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Broadband breakthrough

The fiber-optic phenomenon powers forward. What to know before you pick your connection.

By Noel C. PaulStaff writer of The Christian Science Monitor / August 19, 2002



Michael Feinberg knew he was ready to buy into broadband when navigating the Internet began to seem more like slogging than surfing.

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In the course of researching law cases, or downloading music files, the Chicago law student's dial-up Internet service through America Online began consistently to disconnect.

Mr. Feinberg soon found a high-speed antidote. His new modem, acquired from the local cable company, boosted the speed of his Internet service by a factor of 10.

He was able to access the Web immediately, and could talk on the phone while working online. For Feinberg, the service has become an at-home necessity. "I don't have to deal with the hassle of having to load each page every time I need a law case," he says.

Faster Internet service is the main engine driving Americans' relatively quick adoption of broadband, the high-speed transmission of text, audio, and video, normally through cable or telephone lines. More than 15 million households now subscribe to a broadband service – up from 9 million just a year ago and 3.5 million in 2000, according to ARS, a market-research firm in La Jolla, Calif.

Most dial-up web users (about 50 million US households) have waited to update their service because of concerns about price. Yet many holdouts are beginning to switch, spurred by new plans that bundle broadband with other services or offer lower prices for different levels of Internet service.

Despite the availability of broadband services that are now priced at less than $25 a month, providers suspect many interested consumers may wait a few years to upgrade.

Millions of potential customers, experts say, have been turned off by broadband over the past three years after discovering that the service was not available where they lived or was too much of a hassle to install.

Some may also have been confused about differences between broadband's two primary means of distribution: cable and digital-subscriber lines (DSL).

Providers, experts say, now must give people reasons to take a second look.

"It was frustrating for consumers from the beginning," says Ernie Berckstrom, an analyst with market research firm In-Stat/MDR of Scottsdale, Ariz. "The marketing was out in front of what was actually being offered."

Not-so-speedy beginnings

Americans' thirst for broadband soared during the late 1990s. But only a fraction of consumers ultimately received service. The problem: Providers could not meet demand.

Cable companies, which often offer both high-speed Internet and digital cable television, often overpromised, experts say. Local telephone companies, which provide high-speed Internet on DSL, did the same.

Consumer interest has recently been reignited because both cable and telephone companies have beefed up their networks to hold more data and reach more customers. "The telcos have gotten their act together," says Mr. Berckstrom.

Telephone companies in particular are more aware of the limitations of their service – speeds slow further away from the companies' central offices. The time to set up service has been cut from about a month, in some cases, to about five business days for both cable and DSL.

Though coverage gaps still exist in suburbia and rural America, about 75 percent of American households can now receive broadband in their homes.

Consumers adoption of broadband no longer hinges on technological capacity. "The market has reached the point where it's no longer an issue of supply, but demand," says Mark Kersey, a broadband analyst with ARS.

The pull of new pricing

Most consumers first look at cost when considering whether to switch to broadband.

Broadband providers have traditionally offered a flat fee for one service plan. But many are beginning to show more flexibility with their pricing.

Covad, a Santa Clara, Calif.-based firm that provides nationwide DSL service, recently began offering four different service with prices that range from $22 to $60 per month. They are called "Quick," "Fast," "Faster," and "Fastest." Quick service is about four times as fast as standard dial-up service. Fastest service is about 25 times as fast.

Cable companies AT&T Broadband, Charter Communications, and Cox Communications have all unveiled tiered pricing in different parts of the country.

The faster services are targeted at those who each day spend hours online, thereby "hogging" bandwidth. The slower, lower-priced services hope to attract price-sensitive consumers who care primarily about sending and receiving e-mail.

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