December 20, 2002, 8:24 AM — The growth of broadband Internet access in the U.S. slowed in the first half of 2002, with 27 percent more lines installed in that period following a 33 percent gain in the second half of 2001, the U.S. Federal Communications Commission (FCC) reported this week.
High-speed Internet connections continued to reach more parts of the country, with subscribers in 84 percent of the nation's zip codes, compared with 79 percent six months earlier. However, the growth rates for deployment of both ADSL (Asymmetric Digital Subscriber Line) and coaxial cable-based connections shrunk, according to a statement by the FCC.
The information was collected from service providers and includes data as of June 30, the statement said. The agency gathers data on broadband deployment every six months.
High-speed lines, defined as Internet connections that provide service to homes and businesses at speeds higher than 200K bps (bits per second) in at least one direction, grew 27 percent in the first half of 2002, to 16.2 million lines from 12.8 million. In the second half of 2001, the number of lines grew 33 percent to 12.8 million from 9.6 million.
The slowdown was sharpest for ADSL, which grew 29 percent in the period to 5.1 million from 3.9 million lines. In the previous period, ADSL lines had grown 47 percent. However, adoption of cable broadband also slowed, to a 30 percent rate from a 36 percent rate. In the first half of 2002, cable broadband lines increased to 9.2 million from 7.1 million.
The country's weak economy probably was the biggest factor driving down broadband growth in the period, according to David Neil, a networking analyst at Gartner Inc., in Stamford, Connecticut. Although the price of broadband is not exorbitant, in the range of about US$40 and $50 per month, neither is it inexpensive.
"Everybody has just been very careful about the money they've been spending. ... If you're not using it for business purposes, it's a big chunk of change to justify," Neil said.
Another factor holding back adoption of broadband is that potential customers have heard horror stories about setup problems, he added. Although setup seems to have improved since the early days of broadband, negative perceptions linger.
"It's very difficult to develop a good reputation, but it's very easy to lose it," Neil said.
ADSL in particular is being held back partly by the relatively slow expansion of services to reach more customers, he added. Carriers may want to offer broadband to more customers but they are now strapped for cash. Lack of awareness plays a role, too: Potential broadband customers who once called the local carrier and were told ADSL wasn't available to them yet may have turned to cable, or given up on broadband all together, Neil said.