Multimedia Will Spur Broadband Growth

The increase in the number of Web sites featuring multimedia offerings and interactive graphics will push consumers to sign up for broadband access services, according to a report by Communications Industry Researchers, Inc. (CIR)

The report “Beyond T1/E1 1999-2000, North American Residential Broadband Access Market Opportunities” claims that households that have signed up for Internet access at speeds near or above 1.5 Mbps will grow from its current total of approximately 1.6 million to 31.7 million by 2003. According to the report, multimedia is expected to spur this growth because where the average file transfer from the Web was about 4 KB just a few years ago, it is now 15 times that amount, rendering traditional dial-up service increasingly inadequate.

CIR’s report predicts that xDSL will finally start to come into its own by the year 2000, after years of unrealistically optimistic plans for the technology. The report credits the new G.Lite standards, which are backed by such companies such as Intel, Microsoft, Compaq, Cisco, Ericsson, Lucent, Nortel, and Siemens, with potentially providing an entry-level version of xDSL, while emerging VDSL technology provides a migration strategy to the very high speeds that will be required by consumers in the not-too-distant future.

The entire market for xDSL products and services will be worth approximately $10.4 billion by 2003, compared with $252 million in 1999, the report found.

The report also found that the standardization of cable modems, led by CableLabs, should help make cable modems a familiar domestic appliance within a few years. As a result, CIR projects that the market for cable modem products and services will be worth approximately $8.6 billion by 2003, compared with $860 million in 1999, with most of the cable modems offering two-way service.

Cable modems and xDSL to account for the bulk of broadband residential access in the near future, the report found. However, CIR sees some hope for broadband access via satellite and wireless infrastructures.

Two-way broadband satellites still lie some way off in the future as residential access platforms, but the low infrastructure cost coupled with the ability to rapidly deploy this infrastructure could make wireless technology the obvious choice for the many users who will not have cable modems or xDSL available to them for many years. MCI WorldCom’s acquisition of CAI Wireless and Sprint’s acquisition of American Telecasting and Peoples Choice TV has vindicated MMDS as a residential access medium, according to the report, and although most LMDS providers are currently targeting larger businesses, they may ultimately refocus on residential access.