There is likely to be a slowdown in broadband growth in the US unless providers take steps to persuade dial-up users that it is beneficial to upgrade. This is one of the main conclusions of a new report on the subject by Ipsos-Insight.
It is estimated that around 19 million US households had a high-speed internet connection by the end of March (see
Broadband Goes Mainstream In The US), an increase of approximately 50% year on year. However, there were already signs of a decline in the rate of growth. This is due in part to the limited availability of high-speed services and also the reluctance of some dial-up users to make the switch to broadband (see
US Broadband Reaches 30m, But Growth Looks Set To Slow).
At the end of April, Ipsos-Insight conducted a survey of dial-up users to determine attitudes towards high-speed internet access. It found that almost two-thirds of Americans are online and most of them are still connected via narrowband. Four-in-ten dial-up users said that cost was a reason that they had not yet switched to broadband while another third stated that they had no need for the technology.
What can be deduced from these findings is that the rate of growth in broadband adoption will fall unless dial-up users can be convinced to join the fast lane. The average monthly charge for a broadband cable connection is just over $40 and the report claims that only 3% of existing dial-up households are likely to upgrade if current prices are maintained.
Limited effect of price cuts The survey found that if prices were moved down to $30 per month, DSL and cable modem companies could see 10% of dial-up users switch to broadband while one-fifth of narrowband subscribers said they would make the change if the monthly cost fell to $20. However, with 80% of dial-up users seemingly unwilling to subscribe to broadband, even if access charges are halved, it is apparent that money is not at the root of the problem.
Jo-Ann Osipow, a senior vice-president with Ipsos-Insight commented: “Dropping the cost of subscribing to broadband will help to convert some dial-up users but in both the short and long term, successful broadband providers will be those who focus their efforts on the consumer – as much as on service attributes like faster speed or new features.”
The report says that while limited price cutting may bring in a certain number of extra subscribers, this has to be weighed up against the revenue losses that would accrue. It claims that the outstanding broadband providers will be those who deliver the most effective messaging and positioning in the quest for new business.
According to Osipow: “They will look closely at the different ways consumers are using the internet, and thus be able to customise their marketing, communications, and content bundles so that they generate the most impact. Individualised and flexible content packages with access will be important to broadband’s growth in the US.”
