A quarter of all online homes in the U.S. will use high-speed, broadband connections to the Internet by 2002, according to a new report.
Forrester Research predicts that 16 million U.S. households will be using high-speed access by then. And these connections will change the way consumers use the Internet and create new opportunities for service and content providers, according to Forrester.
"Once consumers get a taste of high-speed Internet access at home, they'll never go back to dial-up," said Christopher Mines, director of Forrester's People & Technology Strategies service and author of the report, "Broadband Hits Home," in a statement.
Cable companies will be the leading provider of residential broadband services, capturing more than 80 percent of the market by 2002, Forrester predicts. Cable data services are poised for significant growth over the next 18 months, surging from 350,000 subscribers in mid-1998 to more than 2 million by the end of 1999.
This growth will be driven by falling cable modem prices and rising consumer awareness, according to the report. At the same time, the major cable operators will seek to expand their subscriber base in existing markets while simultaneously exploring service offerings in new cities, the report states.
The remaining 20 percent of the residential broadband market will be served by the local telephone companies using digital subscriber line (DSL) technology, the report states. Held back by competing technologies, a lack of standards, and high equipment costs, the telcos will be slow to roll out their broadband offerings, while consumers will be disappointed by the initial price/performance ratio and service limitations, Forrester predicts.
"Forrester believes that the telcos won't take residential broadband seriously until AOL pressures them to deliver," Mines said in a statement. "Forced to create its own premium broadband offering to compete with cable services from @Home and Road Runner, AOL will require its network suppliers to provide DSL connections. Lured by the potential of AOL members turning to broadband, the local telephone companies will start to accelerate their DSL efforts."
Broadband holds the key to new applications and content services, Forrester predicts. Online banking and investing, for example, will take advantage of the always-on connection to provide a steady stream of information and account updates.
While broadband services are more expensive than current dial-up offerings, Forrester has found that early broadband consumers have higher average incomes and are willing to pay premium prices.