Broadband Market Still Poised for Growth

Despite talk of a slowdown in broadband adoption in 2005, high-speed Internet access reaches 60 percent of U.S. households. According to “Broadband Access and Services in the Home 2006,” a report released by Leichtman Research Group, the market can expect continued growth.

Forty percent of current narrowband, or dial-up, subscribers say they want to upgrade to a broadband account. Barriers to adoption, such as cost and availability in rural areas, no longer keep narrowband users from upgrading to high-speed.

“The number of broadband subscribers in America will nearly double [in the next five years], so there’s a huge opportunity,” said Bruce Leichtman, president and principal analyst for the Leichtman Research Group. “With lower entry prices, particularly with DSL, the migration from dial-up is much quicker than many expected.”

Cable holds a lead in the number of subscribers. An earlier report released by Leichtman said cable operators supplied 25.8 million broadband subscribers, and DSL serviced 20.2 million out of 46 million high-speed Internet subscriber accounts. The 46 million subscribers account for 94 percent of the market.

Cable subscribers tend to be in households with higher incomes, according to the report. Thirty-seven percent of households with annual incomes over $75,000 subscribe to cable versus 27 percent of DSL subscribers. Of households earning $30,000 to $75,000, 21 percent subscribe to DSL, and 18 percent to cable.

“Income is the greatest predictor of broadband penetration, and cable does very well among the high-income groups,” said Leichtman. “Where DSL has performed very well in the past year is in the middle class where they have taken a market share lead over cable.”

Data are based on a telephone survey of 1,600 randomly selected households from throughout the U.S. Additional data are derived from provider-side research.