DSL or Cable Modems:  Phone Companies Race Cable Companies for Internet Consumer

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BOONTON, NJ. January 25, 1999:

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Internet consumers may be willing to spend $1.2 billion on high-speed access this year, but they will only pay once for the modem needed to establish a broadband connection, says a new Consumer Telecom Report by Insight Research. With competing xDSL modems and cable modems selling at around $250-$300 each, the broadband modem that reaches the mass market first will capture an initial base of customers who will be reluctant to pay again to switch technologies.

According to Insight's report Consumer Demand for Broadband Services: xDSL, Cable Modems, and Wireless, it is a race to market between the telcos with xDSL service and competing MSOs with cable modems, each hoping to establish that important customer base. The report posits two growth scenarios; the first, in favor of xDSL catching on quickly, assumes that the Universal ADSL Working Group (UAWG) will develop an xDSL technology to become a built-in standard for tomorrow's computers. The second scenario, favoring an initial lead for cable modems, presumes that cable operators will roll out the necessary system upgrades to handle heavier traffic volumes, and that consumers will opt for the slightly faster service cable modems provide. Interestingly, in each scenario, cable modems lead in market share by the year 2003.

"DSL's main advantage is that it can be marketed and sold by the local telcos to the consumer market in the same way that they market other services such as call waiting," says Robert Rosenberg, president of Insight. "However, cable already covers 70 percent of all households and cable operators appear to be rolling out their high-speed service faster than the incumbent telephone companies."

Further broadband consumer demographics and forecasts of telecommunications equipment and service revenue are published in Consumer Demand for Broadband Services: xDSL, Cable Modems, and Wireless. Primary research consisted of interviews with regulators, industry players, and academicians, as well as Insight's proprietary survey of 1,018 consumers. For this sample, the survey data was weighed to account for probabilities of random selection and balanced by age, gender, race, and education to match U.S. Census demographic variables.  See www.insight-corp.com/broad.asp.

Broadband Access: DSL or Cable Modems 2002-2007

Optical Networks: DWDM and SONET 2003-2008

Broadband Network Management 2003-2008

Donna Savino

at Insight Research

973-541-9600