Jupiter Research today reported that as of the end of 2003, 21.5 million households, or about one-fifth of U.S. households, connected to the Internet via broadband. Based on historic growth rates and current trends around broadband availability, interest and pricing, Jupiter Research forecasts that by 2008, 46 million households—representing half of online households and 40% of all U.S. households—will connect via high-speed, always-on technologies.
Jupiter Research’s new report, “The DSL Market Opportunity: Closing the Gap with Cable Modem Providers”, shows how the U.S. broadband landscape is slowly starting to grow more competitive, with attendant benefits to consumers and greater U.S. broadband adoption. “The telcos and cable operators halfheartedly competed for broadband customers in the past,” said Joe Laszlo, Senior Analyst with Jupiter Research. “2003 was the first year we saw coherent competitive messages in the market: DSL’s story was about low cost, while cable modem services were about faster connection speeds,” added Laszlo. Jupiter Research believes that the continued growth of online video, music and game offerings in 2004 will increase broadband’s appeal, but warns that providers must focus on reducing prices to truly spur demand.
The dot-com boom saw many failed efforts to deliver video and other rich media content, well before a substantial audience with broadband at home even existed. With the emergence of such an audience, Jupiter Research expects the renaissance of broadband content efforts will accelerate in 2004. Video services like RealOne, ESPN Motion and MSN Video, and music offerings like Napster, Real Rhapsody and the iTunes Music Store, will be joined by others as media companies explore new ways to serve this audience. Jupiter Research believes broadband ISPs should increasingly differentiate themselves based on content and features, rather than speed and price alone.
At the same time, broadband ISPs must deliver services that can sustain pricing below $40 per month. Despite growing mainstream broadband adoption, most dial-up consumers remain skeptical of broadband pricing. At $29.99 per month, fully 47% of dial-up consumers said they would be somewhat or very likely to get broadband in the next year. At higher prices, demand dropped steadily, so that at $44.99 per month, only 22% of dial-up consumers expressed an interest. According to Laszlo, “Although the price of broadband moved closer to being right in 2003, all service providers must reevaluate the economics of low-cost broadband offerings to maintain the pace of consumer demand in 2004.”
The complete findings of this report are available to Jupiter Research clients online. For more information on the report or Jupiter Research’s Broadband research service please contact Kieran Kelly at [email protected] or call 1-800-481-1212