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Broadband Internet Access Market Saturation

While dial-up access to the Internet continues its slow decline globally, the number of Internet adults utilizing wired broadband connections may also be peaking, according to results released by Ipsos Insight. No matter, there's still lots of upside potential in China and India.

At the end of 2006, it is estimated that over three-quarters (77 percent) of the global online population was utilizing a broadband connection to access the Internet, in comparison to just 21 percent utilizing a dial-up connection. And though the prevalence of broadband access continued its steady growth trend through 2006, growing an additional seven percentage-points from 2005 (70 percent), the days of robust annual growth for broadband penetration may soon be coming to an end.

The latest findings from "The Face of the Web 2006" -- based on interviews in 12 key global markets with more than 6,553 adults, including 3,798 active Internet users at the end of last year -- reflect the adoption possibilities of the Internet that few other consumer technologies have shown in the past.

Ipsos Insight, the global survey-based marketing research firm, has been tracking global Internet developments since 1999. Brian Cruikshank, Executive Vice President at Ipsos explains: "Over the past several years we have witnessed a significant migration within the online population to broadband access technologies. Most of these users were either upgrading from dial-up connections, obviously craving faster connection speeds, or were new users that jumped straight to broadband access to get online. However, with fewer dial-up users to convert in the future, and fewer net new users to capture, broadband growth may begin to plateau in many developed markets in the near future."

Since 2003, the percentage of active internet users -- those who have gone online in the past 30 days -- utilizing a high-speed connection has jumped over 20 percentage-points, as digital subscription lines (DSL) have been the major force driving up broadband penetration globally.

In comparison, the number utilizing dial-up access has declined just as rapidly; just one in five Internet users today utilizes dial-up access to get online (20 percent), less than half the rate (45 percent) Internet users had utilized dial-up connections just three years ago.

While most Internet users in developed markets primarily rely on high-speed DSL connections to get online, the prominence of high-speed access technology varies significantly by region. Within North America -- US, Canada and Mexico collectively -- cable modem connections represent a much larger percentage of overall high-speed access compared to other parts of the world.

In the U.S. alone, the percentage of those using cable modems (30 percent) is nearly equal to the number utilizing DSL (33 percent), and in Canada cable modem is the leading Internet access technology. Within Asia Pacific, optical fiber connections are much more common than in any other part of the world, symptomatic of the high demand for Fiber to the Home (FTTH) installations in South Korean and Japanese households.

Despite the fact that wireless Internet access from a PC still remains a relatively nascent behavior -- just 15 percent of users connect to the Internet in this manner today -- Ipsos believes that the future of Wireless Internet access looks very promising globally. Two factors contribute to this optimism.

First, the rate of household ownership of notebook PCs continues to climb globally, now at 34 percent, as the growth rate for desktop ownership has remained stagnant for the past several years, underscoring the notebook's dominance in driving PCs sales today.

In addition, the prevalence of mobile Internet browsing -- surfing the web on a wireless handheld device such as a cell phone or smart phone -- also continues to climb globally; at the end of 2006, nearly one in three adults (31 percent) had ever accessed the Internet on a wireless mobile device.

Second, in many underdeveloped nations, which collectively represent the industry's untapped market for Internet user volume, some online adults are beginning to leapfrog high-speed tethered connections, such as cable and DSL, and opt for Wireless service to connect to the Internet simply because that's where the access opportunities are emerging within these markets.

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