Friday, November
3, 2000
One in Three U.S. Households to Connect Via Broadband
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 percent 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 percent of all respondents to a Jupiter
Consumer Survey said they have no interest in any broadband
offering, compared with 56 percent 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 services
to prevent commoditization and price erosion."
