Over one third of U.S. online households are expected to use a high-speed Internet connection by 2005, a national study says, and Rhode Island experts agree.
More than 28 million U.S. online households will use a high-speed Internet connection by 2005, according to a report from Jupiter Research, an Internet commerce research firm in New York City. Jupiter projects that 36 percent of U.S. online households will use a broadband connection by 2005. While Jupiter analysts forecast mild growth during the 2000 to 2001 time frame, adoption of the technology is expected to grow between 2002 and 2005.
“I think that with the ease and convenience of broadband connections, more and more households will change over,” said Scott Hightower, director of consumer broadband services at Cox Communications. “If you look at Rhode Island as a market, we’ve tried to bring high-speed broadband connection to as many areas as we could. We’ve been able to get high-speed broadband connectivity out to a large percentage of the state in just a few years.”
Of the Rhode Island counties that Cox – which has 300,000 cable customers – serves, 92 percent offer broadband connection. Broadband connectivity is currently available to 40 percent of households nationwide, according to Hightower.
Broadband offers consumers better access to more content-rich web sites, such as those with sound effects and heavy graphics.
“With a broadband connection, you can download music files and short videos,” he said.
Robert Pia felt that Jupiter’s projections may be a little conservative.
“I think that’s low,” said Pia, vice president of engineering at Providence’s Merrill Clark. “We’re fairly tech-savvy in this part of the country.”
But Pia admitted that the market for – and ultimately the growth of – such services is based largely on population density.
“There’s not a lot of money in doing DSL in Iowa,” he said.
American Broadband Incorporated’s (ABI) Tony Peduto agrees with the study’s projections.
“I think it’s right on target,” he said.
Peduto is the vice president and general manager of American Broadband Rhode Island. ABI is expected to establish its service in 20 Rhode Island cities and towns next year.
Peduto said the company anticipates receiving its construction certificate 45 to 60 days after a public hearing scheduled for Jan. 30. After the construction of its broadband network, ABI expects to begin serving Rhode Islanders during the third quarter of 2001.
Jupiter attributes current growth to demand from early adopters of the technology. Broadband services still fail to resonate with more mainstream households, including online novices; 53 percent of all respondents to a Jupiter consumer survey said they have no interest in any broadband offering, compared with 56 percent who responded in 1999.
By 2005, Jupiter predicts broadband access technologies will become stable in terms of capabilities, and competition among broadband providers will drive all entrants to find new ways to differentiate their service from that of their competitors.
Cox already has discounts for customers subscribing to more than one service, offering them $10 off their total bill. Like Cox, ABI will offer subscriber packages that will include cable television, high-speed Internet access, local and long-distance telephone services and universal billing.
The Jupiter study suggested that broadband vendors could design packages for specific user groups, such as telecommuters, active stock traders, families, and gamers.
For example, active traders could receive a package that includes an increased level of security and bundled-in comprehensive financial tools; families could select a package that includes access to educational software and a Multi-PC home networking solution.
Peduto said ABI may eventually offer a cable package where users can personalize their television service by deciding which individual channels they want.
Another way in which Peduto believes companies will distinguish themselves is through customer service.
“Once they (customers) pick a basic service provider, you’ll see companies not making it as the result of customer service pitfalls.”
Consumers still say price is the primary reason they have yet to choose broadband service, according to Jupiter data. Less than 10 percent of online households are in the early adopter category that will purchase broadband, regardless of cost.
However, declining infrastructure costs, and competition, and the bundling of applications with access will push down the price of broadband access over the next three to four years; prices for low-end broadband access will trend toward the current dial-up access range – approximately $20 to $25 per month by 2005.
Through Cox, a high-speed Internet connection costs $29.95 per month. Hightower said he feels equipment costs will certainly play a role in the switch to broadband technology.
“Equipment prices have been high, but are coming down dramatically,” he said. “As equipment prices continue to come down, more and more people can switch over.”
