INTERNET AND BROADBAND

The United States leads the world with over 167 million Internet
users of which more than one third have broadband connectivity,
according to a study by Arbitron. This study concluded that
64 percent of Internet users who have broadband access were
connected through their workplace, and the balance have home
access. The Internet has transitioned from text-based email
and file transfer in the mid-1990s to digital audio broadcasting
and animated advertising in early 2000. The demand for high
bandwidth applications such as animation, video streaming,
and high-speed connections to corporate networks has led to a
multi-megabit bandwidth race. Digital subscriber line (DSL) and
cable modem technologies are main contenders for this high
bandwidth race, followed by emerging wireless networks.
In the autumn of 2000, the U.S. Department of Commerce
found that 51 percent of all American homes had a computer,
and that nearly two-thirds of American Internet users had
bought something online. These percentages are similar to
those of other developed nations, as depicted.

By 2001, there were over 2.3 million DSL customers in the
United States. Estimates show the market for DSL customers will
reach 7.74 million residential customers and 1.83 million business
lines, for a total of 9.57 million DSL lines deployed by 2003.
High-speed connectivity is a commodity. As service providers
adapt their networks and strategies to meet the demand for
high-bandwidth services and applications at reduced cost, some
are attempting to capture high-bandwidth customers by offering
access to key information service providers (e.g., a specific
Internet service or digital video provider).
The customers’ key interest in high-bandwidth service
includes speeding up large file transfers, viewing high-resolution
images and enabling multimedia applications such as streaming
audio and video. The attempt of service providers to restrict
access to certain information content providers is likely to divert
attention from developing cost-effective high-speed networks
and create opportunities for other providers to offer access to
other information content providers.
Early adopters of broadband services are affluent. Of broadband
users, 21 percent of these households have annual
incomes over $100,000. Broadband users are also twice as likely
to be active online purchasers when compared to low-speed
users.* Additionally, most of these users also have cellular
phones, PDAs, and other handheld devices such as digital cameras
and music players.
In a recent survey of online consumers, 80 percent stated
that they would pay approximately $25 per month for broadband
access alone; 26 percent of those said that they would pay
$50 or $60 for a package of broadband-enabled applications
(including premium quality downloadable music or video files)
in addition to the cost of broadband access.† Tables 3.2 and 3.3
show the number of users and market penetration of wireless
access worldwide.
As cellular technology connects phones, PDAs, and other
devices across networks, wide area networks (WAN), local area
networks (LAN) and the personal area network (PAN), we see
the emergence of IEEE’s 802.11B as the de facto wireless
WAN standard. As major corporations including Cisco,
Compaq, Dell, and others are designing their products for
faster cable-free network setup in offices and corporation campuses,
we believe that the home market will also adapt, according
to a study conducted by the Aberdeen Group, the home
network market, including both wireless and wired initiatives
will hit $13 billion by 2005.