Is the Broadband Business Changing?

Carl Weinschenk

An interesting post from Om Malik suggests that overall growth in the broadband market appears to be slowing down while high-bandwidth options seem to be weathering the storm a bit better than pokier connections.


Broadband, of course, is the key to convergence. The faster the network, the more elegant the possible applications.


It's important not to jump to conclusions about the slowdown. It may be simply that the broadband industry is reaching a more mature point at which gains are more difficult. Perhaps UBS Research projections of a fall off of 2 percent in BellSouth's DSL business between Q3 this year and last, along with flat combined DSL/cable modem numbers, are positive signs (albeit well disguised). They could be interpreted as showing that sales people have been doing their jobs, signing customers and reducing the pool of potential new subscribers.


So, perhaps, the news isn't dire. Indeed, the numbers suggest that Verizon's fledgling FiOS fiber service and a comparatively fast version of BellSouth's DSL offering are bucking the trend and selling well. This suggests that more folks will pony up the money if they are offered something new.


The bottom line, as Malik says, is that speed sells. This suggests the business is changing -- gone are the days when people were thankful for any broadband they could get their hands on, even marginal services. Now, with competitors nipping at each other's heels, people demand fast speeds at low prices.


For years, the dynamic was that phone companies sold cheap and relatively slow DSL lines, while cable operators charged more for faster modem services. The fact that the telephone companies are succeeding with faster services may signal a new phase in which the key metric isn't the overall number of subscribers, but the value of the services for which they pay.

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