Consumers Face Choices for Broadband Access

The demand for high-speed broadband access connections outpaced supply of enabling devices during the first quarter of 2000, as worldwide shipments of broadband cable modems exceeded 1.47 million units, according to Dataquest Inc., a unit of Gartner Group, Inc.

Dataquest analysts said the first quarter of 2000 registered extraordinarily strong shipments of cable modems, as the worldwide market for demand for broadband access continued unabated into the new year. Cable equipment based on the DOCSIS standard accounted for 61 percent of worldwide cable modem shipments in the quarter. Forty percent of shipments were proprietary, while Digital Video Broadcasting/Digital Audio-Visual Council (DVB/DAVIC) cable modems continued to remain mostly in the trial stage representing 0.2 percent of all shipments.

“Broadband service providers installed high-speed modems as fast as they could take delivery, and there was literally no stock of inventory to be had during the period,” said Patti Reali, senior analyst for Dataquest’s e-Remote Access Worldwide program. “The first quarter was especially strong for cable modem vendors supplying units into North America and Asia. While demand is strong, cable modem vendors have been hit by component shortages, particularly for radio frequency (RF) tuner subcomponents, which could take as much as 60 days to be sorted out.”

Consumers looking to DSL, in particular providers offering free DSL, for their broadband answer may find that the promise of free broadband access is easier to make than deliver. According to a report by Cahners In-Stat Group, free DSL has proven to be less glamorous than once heralded. While the service itself will be free, consumers will still have to purchase DSL modems. Additionally, subscribers will still be subject to a constant barrage of advertisements and bandwidth-hogging streaming messages that could slow down network performance. Free DSL will also be provided at the slower ADSL speeds, with providers looking to upsell end-users to higher speeds. According to In-Stat, free DSL providers are still in the early testing phase, and have not yet been deployed in any market.

At present, it costs, $150 to $200 per year plus initial installation costs to support a single DSL user, a cost that cannot be supported solely by advertising revenues, according to In-Stat’s research.

“Current obstacles make free DSL an uncertain proposition over the long haul,” said Mike Lowe, Senior Analyst for In-Stat’s Advanced Carriers Service. “At the very least, it will require a home run on the part of providers to make free DSL a reality. Nevertheless, if providers meet the challenges, free DSL providers will have a real impact on the rapidly growing DSL and broadband markets.”

According to In-Stat, the DSL market will experience exponential growth, amounting to approximately 5.4 million ADSL and 3.1 million SDSL subscribers by 2003, a 77 percent growth year-over-year.