35 Million Broadband Users Predicted by 2006

The troubles being experienced by some broadband providers aren’t indicative of the future of broadband, according to a report by Jupiter Media Metrix. The research predicts that more than 40 percent of the U.S. online households will be sporting fat pipes by 2006.

According to the report, 41 percent of online households in the United States will subscribe to a broadband Internet connection service by 2006 — up from 9 percent in 2000. Jupiter analysts forecast that the number of households accessing the Internet via broadband connectivity (cable modem, DSL, satellite or fixed wireless) will increase from 5.2 million in 2000 to 35.1 million in 2006, with cable modems leading the way. This is welcome news for both content providers and marketers waiting to take advantage of increased bandwidth among end users.

“Despite the recent failures of several broadband pioneers, and slower growth of the overall online population, broadband will find the masses in the U.S. shortly,” said Joe Laszlo, a senior analyst at Jupiter. “While consumers’ awareness of broadband has grown considerably, improved and increased marketing by cable and DSL providers will finally help overcome lingering resistance to the cost of broadband subscriptions. It is absolutely critical for companies with relevant content, products and services to time their business initiatives to reach the anticipated broadband audience.”

Several previous studies have found that consumers use the Internet differently once higher connection speeds are available. Jupiter’s study found broadband consumers use their connections more intensively than narrowband consumers. The most significant disparities occur in entertainment and financial services areas. Jupiter found broadband users are more likely to download music (46 percent of broadband users vs. 26 percent of dial-up users), listen to music (48 percent vs. 30 percent) and watch video (36 percent vs. 18 percent). More broadband consumers conduct personal banking (48 percent vs. 30 percent) and stock-related activities online (35 percent vs. 23 percent) than dial-up consumers.

Despite the differences, the most popular activities for dial-up and broadband consumers actually remain very similar. Both broadband and narrowband Internet users stick to the basics, such as e-mail, gathering information and instant messaging.

In order to gauge which Web sites attract broadband visitors, Jupiter Media Metrix has developed a broadband user concentration (BUC), which is the percentage of a Web site’s total unique visitors that connect to a site via broadband. The Web sites with the highest BUCs in the first quarter of 2001 were Time Warner’s Road Runner broadband ISP (52 percent BUC), Citibank.com (38 percent) and GamingClub.com (36 percent BUC). As expected, financial services firms generally have relatively high BUCs. Wellsfargo.com and Chase.com both achieved a BUC of approximately 25 percent.

“Web sites and activities that are popular with the broadband audience indicate that broadband users are becoming increasingly mainstream,” Laszlo said. “Marketing strategies built around this audience should still target the young, Internet-savvy and entertainment-oriented audience; but, they should also embrace segments like middle-class or upper-middle-class families that currently use the Internet and individuals that actively manage their finances, such as frequent stock traders.”

While Jupiter’s research expect cable modems to lead the broadband charge in the United States, another popular broadband technology reached a milestone in recent months. The number of broadband customers using DSL worldwide exceeded 10 million for the first time at the end of June 2001, according to Point Topic. This represents a 354 percent increase over the 12 months since end of June 2000.

North America has seen slowing DSL growth rates, Point Topic found, but growth in Europe, Asia-Pacific and South America remains strong compared to the end of 2000. And new broadband markets are developing rapidly in these regions.

“Twelve months ago, countries like Japan or Brazil hardly registered in the DSL totals,” said John Bosnell, editor of the DSL Worldwide Directory. “But now these markets are starting to mature. For example, in the last six months, Brazil has overtaken the U.K. in terms of DSL subscribers. In the same six-month period, the number of DSL subscribers in Japan increased by 2,900 percent.”

Korea Telecom continues to be the leading DSL operator, according to Point Topic, with more than twice the number of subscribers of second-place SBC. Five of the top 10 operators are American, and two Korean. Deutsche Telekom was the leading European DSL provider, well ahead of Telecom Italia and France Telecom. Spain’s Telefonica ranks 16th, with Britain’s BT coming in at 24th, with approximately 70,000 subscribers.

Point Topic’s research shows that the top 15 DSL providers around the world have more than 80 percent market share.

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