Study: Broadband will shape e-commerce

That's the message of a study of chief executive officers, who agreed overwhelmingly that broadband access to the Internet is the most important trend for the technology sector and may provide the spark that revives the downtrodden e-commerce niche.

Nearly two-thirds of 128 CEOs surveyed by researchers at consulting firms Ernst & Young and Cap Gemini Ernst & Young cited broadband connectivity as the "most significant immediate factor influencing the way customers will experience entertainment and communications and utilize technology over the next few years."

Broadband is any means of connecting to the Internet other than traditional "dial-up" access over standard copper telephone lines. Broadband includes access via cable modem, digital subscriber line (DSL), T1 and T3 lines.

The survey, which promised executives anonymity in exchange for details, highlighted an unwavering optimism despite the stock market slump and threat of global economic recession. Many CEOs emphasized that broadband access would speed up online transactions, improve customer service, entice people to spend more time and money online and generally rejuvenate the e-commerce sector, which has been particularly hammered in the economic slowdown.

"Broadband connectivity will be the tide that lifts all ships," beamed one hopeful CEO, whom researchers said summarized the "prevailing sentiment" of peers.

Skeptics may have a tough time directly connecting the CEOs' breathless enthusiasm for broadband with a renewed flourishing of the e-commerce niche. After all, many investors were duped by surveys touting the immergence of Web browsers and the popularization of dial-up access in the mid- to late 1990s.

But Ernst & Young and Cap Gemini Ernst & Young researchers said that CEOs and the survey, dubbed "Business Redefined," have legitimate claims.

Households connected with broadband access consume more than 20 percent more entertainment time than households without high-speed access, according to Ernst & Young. And nearly 80 percent of large companies will have fiber connections to their buildings by 2004, compared with 65 percent today.

Even midsized businesses with 100 to 499 employees are driving demand: 54 percent are expected to have fiber-optic access by 2004, up 35 percent from current levels, according to Ernst & Young.

"Broadband is snacking technology," said one CEO. "With broadband's convenience you will eat more."

Another gushed, "Broadband will be everywhere, and it will be reliable, available, and low cost."

The 128 entertainment, communications and new media CEOs from around the world are even bullish on one of the most bloodied e-commerce segments: online advertising. As dot-coms and traditional companies shrink ad budgets, numerous e-tailers that relied on the spending--including eToys and Pets.com--have died, while larger portals, including Yahoo, have withered.

But that didn't dent surveyed CEOs' prospects for the future.

"Advertising in the digital world will be a lot more effective. Consumers will have a choice to either remain anonymous and receive content for a premium, or surrender some personal information and receive the content with some personally targeted ads," predicted one CEO, without detailing how online advertisers will reap these new efficiencies.

But not all the surveyed CEOs were examples of irrepressible optimism and can-do spirit. With the revival will come a dramatic restructuring of the e-commerce segment that will continue to rattle executives, kill off even more young companies and throw business plans into turmoil, they said.

Researchers proclaimed that the next few years will be marked by a "profound blurring and restructuring across communications and entertainment as well as the technologies enabling these industries." Globalization, deregulation, technology-compressed product life cycles and lower barriers to online entry for dot-coms and bricks-and-mortar companies will be boons to the consumer--but nightmares to the CEOs.

"The customer will no longer be held hostage to a single provider," one CEO said. "Competition is finally taking root."