Penetration of High Speed Data Services Projected at 54% of Internet Homes

Penetration of High Speed Data Services Projected at 54% of Internet Homes

The findings of a new study, by Horowitz Associates and Livingston and Company, show that two-fifths (40%) of current dial-up subscribers are currently considering switching to High Speed Data service, either through a cable modem or a DSL line. Potential penetration of High Speed Data could soon reach 54% of all Internet homes.

The study findings say that HSD providers have attracted a core segment of consumers that value basic features of HSD such as speed, "always on" capabilities and not having to tie up the phone line to access the Internet. As cable providers and telcos vie for new subscribers in the same markets, applications, content and price-point tiers will play an important role in acquiring, retaining and upgrading customers. "Unlike the early days of cable, the market for HSD is competitive at the outset." commented Howard Horowitz, president of Horowitz Associates, Inc.

Consumers' interest in applications such as home networking, firewall and security, and parental controls stand out in the survey. Seven out of ten (71%) of all current HSD subscribers express interest in at least one of the applications tested, and one in four (23%) express willingness to pay upwards of $10 more than the standard price for HSD for such applications. Potential is also strong among the next wave of High Speed adopters with 81% expressing interest in add-on applications with 32% willing to pay more than the current $45 average monthly cost for HSD service.

Many, but not most, current and potential HSD customers will also pay more to access premium content such as streaming and downloadable music and video, news, sports, and content for children. Two out of five (40%) current HSD subscribers are interested in at least one premium content offerings covered in the survey, and one in four (27%) are willing to pay extra for access to a bundle of premium content. Interest in premium content is particularly high among young, 18-34 year old High Speed adopters, and among households with children.

Tiering - allowing consumers more control over the price of HSD service with choices based on speed, bytes, and game capabilities - will also play a role in driving HSD. Almost half (45%) of those considering HSD are interested in some type of tiered service, with 18% willing to pay more for higher capacity tiers, and 14% choosing to pay less for a lower capacity tier. One in five (20%) of current HSD subscribers say they would pay less to take advantage of a lower tier offering.

More information from adrianaw@horowitzassociates.com

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