Broad Appeal

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Businesses are already crafting ways to make high-speed Internet access essential to Joe Consumer.

Mary Lou Jay had the need for speed. As a home-based, freelance writer, her efficiency in conducting research, verifying facts, and corresponding with clients via the Internet, was dependent upon getting online easily and quickly. About a year ago, she upgraded her dial-up connection at home to Comcast's high-speed cable access, and life has never been the same. "The speed is terrific and I like that I can stay connected all the time," says the Baltimore-area suburbanite. "I can't imagine being without it. Going back to the slower connection would be like going back to operator-assisted long-distance after you've had direct dialing."

Jay, 47, is one of about 5.4 million early adopting broadband consumers - the majority of whom are highly educated, techno-savvy professionals, spoiled by high-speed Internet connections on their office computers, and desperate for equally fast access at home. Right now, barriers such as limited availability, high prices, complicated installation processes, and lack of competition, are impeding broadband adoption by the bulk of Americans. But the experts agree that eventually - whether it's 5 or 20 years down the road - anyone who wants it will have the option. Therefore, the long-term future of broadband as a mass medium depends not just on signing up the eager folk like Jay, but on convincing today's approximately 35 million dial-up consumers - not to mention the 94 million people who have no Internet access at all - that broadband is worth the investment.

That task is left to high-speed service providers and Web-based ventures who must provide the relevant, personalized content and life-easing applications which experts say will be key drivers in the years to come. Companies that act now to educate Joe Consumer about the beauty of broadband, beyond speed, will win his loyalty while securing market share in an industry expected to grow to almost $15 billion by 2005.

Demand for broadband is huge - and growing fast. The percentage of online households using a DSL (Digital Subscriber Line) or cable modem connection, the two most popular and available means, has risen from 5 percent to 11 percent in the last six months, according to Statistical Research, Inc. (SRI). Just 18 months ago, that figure stood at 1 percent. In contrast, the proportion of online households accessing the Web via a shared phone line, or dial-up connection, dropped 9 percent to 68 percent in the past six months, after staying at a consistent 75 percent from spring 1998 through spring 2000.

Sixty-three percent of consumers say the "need for speed" is by far the number one reason they subscribe to broadband, according to a recent Arbitron study. But in broadband households, the Internet becomes more than just a fast way to beam work home from the office. As users discover Web sites with high-bandwidth applications such as movies-on-demand, animated graphics, multi-player computer gaming, and streaming radio, the Internet will become an entertainment and information medium on par with television and radio.

In fact, of total time spent with electronic media, broadband consumers spend 21 percent with the Internet, 24 percent with television, and 21 percent with radio. In comparison, the average American spends 11 percent of that time on the Internet, 33 percent with television, and 28 percent with radio. Overall, 77 percent of high-speed users say they use the Internet more than they did with dial-up service. Jay, for one, says her 16-year-old daughter, Kate, was "anti-computer" before getting broadband, but now she loves downloading music files and watching movie trailers, as well as playing games over the Internet.

In the short term, at least, demand for service is far outpacing supply. Technical difficulties in the upgrading and extending of phone wires and cables are creating huge waiting lists in many areas. But Gregory Scaffidi, an analyst with Forrester Research, predicts those problems will all but disappear, as government regulations loosen, self-installation technologies become available, competition increases, and subscription prices drop. The industry will hit "hypergrowth" in 2001, reaching 46.7 million households by 2005. In fact, 55 percent of current dial-up consumers say they are ready and willing to switch to broadband the minute it becomes available.

But what about the other 45 percent? For consumers who are using the Internet solely for e-mail and simple browsing, speed may not be reason enough to pay $40 to $75 per month. Forty-five percent of online households today report paying less than $20 a month, or nothing, for Internet access, according to SRI, and 72 percent of dial-up consumers say they aren't willing to pay more than $25 per month for broadband, according to Forrester. Then there are those for whom price is no object: 57 percent of non-Internet users say they are not interested in ever going online, regardless of cost; and 39 percent feel they aren't missing out on anything by not doing so, according to the Pew Internet & American Life Project.

"The early adopters have been introduced to broadband in the workplace, so they automatically understand many of the benefits, but there are still many who have not had that experience," says Mike Megalli, senior consultant for Siegelgale, a branding, advertising, and corporate identity consultancy in New York. "For them, relevance and education are key. Companies must give people content that is relevant to their lives. Show them what they are missing."

In fact, more than 67 percent of respondents in a survey conducted by Jupiter Research say they've never used broadband. Part of that result may be confusion over what "broadband" really is, since some dial-up companies market their services as "high-speed." (In general, Internet connection speeds of 100 kilobytes per second [Kbps] or higher are defined as "broadband." Dial-up, or "narrowband" connections are usually limited to 56 Kbps.) "This illustrates the uphill road that broadband ISPs and online ventures face," says Joseph Laszlo, a Jupiter analyst. "Firsthand broadband experience is often a vital factor in consumers' decision to upgrade a home connection from dial-up to high-speed."

Therefore, in order to turn the Internet into a truly mass medium, broadband companies have to help consumers navigate the learning curve. Some are already beginning to do so, by launching educational marketing efforts, partnering with niche and personalized content developers, and designing easy-to-use applications that consumers will be unable to live without. "A lot of the marketing to date has been very technical and all about how many kilobytes of speed this service or that will get you, but most people can't relate to that," says Jon Hambridge, executive director of brand and acquisition marketing for NorthPoint Communications, a wholesale DSL provider. "We wanted to capture the enabling functionality of DSL and show consumers how it really makes your daily life different and better."

