FiOS and Fiber
A fiber-optic connection is great--if you can get one. Problem is, most people can't, at least not yet. Just 18 percent of small-business and 12 percent of home respondents in our survey reported having fiber connections available in their area, numbers that should grow slowly as Verizon expands its (currently) 16-state FiOS network. But despite fiber's technological advantages--its thin strands of glass are capable of carrying virtually unlimited amounts of data--Verizon is the only major ISP installing fiber to the home.
The reason is cost. Verizon is spending $18 billion through 2010 to run fiber to 18 million homes and businesses. By comparison, cable providers are trying to squeeze every last megabit out of their current infrastructure, as exemplified by Comcast's 150-mbps cable modem.
AT&T, meanwhile, is taking a cautious, money-saving approach, laying fiber to the curb and completing the hookup using existing copper phone wiring. Called U-verse, AT&T's next-generation broadband is available in 15 markets, but had only 26,000 subscribers as of mid-May. The company expects to offer the service to some 8 million customers in 13 states by year's end, with another 10 million customers slated to gain access by the end of 2008.
Unlike fiber and cable, DSL is doomed. Says IDC broadband analyst Matt Davis: "DSL will be around for a long time, but will ultimately be replaced by fiber." Phone companies will offer DSL for another decade, while moving an increasing number of users to fiber.
For now, though, DSL-level speeds are fine for many users. As was the case last year, the most popular online activities are non-bandwidth-intensive Web browsing, e-mail, and instant messaging, which 97 percent of respondents do daily.