Cable Internet access, which currently holds
a corner on the high-speed market, will face competitive challenges from
alternative technologies in 2002, according to a new study by The Strategis Group.
The study “High-Speed Internet: Demand, Technology, and Strategy” predicts
that by 2002 cable modems will lose its hold on the market as digital
subscriber line (DSL) service gains more popularity. Cable modems will
still control 68 percent of the residential market, down from about 90
percent at the end of 1998.
DSL has so far been a business data tool, but standardization and the
continued development of “G-Lite” (splitterless DSL) will help make DSL
into a residential reality.
“DSL and cable technologies have fundamentally different economics,” said
David Eiswert, consultant with The Strategis Group. “DSL investments are
scalable, giving LECs the option to choose the timing of their deployments.”
Cable modem service is priced more competitively than DSL. If DSL and cable
high-speed access are close substitutes, DSL prices will have to come down.
“DSL providers must either justify $20 to $30 price premiums, bring price
in line with cable, or accept the role of niche provider in the residential
market,” said John Zahurancik, director of The Strategis Group’s Internet
and Competitive Telephony Group. “The question is how quickly will they
fall?”