Of the 30 million U.S. households predicted to have broadband service by 2004, 17 million will have a home network, according to Parks Associates. But will the residential market be able to lift telecom as a whole?

by Michael Pastore of cyberatlas.internet.com [April 30, 2001]

Of the 30 million U.S. households predicted to have broadband service by 2004, 17 million will have a home network, according to Parks Associates, which also found the home networking market will present new opportunities and unique challenges to service providers.

Parks Associates' report, "The Broadband Networked Home: Profiles of an Emerging Market," found the consumer segment interested in broadband networks already places strong emphasis on product reliability and interoperability. Most consumers in a household with a broadband network are inclined to endorse reliability over price; so a service provider and its products must inspire confidence to be successful, even if it means a slightly higher price tag. People in this segment would also rather install the product themselves than pay a professional, which should help keep costs down.

"Being unaware of what consumers consider important will significantly undermine a service provider's ability to sell not only broadband and home networking technology, but the next generation of value-added services," said Michael Greeson, senior analyst with Parks Associates. "Too often, residential service providers proceed with a very limited awareness of what the consumer actually wants. This should not be happening, especially since residential broadband consumers have a very clear idea of what services they would like to see from providers and how much they are willing to pay for those services."

One analyst even suggests that if the providers of broadband and home networks can come up with imaginative and attractive offers, the rapid expansion of the networked, high-speed home could lead the telecom industry out of its current slowdown.

"While high-speed access has long been a top desire of anyone who has waited for a page to load off of a dial-up modem, the demand for networks and residential gateways is a relatively new phenomenon," said Clifford Holliday, an author and analyst for IGI Consulting, Inc., and president of B&C Consulting Services. "This new demand is largely an artifact of the rapidly increasing number of multiple computer homes, and by the work-at-home trend. We now are in a situation with 40 percent to 50 percent of all new computers going to a home that already has a computer. Add to that the fact that 30 percent of our work force now works at home, at least part of the time, and the need for networks and gateways becomes obvious."

Residential gateways will allow home users to share their high-speed line, as well as printers, hard drives and other peripherals. Despite the current downturn, Verizon reported ADSL sales of more than 180,000, Holliday said. But service providers have yet to realize they can offer value chain offers to their customers, by combining high-speed access, with home network and gateway installations.

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