Market Update: West Corp. to Acquire Smoothstone

Carl Weinschenk

A study from The Pew Internet & American Life Project validates research from Cisco and The Broadband Forum that was released during the past few weeks. The studies approach the topic in slightly different ways, but the bottom line is about the same: The world of broadband is increasing at an accelerating clip. People are using broadband for more things, and the type of content in the pipeline is more bandwidth-intensive.

 

<strong>The increase isn't a spike-it's permanent growth</strong>.Pew says that 63 percent of the adult population in the U.S. now subscribes to broadband. That's 8 percent more than a year ago. Note that the gain was made during a year of dreadful economic conditions. Comparisons to other services show the depth of people's affinity for broadband: Nine percent of users cut back or canceled online services last year (presumably, the overall growth was driven by new broadband customers) compared to 22 percent who cut back on cable television. Even more telling was the fact that 2 percent more people-11 percent-cut their landline phone service than scaled back or cut broadband.

 

Comparing broadband to phone or cable television is an apples-to-oranges comparison. Landline phones essentially are used only for talking (with a bit of dial up Internet and faxing thrown in) and cable television is all about entertainment. Broadband, however, is a delivery mechanism, not an application or service. It gleefully supports any number of work- and entertainment-related activities.

 

Broadband growth is driven by taking market share away from the one-trick-ponies such as legacy phone and cable television. At the end of the day-once business plans, back offices and other elements are fully baked -- cable operators and traditional phone companies will essentially have no response to IPTV and VoIP except to get into those businesses themselves. This is happening -- and it further drives the use of broadband.

 

On a simpler level, broadband has become a utility. Even people who lose their jobs will cling to it until their financial situation is truly dire for a couple of reasons. Broadband simply is the best entertainment value for folks on a tight, but not emergency, budget. It also is the key tool in finding new employment.


 

The bottom line is that predictions about broadband growth are, if anything, conservative. There isn't anything that won't enlarge its role. The importance of the Pew study isn't to show how great demand is, though it does that. Rather, the value is in demonstrating how broad and multifaceted that demand is.



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