Status-quo over broadband

Everyone has heard about the Digital divide. The concept was closely linked to the Al Gore’s expression of Information Highway. But now that DSL is (really) taking off in the US, there’s another kind of divide: the broadband wall.

Middle-income and price-sensitive households, which have been relying on dial-up modem to access the Net, switch to DSL through a phone company offer: “According to a recent report published by Leichtman Research Group, about 21 percent of households earning an annual income of between $30,000 and $75,000 a year subscribe to DSL,” says CNet.

By contrast, high-income households oscillate between cable broadband and DSL: “37 percent of all households with annual household incomes over $75,000 subscribe to cable broadband and 27 percent subscribe to DSL.”

As in Europe, DSL and cable are already battling in a fierce horse race, and that telcos seems to outrun cablecos, we expect this bipolar status-quo to scramble soon. That an upcoming price war will badly wound cable companies, unable to slash their price by two or more.

Wrong. The Leichtman’s study reports: “Comcast, the largest cable operator in the U.S., added 436,000 new subscribers in the first quarter of 2006, the largest number of new subscribers the company has ever signed up in a first quarter. And Time Warner, the second-biggest cable company in the nation, had its best quarter ever for broadband subscriptions, winning 343,000 new subscribers in the first quarter.”

“Everyone wants to make it a horse race between cable and DSL,” said Leichtman. “The truth is, there is plenty of opportunity for both sides to win.”

Jun 17, 2006 | By Nuno

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