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Broadband Price and Serviceability Top Customer Concerns

by John Ochwat

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If you're thinking about producing rich content for the Internet, it's easy to rhapsodize about the good old days, when a few small photos and some text made up a Web site. Back then, you didn't have to worry about compression, server balancing, or bandwidth.

But even back in the old days, people were imagining the types of things possible when high-speed access was the norm rather than the exception. "As soon as everyone has high-speed access," many a sentence began.

Because not everyone has high-speed access, bandwidth is still a big issue, and it affects decisions on what goes on a site, and how big it is. There are now more ways to access the Internet than there were a few years ago, and the door is still open for new technologies to enable different ways and speeds of access.

With all that in mind, how will people be accessing the Internet, and at what speed? Is the number of people accessing at higher speed growing? We went in search of answers.

The good (and slow) old days

As recently as a few years ago, the only high-speed access to the home was a T1 line. But for those who have not won the lottery or made a fortune at a dot-com, the thousands per month it cost made it prohibitively expensive. Not only that, many phone companies won't even install them in homes.

The other option was ISDN (Integrated Services Digital Network), which was more widely available and realistically priced, but slower (about 128 Kbps). However, in the past year or two, two other options have emerged that are faster and cheaper -- namely DSL and cable modems.

DSL (Digital Subscriber Line) comes in a number of flavors (asymmetric and symmetric, for example) and offers speeds of 1 to 8MB per second.

Cable modems are also screamingly fast - up to 1 million characters per-second (1 Mbps), equivalent to about 35 times the speed of a 28.8-Kbps modem and 10 times or more the speed of an ISDN connection. While uploading speed varies depending on the equipment used by the cable company, for the purposes of downloading (in other words, your audience), it's very, very fast.


Average Connection Speed

Connection Speed

% of Internet Users

Less than 14.4K bps


28K bps


33.6K bps


56K bps


56K - 1M bps


Greater than 1M bps


Connection speed is rising. Only 3% of Internet users surveyed still connect at a speed of 14K bits/second. Over 65% of users connect at speeds between 28K and 1Meg bits/second.

Source: Laare Rowan of Web Design Guide explains: "[These statistics] come from a variety of sources, both private (Internet marketing companies who run private testing) and public sources such as GVU's data. Each published number, except when attributed to a specific source (i.e. Nua Internet Surveys, etc.) is my own best guestimate, based upon the weighting I give each source."

However, DSL and cable modems are relatively new to home users. A year ago, Kinetic Strategies Inc. (publishers of Cable Datacom News) estimated there were 1.8 million homes using cable modems, and xDSL.com, a Tulsa, Oklahoma consulting company, estimated there were only 575,000 DSL lines in use.

Only as fast as the technician

A year later, those numbers have picked up. According to Kinetic, 3.2 million (out of a total of 110 million) US homes have cable modem access, and 1.0 million have some form of DSL service. Even with that growth, "the number of homes accessing the Internet at high speed is still miniscule," says Kinetic's president, Michael Harris.

Of course, not everyone accesses the Internet at home. According to research firm Jupiter Communications, the number of corporate broadband users is about three times the residential installed base. In other words, if people are willing to use their corporate connection to see your stuff, you're in much better shape.

While usage of both DSL and cable modems is growing, both have technical and consumer issues that will work against them.

Many cable television systems were set up to send a signal but not receive one. In other words, to send something back up the pipe (say, e-mail) was impossible. However, for Internet service, it's a requirement. Thus, "Availability of the service is the biggest factor for cable modem service," notes Bob Larraibeau, director of access networks for the research firm Ryan Hankin Kent.

According to Kinetic, cable modem service was available to 48 million homes in the U.S. and Canada in June 2000, approximately 44 percent of all cable homes passed. And AT&T, which is in the midst of a massive upgrade to its cable networks, estimates it will only have two-way cable to 80 percent of homes at the end of the year. And that's assuming that cable runs to your house to begin with. Since cable to the home is not as universal as telephone service, that's hardly a given. Which means cable modems will be far more prevalent in urban and suburban areas than in rural ones.

Then there's the problem of installation. According to Gary Schultz, president and principal analyst of MRG Inc., "For DSL as well as cable modems, the issue is still the last mile -- might be the last 75 feet." Unlike a 56K modem, cable modems and DSL lines both need trained installers, which are not always available.

"We hear installation horror stories all the time," Schultz notes, adding that his company has considered putting out a report on the travails of installing broadband to the home.

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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