Broadband penetration to approach 70% in next 10 years

Penetration of both cable and DSL in Canadian households has grown considerably since they were first introduced, but both technologies appear to be reaching a saturation point, according to new research from Maravedis. The Montreal-based research firm indicates 2006/2007 could be a turning point as wireless technology begins to take a greater share of broadband households at the expense of the two wireline-based technologies. More information on the growth of broadband wireless will be presented in an upcoming issue of Network Letter affiliate publication Report on Wireless. "We feel that 2006/2007 are years where we’re going to see a cap in terms of penetration rate for DSL and cable, and as wireless is introduced in different areas that’s going to eat into the subscriber base of cable and DSL," Maravedis senior analyst Julien Regoli tells Network Letter in an interview. The Internet penetration numbers are part of the Canadian Internet Database (CID), which Maravedis released on November 7. It is a comprehensive report detailing Internet user statistics based on technology and by postal code. The report also provides Internet penetration growth figures by technology for the next several years. Cable, DSL and wireless to dominate in 10 yearsAccording to the research firm, more than 95% of Canadian households with Internet access will subscribe to a broadband service by the end of 2010. Maravedis predicts that overall household Internet penetration will surpass 70% by 2017 and that all households by that time will subscribe to high-speed services. The research company notes that the West and Ontario will lead in overall penetration with levels above 75% while Quebec and Atlantic Canada will still only have penetration rates of approximately 55%. British Columbia is expected to lead the country in Internet penetration with a rate close to 80%. At the end of 2005, slightly more than 58% of Canadian homes had Internet access – a figure that is expected to increase to a little more than 60% by the end of this year, according to the research firm (see chart below for the penetration trend growth). Regoli admits this is a conservative estimate, but suggests the Internet penetration growth curve will mirror that of cable TV penetration growth, which has also slowed in recent years. There are a number of factors to explain why cable TV penetration growth can be used as a good proxy for predicting Internet penetration growth. As with cable TV, consumers have to buy a separate piece of equipment and then subscribe to a service with monthly recurring service charges. "I appreciate the fact that may be on the conservative side, but we’re following a deceleration of growth and we don’t want to be to be overly optimistic because we suspect we’re heading into a recession, so that’s going to slow down growth in the next few years," he explains. As broadband penetration continues to grow, the death of dialup is nearing, according to Regoli. While the content and graphic rich nature of websites have caused the decline of dialup, the decreasing price gap between lower-speed broadband and dialup has also played a role. For $25 per month, a customer can receive an intermediate-speed broadband service compared to $10 to $15 per month for a dialup service. The impetus for the CID came from a carrier client that wanted postal-code-level detail of Internet penetration and use of the various broadband technologies in three cities in British Columbia. After completing the project, Maravedis decided to conduct the exercise nationally.

Broadband penetration to approach 70% in next 10 years

News | 11/24/2006 5:00 am EST

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