Year in review: Dawning of the broadband age

In 2004, broadband reached its tipping point.

In August, a study conducted by Nielsen/NetRatings shows more Americans accessing the Internet through a high-speed connection than through slower dial-up by a ratio of 51 to 49. The gap will only increase as providers entice the U.S. dial-up base. DSL offers cheaper subscriptions than cable, which promises higher speeds.

This study only concluded that Americans want their broadband. Americans want their broadband by any means necessary. The events of the past year also show they are willing to look beyond their phone or cable company to get it.

Municipalities in predominately rural areas are raising funds to provide all citizens with super-fast fiber optic broadband lines that can deliver phone and video as well. Larger cities, including Philadelphia, parts of Los Angeles and San Francisco, are considering plans to blanket neighborhoods with Wi-Fi wireless broadband access.

These grassroots efforts, however, have met stiff resistance from Baby Bells and cable franchises. The incumbents claim governments should not compete with the private sector, and that using public funds would undermine competition.

The Bells and cable have a reason to pick these fights. Both industries are pouring money into upgrading their networks to compete into each others' traditional power bases.

Facing continued land line phone defections, the Bells--Verizon Communications, SBC Communications, BellSouth and Qwest Communications--plan to invest billions of dollars to upgrade their copper infrastructure with fiber. The upgrades will not only offer faster Internet access, but eventually it will let the Bells deliver video and high-definition TV programming to compete against cable.

Cable giants such as Comcast, Time Warner Cable, Cox Communications and Charter Communications, are mulling options to enter the wireless phone business, an arena dominated by the Bells.

Despite the industry clashes, the result for consumers is positive. DSL services have dipped as low as $26.95, which requires a local phone line, for SBC customers, while Cox's cable systems raised its Internet speed limit to 4mbps from 3mbps. The Bells' entry into the video business in 2005 will show whether competition can drive down prices and broaden options for pay TV.

All of these business maneuverings and trends point to the same conclusion. The broadband age has arrived, prompting entertainment, communications and information industries to immediately shift their plans. The ripple effect is already spreading into other areas such as medicine, defense and education, while politicians and regulators ponder ways to shape policy surrounding a more efficient medium of disseminating information.

Hang on for the ride.

--Jim Hu