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Broadband Price and Serviceability Top Customer Concerns
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Percentage of consumers who plan to switch from dial up to broadband.

Finally, there's the issue of what consumers are willing to spend to get higher speed. While many consumers who have had access to higher speed have a hard time going back to slower access - "You can't go back once you've had it," says Schultz - many more aren't willing to pay more for it in the first place. A recent survey by Jupiter Communications found that a whopping 73 percent of Internet users have no plans to get high-speed connections in the near future (see chart).



While high-speed service will likely get cheaper, it probably won't happen soon. The phone company typically controls DSL, while the cable company controls cable modem access. Both are monopolies, with no competition except with each other when competing in the same market.

What's coming down the pipe

There is some good news in all of this, though. Mainly, despite problems with availability, installation, and customers balking at paying more for DSL than AOL, both connections are predicted to have healthy growth.

Both DSL and cable modems are expected to grow at healthy rates over the next three years. Kinetic's Harris predicts 7.2 million cable modems in place at the end of 2001, and Adam Guglielmo, an analyst with Telechoice, says having 6.0 to 6.5 million DSL lines in place at the end of 2001 "would be pretty achievable."

Guglielmo's prediction is far more optimistic than many of the traditional research houses' but then, it may be more accurate, too. "All you have to do is look at the actuals and eyeball the growth rates," he says.

Even at the end of 2001, the penetration of high-speed access into the home won't be that extensive. Both International Data Corp. and Jupiter are pointing to 2003 as the turning point, when the critical mass of homes will have high-speed access.

Internet access in 2003 -- dial up remains dominant.

IDC projects broadband in 18 million homes in 2003, while Jupiter is more conservative still, predicting that DSL or cable modems will be in 13.3 million households, which is just under 20 percent of the US market (see chart).

Those estimates are likely on the conservative side. With more optimism, Telechoice projects there will be 9.6 million DSL lines in 2003, and Kinetic projects 15.9 million cable modem customers, for a total of 25.5 million homes.

However, that doesn't mean people have to wait until 2003 to stream video. "ISPs claim they can host video, but that's not realistic yet," says Schultz. But, he adds, "you will see more inexpensive hosting services as time goes on."

In fact, one of the biggest business opportunities to arise in the next few years will be for companies that solve problems related to network speed. As Schultz notes, "What everyone is doing is making way better use of bandwidth (caching and/or buffering) in addition to creating more hosting networks like Akamai."

Advances made in codecs (media compression/decompression algorithms) will also help. While these benefit those with cable modems and DSL lines, they really benefit dial-up users.

"They're really getting much, much better each year -- you see big improvements in the sub-200 Kbps range. That means in another 18-24 months there's a good chance that what you get over DSL today, over a low-level DSL, you could be getting over standard dial-up. That's how fast the technology is moving."

"You can put some kinds of compressed video clips on the Web - that's already possible," says Schultz, but he cautions that, despite these advances, "Anyone who puts video on there without giving it thought will waste their time, their customer's time, and their money. The smaller companies that want to get into this would want a product or service that lends itself to video. People are impatient, and there needs to be a good reason why your target market needs video."

Despite that, Schultz sees a rich future for rich content. He calls the growth in bandwidth on the backbone and into the home "the new freeway phenomenon. You install capacity, and people find a way to fill it up. The same thing is going to be true with bandwidth. The demand won't subside any time soon."

And for people uploading or downloading rich content on the Internet, that's good news.

John Ochwat is a former editor for Upside magazine and contributes to numerous tech publications.


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