Broadband Growth Debated

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Reports last week held conflicting views of the total number of broadband households — and whether the growth rate for broadband may be slowing.

A new report from the Pew Internet and American Life Project found a 50% boost in broadband Internet connections between March 2002 and March 2003, with broadband now humming along in 30 million U.S. households.

On the downside, the survey found that fewer experienced dial-up users — considered a prime target for upgrades — say they want broadband service, compared to a year ago. In March of 2002, 53% of users who had been online for at least six years said they wanted to move to broadband, but that percentage dropped to 43% in March of this year. The experienced dial-up users willing to move to broadband represented 13% of the total narrowband population.

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Also, users who said they're most likely to jump into broadband also say it isn't available in their neighborhood. In a separate survey of 1,677 Americans in October 2002, the Pew researchers found that 57% of dial-up users said they have no interest in getting a faster connection, while 38% said they do.

But the numbers reverse in areas where broadband isn't available, with 61% saying they would like to upgrade to broadband and 35% saying they wouldn't.

Cable continues its lead in connections over its digital subscriber line competitors, and there are indications the gap is widening. The Pew survey found a slight shift toward cable-modem service over the past year, rising from 63% of total broadband connections in March 2002 to 67% now.

The percentage of DSL connections dropped from 34% in 2002 to 28% this year.

In all, there are 21 million cable-modem customers now, compared to 13 million a year ago, according to the Pew survey. The DSL ranks swelled from 7 million to 9 million in that time period.

The Pew study also found experienced dial-up users most likely to migrate to broadband have almost identical online use patterns as their broadband peers. About 35% of veteran dial-up users tap news on the Internet daily, compared to 41% among broadband users. Only 23% of newer dial-up users tap news daily.

The falling growth rate was also highlighted in a UBS Warburg report issued last week. The investment firm found the new subscriber-growth rate among digital subscriber line and cable modem providers dropped from the third quarter into the fourth quarter of 2002.

The rate for cable operators dropped from 58.8% to 56.5%, while among the nine largest DSL providers, the growth rate slowed from 59.4% to 54.2% in the fourth quarter.

Lower counts

But the Warburg report does differ significantly in placing the total number of broadband subscribers in the United States. It puts the number closer to 17.3 million claimed by the top 16 DSL and cable providers.

Similarly, Leichtman Research Group's estimates put the total number of subscribers claimed by cable and DSL providers in the United States at about 19 million as of the first quarter.

The Leichtman findings also contradicted growth-rate results of the other two studies, instead finding that with almost 1.9 million new DSL and cable-modem customers added, the sector had a record growth quarter.

Cable companies claimed 65% of that new subscriber growth, adding 1.23 million, Leichtman found.

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