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apace, despite economy
But growth in dial-up use slows to almost a trickle
By Marty Beard
The number of people opting for high-speed internet connections is growing at a healthy clip, outpacing the growth of internet use in general.
In November 2001 the universe of residential broadband users reached 21.3 million, roughly one of every five internet users.
That represents 90 percent growth over November 2000, when 11.2 million people had broadband access, according to recent data from Nielsen//NetRatings.
Moreover, broadband use continues to grow in the double digits while growth in dial-up connections appears to be stagnating.
The number of users with dial-up connections grew just 1 percent between November 2000 and November 2001.
In all there were 105.5 million active internet users as of November 2001, up 11 percent from November 2000.
"Given the fact that people’s coming online has been slowing down, this is definitely good news," says Nielsen//NetRatings analyst Jarvis Mak.
The rapid spread of high-speed internet access is especially notable in light of the sour economy. During recessions consumers tend to cut back on luxuries. Broadband can cost twice as much as dial-up service.
The growth is also notable in light of the number of DSL and cable internet access companies, most notably Excite@Home, that have gone out of business in the past year.
Ironically, while the sour economy appears not to have slowed broadband growth, it is credited with hurting dial-up growth, as Mak explains it.
The slowing economy has put an end to many of the super-cheap internet access and free access providers.
"The first thing the economic downturn affects is the advertising market, and when that happens, the ISPs that are heavily dependent on advertising revenue, which before allowed ready access to come online, have disappeared," Mak says.
Broadband is spreading in spite of the listless economy, and in part because many of the high-speed providers are offering discounts to attract new customers.
"Once they’re hooked into cable or DSL access, not many people will go back and say, this wasn’t really worth it," Mak says.
Mak says the disappearance of some broadband providers is a natural evolution of the market, with weak players being weeded out and the strong ones gaining a better hold.
"The infrastructure is there, and it doesn’t cost them new money to bring on new subscribers," he says.
The troubled high-speed providers, for the most part, are the ones that lease space from other broadband providers, according to Mak. A couple of examples are competitive local exchange DSL carriers like Northpoint or Covad that have had to fight and compete against SBC and other major telcos.
"As long as it’s not one of those guys, the infrastructure is there and people can hop on."
Broadband’s rapid spread bodes well for the evolution of the internet.
Broadband users are more avid online shoppers and more into streaming media than are people who still go online via dial-up connections.
Of broadband users, 12.7 million accessed streaming media in November, up 94 percent from November 2000, when 6.6 million used it.
In comparison, 40.7 million narrowband users partook of streaming media last month, up 18 percent from November 2000.
Last year broadband users spent 67 percent more dollars online each month than narrowband surfers.
Broadband will continue to grow, according to Mak.
"While the broadband universe eventually will start to slow down, it will take some time before the market is saturated," Mak says.
"It has outpaced the growth of the active internet universe. Of course eventually the broadband universe will start to plateau, just as the growth of the active internet universe has gone from double digit growth--20 percent, 12 percent--down to 11 percent year-over-year."
December 17, 2001 © 2001 Media Life
-Marty Beard is a staff writer for Media Life.
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