Telcos Are Racing to Redefine Themselves to Capture Broadband Users, IDC Says

FRAMINGHAM, Mass., May 4, 1999 — As the Internet accelerates change in the telecommunications industry, major telecommunications vendors are quickly moving to redefine themselves as all-purpose communications companies. According to a new report from International Data Corporation (IDC), local exchange carriers (LECs) and cable companies understand that a successful broadband play is going to be a critical component in winning this race.

"For an industry that was dominated 20 years ago by a monopoly and an any-color-you-like-as-long-as-you-like-black mentality, the emergence of the Internet and other new technologies presents unfamiliar challenges," said Tom Kiersted, senior analyst with IDC's Telecommunications Brands and Bundles research program.

According to IDC, among the hurdles in the residential broadband race is figuring out how to successfully brand and market competing services. Currently, the two leading broadband technologies are DSL and cable modem. "The pitch for both flavors of service sounds very similar — with the key being speed," Kiersted said. "And with LECs cutting the price of DSL, the price competition is getting fierce. So, the ability to establish and build successful broadband brands is a key factor in winning this race."

Both cable companies and LECs have a legacy they will have to overcome to gain enthusiastic consumer adoption of their broadband solutions. Many observers viewed the LECs' introduction of ISDN service a few years ago as very unsuccessful. And as for the cable companies, consumers generally rank cable vendors among the least satisfying of any telecom service providers.

"The biggest hurdles that data over cable will need to clear are the reputation cable providers have earned with consumers in the cable television market and proving that the technology can and will keep up with demand to successfully deliver on the promises of their services," Kiersted said.

Despite cable's bad reputation, the jump it has on DSL gives it an immediate advantage in the market. "If a consumer wants broadband access badly enough, he will buy whatever is available from whoever is selling — even if it is cable," Kiersted said. "First-to-market will continue to have a major impact in the near future adoption of DSL or cable modem technology."

Broadband Branding: Bonanza or Bust (IDC #B18555) examines the market for broadband technology. It discusses the players and their product offerings, positions DSL versus cable modems and examines their strengths and weaknesses, profiles broadband customers, and highlights a shopper's experience while trying to purchase DSL and cable modem service. The report concludes with a discussion on factors that will influence the future of broadband brands. To order a copy, contact Janis Dempsey at 1-800-343-4952, ext. 4145 or at jdempsey@idc.com.

About IDC

International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods, and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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