DSL service closing the gap with cable
As a greater number of Americans buy into high-speed Internet connections at home, causing an explosion in the broadband marketplace, DSL is finally catching up with cable.
According to the latest numbers available from Forrester Research Inc., an independent technology and market research company, of the 73 million U.S. households with Internet access in 2004, 31 million, or 42 percent, were equipped with broadband.
Another 17 million new broadband customers were projected to be added by the end of 2006, though the exact numbers have not been released by Forrester, and more than 50 percent of all online homes today are using a high-speed connection.
Cable broadband, which has traditionally outmatched DSL in the marketplace, is still in the lead. But over the past four years, more new customers are signing on with the phone companies. And in the past two years, the DSL gains have accelerated.
In 2002, for example, 67 percent of broadband users were using cable, compared to just 31 percent for DSL. The remaining two percent were split between satellite and fixed wireless. By 2005, however, 58 percent of broadband households were using cable, compared to 41 percent using DSL -- narrowing the difference by 19 percentage points over four years.
"The gap is definitely closing," said E. Van Cullens, president and CEO of Westell Technologies Inc, an Aurora-based modem maker whose products are used by Verizon Communications Inc. for DSL service.
Charles S. Golvin, a principal analyst with Forrester who authored the study, said the drive behind DSL's rise in the marketplace is simple.
"I'll give you three reasons," he said in an interview. "Price, price and price."
Over the past two years, DSL prices have dropped significantly while cable prices have remained high. Verizon, the largest provider of DSL, offers monthly service for as low as $12.95 a month for the first year. BellSouth Corp., which recently announced a merger with AT&T Inc., offers DSL for as cheap as $25 and as much as $47 a month. Comcast Corp., the nation's largest cable Internet provider, sells monthly service for about $35 a month.
"They are pricing this service , very aggressively," Golvin said of the telephone companies.
Joe Chandler, director of media relations for BellSouth Corp., second in DSL, said the drop in DSL's prices "is symptomatic of a competitive marketplace. The more competition in any market, be it an airline or broadband, you have to compete on speed, quality and price."
The cheaper prices have fed into what Golvin calls a "technology adoption cycle." In the cycle, high income households adopt a new technology before low income households. Therefore price becomes increasingly important as a technology becomes more popular.
"Two years ago, those who did not have broadband, were people who were much more price sensitive." He argues that the drop in price has helped bring new, lower income customers into the high-speed fold.
The difference in pricing has led to a difference in marketing strategy.
Over the past 18 to 24 months, telephone companies have used the low prices as their major selling point while cable companies have advertisements touting performance.
Pat Keenan, vice president of communications for Comcast in the greater Chicago region, said her company does not highlight the price of its service when marketing to potential customers. "We talk about speed consistently and we talk about features," she said.
The difference between DSL and cable service depend on whose answering the question?there are advantages and disadvantages to both. Keenan argues that Comcast's cable broadband is a more powerful and faster connection.
Chandler says BellSouth and other telecom companies provide a more reliable and secure way to surf online.
The actual difference is that DSL uses a dedicated phone line to connect a household to the network, while cable uses a "bus network," which is one connection shared by several users.
Phillip J. Remek, a Florida-based senior equity analyst who tracks Comcast for Guzman & Co., argued that the bus system is faster and better than DSL's dedicated line, and thus worth the extra cost. "Cable has been able to compete on speed, not price," he said. "Cable keeps offering faster download speed and pricing has been pretty stable? People are willing to pay up for faster Internet."
"DSL is a very limited type of broadband," Remek added. "We're heading toward a world where you download music, movies, interactive gaming?and people want some power in their connection to handle those things. After a while, you get tired of waiting for the downloads."
Source: http://nwitimes.com
According to the latest numbers available from Forrester Research Inc., an independent technology and market research company, of the 73 million U.S. households with Internet access in 2004, 31 million, or 42 percent, were equipped with broadband.
Another 17 million new broadband customers were projected to be added by the end of 2006, though the exact numbers have not been released by Forrester, and more than 50 percent of all online homes today are using a high-speed connection.
Cable broadband, which has traditionally outmatched DSL in the marketplace, is still in the lead. But over the past four years, more new customers are signing on with the phone companies. And in the past two years, the DSL gains have accelerated.
In 2002, for example, 67 percent of broadband users were using cable, compared to just 31 percent for DSL. The remaining two percent were split between satellite and fixed wireless. By 2005, however, 58 percent of broadband households were using cable, compared to 41 percent using DSL -- narrowing the difference by 19 percentage points over four years.
"The gap is definitely closing," said E. Van Cullens, president and CEO of Westell Technologies Inc, an Aurora-based modem maker whose products are used by Verizon Communications Inc. for DSL service.
Charles S. Golvin, a principal analyst with Forrester who authored the study, said the drive behind DSL's rise in the marketplace is simple.
"I'll give you three reasons," he said in an interview. "Price, price and price."
Over the past two years, DSL prices have dropped significantly while cable prices have remained high. Verizon, the largest provider of DSL, offers monthly service for as low as $12.95 a month for the first year. BellSouth Corp., which recently announced a merger with AT&T Inc., offers DSL for as cheap as $25 and as much as $47 a month. Comcast Corp., the nation's largest cable Internet provider, sells monthly service for about $35 a month.
"They are pricing this service , very aggressively," Golvin said of the telephone companies.
Joe Chandler, director of media relations for BellSouth Corp., second in DSL, said the drop in DSL's prices "is symptomatic of a competitive marketplace. The more competition in any market, be it an airline or broadband, you have to compete on speed, quality and price."
The cheaper prices have fed into what Golvin calls a "technology adoption cycle." In the cycle, high income households adopt a new technology before low income households. Therefore price becomes increasingly important as a technology becomes more popular.
"Two years ago, those who did not have broadband, were people who were much more price sensitive." He argues that the drop in price has helped bring new, lower income customers into the high-speed fold.
The difference in pricing has led to a difference in marketing strategy.
Over the past 18 to 24 months, telephone companies have used the low prices as their major selling point while cable companies have advertisements touting performance.
Pat Keenan, vice president of communications for Comcast in the greater Chicago region, said her company does not highlight the price of its service when marketing to potential customers. "We talk about speed consistently and we talk about features," she said.
The difference between DSL and cable service depend on whose answering the question?there are advantages and disadvantages to both. Keenan argues that Comcast's cable broadband is a more powerful and faster connection.
Chandler says BellSouth and other telecom companies provide a more reliable and secure way to surf online.
The actual difference is that DSL uses a dedicated phone line to connect a household to the network, while cable uses a "bus network," which is one connection shared by several users.
Phillip J. Remek, a Florida-based senior equity analyst who tracks Comcast for Guzman & Co., argued that the bus system is faster and better than DSL's dedicated line, and thus worth the extra cost. "Cable has been able to compete on speed, not price," he said. "Cable keeps offering faster download speed and pricing has been pretty stable? People are willing to pay up for faster Internet."
"DSL is a very limited type of broadband," Remek added. "We're heading toward a world where you download music, movies, interactive gaming?and people want some power in their connection to handle those things. After a while, you get tired of waiting for the downloads."
Source: http://nwitimes.com
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