DSL growth(29.7% sequential Q2 from Q1 ) outpaced cable modem:
dailynews.yahoo.com
As Cable Modem Growth Rate Slows, Can
Others Capitalize?
By Daniel F. DeLong, www.NewsFactor.com
Internet users are hooking up to the Web through cable television modems
at a healthy pace, but the rate of growth trails that of telephone and
satellite
companies, according to a study released Monday by the National Cable
and Telecommunications Association (NCTA).
Nearly 1 million new cable modem subscribers
were signed up in the second quarter, which
brings the total to 8.5 percent of the 65 million
potential customers, the NCTA said.
The 920,000 new users represented an increase of about 20
percent from the
first quarter. However, the growth rate was less than that
of broadband
telephone digital subscriber line (DSL) hookups, which rose
29.7 percent, or
still-nascent satellite providers, which jumped 52 percent.
Broadband Still Tiny
High-speed Internet access still represents about 15
percent of the Internet's
70.7 million total users. Cable modem (news - web sites) users now total 5.5
million, the NCTA said.
Earlier this year, chairman Bill Gates (news - web sites) of Microsoft (Nasdaq:
MSFT - news) called
broadband access the weakest link of the Internet. Gates said development of a
number of Internet
companies and improved technology is being held back because the vast majority
of consumers still use a
dial-up service.
Dial-up dominance is keeping customers away from all of the rich online
programming that is being
produced, Gates said. It also shuts the door on much-needed advertisers that
want something beyond a
banner ad.
The biggest issue facing broadband providers is cost, analyst Jeffrey
Wlodarczak of CIBC World Markets
told NewsFactor Network.
Cable Least Expensive
Access through a cable television system is the least expensive way consumers
can get broadband service.
The upfront cost is usually about US$50 -- using discounts that are frequently
offered and extended -- and
the service costs about the same every month.
Wlodarczak said cable modem users have found fewer problems getting online than
other broadband
customers, since the service is operated over the same lines as the television
set.
Overcoming Perceptions
Issues including installation problems, shaky corporate finances, lawsuits and
the demise of several
companies have held back DSL growth.
At the same time, despite perceptions of problem-plagued service, DSL continues
to draw plenty of new
subscribers.
Verizon Communications (NYSE: VZ - news), the nation's largest local phone
company, says it has 840,000
DSL Web customers, while the No. 2 firm, SBC Communications (NYSE: SBC - news),
has slightly more
than 1 million.
Satellite Holds Promise
Perhaps the most promising competitor to cable modems is satellite-delivered
broadband, which is still in its
infancy.
Up-front costs are holding back growth, according to industry analysts.
Typically, a new customer pays
about $600 after rebates for equipment, and then about $70 a month for service
-- about 30 percent to 50
percent higher than either cable modems or DSL service.
Wlodarczak said the cost difference will narrow as the price of equipment drops
and satellite providers
transmit more efficiently.
Bundling TV, Internet
Michael Goodman, an analyst with research firm Yankee Group, told NewsFactor
that the key to growth
for satellite providers is to bundle Internet access with television service to
cut costs.
He said there are about 16 million households that already subscribe to TV
services, and a high number of
them also use the Internet.
Other analysts think the number of customers converting to high-speed access
will continue to increase as
dial-up providers, such as AOL, raise their rates.
If broadband providers keep rates in check, a number of users are liable to
migrate to their services,
analysts say. |
