From the section Market Snapshot.

Monday, March 13, 2000

Although digital subscriber line (DSL) service has a much smaller share of broadband services than cable modems in the United States (29 percent vs. 67 percent at the end of 1999), DSL may soon catch up in terms of the number of households using it.

A survey conducted by Parks Associates of Dallas in January, and now featured as part of the company's Broadband Access @ Home study, shows DSL making strong gains in key consumer areas.

"My projection is that DSL will catch up with cable modem deployment quickly," says Hongjun Li, director of research at Parks Associates, a high-tech consultancy. "When customers do have a choice between DSL and cable modems, more people will opt for DSL. A 1998 survey we did showed this, and our January 2000 survey showed this."

Li says DSL use will equal cable modem use among U.S. households by 2004.

"A second reason for my projection is that telephone companies have significantly accelerated the pace of DSL deployment and lowered the price several times," Li adds.

A third reason for Li's prediction: DSL has more marketing channels than cable modems. Many independent Internet service providers do not have access to cable modem service. They do, however, have access to DSL if they partner with regional Bell operating companies, which many have.

"The key difference is that ISPs can resell DSL, but not cable modem service, so DSL has a larger distribution network," Li says. "There are also a number of [competitive local exchange carriers] providing DSL through their own facilities, although they may lease some business lines from the telcos."

The survey found consumers are more aware of cable modem service than DSL. Fifty-nine percent of dial-up Internet users are aware of cable modems; 50 percent of them are aware of DSL; 15 percent know about DirecPC; and 28 percent are aware of none of these.

But consumer knowledgeable about DSL and cable modems find DSL more desirable. Dial-up Internet users, who are most likely to become the next broadband customers, are more likely to subscribe to DSL than cable modem service when they upgrade their Internet access. About 34 percent say they want DSL, compared to only 25 percent who want cable modem service.

From the section Market Snapshot.