Carriers Buy into Remote Terminal Buildouts, Seek to Leverage Current Infrastructure, According to the Yankee Group; Despite Tumult, DSL Outlook Remains Strong.

Business/Technology Editors

BOSTON--(BUSINESS WIRE)--July 26, 2001

The Yankee Group's 2001 DSL Subscriber Forecast has found that the U.S. DSL marketplace has undergone enormous changes over the past 12 months. Investment in data competitive local exchange carriers (DLECs) was reduced dramatically over this period, and to compound the challenges facing the sector, the overall telecom market suffered an enormous decline.

However, the forecast also found that despite this tumultuous period, DSL deployment continues to forge ahead with improvements in the upgrade of remote terminals, modest ILEC central office expansion, and IXCs entering the market. In addition, the cost of equipment and new operational efficiencies has created a much more cost-effective business model than was present 12 months ago.

According to Matthew Davis, program manager of the Yankee Group's E-Networks & Broadband Access research and consulting practice, "DSL availability will not suffer since most of the DLECs and smaller carriers that ceased operations were overlapping existing ILEC footprints. Furthermore, operational and provisioning capabilities have been developed and appear to be on track as a stimulus to large-scale deployment." Davis concludes, "Market demand for broadband continues to be strong. As a result, while there have been some minor short-term readjustments, the five-year forecast for subscriber growth in the United States remains consistent with our previous calculations, and we are confident that DSL will remain a strong, viable broadband alternative going forward."

The Yankee Group anticipates DSL subscriber growth will total 4.5 million subscribers at the end of 2001, with 3.3 million representing residential subscribers and the remainder attributable to businesses. These totals are forecasted to grow to a total of 16.7 million overall subscribers in 2006, with 12.5 million being residential subscribers.

NOTE TO EDITORS: For additional information or comment, contact Matt Davis at [e-mail].

The Yankee Group (www.yankeegroup.com)

As a global leader in technology research and strategic consulting, the Yankee Group provides accurate, reliable, and trusted research; custom consulting; and personalized one-to-one client interaction encompassing all areas essential to e-business success: Internet, electronic commerce, communications, wireless, computing, and enterprise applications. Established in 1970 and headquartered in Boston, the company maintains offices throughout North America, Europe, Latin America, and the Pacific Rim.