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Mass market in fast Net service is coming
By John Dodge, Special to the Globe, 2/25/2002 The key question about "broadband" connectivity is still ubiquity. When will it be as common and cheap as a household telephone? The answer will determine when a raft of services dependent on fast Internet connections can reach a mass market. The bare-bones definition of broadband is a minimum download speed of 384 kilobits per second, or about seven to eight times higher than the fastest dial-up modem. In theory, broadband can go up to 10 megabits per second and eventually to 100 mps but, in practice, most consumer broadband download connections today range between the minimum and 1.5 mps. A broadband report released last year by research firm Cahners In-Stat Group flushes out the definition, and the business stakes, so mere mortals can understand it: "Broadband includes all flavors of high-speed digital voice [telephony], data and video services as well as the underlying infrastructure, clients and technologies that enable these services." This definition places digital cable TV signals, for instance, under the aegis of broadband, but viewers seldom watch TV with download speeds in mind. Speed matters a lot with the Internet. That's why if you use the Internet and don't have a broadband connection, you very well could within the next two to three years. As for ubiquity, broadband Internet access across its half-dozen delivery technologies was available to 60 to 70 percent of the 108 million households in the United States at the end of 2001, according to Cahners In-Stat. Penetration, however, is far lower. The good news is that it's growing rapidly. By the end of 2001, broadband found its way into 9 percent of American households, or 9.72 million households, and that's expected to double to 18 percent by the end of 2003, Cahners In-stat says. By the close of last year, 57 percent of all US households were on the Internet, with 14 percent of those using a broadband connection. By next year, 67 percent of households should be on the Internet and 27 percent of those will use a broadband connection. The growth isn't fueled by any single killer application, but rather by a series of small drivers, according to Cahners In-Stat senior analyst Daryl Schoolar. "It's small killer apps such as online gaming, home networking, people working from home, streaming video, audio downloading, and the natural love of speed," he explains. Convenience of an always-on connection is another. The two primary technologies that deliver broadband are cable modems from giants like AT&T Broadband, and digital subscriber line service mostly from the phone companies. Less mature and more expensive broadband technologies include fixed wireless; satellite service such as DirecPC, a good but expensive option when neither wired DSL or cable are available; and "third generation" wireless, a new technology that integrates the data and cellular worlds. Roughly two thirds of today's broadband Internet connections are cable-based and more than half of those are served up by AT&T Broadband and AOL Time Warner Inc. The former says it has 1.5 million Internet access accounts out of a base of 14 million cable subscribers overall. That base will balloon to 22 million should AT&T Broadband's proposed merger with Comcast Corp. be consummated. AOL Time Warner says it has 1.9 million Internet access accounts out of a cable base of 12.8 million subscribers. AT&T Broadband is the biggest broadband supplier in New England and plans this year to complete a $460 million overhaul of its system, bringing digital cable TV and high-speed Internet access to all of Boston, 13 more suburbs, and all of its New Hampshire franchises. Many cities and towns in Massachusetts have been frustrated because cable Internet access is offered across such a random patch quilt of towns and communities. Cable have-nots can opt for phone line-based DSL, but availability is also spotty, governed by the proximity to a central phone office. Beyond 18,000 feet, DSL is usually not offered, and even within that range quality of the service can vary. Entering your phone number on Verizon's Web site will tell you if you can get DSL. (This reporter was 0 for 2 trying in two Boston suburbs.) Verizon spokeswoman Bobbi Henson said about 60 percent of the households are covered in Massachusetts. Just as cable Internet access is often favored by consumers because they already have cable TV, DSL is often popular with small businesses because of omnipresent telephone lines. Verizon, according to its own research, ranks second with 1.2 million accounts to leader SBC Communications Inc.'s 1.3 million. Third is Bellsouth Corp. with 620,000 accounts, followed by Qwest Communications International Inc. with 448,000, according to Verizon's data. "We're projecting 1.8 [million] to 2 million DSL customers by the end of this year, closing the gap even though cable had a jump on us," says Henson. In terms of price, cable holds a small edge over DSL. Verizon DSL service start at $49.95 a month while AT&T Broadband's cable Internet access ranges from $40.95 to $50.95. Still, both high-speed options are pricey compared to America Online's $23.90 a month even at sub-broadband speeds. Businesses pay $140 a month or higher for broadband, but generally get more services, such as multiple e-mail accounts and access points as well as faster speeds and guaranteed service levels. On a much smaller scale, fixed wireless is gaining a toehold in selected parts of Massachusetts. WhizWireless LLC of Lawrence claims to cover about a 2,000-square-mile area around its base of operations and caters to businesses with a starting price of $142 per month. Consumers can get it for around $50 to $60 a month, promises WhizWireless owner and microwave engineer Peter Butler. The 14-employee company even offers a specialized service for boaters at $30 a day. Should you live squarely in the middle of nowhere, with none of these services available, WorldCom just started offering business-level DSL over satellite, albeit for a hefty $190 a month. "World Internet VSAT is for a telecommuter or if you're a small business in Podunk," says Ralph Monfort, the WorldCom director of Internet Services. In other words, the further away you get from high-volume providers such as Verizon or AT&T, the more expensive broadband gets. If history is a guide, pricing is more likely to go up with providers taking advantage of availability constraints and strong demand that won't diminish any time soon. As always with high technology, big bets are being placed on the future. A major initiative of the Computers Systems Policy Project would vastly expand the availability of broadband and speeds. In December, high-tech chief executives such as Michael Dell of Dell Computer, Lou Gerstner of IBM, and Craig Barrett of Intel met with members of Congress and the Bush administration to push their ambitious broadband agenda, which calls for 1.5 mps in 80 percent of US homes by the end of 2003 and 100 mps into 100 million homes and businesses by the end of the decade. The latter would lower the time to download 10 MRI results from 40 hours with a dial-up modem to 1.3 minutes, proponents claim. Don't hold your breath. Most rational insiders will tell you the country is more than two years away from ubiquitous, inexpensive 1.5 mps service. Even today, most broadband connections don't consistently download even at the lower of the two CPSS goals (and uploading is always a fraction of the download speeds). John Dodge is an executive editor at Bio-IT World. He can be reached at jdodge@mediaone.net.
This story ran on page C5 of the Boston Globe on 2/25/2002.
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