Cable modem, DSL growth to eventually slow, firm says

According to a recent research study by Merrill Lynch, cable modem Internet access subscribers will outnumber DSL users by 6.1 million in 2003.

The report estimates there will be 14.8 million cable modem Internet access users and 8.7 million DSL users by year-end.

Cable modem service, since its inception, has been more popular with customers. But Merrill Lynch expects to see DSL use pick up this year, with a larger increase in subscribers than in previous years.

In 2001, the number of DSL users increased by 1.9 million; in 2002 DSL subscribers increased by another 1.9 million. This year, the firm says 2.6 million users will sign up for the broadband service.

Despite cut-rate pricing and local service bundles, the number of new DSL customers is still expected to fall short of the number of new cable modem subscribers.

In 2001 the number of cable modem users increased by 3 million, and in 2002 cable modem subscribers increased by 4 million. This year the number of cable modem users is expected to increase by 4.4 million, according to Merrill Lynch.

Looking ahead, however, the financial research firm expects high-speed service adoption to slow down slightly in 2004 and 2005. Merrill Lynch predicts the number of DSL users to increase by 2.3 million in 2004 and 2.2 million in 2005.

The firm predicts the number of cable modem users to increase by 3.9 million in 2004 and 3.6 million in 2005.

There are some users who are not willing to pay $20 to $30 more per month for broadband Internet access and are very happy with their $20-per-month dial-up service. And these high-speed service providers have a set market defined by geographic boundaries. You can only try to sell DSL and cable modem services to the same users so many ways. Either they’re going to adopt the service or they’re simply going to stick with what they know.