Report: DSL to Overtake Cable Internet

The number of households using broadband is expected to double within the next three years as DSL surges past cable Internet as the high-speed service of choice for consumers, analyst firm JupiterResearch said Monday.

By 2011, 79 million U.S. households and 110 million households in Western Europe will have broadband access. This would equal 65 percent of Internet-connected households in the United States, the report says. However, the US market would continue to trail some countries in Western Europe, where broadband access is cheaper.

The report is good news for cable Internet subscribers, which for the most part have seen no drop in monthly subscription rates. An ominous forecast may help to spur cable operators to lower prices.

Cable companies have long said that the value and speed of cable Internet justify the higher price, which in some cases is two or three times more than a competing DSL offering in an area.

"Strong momentum on the part of telephone companies means that DSL will overtake cable modems in market share by 2010," said Joe Laszlo, Research Director at JupiterResearch and lead author of the US Forecast report. "US cable operators will have to combine price cuts and better marketing efforts to forestall this outcome."

The story is different in Western Europe, where DSL already holds a commanding advantage over cable modem-based services. By 2011, almost 89 million of those 110 million broadband households will be connected by DSL.

Additionally in Europe, telecommunications companies will need to work harder to make money from broadband, JupiterResearch says. Each household will generate 54 percent less revenue in 2011 when compared with 2005.

"The hope of European telecom incumbents that new revenues from broadband will compensate for declining traditional fixed voice revenues will not be met through broadband access alone," said Ian Fogg, Senior Analyst at JupiterResearch and lead author of the European Broadband Forecast. "Broadband Internet service providers must control their costs as they look to new revenue sources enabled by widespread broadband adoption."