Events | Previous Events
October 10, 2001 Event
Internet Interrupted: Breaking The Broadband Promise
The basic economic principles of supply and demand apparently don't apply to the broadband market. Nearly every high-speed Internet service provider is facing serious financial perils, ranging from precipitously dropping stock prices to bankruptcy or even downright insolvency. Curiously, the downturn comes amid ever-growing excitement over broadband connections. The nascent industry is faced with millions of consumers and businesses that are eager for a high-speed alternative to slow dial-up access. The broadband problem is particularly frustrating because it is the one major piece of the physical computing infrastructure that currently is limiting new, high-bandwidth applications. How is it possible for this industry to struggle when demand for high-speed access has never been higher? A combination of market conditions, government regulation, and slow adoption has crippled the once promising outlook for broadband, a technology once heralded as the most powerful driver of the Internet's potential.
Broadband represents a massive business opportunity. According to Cahners Group, worldwide broadband revenue will grow to $37 billion in 2005, from $6 billion today. Yet once high-flying companies such as Covad, Northpoint, PSINet, and even Excite@Home are dead, or almost dead. The "grow at any cost" models have not worked for these failed dotcoms. The larger, more established players have been blunted by legislation, specifically the Telecom Act of 1996. This law stipulates that Bell monopolies must open local networks to allow competition into the market for local telephone service. As an incentive to open networks, the Bells were offered a carrot: open the lines, and you can enter the market for long-distance service. Since the act had a carrot but no stick, the Bells faced no real penalties for not opening their networks. With the Bells having to gain certification in most states, the vast majority of the country is left without the services of companies that by all rights should be major players in the high-speed revolution.
Aside from the fates of the companies involved in providing broadband, many still see high-speed Internet access -- which will eventually open up a wide range of streaming and interactive video and audio to consumers -- as the key to what's left of the new economy. A gusher of speculative dollars drove the "if you build it, they will come" approach of the late '90s. Entrepreneurs wanting to join the broadband building spree had little trouble finding investors willing to put up millions. Their vision was clouded by dollar signs. A clearer vision of a more grounded future will be needed to predict and eventually make use of the information-age infrastructure now in place. Beyond that, what kind of products -- interactive movies, music, games, video conferencing, you name it - will flow through this service? And will broadband be the adoption growth driver as many have predicted? Either way, the industry and government must await real broadband demand, and that decision ultimately will be left up to the Internet user.
People Still Signing Up for Broadband
