The Broadband market is seeing great growth and potential as new applications are built that needs high-speed connectivity. With the phenomenal growth in multi media applications that allow songs and videos to be downloaded or shared, the accent on service and technology has become very sharp. According to a report published by Point Topics, the major thrust is on technology and it is companies that use the latest technology, that prosper (Point Topic, 2007). The broadband market is dominated by technologies such as Cable, DSL, WLAN, Satellite, Leased Circuits, FTTx and others and competition is driven by access regulation and is intramodal or platforms based rather than facility-based. With increasing market penetration, technology and costs are facing increasing pressure as companies try to reduce the costs while increasing the technology inputs. Point Topic reports that in countries such as France and UK, the DSL technology has a very high market share, as much as 94% while the cable networks are left far behind. Wireless broadband networks are still coming up but the access is limited to certain regions in metros and the impact on the market share is not so sharp. ERG (2007) has reported that countries with high growth promise are the ones that need to invest heavily in the technology. Growth in these countries is driven to a very large extent by the quality of connectivity and organizations that invest in DSL seem to grow by a factor of 6. DSL has certain advantages over the cable network since the signal encryption and transmission is done by uing digital technology while Cable uses the analog model. The use of digital technology means that two way communication at very high speeds can be enabled at lower costs.
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Patra (2007) has written about the technology drivers in the Broadband market. According to the authors, while satellite based networks and cable based services are more popular for cable TV, when it comes to high speed Internet access, it is DSL services that have an edge over other technologies. There are four technologies that drive the Broadband market and they are jelly filled cables, optic fiber cables, integrated service digital networks and very small aperture terminals. While Jelly filled cables are far cheaper than other technologies, the transmission rate is 28.8 Kbps and this is considered as the starting point for the broadband market. ISDNs and optic fiber cables on the other hand operate at gate speeds of 100 Mbps or more. But these technologies are very expensive to install and maintain and only big companies can afford them. This brings into focus the economies of scale. Large companies such as NTL, Nortel, BT and others, which have a market share of 30% or more, find it economically viable to offer such services. The cost of fiber has come down by almost five-to-seven times in the last eight-to-nine months and this proves the economic theory of supply and demand that supply rises to meet the demand and the rates would decrease. With subscriber base of more than 2 million, these companies can distribute their fixed and operating costs over a wider base and this helps to reduce the per subscriber cost. Patra has reported that the market is self regulatory and the costs come down as the use is increased and he has suggested that the prices of fiber optical cables has reduced by about seven times in the previous eight months.
ERG (2007) suggests that the barriers for entry for new entrants is very high since they would have to not only invest in new technologies but also try to increase the customer base and get new clients. New entrants would indeed find it difficult to survive since the economies of scale would be against them and they would be faced with price cuts and discounts that established companies would offer to undercut the new entrants.
ERG. 2007. Broadband market competition report. Web.
Patra Gaurav. Arora Shipra. 2007. Boom time ahead in broadband market. Web.
Point Topics. 2007. Global Broadband Statistics: Technology Market Share. 2007. Web.