US Broadband Growth to Slow: Large Numbers See No Need

Many American dial-up users are simply not convinced they need broadband, even if the price were to fall by half, according to new research from Ipsos-Insight. Falling prices should help in stimulating interest in subscribing to broadband, but there may be a more fundamental requirement: the need to better communicate its benefits.

Last week a survey by Nielsen//NetRatings, reported on DRNO 2nd June, showed that some European markets have already overtaken the US in terms of broadband take-up, notably France and Spain - and suggested that by March 2004 the number of broadband subscribers in the US would be 53m, only 6% more than the European figure.

The Ipsos figures indicate an imminent slowdown in broadband growth unless there are new initiatives by providers. The research talked to dial-up users and examined likely growth both at current and lower price points. The findings show that almost two-thirds of Americans are online, and most of them are still connected via dial-up. Four-in-ten dial-up users said cost was a reason they hadn't yet switched to high-speed Internet access. Another one-third are not convinced they need broadband at all. At current high-speed connection prices (average: $40.70 a month for cable providers), a tiny 3% of current dial-up households are likely to convert to high-speed access.

Cross-analysis suggests that if prices moved down to $30 a month, both DSL and cable modem companies could potentially triple new subscriptions vs. the current average (increasing to 10% for DSL, 9% for cable). If they dropped further to $20, one-fifth (20%) of Americans with dial-up said they would sign up for high-speed (whether DSL or cable). But that still leaves 8 in 10 (80%) dial-up users who wouldn't switch, even at the $20 price-point, roughly half the 2003 price to date.

Rolling out the right messaging and positioning-and matching these to the right consumer segments-is seen as crucial if broadband providers are to reach their potential in the U.S.

'The expected slowdown in growth is obviously not just about the price-point being too high', said Jo-Ann Osipow, a Senior Vice-President with Ipsos-Insight, 'It's about a huge segment of dial-up users not being convinced that they need to convert to high-speed, perhaps because 'faster' isn't enough of a value proposition. They need to know what 'faster' lets them do.'

According to Osipow, 'successful broadband providers will be those who look closely at the different ways consumers are using the Internet, and ... customize their marketing, communications, and content bundles so that they generate the most impact'.

Data was collected on April 29 and 30, 2003 via Ipsos Express, a nationally representative poll of 1,000 U.S. adults conducted twice weekly. For the price elasticity analysis Ipsos used the What Price? component of its proprietary IpsosConcept/Tester(SM).

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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