Broadband Consumers Set to Hit 35 Million by 2005

The installed base of broadband-enabled consumers will reach 35 million by 2005, as availability soars and prices for basic access fall, according to a report by Forward Concepts, which found cable modems should garner nearly 60 percent of the consumer subscriber market, while DSL will dominate the small office-home office (SOHO) and enterprise segments.

The report “Broadband in the Local Loop ’00” concludes that despite technical, regulatory, and customer uncertainties, the cable modem and DSL communities will continue to roll out services and that customers of all types are increasingly aware of the availability of broadband local access and are willing to pay more for these always-on services.

It also found that penetration into the 7 million companies with fewer than 20 employees could reach 40 to 50 percent, and into the 1 million companies with 20 to 100 employees could reach 75 percent.

“Internet access will remain an overriding concern, but vendors and service providers must look beyond raw bandwidth and pipelines to view DSL and cable modems as enabling technology for enhanced services,” said Andrew Davis, the report’s author. “These services–including packet voice, e-commerce, distributed education and training, entertainment, virtual private networks for remote LAN access, PBX extensions, gaming, and videconferencing–will provide the real revenue opportunities and drive customer retention.”

The study also details how the value-added services will play an increasingly important role for all broadband service providers (and their customers) and will begin to blur the distinctions between a network service provider, an ISP, and an ASP.

The two largest consumer applications for broadband services are Internet access and education/training, which are forecast to grow over the five-year forecast time frame to $6.2 billion and $2.1 billion, respectively. The major SOHO applications will be Internet access and packet voice, with expected market sizes of $4.6 billion and $1.3 billion respectively.

In the enterprise market, the two largest applications are forecast to be virtual private networks (VPNs) and general Internet access at $5.1 billion and $1.7 billion, respectively. The overall compound growth rate for packet voice services is expected to top 250 percent.