Consumer Interest in Broadband Hits All-Time High
Jupiter analysts have found that these dial-up consumers actually favor utility over entertainment, even though companies catering to a broadband audience emphasize entertainment and rich-media applications.
According to a new Jupiter Research Report, titled “Broadband Audience: Maximizing Revenue from the New Mainstream,” for the first time in years, the top motivator of dial-up users planning to switch to broadband is a persistent “always on” connection (59%). Less important are entertainment-related features such as the ability to view quality video (26%) and listen to audio (15%).
“Despite rising prices, demand for high-speed Internet connections is increasing,” said Dylan Brooks, senior analyst with Jupiter Research. “Broadband connectivity will soon be the rule, not the exception, for Internet users. For ISPs, the key to reaching this burgeoning nationwide audience is to embrace multiple technologies. Incumbent providers of access and content, not competitive upstarts, will win the broadband battle and make the best partners, even at a premium.”
Broadband Going Mainstream
Broadband has at last passed a critical inflection point in the U.S.—household subscriptions nearly doubled last year, from just over five million to 10.4 million. Moreover, individual broadband users, including those at work, totaled 38 million in 2001 – 32% of at-home and at-work Internet users.
According to Jupiter analysts, broadband households have long been going online: 60% have an online tenure of more than two years. However, households that have come online in the past 24 months make up a growing portion of the broadband audience: 27% in summer 2001 compared with 17% in summer 2000.
While the wealthiest households remain the most likely to have a broadband connection, lower income groups are increasingly entering the fold. Jupiter Consumer Survey data reveal that nearly one-third of broadband households have annual incomes lower than $50,000 today, up from only 26% two years ago.
Acquire Customers Online, Not Off
In an August 2001 Jupiter Consumer Survey, broadband consumers said that self-initiated research and recommendations from friends were relatively important factors in choosing providers. However, no single influencer drove even 15% of broadband users to make a selection. In fact, almost 40% of broadband users said that they were not sure if any single factor influenced their decision to sign with a specific service provider. According to Jupiter analysts, this uncertainty suggests that costly ad campaigns may currently be ineffective tools for acquiring new customers. Instead, companies with high website traffic or a strong word-of-mouth from satisfied customers, will prove most successful in garnering broadband subscribers.
“Broadband service providers now face the challenge of selling a complex product to an audience that is increasingly mainstream,” said Joe Laszlo, senior analyst with Jupiter Research. “By using the Web as a sales channel, broadband providers can educate consumers about broadband’s benefits, while at the same time control customer acquisition costs. With these costs running upwards of $500 to $700 per customer, broadband providers must place greater emphasis on the Web channel this year.”
Road Runner Runs Away from Competition
By examining traffic to broadband websites of a number of major Internet Service Providers (ISPs) and carriers, Jupiter analysts have found that Road Runner regularly garners over four million monthly unique visitors to its site—more traffic than that to any other provider’s broadband-related site. In comparison, most of the broadband sites of other major carriers each had around 300,000 to 500,000 monthly unique visitors.