BBH Central IconBBH Report Home PageSandy and Dave
  CENTRAL home  |   REPORT home About/Contact Us  |   Subscribe  |   Index by Topic  
The May 23, 2002 Issue Provided by System Dynamics Inc.
Table of Contents Print this article Email this article to a friend

Broadband: Are We Reaching "The Tipping Point"?

Have you read "The Tipping Point" by Malcolm Gladwell? It's one of those books that presents an idea so intuitively appealing, and in line with your own experience, that it makes you wonder why you didn't think of it yourself. As Gladwell says on his Web site "The word "Tipping Point" comes from the world of epidemiology. It's the name given to that moment in an epidemic when a virus reaches critical mass." He goes on to explain that "once you start to understand this pattern you start to see it everywhere. I'm convinced that ideas and behaviors and new products move through a population very much like a disease does."

When writing about new technology adoption, the mass media always seems to have a binary approach: everything is either disappointingly slow or growing like crazy. There's little understanding of the dynamics of how something moves from being new to being taken as normal. When home PCs were first introduced, the press wrote articles saying how specialized they were because "only 5% of US consumer homes have a PC"; then they were writing "only 20% of consumers have a home PC", then "only 40%". Now two-thirds of US homes have PCs and the newspapers and TVs are full of PC ads targeted to the consumer. Things progressed in a similar manner with online services and Internet access. Now we're hearing the same story again about the "slow" adoption of broadband.

Broadband services (cable and DSL) started becoming available in North America during 1996 and 1997. By the end of 1997, it was in about 110,000 homes - a penetration of about 0.1%. At the end of 2001, it was in more than 10% - a hundred-time growth in four years. Let's look at some of what's been happening this year.

  • A news release from Nielsen/NetRatings reported that broadband usage had outpaced narrowband usage for the first time. Their measurements showed that 51% of the online hours in January 2002 were by broadband users, whereas last year the number was 38%. They wrote about the growth as "the unstoppable march towards broadband".
  • An article about Taiwan in the Financial Times pointed out that the size of Taiwan's broadband Internet population quadrupled in 2001 to 1.13 million, because of heavy promotion of low-priced ADSL services by domestic operators. The number of subscribers is expected to more than double again during 2002.
  • Telecommunications Reports International (TRI) reported that a significant shift in the online access market began in 2001, with dial-up access providers seeing their first-ever year-over-year decline in number of users. However, providers of broadband Internet access, including cable modem and digital subscriber line (DSL) connections, closed the year with significant gains. Although the US online access market grew barely one percent (from about 68.6 million users at the start of 2001 to 69.3 million by the close of the year) the DSL and cable modem access methods combined recorded a 62-percent growth rate for the year according to TR's Online Census. This was despite the shut-down of @Home and the increases in rates by many DSL and cable broadband providers.
  • A new report from Nielsen/NetRatings showed that the largest broadband markets (such as NY, LA, Boston, Philadelphia, Wasington and Atlanta) experienced at least 48% year over year audience gains comparing this April with a year ago. The top two broadband cities, New York and Los Angeles, had more thtan 70% year over year subscriber growth. Of the 20 cities with the most broadband users, Orlando, Fla., saw the greatest growth of 183 percent year over year.

These and many other reports tell us that broadband is reaching the tipping point. Expect the popular press to recognize it sometime soon.

( ) ( ) ( )