The report predicts that in 2010, 32 percent of the U.S. population--mainly lower and middle-income people--still won't have an Internet connection, mainly due to connection costs.

"Despite falling prices for PCs, the potential for the Internet to become a true 'mass' medium remains limited by the lack of ubiquitous access," stated the report. "As a result, endemic advertisers, marketers with e-commerce activities, companies offering deep information to consumers, and those seeking niche audiences will continue to be the primary users of Internet advertising, rather than advertisers focused on mass marketing."

At the same time, traditional broadcast TV will likely continue to grow in significance to marketers, because free TV will be one of the only ways to reach all demographic groups. "Marketers will actually find traditional media to become increasingly important because of the relative scarcity of ways to reach masses of consumers," predicted Magna.

The report suggests that free municipal Wi-fi could expand the demographic range of Web users, making the Internet more of a mass medium than current projections indicate. Currently, free Wi-Fi networks are planned for a number of cities, including San Francisco. In April, that city tapped Google, in partnership with Earthlink, to provide free, ad-supported Wi-Fi service to the city.

Research from the Pew Internet & American Life Project released in May concludes that 42 percent of Americans now have high-speed connections at home, up from 30 percent in 2002. The average price for broadband connections as of last December was $36 a month, according to Pew.

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