US Broadband users want more Zip.

How fast is fast enough?

US Internet users are consuming more online video, playing more video games and generally doing more of the things that eat bandwidth.

As a result, fiber-to-the-home and faster cable modem technologies are fueling a new round of bandwidth envy.

“Many consumers are actively looking for a broadband service that will increase the amount of bandwidth that they can use,” said Mike Paxton, an analyst at In-Stat

Nearly 33 million US households will have broadband services with speeds of 10 Mbps or higher by 2012, up from 5.7 million at the end of 2007, according to a March 2008 report by Parks Associates.

That is fast enough to stream high-definition video.

The average download speed of a US broadband connection is currently 3.8 Mbps, while the average upload speed is 980 Kbps, according to In-Stat.

Parks Associates said that although the new higher-speed broadband services appeal to many existing users, there are some potential issues.

The company cited ISP mistakes in bandwidth management, uncertainty around “network neutrality” and friction between broadband service providers as problems that could hold back growth.

The net neutrality issue is especially relevant. If some ISPs charge higher rates to heavy users (both consumers and sites that get a lot of traffic), this may be a disincentive to other providers to make capital investments in higher-speed infrastructure for all users.

eMarketer projects that there will be 20% more US cable broadband subscriptions in 2012 than in 2008. Some of these subscriptions will be at higher speeds. Many existing cable Internet customers are likely to upgrade to higher speeds as they become available.

The number of broadband households using technology other than cable or DSL—especially fiber-to-the-home, will more than double by 2012 to a total of 8.6 million.

“Long-term broadband users are looking to upgrade not only their speeds but more particularly their services,” said Ben Macklin, senior analyst at eMarketer. “Verizon and AT&T now have a genuine triple-play alternative to the cable operators. Cable operators are taking voice customers from the telcos, and telcos are now beginning to take video customers from the cable operators.”

Mr. Macklin said that all broadband providers needed to identify and segment their target markets to tailor their service offerings and marketing campaigns.

“The next phase of broadband competition will be a marketing-led strategy rather than a technology-led strategy. Marketing a bundle of broadband services for $100 to $150 per month will not be good enough.

“Each part of the triple-play bundle has to be competitive in its own right in the market. It is a case of both defense and offense for both cable companies and telecom operators.”

Courtesy of http://www.emarketer.com