While high-speed internet access is envisioned as a mass market phenomenon in the future, broadband usage in 2001 remains a niche activity.
    It is also a form of media consumption with a pronounced geographic limitation to date.
    In fact, 30 percent of all broadband users live in just five metropolitan areas--New York, Los Angeles, San Francisco, Boston and Seattle--according to new figures for the month of April from Nielsen//NetRatings.
    Fully 10 percent of all broadband users can be found in the New York City area alone. Another 6 percent are in Los Angeles.
    At first glance, such usage patterns may seem surprising. But the sheer size of the populations of New York and Los Angeles work in their favor, along with New York’s high percentage of apartment dwellers.
    Broadband providers have found it easier to target more customers by wiring apartments than single family suburban houses.
    In general, the spread of broadband is mirroring the spread of other media before it, according to T.S. Kelly, NetRatings’ director of internet media strategies.
    "We look at what’s going on with broadband and see that it is developing very much like the internet did in the mid and late ’90s, where it focused on targeting the early adopters," says Kelly.
    As of April some 15 percent of all active internet users accessed the web with a high-speed connection, according to Nielsen//NetRatings. In numbers this added up to nearly 16 million internet users going online via cable modem, DSL, ISDN and LAN connections.
   This figure is up from 6.8 million in April 2000—an increase of 134 percent over the past year.
   But Kelly says that three factors could limit broadband growth in the near future.
    First, the price point is still a bit higher than most consumers can afford. High-speed internet access via cable modem typically costs around $45 a month, and DSL connections can cost that or more.
    "Consumers spend X amount on cable and X amount on so many other things," Kelly says. "Do they have enough money left over to purchase broadband, if it’s $30, $40 a month or even more?"
    Second, high-speed internet access is not widely available yet. And in places where it is available, Kelly says, it is often unreliable, with poor customer service.
    He notes that this parallels the spread of cable TV in the late 1970s and early 1980s.
    "Look at how cable developed in the late ’70s and early ’80s," Kelly says. "You saw people stringing up cable wire on telephone poles across the country. 
    "But then your neighbors or people down the street had it, but you didn’t, and you wanted it. You might have gotten it, but there might have been poor service, dropouts.
    "Cable customer service went through growing pains and has finally reached a point where they’re satisfying customer needs better than ever," he adds.
    The third factor that could limit the spread of broadband is the content itself. Specifically, Kelly says, broadband needs some form of programming that is so new and compelling that people will actually want it badly enough to line up for it.
     "Broadband content needs to evolve," Kelly says. "Where is the killer app, that ‘I want my MTV’-like killer app that drives consumption, that drives people to say that they want their broadband?"
    Napster, he says, was a contender for the killer-app crown, but copyright and other legal issues changed that.
    For now, according to Kelly, broadband access remains the province of early adopters.
    That will change as more and more consumers upgrade. Broadband access is spreading at what he deems a healthy clip, and there should be about 20 million users by the end of this year.
    "Internet penetration is up to 70 percent in some markets, such as Seattle and Portland," Kelly says. "We’ve seen internet growth in those markets begin to slow because we’ve reached a certain threshold of users, so we’re now in single-digit growth.
    "The same markets where internet access has slowed are the same markets where broadband is beginning to take hold."

May 16, 2001 © 2001 Media Life

-Marty Beard is a staff writer for Media Life.

Printer-Friendly Version |  Send to a Friend
Cover Page | Contact Us