Need For Higher Bandwidth Connections Spurs xDSL Equipment Growth

EDP Weekly's IT Monitor, August 9, 1999

Driven by users demanding faster access to the Internet, worldwide shipments of digital subscriber line (xDSL) equipment is forecast to grow from 350,000 units in 1998 to 9.8 million units in 2003, according to the Dataquest unit of Gartner Group Inc.Healthy market growth is expected for xDSL in all regions, with the United States leading the way as 50 percent of US households had a PC and 36 percent of the PC households were connected to the Internet at the end of 1998.

"DSL technologies have barely started to tap the total available market for broadband Internet access," says Kathie Hackler, principal analyst for Dataquest's Remote LAN and Internet Access Worldwide program."In this early stage of the market, xDSL is mainly being deployed as a business tool for telecommuters and SOHOs, while cable modems have been more targeted for consumer/residential applications.With the market momentum that both technologies are gaining, it appears for at least the next five years, that both will be market winners."

Dataquest analysts say two main factors will drive the market growth:a growing need to access information on the Internet and remote intranets, and an increasing tendency to use the Internet not only for e-mail, but also for more bandwidth demanding tasks such as research and education and news and information access.Another factor spurring the growth of xDSL is telecom providers' need to compete with cable modems, which currently lead xDSL in shipments.In 1998, 2.4 cable modems were shipped per every xDSL customer-premise equipment (CPE) device.

"As broadband Internet service providers expand the footprint of their service offerings into more major metropolitan and second and third-tier markets over the next five years, the outlook for cable modem shipments is for vigorous growth in North America," predicts Patti Reali, industry analyst for Dataquest's Remote LAN and Internet Access Worldwide program.