• by November 1, 2000

More than 28 million US online households, or over one-third of US online households, are expected to use a high-speed Internet connection by 2005, according to a new report from Jupiter Research, the worldwide authority on Internet commerce.

As last-mile technologies continue to evolve, consumers will perceive few differences between leading broadband technologies. Jupiter warns that broadband access providers seeking a share of this audience must focus on service differentiation and customer retention to attract consumers in an increasingly crowded competitive landscape.

Jupiter projects that 36% of US online households will use a broadband connection by 2005. While Jupiter analysts forecast mild growth during the 2000 to 2001 time frame, adoption is expected to grow robustly between 2002 and 2005. Jupiter attributes current growth to pent-up demand from early adopters. Broadband services still fail to resonate with more mainstream households, including online novices; 53% of all respondents to a Jupiter Consumer Survey said they have no interest in any broadband offering, compared with 56% who responded in 1999.

By 2005, broadband access technologies will become stable in terms of capabilities, and competition among broadband providers will drive all entrants to find new ways to differentiate their service from that of their competitors. According to Joe Laszlo, an analyst with Jupiter, broadband service providers must shift from their current technology-centric messaging to more of a service focus to capture a broader base of users.

“Stronger broadband adoption rates will come only as broadband service providers refocus on applications and retention from their first interaction with potential customers,” said Laszlo. “Service providers must tailor packages that are similar to the tiered services offered by cable and satellite providers, which appeal to specific audience segments to build future services and customer loyalty. Suppliers of broadband access and content must deliver services for today’s broadband early-adopter demographic, while strategically planning for wider adoption over the next several years.”

Laszlo explained that while some ISPs will cast a wide net to secure a large number of consumers, Jupiter believes that broadband offerings may fare well if they target their audience more narrowly. Vendors should design packages for specific user groups - such as telecommuters, active stock traders, families, and gamers. For example, active traders could receive a package that includes an increased level of security and bundled-in comprehensive financial tools; families could select a package that includes access to educational software and a Multi-PC home networking solution.

“Broad, untargeted services will appeal to most consumers, including the price-sensitive, not-very-loyal, and broadband-skeptical portions of the online audience,” added Laszlo. “Broadband providers must offer high-value, differentiated servic