In September, NorthPoint, along with partner Microsoft Network (MSN), set up kiosks in 2,200 Radio Shack retailers around the country where consumers could test-drive broadband's capabilities. The effort reinforced the company's spring ad campaign, which touted the benefits of the "broadband lifestyle." NorthPoint also distributed an easy-to-follow booklet entitled "Living & Working Broadband," written by the author of DSL for Dummies, to help consumers appreciate the benefits of high-speed service.

Prodigy Internet's educational marketing push, targeted primarily at convincing current dial-up subscribers to upgrade, includes a flyer entitled, "A list of cool things consumers will be doing with broadband DSL connections that they can't do now." Among them, the ability to set up computer networks and to operate home appliances remotely - "watering your lawn from the office will become a reality." DSL will also "revolutionize sports viewing," according to the pitch, by offering real-time interface and 3-D graphic renditions of plays from various players' point of view.

In addition to telling consumers what they can do with broadband, companies are also showing them what can be done, through partnerships with content providers. Prodigy, for example, partnered with NBCi to present unique behind-the-scenes coverage of the Summer Olympics. Tine Grimm, vice president of technology for [email protected], an online guide of Web events, says sites that provide such exclusive coverage requiring a fast connection will be very successful. But, she adds, businesses need to do even more to leverage consumers' desire for personalization. "The Olympics could have been the biggest online moneymaking event ever, and would have brought in many, many broadband users, if companies had given people more control over how they got to view it," says Grimm. For example, as a German living in the U.S., Grimm says she would have liked more in-depth coverage of her country's athletes. If an online venture had offered her the ability to tailor video and audio from the Games to her own viewing tastes, she would have willingly paid for the privilege.

Grimm is far from alone. There is a growing, albeit subtle, demand for expanded choice and on-demand media and information. Ron Roy is cashing in on the trend. "We're tapping into people's passions," says Roy, founding partner of UltraStar, an Internet company that creates exclusive interactive and multimedia content for fan Web sites. "Every person has an affinity to some brand. We figured if we built it, they would come. And they do." For fans of the New York Yankees, for example, UltraStar created, where, for $14.95 a month, Web cams in the stadium and locker room give members a behind-the-scenes peek. Fans also get special offers on discounted tickets and merchandise, live chats with players and coaches, up-to-the-minute injury reports and news, and a customized e-mail address at [email protected] Right now, most content can be viewed with a dial-up connection, but UltraStar subtly encourages members to sign up for broadband by creating more advanced content. (Members can purchase DSL service directly through the sites.)

At BowieNet,, for example, David Bowie fans from around the country can download more than 550 songs and every video the singer ever produced. When Bowie recently released a new track, members had the opportunity to download several versions of the song before anyone else, chat with the artist in the recording studio, and vote on the tune that became the final cut. While those with dial-up connections also participated, broadband members had a much easier time downloading the songs and were able to be more active in the real-time chats.

Time Warner is starting to use relevant niche content to drive subscriptions to its Road Runner cable service as well. In Columbus, Ohio, the company signed a deal with Sportscapsule, a pay-per-view, online video service that creates customized hometown sports reels. With this service, the mother of the high school quarterback, for example, can create a video of her son's achievements throughout the season, add music, graphics, sound effects, and even calls by famous sportscasters such as John Madden - and then share it with family members nationwide via the Internet.

"This will be a strong way to convince people in groups of leagues, teams, and schools to get a broadband connection," says Michael Paolucci, president of Sportscapsule. And for big national companies such as Time Warner, owning localized content provides not only a trusted hometown feel, but gives people a reason to choose their service over another.

The development of broadband-enhanced applications that make daily life simpler and more convenient will also help drive adoption. Forty-five percent of current high-speed Internet users say they regularly use applications that utilize broadband's "always on" feature, such as checking the weather, stock quotes, directory assistance, movie listings, and traffic reports, according to Jupiter. In focus groups, Sprint found that one of the first things people do once they get a broadband connection is move the computer from the den to the kitchen.

"The computer becomes the way you get information," says Bob Thompson, president of Sprint's National Consumer Organization. "Rather than having to wait 18 minutes for the Weather Channel to report on your town, people can now get the specific information they need in two minutes." And beyond the PC, other "always on" gadgets - mobile phones and personal digital assistants (PDAs), among others - will increase demand for bandwidth. International Data Corp. (IDC) estimates that by 2003, there will be 723 million Web-attached information devices, up from 87 million in 1998.

As a result, applications that use high-speed Internet access to make daily tasks easier will win big points with consumers. Sprint, for one, is rolling out a broadband-enhanced product next year that will combine cell phone messages, home and work voice mails, and home and work e-mails into one central mailbox, wherever the consumer wants it. In other words, if someone prefers e-mails, it will convert all voice messages to text, and vice versa if the person prefers voice.

Ed Ritchie, owner of a software development company in Santa Clarita, California, originally signed up for DSL service for the speed. But after just 10 months, it has become an integral part of his life. Ritchie does all his banking at Bank of America's Web site. He uses the UPS site to arrange shipping, in order to avoid lines at the post office. Rather than worry about his favorite movie being out of stock at the local video store, he rents DVD movies online, and has them delivered at his convenience. He also will no longer buy a CD if he can't first listen to a sample online. In fact, he finds himself doing a lot more Net shopping in general lately. "I'm considering moving, but I won't go to an area where broadband's not available," he says. "I can't live without it." Words that everyone may soon live by - if marketers get their wish.

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