Dataquest: Satellite broadband will surge by 2005

While cable Internet and DSL (digital subscriber line) installation has yet to take off in the consumer market, analysts predict satellite broadband connections to soar skyward over the next four years.

Most terminals are in the consumer market, but Dataquest, a unit of Gartner Group, Inc., expects both the business and consumer markets to have similar growth rates over the next four years. By 2005, the analysts expect North America to account for 54 percent of all satellite broadband access terminals, with Europe and the Asia-Pacific region accounting for 30 percent and 16 percent respectively.

High-tech market analysis firm Dataquest Inc. forecasts in a study released Thursday that the number of satellite terminals in the world's three major economic regions will increase from an installed base of 293,500 terminals last year to 7.2 million terminals in 2005. Most of these terminals are in North America now, with most of the remainder in Europe and the Asia-Pacific region.

"I think that fundamentally, we're going to see growth in all areas of broadband," said Patti Reali, a senior analyst for Dataquest. "I also think that cable and DSL isn't going to be able to reach everywhere."

While cable is the best buy per kilobit for customers in residential areas, Reali said, it may not be profitable for land-based broadband providers to lay cable or optical fiber in areas with a low population density. Satellite broadband may be the only way for folks in the middle of nowhere to get fast downloads.

"There will be a lot of parallels with adoption of digital satellite for television, like DirecTV and EchoStar, " she said. "All the early adopters were rural. It's the density per mile that counts."

Current satellite services allow customers to receive and send data at speeds similar to DSL. The StarBand Communications Inc. service touts download speeds of up to 500k bps (kilobits per second) and uploads at 150k bps, while Hughes Network Systems Inc.'s DirecPC service promises downloads of up to 400k bps and uploads of 125k bps.

Hardware and installation for either service is around US$600, and service charges tend to be slightly more expensive than either cable or DSL service.

Dataquest, in San Jose, California, is a unit of Gartner Group Inc. It can be reached at 1-408-468-8000, or via the Web at http://www.dataquest.com/.

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