More consumers hooked on broadband

Broadband Internet use in U.S. homes surged 59 percent in 2002, fueled by consumer defections from slower dial-up connections, according to a study.

The spike in broadband use came at a

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cost for slower narrowband access, which declined 10 percent in the United States between December 2001 and December 2002, according to Internet measurement firm Nielsen/NetRatings. Still, more Americans access the Web using narrowband connections vs. broadband, a difference of 74.4 million to 33.6 million users, respectively.

The study adds fuel to what many Internet companies have been predicting for years; mainstream Web users are embracing faster speeds to conduct their daily online tasks. Much of this growth was stimulated by consumers' greater comfort in surfing the Web and downloading multimedia content. But the biggest driver of home broadband use is a matter of dollars and cents.

"The most significant factor is the economic level," Greg Bloom, an analyst at Nielsen, said in an interview. "People all across the land who have paid for a second phone line used exclusively to dial into the Web are all switching to broadband."

That means it costs less for people to spend $40 to $50 for cable or digital subscriber line (DSL) access than installing two narrowband lines to free up the phone while surfing the Web. Both cable and DSL allow simultaneous surfing and phone use.

Among the people surveyed for the Nielsen study, consumers between the ages of 55 and 64 showed the greatest surge in broadband adoption, at 78 percent. The slowest growth was among 21- to 24-year-olds, at 24 percent.

The study also said that broadband users tend to spend more time and visit more pages online. Broadband consumers averaged 17 hours and 20 minutes online in December 2002, while narrowband users spent less than 10 hours online. Broadband users viewed more than 1,300 Web pages per person, more than double that of narrowband users.

Jumping on the broadband wagon
The numbers raise flags for many companies trying to piggyback on broadband growth--from cable and telephone companies that provide access to Web sites that cater to higher speeds.

Racing toward a speedy Net U.S. consumers between the ages of 55 and 64 showed the greatest growth in broadband adoption in 2002. Age group Percent growth 55 To 64 78% 50 To 54 75% 65 To 99 67% 12 To 17 66% 2 To 11 62% 35 To 49 62% 18 To 20 47% 25 To 34 45% 21 To 24 24% Source: Nielsen/NetRatings

The stakes are especially high for Internet giants such as AOL Time Warner's America Online unit, Yahoo and Microsoft's MSN. All three companies have outlined their ambitions to lure high-speed users onto their services by partnering with cable and telephone companies or offering broadband versions for an additional fee.

Both AOL and MSN, the country's two largest access providers, face an economic dilemma; most of their subscribers use their narrowband service, and migrating customers onto more costly broadband services would diminish the higher-margin business of narrowband.

Thus, both companies are trying to market "bring your own access" plans, in which consumers accessing broadband from a different provider can pay an additional fee to access AOL or MSN's service. Internet giants also are trying to partner with cable and telephone companies instead of running the entire service from network management to billing.