March 10, 2004 11:38 AM PST

Broadband overtaking dial-up in major cities

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Broadband is rapidly becoming the preferred way residents of major U.S. metropolitan areas are accessing the Internet, according to a study released Wednesday.

San Diego currently has the highest broadband penetration rate in the nation, with 52 percent of its residents connecting to the Internet using a high-speed service, according to online measurement firm ComScore Networks. Boston ranks second with an even split between broadband and narrowband customers. New York City is in third place with 49 percent.

The San Francisco Bay Area and Los Angeles rank ninth and tenth with 44 percent broadband penetration each.

Despite gains in certain major cities, dial-up services remain the preferred choice for Americans to go online. Sixty four percent of all online Americans still use a dial-up services such as America Online, MSN and EarthLink. AOL still holds the lead, counting 28 percent of the U.S. Internet population as subscribers.

Still, the fact that San Diego now has more than half of its Internet users on broadband highlights a growing shift to speed. Much of the past year's growth has been sparked by competition, the study said.

The Baby Bells-- SBC Communications, Verizon Communications, BellSouth and Qwest Communications--have aggressively cut prices for their digital subscriber line (DSL) services in hopes of gaining new customers. Cable companies such as Comcast, Time Warner Cable and Cox Communications responded by nearly doubling their base download speeds.

"It's clear that increased promotional activity and lower prices introduced by these competitors are fueling the momentum of broadband growth, particularly in larger markets," Russ Fradin, executive vice president of ComScore Networks said in a statement.

While the Bells' pricing has helped it gain more customers, cable modems still dominate with 63 percent of the market, with the remaining 37 percent going to DSL, the study said.

Nine of the top 10 broadband markets reported cable as their primary broadband provider. The only exception was the San Francisco Bay Area, where 60 percent of all broadband subscribers use DSL, the study said.

As for major metropolitan areas with the lowest broadband penetration, Albuquerque and Santa Fe, N.M., topped the list with 24 percent, followed by Grand Rapids, Mich., Harrisburg, Pa. and Indianapolis tied with 30 percent.

 

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