• by Aaron Baar , October 14, 2010

Do you know who's using your home network? More importantly, do the service providers?

According to Mintel, nearly three-quarters of American consumers say they have Internet access at home, although only 56% say they subscribe to a home Internet service. This data suggests that as many as 16% of WiFi users are piggybacking on their neighbors' connections, using a mobile connection or hotspot from a wireless provider or simply don't know where their Internet connection comes from.

"One-sixth of the Internet-at-home population isn't paying for it," Billy Hulkower, senior analyst at Mintel, tells Marketing Daily. He added that home Internet penetration barely moved between 2006 and 2009, despite the rise of Internet sites such as Facebook, Pandora and YouTube. The data suggest that people are using different methods to access the Internet "even if they haven't paid for access themselves."

Younger and more affluent consumers are more likely to pirate WiFi service, with 20% of survey respondents from households with incomes higher than $75,000 saying they access the Internet from home but don't have a subscription.

"I don't think that any [consumers] think this is a big deal, but if you think about the loss to Internet service providers, it's huge," Hulkower says.

According to Mintel, home Internet service providers have seen their revenue increase only by 3% over the past five years. As more people access the Internet in different ways, those revenues could continue to drop, Hulkower says.

At the same time, the providers aren't sure how to combat the rise in WiFi piracy, he says. Some companies are sending letters to customers, noting that spikes in Internet usage from their portal could indicate WiFi piracy (while also subtly suggesting their networks are unsecure).

Others have threatened to cut off service to customers if they detect several computers eating up bandwidth through one network connection. The latter technique, Hulkower notes, may not be a wise tactic for companies wishing to continue their customer relationships.

"If you didn't know someone was using your service, and you got a notification that your service could get cut off, that could be a customer killer," he says.