U.S. households using cable modems, DSL, or other broadband technologies to connect to the Internet will increase by more than 40 percent during 2003, when the projected installed base of residential broadband subscribers in the U.S. will grow from 17.9 million homes to 25.3 million homes by the end of 2003.

“Cable and DSL providers now deliver broadband service to over 17 million subscribers in the United States, and these customers are generally very satisfied,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “While narrowband subscribers will remain the majority of online users for the next few years, narrowband ISPs are faced with the challenge of retaining subscribers who might want to upgrade to broadband, or downgrade to lower cost narrowband alternatives.”

U.S. Broadband Households, 2001-2007
Year	Penetration	Households (millions)
2001	17%	10.4
2002	23%	15.7
2003	30%	21.4
2004	35%	26.7
2005	39%	32.0
2006	43%	36.8
2007	46%	40.7
Note: Penetration means percentage of US online households with broadband as opposed to percentage of total US households with broadband.
Source: Jupiter Research (a unit of this site’s corporate parent)

“Despite the slow economy, consumer demand for broadband was remarkably strong in 2002, when the U.S. market grew by more than six million subscribers,” noted James Penhune, a director of the Strategy Analytics Global Broadband Practice. “Over the next five years, high-speed access will become the norm for residential Internet users as broadband becomes more widely available, more flexibly priced and a more powerful vehicle for new kinds of entertainment, content and services.”

European households are making the conversion too, as Strategy Analytics predicts that 38 percent of European homes will have broadband Internet services by 2008. With a whopping 6.3 million customers signing up for broadband during 2002 — an increase of 55 percent over 2001 — Strategy Analytics estimates that 7.5 percent of all European households now subscribe to a broadband Internet service. Another 7.2 million European homes are expected to subscribe to broadband during 2003, bringing the total to 19.1 million, or 11.9 percent of total households.

“Our analysis shows that broadband has been most successful in countries such as Belgium, Denmark and the Netherlands, where there is strong competition between cable and telco operators,” says Nick Griffiths, director, Strategy Analytics Global Broadband Practice. “Governments and regulators must adopt policies to encourage multiple operators and service providers to compete for new subscribers, otherwise broadband will remain the preserve of the affluent, urban minority.”

Globally, Strategy Analytics reports that DSL took an increased share of the market in 2002 — 62 percent of the broadband modems sold in 2002 were DSL, up from 57 percent in 2001. Another 33 percent were cable, with fiber, fixed wireless and other technologies accounting for the remainder. In Europe, ADSL increased its share of new customer acquisitions from 72.3 percent in 2001 to 76.1 percent in 2002, while cable’s share fell from 26.0 to 22.6 percent.

While DSL is expected to dominate the global market over the next five years, cable modem is the broadband service of choice in the U.S. Strategy Analytics forecasts that 16.1 million homes will use cable modems by the end of 2003, while approximately 7.9 million homes will use DSL connections, and another 1.3 million homes will get broadband through other, less established, technologies such as fixed-wireless services, two-way satellite links and fiber to the home.