Cable Still Tops DSL — For Now

The number of broadband Internet subscribers has jumped to 12.8 million
users, according to the Federal Communications Commission (FCC) biannual
review released Tuesday, with cable still maintaining a healthy lead over
digital subscriber line (DSL) — for now.

The report, culled from information provided by incumbent Internet service
providers (ISPs) to the agency’s wireline competition bureau, shows cable
adoption rates has risen to almost 7.1 million users while DSL grew to more
than 3.9 million. Wireless subscribers — consisting of satellite and
fixed wireless — came in a distant third place with 212,610 subscribers.

While both cable and DSL have shown healthy gains for the latter months of
2001, 41 and 45 percent respectively, the numbers show high-speed solutions
still have a ways to go in gaining mass appeal.

Broadband still has a ways to go, according to a January 2002
NielsonNetRatings survey, which finds the total number of U.S. Internet
users stands at 164 million, making broadband’s 12.8 million a vast
minority of the mass Internet population.

The overall number of people signing up for broadband of any type has
tapered in recent months, also, from 36 to 33 percent. Nowhere is this
more evident than the growth rate for wireless high-speed service, which
saw a 73 percent increase between December 2000 and June 2001. In the last
six months of last year, the wireless number plummeted to 9 percent.

Meanwhile, DSL and cable have swapped growth rates, indicating a reversal
in fortunes for the telephone company-based technology against its
archrival. In the first six months of 2001, cable and DSL had growth rates
of 45 and 36 percent respectively. Those numbers flip-flopped in
June-December 2001 to 47 percent (DSL) and 36 percent (cable), a sure sign
that DSL is gaining popularity.

According to a January 2002 NielsonNetRatings survey, broadband is growing
mainly in metropolitan areas, with a 48 percent year-over-year growth rate
(the survey includes ISDN and LAN users). That figure agrees with the FCC
report, which shows 98 percent of the most densely populated zip codes had
high-speed service subscribers.

The FCC report got its genesis in March 2000, when the agency started
gathering information from incumbent service providers (incumbent telephone
companies and cable operators) “in its efforts to monitor and further
implement the pro-competitive, deregulatory provisions of the
Telecommunications Act of 1996.”

The figures show that while the number of broadband subscribers has grown,
the number of providers owning the high-speed access lines hasn’t. The
reports finds the four incumbent telephone companies — SBC Communications
, Verizon Communications , BellSouth and Qwest Communications — have a stranglehold on
the DSL market, owning 90 percent of the access lines in the nation, while
only 2.7 percent are owned by competitors.

The competitive landscape reflects that ownership level. As of December
2001, only 39.9 percent of U.S. households have one or no high-speed
service in their area, though that figure has halved from December 1999
levels of 40.3 percent. Just 9 percent have a choice of four ISPs and only
4 percent have 10 or more available in their city.

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