5 August 2003 Laurel, MD Lightwave--The demand for residential broadband continues to surge despite a still struggling economy. 2002 was a watershed year for high-speed Internet connections in the U.S., and all signs are pointing to another record year in 2003. In its latest report, The High-Speed Data Outlook: Market Forecasts 2003-2007, The Confluence Research Group points out that all forms of broadband connectivity - cable modems, DSL, fixed wireless/satellite, and direct fiber - are expected to show continued strong gains in the numbers of subscribers through 2007 and beyond.
"Industry observers predicted that bandwidth would be a strong lure for consumers, but the adoption rates of cable modem and DSL services rank among the quickest in the history of technological innovation," said Jason Marcheck, principal analyst of The Confluence Research Group, "And to do so during very tough economic times, is impressive."
According to the report, despite the fact that residential broadband is a confirmed success, key questions about the market remain. Questions foremost on the list of uncertainties include: How successful have incumbent local-exchange carriers been in capturing market share dominated by cable companies? How will fiber-to-the-X impact cable modem and DSL services? Is a price war between regional Bell operating companies and large multiple system operators on the horizon?
"Although a market in its early adopter phase is exciting to watch, the way companies adapt to the changing conditions in a maturing market is often more crucial than gaining that 'first mover advantage'," Marcheck pointed out. "Companies are well aware that this is no time to put their residential broadband offerings on auto pilot."
Recent announcements offering tiered pricing structures designed to make broadband service more enticing to a larger segment of the population might be the catalyst that starts another broadband price war, such as occurred in early to mid 2000. As cable modem, DSL and other services become more ubiquitous, consumers will become increasingly less dependent on any single provider for a broadband connection. The report points out that this increase in choice might make pricing strategies more important than ever.
"As of now, cable companies are denying any concerns over the possible threat that tiered DSL service offerings pose," stated Marcheck, "but it is my sense that as consumers are presented with viable alternatives, consisting of multiple service levels, at prices that more closely match their budgets, the cable companies might not be able to get away with a one size fits all approach."
The High-Speed Data Outlook: Market Forecasts 2002-07 was released on August 1, 2003 and contains forecasts and analysis based on the latest information available as of mid-year 2003.