Flagging economy stymies US broadband growth

The growth of broadband Internet access in the US slowed in the first half of 2002, with only 27% more lines installed in that...

The growth of broadband Internet access in the US slowed in the first half of 2002, with only 27% more lines installed in that period compared with a 33% gain in the second half of 2001, according to the US Federal Communications Commission (FCC).

High-speed Internet connections - defined as Internet connections that provide service to homes and businesses at speeds higher than 200Kbps (bits per second) in at least one direction - continued to reach more parts of the country, with subscribers in 84% of the nation's zip codes, compared with 79% six months earlier.

However, the growth rates for deployment of both ADSL (Asymmetric Digital Subscriber Line) and coaxial cable-based connections, have shrunk.

The slowdown was sharpest for ADSL, which grew 29% in the period to 5.1 million from 3.9 million lines. In the previous period, ADSL lines had grown 47%. Adoption of cable broadband also slowed from 36% to only 30%. 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 inhibiting broadband growth in the period, according to Gartner networking analyst David Neil. The cost of broadband in the US ranges between $40 (£25) and $50 (£31) a month.

"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 broadband adoption 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.

ADSL in particular has been held back partly by the relatively slow expansion of services to reach more customers, Neil said. Carriers may want to offer broadband to more customers but they are now strapped for cash.

Lack of awareness also plays a part, he added. Potential broadband customers who once called the local carrier and were told ADSL was not available to them yet may have turned to cable, or given up on broadband all together.

Consumers' Internet habits, such as surfing the Web and buying books or travel products online, will drive them toward broadband as they get frustrated with waiting for dial-up connections.

At the same time, broadband was, increasingly, found in areas with lower incomes and less population density, according to the FCC. With zip codes ranked by median household income, broadband subscribers were found in 69% of the bottom one-tenth of zip codes, compared with just 59% in June 2001.

Of zip codes at the top of the income scale, 98% were broadband subscribers. There were subscribers in half of the least densely populated zip codes, compared with 37% in June 2001. Broadband was in use in 99% of the most densely populated zip codes.

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