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IPCC Feature Article

March 31, 2006

Broadband Adoption in U.S. Booming, but Still Trails Global Rates

Erik Linask, Associate Editor

Consumer Electronics Association (CEA) President and CEO Gary Shapiro has announced that a new CEA study reveals that 43 million U.S. households now have broadband Internet access — in 1999, that figure was just two million.

“Broadband households are quickly becoming the norm — it is very possible that dial-up Internet connections will be a thing of the past by the end of the decade,” Shapiro said.
The tremendous growth of broadband has paved the way for numerous other technologies, products, and services.  Given the growth rate — upwards of 2,000 percent since 1999 — it is hardly surprising that the demand for VoIP, IPTV (News - Alert) (News - Alert), EV-DO, and other broadband applications is also steadily increasing.  As enabling technology evolves, so, too, will the end products that are purchased by innovation-hungry consumers.
“High-speed Internet services have ushered in many new applications, devices and services that consumers are demanding. CEA research shows a bright future for custom retailers and installation professionals, because not all consumers are technically savvy enough, or want to spend the time to set up all the devices and applications they wish to use."
According to the CEA study, Broadband and the Home of Tomorrow, 33 percent of households that currently do not own a high-definition television are interested in having a professional install one within the next 24 months — nearly 20.5 million households. Also popular are digital video recorders (DVRs) and distributed audio systems. 
Expectedly, the CEA study determined that dial-up Internet access is on a notable decline — down from 74 percent of residential connections in 2000 to 60 percent in 2003 and 36 percent now. 
More interesting is the finding that digital subscriber line (DSL) service has gained on its cable counterpart.  In October 2000, cable broadband accounted for 15 percent of all residential Internet connections, compared to only four percent for digital subscriber line (DSL). Currently, cable and DSL are head to head, each owning a 29% market share.
“Speed and reliability are important, but the cost must be factored in and, when it comes to cable, consumers increasingly are missing the value," said Shapiro.
According to the survey, service satisfaction and cost satisfaction show in inverse relationship:  Dial-up customers are the most pleased with the cost of their service (53 percent), but least pleased with the speed (26 percent); cable Internet subscribers are least happy with cost (26 percent) and happiest with speed (76 percent); and between the two are DSL customers, 46 percent of whom are happy with the cost and 69 percent with speed.
The result is that, while 61 percent of DSL subscribers would recommend their ISP, only 46 percent of cable customers would do likewise.  Though DSL has a noticeable advantage, both have considerable room for improvement in customer recommendation.
Despite the remarkable growth rate of broadband adoption, the U.S. ranks but 15th globally in high-speed Internet penetration. Asian countries top the list — South Korea, Hong Kong, Singapore, and Taiwan all have penetration rates higher than 50 percent (and Japan’s is 49percent).  Many European countries also outpace the U.S., as does Canada.


Erik Linask is Associate Editor of INTERNET TELEPHONY. Most recently, he was Managing Editor at Global Custodian, an international securities services publication. To see more of his articles, please visit Erik Linask’s columnist page.

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