E C O N O M I C R E P O R T O F T H E P R E S I D E N T

of fiber optic cable deployed by telecommunications carriers in the UnitedStates grew by about 16 percent in 1997, and by more than 21 percent in1998, according to data from the Federal Communications Commission.Consumer demand for telecommunications services is leading more andmore American households to purchase additional telephone lines. Althoughsome of these lines are used mostly for voice service, many are dedicated datalines. The number of additional lines more than doubled from 1993 to1997, from 8.8 million to 17.9 million. This surge in growth mirrors thegrowth in American consumers’ use of the Internet. In addition to extraphone lines, many residential users are beginning to purchase newhigh-speed broadband connections to the Internet being offered by phoneand cable companies. For users who need to download large files, the speedof the connection can make an enormous difference in total transfer time.For example, a 10- to 20-minute digitized movie clip might take 10megabytes of computer memory and require about 24 minutes to downloadwith a 56-kilobit-per-second modem. By contrast, a cable modem or ahigh-speed digital subscriber line (DSL) connection offered by the phonecompany can download the same file in less than a minute. Rollout of thesenew services is just beginning: many phone companies are only nowbeginning to offer high-speed DSL connections in response to cablecompanies’ offerings. By the end of the third quarter of 1999, cable modemswere available to an estimated 37 million homes in North America, andapproximately 1.4 million cable customers had signed up for the service. Incontrast, only about 275,000 DSL lines were in service in the United Statesin October 1999. Deployment of DSL is expected to expand rapidly,however: as many as 2.1 million DSL lines may be in service by the end of2000.These investments are supporting the rapid growth of the Internet as itbecomes a standard feature in American homes and workplaces. Accordingto one survey, more than 118 million Americans had access to the Internetin November 1999, of whom more than 74 million were actively using thenew medium. The use of e-mail at home has also risen sharply in the lastfew years, but this usage varies by income: more affluent Americans aremuch more likely to have e-mail access at home (Chart 3-4). This surge inconnectivity has helped put the United States far in the lead in Internet useworldwide. The United States far surpasses Germany, Japan, or the UnitedKingdom in the number of Internet host computers per capita. OnlyFinland has a higher concentration than the United States, according tostatistics compiled by the Organization for Economic Cooperation andDevelopment (OECD). The OECD also found that the United Statesleads all other OECD member countries in the number per capita of webservers designed for electronic commerce. The combination of relatively110 | Economic Report of the President