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Survey shows slowing high-speed Internet penetration in US
2005-09-27

High-speed Internet adoption in the United States has been losing impetus and is poised to slow even further after growing quickly in the past years, a new survey said on Wednesday.

The survey, released by the think tank Pew Internet & American Life Project, found that during the first six months of 2005, 53 percent of home Internet users said they use a broadband connection, up by only 3 percent compared to the previous six months.

This is a much slower growth rate compared with the same period a year earlier. From November 2003 to May 2004, high-speed Internet penetration grew by 20 percent, from 35 percent of home users in December 2003 to 42 percent in May 2004, according to the survey.

The think tank attributed the slowdown in broadband penetration to a maturing of the market.

Early adopters, who are typically savvy about the Internet, well-educated and well-paid, have already signed up for broadband service. But today's dial-up customers, most older adults with lower incomes and educational levels, do not use the Internet to do much beyond basic Web surfing and e-mailing.

"The low-hanging fruit of early adopters is gone," John Horrigan, director of research at Pew, said in a statement. "And the remaining dial-up population seems unenthusiastic in terms of the Internet, so mathematically, that makes for a smaller fruitful pool for providers to select from."

Using national survey data from year 2002 and 2005, the study showed that the role of online experience in explaining intensity of Internet use has vanished, and the explanatory effect of having a broadband connection has grown.

This suggests there will not be much pent-up demand for high-speed Internet use at home relative to 2002, the paper said.

But other analysts said dropping cost of high-speed Internet service would entice new customers.

After drastic price cuts by the Internet service providers, the DSL service cost in the US has reached 15 dollars monthly, even cheaper than dial-up connection. Some experts believe this could have a significant impact on today's dial-up customers.

Cable companies are also going after these consumers by offering special pricing on "triple play" bundles of service that combine telephone, high-speed broadband access and TV service.

Whether dial-up consumers are enticed into subscribing to broadband services is yet to be seen, but it's clear that providers have realized that they must change their strategy to win them over, said Jim Penhune, an analyst at Strategy Analytics.

 


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