According to new data from RHK Inc, at 1.071mn compared to 915,000, additional DSL subscriptions forged ahead of cable subscriptions in the second quarter of 2004. Total North American broadband subscribers were reckoned to number just over 35mn at the end of the period, with 14.3mn DSL, 20.5mn cable, and 0.3mn in RHK's 'other' category. RHK says this was the first quarter in which regional DSL additions 'were substantially ahead' of cable modem additions.

RHK believes the single biggest reason DSL is growing faster than cable in North America is pricing. In a consumer survey conducted by the company in June, 40% of DSL subscribers paid less than US$30 per month compared to 23% of cable users spending the same amount. Again, 69% of DSL subscribers paid less than US$40 per month versus 49% with cable broadband. "In addition to strong pricing packages and greater availability, DSL service providers are likely benefiting from the growing base of direct broadcast satellite (DBS) subscribers, where comparable broadband service options remain virtually non-existent and are often quite expensive", said Teresa Mastrangelo, RHK's program director of Broadband Access Networks with RHK. The idea here is that the RBOCs have partnership deals with DBS providers and are able to assemble attractive service packages that encompass voice, data and video, narrowing the opportunity for cable companies.

What might this mean for cable's worldwide prospects? If you mix and match statistical sources (admittedly not a very scientific thing to do), you could conclude that, at 32.8mn subscriptions in 2003 (source IDC, Worldwide Cable Modem Services 2004-2008 Forecast), worldwide cable modem use is already a minority sport compared to DSL use (63.84mn subscribers at year end 2003, source Point Topic for the DSL Forum). Given the calculation that the US alone accounted for 46.7% of worldwide cable modem subscribers in 2003 (IDC), you might further suppose that any additional loss of ground in North America could signal the beginning of the end for cable as a serious contender in global broadband access markets.

Down not out
However, it's unlikely that the cable industry will sit on its hands and just let any DSL tide flow over it. Other research from Point Topic indicates that the cable community is right up there with the DSL companies when it comes to cutting prices. Published at the end of July Point Topic's Broadband Tariff Benchmarks study has broadband prices falling sharply for both DSL and cable modem services in the first half of 2004. The company says that cable modem operators cut monthly rentals for services by an average of 16%, with DSL operators reducing them by 13% in the same period. Point Topic also concludes that the cable modem market proved to be more dynamic with widespread price falls across Americas, Asia Pacific and EMEA.

The IDC research referenced above takes quite a positive view of cable. While acknowledging that cable isn't the only game in town, IDC projects worldwide cable modem service subscriptions climbing from the 2003 32.8mn figure to 69.4mn in 2008. "The push is on and operators are aggressively marketing broadband services to both residential and business customers", said Amy Harris, manager of IDC's Broadband Markets and Technologies service. "Faster speed broadband is quickly moving from luxury to necessity status, and users are steadily migrating from their dial-up connections".

Watch out for wireless
Nor, if market analysts Visant Strategies are correct, is broadband access likely to remain a straight shootout between DSL and cable. Visant Strategies believes that while DSL and cable modem providers are currently enjoying a duopoly that will remain in tact for the next four years, wireless solutions for broadband will outpace the growth of wireline options beginning in 2009.

The change will be both due to a maturity of wireline solutions and the growth of wireless technologies, such as 802.16/WiMAX, argues the study, 802.16/WiMAX: Strategic Overview 2004. "Wireless technology will play a pivotal role in extending the growth cycle of broadband technology; we are seeing the groundwork for this occur now", said the study’s author Andy Fuertes. Visant Strategies reasons that commercialisation and cost reduction of various smart antenna technologies will allow operators to limit requirements for broadband wireless access (BWA) wireless infrastructure, making deployments cheaper. While tower acquisition and construction remain key barriers to the BWA and 802.16 industries, mesh technologies, though unproven in a commercial setting, could also be used as a solution. Visant Strategies further speculates that the cross pollination of fixed wireless systems with mobile IP-based solutions will also act as a catalyst for BWA and 802.16 growth.
John Williamson