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New study reveals data/Internet access market declined in ’02, but still posted double-digit growth

A study released this week by Convergence Consulting Group Ltd. reveals that the Canadian data/Internet access mark...


March 5, 2003  


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A study released this week by Convergence Consulting Group Ltd. reveals that the Canadian data/Internet access market grew by 12 per cent last year, reaching $6.3 billion in revenue. That compares to a growth rate of 17 per cent the year before.

The firm projects that the market will grow to $7 billion by the end of 2003, and $7.6 billion by the end of 2004; representing growth rates of 11 per cent and nine per cent respectively.

Overall data/Internet access revenue growth rates continue to decline. Data/Internet access sales to business, government, organizations comprise over half the market, but access sales to the residential market have a stronger growth rate.

Carrier sales (sales to ISPs, telcos, i.e., wholesale) are the smallest revenue segment with the lowest rate of growth. The company is forecasting that 2003-2004 residential data/Internet access revenue growth rates will be more than double non-residential Data/Internet access revenue growth rates, despite the slowdown in residential Internet access subscriber and revenue growth.

Other findings in the report show that:

* Dedicated Internet access continues to experience moderate growth rates;

* Digital Private Line is the largest revenue segment, but will be eclipsed by residential high-speed Internet access revenue by 2004. Private Line continues to be the workhorse of carrier (sales to ISPs, telcos, i.e., wholesale) connectivity.

* Despite Frame Relay’s range of speeds and ability to interconnect (Frame-over-DSL, Frame-ATM, IP-enabled Frame), its growth continues to slow due to competition from LAN/Ethernet and IPVPN;

* ATM continues to grow slowly, and is being challenged by the rise of LAN/Ethernet and IPVPN;

* LAN/Ethernet is a strong competitor to Private Line, ATM and Frame due to its speed, scalability and relatively low cost. Unlike many other segments, new customers account for a significant share of LAN/Ethernet’s revenue growth;

* IPVPN is an emerging segment with high growth rates. Remote access and site-to-site IPVPNs will continue to drive this segment forward, challenging both ATM and Frame Relay;

* Legacy will continue to decline going forward;

* Business DSL continues to be a key driver of corporate data/Internet access revenue growth due to its strong account growth. Robust growth rates will continue, however as compared to Business DSL, the firm does not expect business cable to command a significant share of the market within the timeframe covered in this report;

* Satellite Data/Internet Access growth is forecasted to come from new platforms and offerings, as well as government broadband initiatives;

* Business Dial continues to experience a slow decline due to Business DSL and business cable offerings, as well as by consumers using residential home access instead of business access products;

* Despite its slowing rate of subscriber and revenue growth, residential high-speed Internet access will become the largest revenue segment by 2004, and

* Dial Internet access will continue to lose subscribers going forward, but total Residential Dial-Speed Internet accounts are experiencing only a slight decline due to strong cable and DSL Lite Internet subscriber growth rates.

Further information on the study is available at www.convergenceonline.com.


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