Broadband Limit Might Be 60 Percent

A new report from DSL analysis firm Point-Topic says that the experience of South Korea shows that at most, 60 percent of residences in advanced nations want a broadband Internet connection.

by Tim Johnson of www.point-topic.com [September 11, 2002]

Experience in South Korea suggests that the market for residential broadband might be limited to around 60 percent of households, at least under current conditions. South Korea is still far ahead of the rest of the world in terms of the take-up of DSL per 100 population, and still has more DSL lines than any other country. But its growth in DSL and cable modem installations is slowing down sharply, and other countries are starting to catch up.

Taking cable modems into account, about 54 percent of homes in South Korea now have a broadband connection. The number of DSL and cable modem connections together grew by only 11 percent in the first half of 2002, from 8.1 million to 9.0 million, much less than in previous periods. The number of users still relying on dial-up access to the Internet is small and shrinking, so it is likely to be increasingly difficult to grow broadband numbers in future.

"It really looks as though the current wave of broadband connections in Korea is starting to come up against the limits," says Tim Johnson, Publisher of Point Topic. "Since there are strong incentives to use broadband in Korea, this should be sending a message to the rest of the world about where to set targets. If you look at how far dial-up Internet has got in other advanced countries, I think the limit for broadband will usually be about 60 percent of homes."

This still leaves plenty of room for growth worldwide. In North America, where cable modems are bigger than DSL, Canada is reaching about 25 percent and the USA is reaching 12 percent penetration of households. These countries are also showing a slowdown in broadband growth, particularly with DSL, but Point Topic believes this is due to cutbacks in capital spending as a result of the telecoms financial crisis, not saturation.

Another factor affecting the figures is seasonal. Products such as PCs and electronic consumer goods generally generally sell more slowly in the first half of the year and more strongly in second half. DSL figures show evidence of the same tendency.

Other countries are now catching up on Korea. Japan, the USA, and Germany all added more lines in the first half of 2002. The USA has dropped off the "Top Ten" list for DSL penetration completely and is now twelfth among major countries, after Singapore.

South Korea, the USA and Canada still account for nearly half the DSL lines in the world and all three grew relatively slowly in the last half year. The other 47 countries included in Point Topic's survey showed a total growth of 66 percent in the period, led by China, Japan, Brazil and the countries of Western Europe. The UK is gaining ground at last in DSL and was one of the fastest growing major countries in the first half of 2002.

For more data, download Point-Topic's new DSL Benchmarking Report on the company website for free (registration required).

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