• by December 6, 2001

Microsoft Chairman Bill Gates said on Thursday the Internet's role as an important mass medium for advertisers was hobbled by the slow rollout of high-speed broadband service and was still years away.

Gates, speaking at a Microsoft-sponsored conference on the future of digital marketing, said the slow adoption of broadband access into homes has depressed consumers' use of the Internet.

"If it's there and on all the time," Gates said of Internet access, "you would use it quite extensively." He added it should become a priority for political and corporate leaders to make broadband access products more available to home users.

"That's the element that will drive forward," Gates said. Microsoft has stepped up its commitment to the Internet media sector over the past two years, investing heavily in its Web portal and Internet service provider, MSN. The company has committed $100 million in fiscal 2001 to promote MSN to advertisers in the hopes of generating more advertising revenue. This campaign, dubbed "MSN Advantage Marketing" kicked off, however, amid a steep slump in advertising across all media.

EMPHASIS ON BROADBAND

Gates, on the fourth day of a European tour addressing technology and business leaders, has made the broadband topic one of the principal points on his agenda. The software giant has been focusing greater emphasis on the U.S. broadband and cable television market recently in an effort to prevent its arch rival AOL Time Warner from becoming the dominant player there.

Gates declined to offer guidance on when the MSN business unit would break even. He added that its profitability hinges upon a combination of selling advertising and charging users for a variety of MSN services. Broadband Internet access has been heralded as a key business initiative for media companies as it would enable them to generate greater advertising and e-commerce revenues from consumers.

The hype has fizzled in recent years, though, as it has taken longer to get broadband services into homes. Gates said broadband Internet is important to the growth of online advertising in that it allows for near-television quality streamed media, the kind of ad formats that many major advertisers prefer to promote their brands.

Internet advertising revenues have fallen precipitously since the second half of 2000 just as the technology bubble began to burst and a number of dotcoms went bust.

-- Reuters