Introduction to the ISP Market

Aug 2, 2002

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Present and Future Trends

Change is constant on the Internet. The following provides a glimpse of present and future trends. High-speed access appears to be the trend for the next four years. Predictions are that broadband will grow quickly, and that DSL and fixed wireless access will gain on cable.

The year 2000 showed residential high-speed Internet access in the United States (U.S.) growing more than 230 percent, according to research by The Strategis Group, outpacing dial-up access. Increasing consumer demand and technical innovations with self-provisioning are cited as the major cause for this growth. TABLE 1-1 shows residential high-speed growth and trends for the U.S.³

TABLE 1-1 U.S. Residential High-Speed Access Growth and Trends (by Millions)

Access Method	1999	2000	2001	2002	2003	2004	2005
Cable	1.25	4.11	7.12	9.57	11.88	14.19	16.13
DSL	0.58	1.93	4.22	6.88	9.38	11.87	14.22
Wireless	0.01	0.06	0.19	0.95	1.96	3.04	4.71

Fixed wireless and two-way satellite technologies are being deployed as alternatives to DSL and cable modem. These technologies substitute where cable modem and DSL services are unavailable. And in some cases these technologies directly compete with DSL and cable modem. In general, cable subscribers are more satisfied with their broadband service than DSL subscribers. DSL access remains popular among small businesses.

Experts predict that with high-speed access driving the market, residential subscribers will more than triple over the next five years, growing from 8.6 million subscribers in 2001 to more than 36 million subscribers in 2005, according to a report by Parks Associates. They estimate the cumulative value of the residential market will approach $3 billion by 2005.

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