• by Larry Dobrow , August 6, 2004

Broadband users are significantly more likely to shop, bank, and get health care information online than their dial-up peers. And another 4.3 million North American households upgraded to broadband in 2003. So why does Forrester Research Principal Analyst Ted Schadler, author of the firm's new Consumer Technographics 2004 North American Benchmark Study, jokingly suggest that an appropriate headline for a story on its findings might be: "Broadband Ain't As Far Along As You Thought It Was"?

"Don't get me wrong, the correlation between broadband adoption and just about everything else-- whether it's online banking or shopping--is tremendous," he explains. "I just anticipated higher growth." Forrester determined that 23.1 million households in the United States and Canada are broadband-enabled, compared to a recent FCC estimate of slightly more than 28 million.

Schadler gives several reasons for the slower-than-expected broadband growth. He notes that even though costs are declining (from $60 per month to as little as $25), the connection process remains a hassle. "Just compare it to cable TV, where you call up the guy and get the box, and you're done," he explains. "With broadband, you still have to go buy a bunch of stuff. Then there are bundles, different pricing, et cetera. Only now are we starting to see in-home installation."

Asked about the ways that broadband has forced marketers to alter their strategies, Schadler touts the demographic makeup of its users: people in broadband households earn 27 percent more, are online 52 percent more time, and spend more money when shopping online ($80 more than dial-up users during the past three months).

On the other hand, eMarketer Senior Analyst David Hallerman highlights broadband's benefits to would-be advertisers. "The speed is a large part of it, but the always-on nature is just as important," he says. "The Internet becomes a much more integral part of the overall media experience."

Hallerman also believes that broadband will make computer users less resistant to the rich media ads favored by marketers of consumer packaged goods, pharmaceuticals, and automobiles. "For branding, rich media can do what paid search can't. It also gives the entertainment value that consumers are making it very clear they want," he adds.

As for the study's other findings, Forrester reports that DSL continues to outpace cable in terms of growth. Although cable was believed to have a considerable head start--primarily because cable companies serve around 60 percent of broadband households--the report reveals that between 2001 and 2003, the number of cable broadband subscribers slipped 6.5 percent. However, DSL connections jumped 5.7 percent during the same period.

Leichtman Research Group President and Principal Analyst Bruce Leichtman calls these conclusions "just fun with math." He points to figures he compiled, indicating that cable added 4.49 million subscribers in 2003--dwarfing the 2.96 added by DSL. "Growth rate is the most irrelevant statistic," he argues. "They're splitting the new additions 50-50 now, but cable started with a two-to-one advantage. DSL was behind 20 points at halftime, and they're still 20 points behind at the end of the third quarter. Do you congratulate somebody for that?"

Of Forrester's findings about device ownership, most interesting was the revelation that the vision of the fully networked house has inched ever closer to reality--the market for home networks will grow from 10 million households in 2003 to more than 46 million in 2009. Forrester attributes this to a sharp up-tick in consumers' desire to access the Internet from multiple locations within the home. "Nobody ever throws a PC away," Schadler says. Similarly robust growth should be seen in the DVR category (up tenfold by 2009) and camera phones (from 2.7 million households in 2003 to 58 million in 2009).

The exhaustive Consumer Technographics report boasts everything from information on the slowing pace of cell-phone adoption to data on more than 200 consumer brands. As part of the study, Forrester surveyed 60,010 North American households.