Dial-Up Modems' Domination To Continue

SCOTTSDALE, ARIZ.— Despite the buzz now surrounding broadband, it will take at least four more years before the speedy Internet access technology displaces the venerable dial-up modem as the preferred way of going online.

According to In-Stat/MDR, dial-up modems will remain the primary method of gaining Web access until 2006. Cable and DSL service will gain large numbers of subscribers in the intervening years with 25 percent of U.S. households being broadband connected by the end of 2002, with the majority going with cable modems for the next few years.

The installed base of DSL broadband will grow by about 3 million subscribers for a total of 7.6 million by the end of the year, with about 80 percent of these installations going into homes. Cable will continue its quick growth rate with about 10.2 million households equipped by the start of 2003, a 46 percent increase, said Ernie Bergstrom, In-Stat's senior analyst for advanced carrier business.

However, cable's lead will quickly evaporate with DSL catching up in 2004 and then surpassing cable. Bergstrom attributed this to the telco's 100 percent household and business penetration rate, while cable is limited to only a portion of U.S. homes.

"Cable just can't grow beyond the residential," he said.

There are still a few hurdles for broadband to overcome.

In-Stat's study found that the primary reason consumers are holding off from getting broadband is not a lack of availability, which was a sticking point while the broadband infrastructure was put in place, but price and a lack of a compelling application. One such application now rising in popularity is online gaming, which the company said could drive future sales.