US Broadband and the Death of the Land Line Internet Connection?

According to research from the OECD, the US continues to see growth in broadband connections and is the largest in terms of total accounts at around 81 million connections at the end of 2009.  But when the same data is reviewed based on connections as a percentage of population the US drops to 15th.  One article published on Gigaom.com looks raises some concerns about the type of connections and pace of growth.

Graph comparing US broadband penetration to rest of OECD countries

Specifically the increase of fiber connections to the home (FTTH).

But better broadband is hard to see in the OECD numbers. In June 2008 just 3 percent of U.S. broadband connections were fiber to the home, and by of the end of 2009, only 5 percent were (consisting of 1.3 FTTH connections per 100 inhabitants). This number still lags broadband powerhouses like Japan (13.5 connections per 100 inhabitants and about 54 percent of connections) and Korea (16.4 FTTH connections per 100 inhabitants and about 49 percent of connections), plus we could see it slip further given how Verizon has put a halt to future FTTH deployments. More important, 18 months ago just 45 percent of Japan’s connections were fiber while 39 percent of Korea’s were, so they’re still adding FTTH at a much faster rate than the U.S.

Is this a problem for the US?  Maybe.  Because of the market size the US continues to be the primary source of innovation taking advantage of broadband connections.  Even though speeds might be possible at a higher density of population having access to a much larger market, when your business is in bits and bytes is ultimately much more valuable.

Wireless broadband should also be taken into consideration as the introduction of tablet PCs (primarily the IPAD) is changing dramatically the usage patterns and Internet access.  Looking through data for a DMG client’s web site, mobile visitors now account for almost 5% of all traffic, up from less than 1% a year ago.  Half of that traffic is from just IPhone and IPad users and IPad users accounted for no traffic a year ago.

With that kind of growth and the fact that Ipad’s could account for as much as 12% of the US PC and tablet market by the end of 2012 (Goldman Sachs), land-line broadband will most likely start to go the way of land-line phones.  According to recent survey results:

In the last 6 months of 2009, one of every four households (24.5%) did not have a landline telephone but did have at least one Wireless telephone. Approximately 22.9% of all adults (approximately 52 million adults) lived in households with only wireless telephones; 25.9% of all children (more than 19 million children) lived in households with only wireless telephones.

I would not be surprised if in 2011-2012 we started to see a reduction in land-lines to the home and observed an increase in wireless only Internet households as well, especially in urban areas with prevalent Wi-Fi coverage.

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