Cable modem broadband service is expected to grow at high speeds. In-Stat/MDR reports that total worldwide cable modem subscribers reached 27 million in mid-2003, and is expected to hit 34 million by the end of the year. By 2007, In-Stat/MDR projects that there will be 68 million worldwide cable modem subscribers.
By geographic region, North America has the most cable modem subscribers with over 14.6 million. Comparatively, Leichtman Research Group (LRG) estimates that DSL only accounted for roughly 6.8 million U.S. subscribers at the end of the first quarter of 2003.
Supporting data from the Pew Internet & American Life Project indicates that modems served as the primary way people log on using broadband. In March 2003, 67 percent of broadband users connect using cable modems — up from 63 percent in March 2002 — while DSL had 28 percent of the broadband market in March 2003, down from 34 percent a year earlier.
In-Stat/MDR found that the Asia-Pacific region had the second highest cable modem subscriptions at 6.6 million, followed by Europe with 3.7 million.
“With demand for high-speed Internet access increasing, many of the world’s leading cable TV operators have invested heavily to upgrade their cable infrastructure in order to provide cable modem services,” says Mike Paxton, a senior analyst with In-Stat/MDR. “These investments are starting to pay off.”
According to In-Stat/MDR, cable TV operators collected $11 billion in cable modem service revenues in 2002, and this amount is expected to increase to $15 billion in 2003. However, Ipsos-Insight expects U.S. broadband adoption to lag since many users still aren’t ready to abandon dial-up. Four-in-ten dial-up users said cost was a reason they hadn’t yet switched to high-speed Internet access, and another one-third are not convinced they need broadband at all.
“The expected slowdown in growth is obviously not just about the price-point being too high,” said Jo-Ann Osipow, a senior vice president with Ipsos-Insight. “It’s about a huge segment of dial-up users not being convinced that they need to convert to high-speed, perhaps because ‘faster’ isn’t enough of a value proposition. They need to know what faster lets them do.”
With monthly cable broadband services averaging roughly $40 per month, only 3 percent of current dial-up households are likely to convert to high-speed access. However, if the monthly rate dropped to $30, both DSL and cable modem companies could potentially triple new subscriptions vs. the current average (increasing to 10 percent for DSL, 9 percent for cable).
Further research from Ipsos-Insight reveals that even if broadband access drops to $20 per month, only 20 percent of Americans with dial-up said they would sign up for high-speed (whether DSL or cable), leaving 80 percent of dial-up users who wouldn’t switch, even at the $20 price-point.
