media channels; Broad Appeal - Brief Article

American Demographics, Dec, 2000

Businesses are already crafting ways to make high-speed Internet access essential to Joe Consumer.

Mary Lou Jay had the need for speed. As a home-based, freelance writer, her efficiency in conducting research, verifying facts, and corresponding with clients via the Internet, was dependent upon getting online easily and quickly. About a year ago, she upgraded her dial-up connection at home to Comcast's high-speed cable access, and life has never been the same. "The speed is terrific and I like that I can stay connected all the time," says the Baltimore-area suburbanite. "I can't imagine being without it. Going back to the slower connection would be like going back to operator-assisted long-distance after you've had direct dialing."

Jay, 47, is one of about 5.4 million early adopting broadband consumers - the majority of whom are highly educated, techno-savvy professionals, spoiled by high-speed Internet connections on their office computers, and desperate for equally fast access at home. Right now, barriers such as limited availability, high prices, complicated installation processes, and lack of competition, are impeding broadband adoption by the bulk of Americans. But the experts agree that eventually - whether it's 5 or 20 years down the road - anyone who wants it will have the option. Therefore, the long-term future of broadband as a mass medium depends not just on signing up the eager folk like Jay, but on convincing today's approximately 35 million dial-up consumers - not to mention the 94 million people who have no Internet access at all - that broadband is worth the investment.

That task is left to high-speed service providers and Web-based ventures who must provide the relevant, personalized content and life-easing applications which experts say will be key drivers in the years to come. Companies that act now to educate Joe Consumer about the beauty of broadband, beyond speed, will win his loyalty while securing market share in an industry expected to grow to almost $15 billion by 2005.

Demand for broadband is huge - and growing fast. The percentage of online households using a DSL (Digital Subscriber Line) or cable modem connection, the two most popular and available means, has risen from 5 percent to 11 percent in the last six months, according to Statistical Research, Inc. (SRI). Just 18 months ago, that figure stood at 1 percent. In contrast, the proportion of online households accessing the Web via a shared phone line, or dial-up connection, dropped 9 percent to 68 percent in the past six months, after staying at a consistent 75 percent from spring 1998 through spring 2000.

Sixty-three percent of consumers say the "need for speed" is by far the number one reason they subscribe to broadband, according to a recent Arbitron study. But in broadband households, the Internet becomes more than just a fast way to beam work home from the office. As users discover Web sites with high-bandwidth applications such as movies-on-demand, animated graphics, multi-player computer gaming, and streaming radio, the Internet will become an entertainment and information medium on par with television and radio.

In fact, of total time spent with electronic media, broadband consumers spend 21 percent with the Internet, 24 percent with television, and 21 percent with radio. In comparison, the average American spends 11 percent of that time on the Internet, 33 percent with television, and 28 percent with radio. Overall, 77 percent of high-speed users say they use the Internet more than they did with dial-up service. Jay, for one, says her 16-year-old daughter, Kate, was "anti-computer" before getting broadband, but now she loves downloading music files and watching movie trailers, as well as playing games over the Internet.

In the short term, at least, demand for service is far outpacing supply. Technical difficulties in the upgrading and extending of phone wires and cables are creating huge waiting lists in many areas. But Gregory Scaffidi, an analyst with Forrester Research, predicts those problems will all but disappear, as government regulations loosen, self-installation technologies become available, competition increases, and subscription prices drop. The industry will hit "hypergrowth" in 2001, reaching 46.7 million households by 2005. In fact, 55 percent of current dial-up consumers say they are ready and willing to switch to broadband the minute it becomes available.

But what about the other 45 percent? For consumers who are using the Internet solely for e-mail and simple browsing, speed may not be reason enough to pay $40 to $75 per month. Forty-five percent of online households today report paying less than $20 a month, or nothing, for Internet access, according to SRI, and 72 percent of dial-up consumers say they aren't willing to pay more than $25 per month for broadband, according to Forrester. Then there are those for whom price is no object: 57 percent of non-Internet users say they are not interested in ever going online, regardless of cost; and 39 percent feel they aren't missing out on anything by not doing so, according to the Pew Internet & American Life Project.