American Internet Users Ready for High-Speed Access

Twenty-three million American Internet users are interested in buying high-speed Internet access to their home for $40 per month, and more than 12 million are ready to purchase now, according to a report by The Strategis Group.

At the end of 1999, nearly 1.9 million households subscribed to high-speed access via cable modem, digital subscriber line (DSL), direct broadcast satellite or wireless broadband, according to the report “Residential High-Speed Internet: Cable Modems, DSL, and Wireless Broadband.” That represents a 185 percent increase over 1998 totals, higher growth than household Internet adoption in general.

“Demand for high-speed residential access is building like water behind a dam,” said John Zahurancik, VP of Broadband Research at The Strategis Group. “As operator deployment and provisioning creates an avenue for user adoption, we will see a rush of growth in home high-speed usage.”

The Strategis Group forecasts more than 25 million high-speed households by 2004, which will drive service revenues from residential high-speed Internet connections from $580 million to $7.67 billion in the next five years.

Thanks to their “first-to-market” position, cable modems have the early lead among the technologies, and will remain the leading technology through 2004, when they will serve 46 percent of customers in 2004. However, DSL made strong strides in 1999 and will account for 40 percent of the residential market in five years.

Fixed wireless broadband is beginning to become more active in the residential marketplace and will be in a building phase over the next few years as commercial service expands. Recent acquisitions of multi-channel multi-point Distribution Service (MMDS) operators by MCI WorldCom and Sprint, as well as AT&T’s recent announcements with regard to fixed wireless, will jump-start this portion of the industry.

While availability is currently the key constraint on the growth of high-speed services, market education will also prove to be a challenge, the report found. Seventy-five percent of users do not know if anyone in their area provides high-speed access services. Two-thirds say they know little or nothing about DSL. As carriers deploy, they must cross the hurdle of getting the word to potential customers and branding the service positively in anticipation of future market competition.