U. S. Broadband Pricing and Alternatives for Internet Service Providers

Abstract

One facet contributing to the growth in demand for Internet services is the rise of residential broadband in the United States.¹ While broadband access to Internet functionality has long been available to businesses at reasonably affordable prices, only within the last few years has this access become available widely to the residential consumer at affordable rates. In most areas, two technologies are being used to provide broadband Internet access at present: cable modems and xDSL. Current rates for cable modem service are generally between $39.95–49.95 per month and over 150 cable companies currently offer cable modem services in the North America.² As of February 2000, Kinetic Strategies estimated that cable modem customers had reached over 2 million and that providers were adding an additional 5000 customers per day.³ TeleChoice, Inc. has reported that, as of the first quarter of 2000, 880,000 people had subscribed to xDSL service.⁴ The Appendix provides further information on xDSL and cable modem rollouts. In recent months, much attention has been focused on the various technologies used to provide broadband services. Strengths and weaknesses of these technologies have been examined and strategists and visionaries have shed much ink putting forth their views on which technology will triumph.

Broadband has been defined by the FCC to be 200kbps on both the upstream and downstream channels. This bandwidth was chosen as the minimum because it is considered the minimum amount necessary to be able to view webpages as if one was flipping the pages of a book. Conversely, narrowband access is currently limited to a maximum of 128kbps through ISDN lines. Most residential consumers continue to use dial up modems to access the Internet. The fastest dial up modem currently used has download speeds of 56kbps. It should be noted that many residential customers never obtain this maximum during actual use.

Cable Datacom News. Commercial Cable Modem Launches in North America. 01-20-00. Available at www.cabledatacomnews.com/cmic/cmic7.html. Accessed 02-25-00.

Cable Datacom News. Cable Modem Customer Count Tops 2 Million. 03-01-200. Available at www.cabledatacomnews.com. Accessed 03-05-00.

TeleChoice, Inc. North America DSL Market Reaches 600,000 Lines in 1999. Available at www.xdsl.com. Accessed 02-28-00.