High-speed access goes mainstream
Residential broadband took off in earnest in the United States in 2003, as local phone carriers finally got serious about offering their
customers high-speed Internet service.
Verizon Communications, SBC Communications, Qwest Communications
International and BellSouth all moved to beef up their DSL (digital
subscriber line) offerings and make them more attractive to customers
through expanded service,
price cuts and aggressive marketing. Those moves helped
drive DSL growth and put pressure on cable broadband providers to
respond with their own special deals and service improvements.
Broadband services added new subscribers at a brisk clip, with DSL
growing more than 30 percent between January and September to some 8.2
million customers, according to Leichtman Research Group. For the same
period, cable broadband grew just less than 30 percent to 14.5 million
The clearest losers in the race to broadband for now appear to be
dial-up Internet service providers such as America Online and Microsoft's MSN. Both services, the two largest dial-up services in the United States, witnessed a staggering drop in their subscriber rolls in the past year, with AOL losing 2 million members over a 12-month period.
The biggest winners have been consumers, who now have a choice between
several broadband service providers in some major markets. But there is
still considerable uncertainty over the future of broadband in the
country, which lags global trends in bandwidth price and speed.
Meanwhile, the Bells won some significant concessions on broadband
deregulation, when the Federal Communications Commission in August
issued a long-awaited overhaul of telecommunications rules. But the new rules pleased almost no one and have been challenged in court.
Meanwhile, cable companies face a potentially crippling legal ruling in a federal appeals court proceeding that challenges FCC policies aimed at keeping the industry free of regulations that have been imposed on the telephone industry.
Regulatory issues aside, delaying broadband deployment has become
increasingly untenable for the Bells in the face of growing competition
from cable companies.
Phone and cable companies have until now been defined by the services
they offer. But the distinctions are dropping away with the advent of
high-speed digital networks, which are capable of running data, video
and voice applications over the same line.
As a result, cable and phone companies are increasingly stepping on each
other's turf, with cable companies rolling out voice products and phone
companies exploring delivering television programming over DSL lines.