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Broadband Access
Q2 2006: “Lowest Quarterly Growth in Broadband History”
Market Saturation to Blame, Says Point Topic
by Ken Wieland
Due to near-saturation levels in developed markets, Point
Topic, a research firm, has declared Q2 2006 as having the
lowest broadband quarterly growth rate ever.
According to its statistics, the number of broadband
subscribers around the world – compared to Q1 2006 – grew
by only 7.1 percent, taking the total number of broadband
lines to 247.1 million as of 30 June 2006.
Compared to Q2 2005, the annual growth was 36 percent, a
sharp fall compared with the 43.2 percent growth rate between
Q2 2004 and Q2 2005.
“A slowdown in broadband growth in the first half of the year,
due to the seasonal nature of the market, is typical but we’ve
never seen it so low,” says Vince Chook, an analyst with Point
Topic. “The main reason is that some of the markets that
accounted for much of the broadband growth in the past are
now reaching saturation point. Although I expect the growth
rate to pick up in the next couple of quarters, I don’t expect it
to be significantly greater.”
So, what constitutes a ‘saturated’ broadband market? “We
use the most developed markets, such as Japan and South
Korea, as benchmarks,” says Chook.
According to Point Topic, these two markets had a broadband
penetration (by population) of 20 percent and 26 percent
respectively as of 30 June 2006. Broadband penetration by
household, due to the prevalence of multi-dwelling units
(MDUs) – which makes it more economical for operators to
connect large numbers with broadband connections – is also
high in these markets: 52 per cent in Japan and a staggering
85 percent in South Korea. Once markets begin to hit these
broadband levels, says Chook, the opportunities for future
growth are limited.
“It could be that if new broadband applications became more
popular, such as IPTV and HDTV, then the guidance on what
constitutes a saturated market will have to change,” says
Chook. “But that’s not going to happen in the short term.”
Outside North America, Western Europe and parts of Asia,
there are plenty of countries that fall far short of the 20
percent broadband penetration rate by population, China
being the largest. With only 3.6 percent of its 1.3 billion
population connected to a broadband connection as of
June 30 2006, the scope for growth in China is enormous. During
Q2 2006 alone, according to Point Topic, China added five
million new broadband lines, representing 12.6 percent growth
from the previous quarter.
India, however, is the fastest growing broadband country in
the world, increasing its subscriber base by 33.3 percent
during Q2 2006 to over 1.5 million. Point Topic predicts that
India will have over two million broadband subscribers by the
end of Q3 2006.
In terms of broadband technology, DSL still holds the lion’s
share, accounting for 67 percent of broadband connections as
of 30 June 2006. Cable modem and FTTx bring up the rear
with 23 percent and nine percent shares of the market
respectively.
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