CeBIT: High-speed web buoys gloomy tech companies

The high-speed internet has emerged as a beacon for firms at CeBIT, the world's largest electronics trade fair, as computer gear...

The high-speed Internet has emerged as a beacon for firms at CeBIT, the world's largest electronics trade fair, as computer gear makers, telecoms operators and consumers embrace the technology.

French telecom equipment supplier Alcatel told a conference that the take-up of fast, always-on access to the web accelerated in the fourth quarter of 2002, with two million new households hooked up around the world in December.

Research companies forecast total subscribers will rise to 100 million in 2003 from 60 million households last year.

"There is no limit to...what we can do with broadband," said Serge Tchuruk, chief executive of France's Alcatel, the world's top maker of equipment which turns ordinary copper telephone wires into broadband pipes to the home by using DSL technology.

"Voice, sound, images and video come together, all in one flow, and they can be used to create new services," Tchuruk said.

With prices already low enough to attract large numbers of consumers in North America and certain Asian countries, offerings in Europe are also becoming cheaper.

"Prices for broadband have dropped below...€30 a month in Belgium and the Netherlands," said Matthew Nordan, analyst at US market research group Forrester.

Broadband offers data speeds that are typically 500,000 bits of data or higher per second - around 10 times faster than a normal phone line - and supports constant connections to the internet rather than having users dial separately each time.

Tchuruk estimated telecoms and cable operators are earning some €14bn (£9.7bn) a year on broadband, which is starting to compensate for eroding revenues of voice communications where carriers compete aggressively on price.

There is plenty of scope to grow, with broadband in use by less than 10% of households in most countries around the world.

Yet industry executives realise that fast internet alone will not be enough to attract more than a minority of consumers. Tchuruk said no more than 30% of households would take broadband if it just offered faster access to basic web pages.

New demand

Telecoms and cable companies could start selling services like interactive TV, gaming and video communications, said Gerard Kleisterlee, chief executive of Philips Electronics, Europe's largest consumer electronics company.

"Broadband is going to enable service providers to offer a whole new range of services and products," Kleisterlee said.

Others estimate that the ceiling is as low as 20%.

"If you want to exceed...20% you have to create new demand with new services and applications," said Jean-Claude Baumer, European broadband marketing chief of US-based Motorola, one of the world's largest set-top box makers.

Philips signed an alliance with Spain's Telefonica late last year and is now selling a streaming Internet music player, in conjunction with Telefonica's broadband internet. It expects many more such alliances this year.

Philips is also planning to put wireless Internet access links in a wide range of products, such as computer monitors, portable audiovisual music players, DVD players, speakers and televisions, Kleisterlee added.

The world's largest chip maker Intel gave fast wireless internet a push on Wednesday, when it said it will put wireless links to broadband Internet in all laptop chips.

Motorola is catering to the same desire to use internet content throughout the home and office, launching at CeBIT a device that downloads MP3 songs from the home computer over the air, and then plays them on an ordinary HiFi audio set.

After initial scepticism, almost all large telecoms providers in Europe are testing interactive television services over broadband internet connections. Several will introduce commercial services this year, said Tchuruk.

Selling internet music subscriptions, broadcast TV and video-on-demand to broadband users could easily generate extra revenues of €50 a month per household, Tchuruk said. Yet bottlenecks remain. A Forrester poll among technology-enthusiastic consumers showed half of them still thought basic broadband access was too expensive.

Another problem is a lack of co-operation between film and music publishers, telecoms operators, the computer industry and the consumer electronics makers, Kleisterlee said.

The lack of an adequate copyright protection standard means music and film publishers will only sign deals with carriers if they get guarantees their products will not be pirated.

"All these factors will have to come together before the real growth can take off," Tchuruk said.

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