August 18, 2004 10:35 AM PDT

Study: Broadband leaps past dial-up

For the first time ever, more Americans are using broadband to access the Internet than dial-up, according to a study released Wednesday.

As of July, there were 63 million people using broadband at home, making up 51 percent of the total U.S. Internet population, according to market research company Nielsen/NetRatings. That's a 47 percent jump from last year, when broadband totaled only 38 percent of all U.S. online households.

"Consumers are driving it," Nielsen/NetRatings analyst Marc Ryan said about the gains. "Consumers really like having a faster connection. Speed really doesn't kill. Speed is what people want."

Broadband penetration was especially high among consumers under the age of 20, approaching 60 percent, the study said.

The results are not surprising, given the steady growth of subscribers among the nation's largest broadband providers. The Baby Bell phone companies--Verizon Communications, SBC Communications, BellSouth and Qwest Communications--have reported strong subscriber growth over the past year. While cable companies continue to surpass the Bells in total broadband market share, they have watched their growth slow compared with DSL (digital subscriber line).

Comcast, the largest cable broadband provider, last quarter gained 327,000 new subscribers, less than the 350,900 it added a year before. SBC secured 315,000 new customers last quarter, up from 304,000.


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The Bells, which are the largest providers of DSL access, have grown their broadband businesses by slashing prices and offering promotional discounts. SBC, for example, offers DSL for as low as $26.95 a month bundled into its landline phone service. Verizon's costs $34.95 a month after introductory discounts.

Growth in cable and DSL has come at the expense of dial-up services. America Online, the nation's largest narrowband provider, has witnessed a net loss of 3.2 million subscribers over the past two years, most of whom pay $23.90 a month. The steep dial-up declines have been offset by gains in the company's "bring your own access" service, which offers AOL without a narrowband connection for $14.95. BYOA is geared toward AOL subscribers who want to maintain their service after switching to a broadband provider.

An AOL representative would not break out dial-up vs. broadband numbers, citing considerable overlap between the two populations.

Meanwhile, Microsoft's MSN, the second-largest dial-up Internet service provider, reported 4.3 million Net access subscribers last quarter. That was down from 6.5 million the year before.

 

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