The speed of e-commerce

Until recently, the speed of mainstream access to the Internet has been limited to 56K. Conventional technology was limited by the speed of the telephone line and modem. This has posed constraints to both consumers and businesses. However, as is expected with technology, rapid change is underway. Traditional dial-up access is giving way to contending technologies such as digital subscriber line (DSL) and cable modem technology. These new technologies expand the rate of data transfer beyond the capabilities of current dial-up access.

Computer hardware constantly benefits from technological advancements. The capacity of microprocessors doubles roughly every 16 to 18 months with the price remaining constant. Telecommunications bandwidth, however, has not been able to improve as quickly.

Improvements within the telecommunications field required advances in both server-side and user technologies. Although as backbone capacity improves resulting in higher bandwidth capacity, the gain is lost if individual users are limited to 56K modems. This situation has now begun to change.

Asymmetric digital subscriber line (ASDL), a type of DSL technology, and cable modems have now allowed individuals to access the Internet at rapid speeds and at relatively inexpensive costs. ADSL connection charges range from $40 to $70 per month. Cable connection to the Internet varies from $20 to $100 per month, depending on the services offered.

Both new technologies are assymetric in terms of data transfer and can, therefore, can download data into a personal computer faster than they can upload it. This results in a downloading data rate of 20 to 30 times faster than conventional modems. ADSL modems provide a download rate ranging from 1 megabits (MBps) to 5 MBps. They provide an upload rate between 100 Kbps to 600 Kbps. Cable modems provide a download rate of approximately 1.5 Mbps and an upload rate of 300Kbps.

ADSL and cable modems differ in the way they transmit data. ADSL uses telephone lines to transmit data. Cable transmits data over shared coaxial cable lines and the connection to the Internet is shared between 10 to 200 users. The result is cable data transfer which is dependent on the number of users accessing the line at any given time.

As the price of high-speed connectivity decreases, more and more individuals are beginning to switch to these new technologies. Both businesses and consumers are affected by the change in telecommunications technology. This has broad implications for the e-commerce industry.

As more and more shoppers gain confidence in on-line shopping and as high-speed access makes surfing more exciting, on-line commerce will increase exponentially. This creates a cycle whereby increases in on-line sales attracts merchants from around the globe. The increase in availability of products on-line increases consumer purchases on-line.

High-speed access fuels the desire for merchants to remotely create and administer store-fronts as running server-based applications becomes almost as fast as running PC based applications. This creates an increased demand for the use of on-line storefront creation software.

The implications of this for ISPs, Portal sites, Shopping centers and Internet Content companies are obvious. Those companies wise to identify and take advantage of new opportunities within e-commerce will emerge as dominant forces. As entrepreneurs and merchants seek to establish an on-line storefront they will turn to familiar businesses to aid in going on-line and marketing their new storefronts.

This presents an excellent opportunity for high traffic on-line companies to provide highly sought store-front creation and hosting services. This would also lead to additional advertising revenues for companies offering such services as merchants would seek to promote their new on-line storefronts.

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