DSL Fuel

Does DSL have enough gas to overtake cable in the broadband race?

With dropping prices and growing availability, analysts now project DSL to overcome cable modems in number of broadband subscribers. In October, for example, Cahners In-Stat Group predicted DSL subscriptions in North America-2.9 mil-lion at year-end 2000-would jump past cable to 8.6 million by 2003.

One reason for the projections is that DSL lines are beginning to reach farther into the suburbs. While most lines now extend only 12,000 to 14,000 feet from each central office, new line-extension technology is increasing that to 18,000 to 24,000 feet. Furthermore, new equipment is making DSL compatible with the digital loop carrier equipment used in many outer suburbs.

DSL subscriptions are also being fueled by lower prices. Over the past year, major DSL providers have dropped the price of basic monthly packages (typically 384Kbps to 640Kbps downstream and 128Kbps up) from a minimum $49.95 down to $39.95, about the same as cable-modem service. What's more, providers typically rent the required modems for free and run frequent promotions that reduce installation fees.

The lower prices are due primarily to cheaper equipment, which, in turn, stems from a more competitive vendor environment. Compared to cable, there are more service providers, a more diverse selection of services and technologies, and a faster-growing global market. In addition, over half of new DSL customers can choose the cheaper option of user installation, something the cable providers are only beginning to introduce.

"It's huge to be able to do self-installs," says Cahners In-Stat Group analyst Mike Lowe. "The fewer trucks and technicians, the cheaper it gets."

Eric S. Brown, a regular contributor to PCWorld.com, is a freelance writer living in the Boston area.

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This article was originally published in the February 2001 print edition of Entrepreneur with the headline: DSL Fuel.

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