Digital Media

(Credit: Forrester via North American Technographics Benchmark Surveys)

The amount of time people spend online has not increased since last year, according to a report released by Forrester on Monday. Perhaps more interesting, however, is the reason for the trend: people's online behavior has changed.

"Engagement with the online channel has deepened," writes Forrester analyst Jackie Anderson. "Web users are becoming savvier and are better multi-taskers. Many know exactly where they want to go when they log in."

The report, titled "Consumer Behavior Online: A 2009 Deep Dive," shows that overall time spent on the Internet has remained at 12 hours per week. This bucks the trend from 2004 to 2007, when Internet use grew significantly.

Broadband growth has also slowed, according to the report. In the last year, broadband adoption grew only 6 percent, but that's still 6.5 million new households. Now, the majority of households with Internet run broadband, and more than 50 percent of people have been using the Web for at least 10 years. "The Internet starts to more closely resemble a traditional media channel," writes Anderson.

However, people are still watching TV at the same rate (13 hours per week) regardless of being able to stream their favorite shows online. And, while 25 percent of people online watch full-length TV shows on the Internet, those same people also maintain 13 hours per week of TV.

The one trend that has grown in the last year is social networking. Not a huge surprise as we've seen Twitter explode and Facebook grow ever stronger. Still, only one third of online users are members of a social network, but that's a 15 percent increase from 2007.

Forrester has been tracking Internet use since 1998 through this annual survey. It is one of its largest consumer surveys and includes input from 40,000 Americans. This year's survey was conducted in January and February.

A fake report on CNN's iReport site alleged that AT&T CEO Randall Stephenson had been found dead.

(Credit: iReport, screengrab from Business Insider)

Reports began to surface Sunday charging that AT&T had blocked broadband access to parts of the notorious (and powerful) Internet forum site 4chan, which the telecom company confirmed on Monday. Late in the evening, a fake story surfaced on CNN's iReport citizen journalism site alleging that AT&T CEO Randall Stephenson had been "found dead in his multimillion dollar beachfront mansion" after a cocaine overdose.

Suffice it to say that the two events are likely connected. Access to 4chan has since been restored for AT&T broadband customers.

For those who stepped in late: 4chan is sort of like the Internet's equivalent of a league of pirates, den of thieves, or whatever other sort of anarchic analogy you prefer. Decentralized and relying on anonymity, the participants issue large-scale pranks both online and offline, from teaming up with video site eBaumsWorld to launch the "Porn Day" campaign on YouTube to spamming Twitter's trending topics.

The fake iReport disappeared from CNN quickly, perhaps because it read that Stephenson was found "delirious" when "a friend called 911 after a night of what he called, 'male dancers everywhere and the best blow west of the Mississippi.'"

Last October, iReport was the victim of a prank in which a more believable user-submitted story reported that Apple CEO Steve Jobs--who has a well-publicized history of health problems--had suffered a heart attack. It wasn't true, but it was online long enough that Apple's stock took a dip.

AT&T spokesman Michael Coe told CNET News in an e-mailed statement that a denial-of-service attack was what stemmed the temporary block of 4chan traffic and that it has since been restored. "Beginning Friday, an AT&T customer was impacted by a denial-of-service attack stemming from IP addresses connected to img.4chan.org," Coe wrote. "To prevent this attack from disrupting service for the impacted AT&T customer, and to prevent the attack from spreading to impact our other customers, AT&T temporarily blocked access to the IP addresses in question for our customers. This action was in no way related to the content at img.4chan.org; our focus was on protecting our customers from malicious traffic."

"Overnight Sunday, after we determined the denial-of-service threat no longer existed, AT&T removed the block on the IP addresses in question," the AT&T statement continued. "We will continue to monitor for denial-of-service activity and any malicious traffic to protect our customers."

This post was updated at 9:25 a.m. PT.

Some broadband users are considering going back to dial-up as the tough economic climate forces them to cut their household budgets, according to a story published Friday in the Chicago Tribune.

While it's unlikely Americans will ditch broadband for dial-up en masse, there are likely to be some people who find the $20 to $50 monthly fees for DSL or cable modem broadband service to be too high, when dial-up providers such as NetZero are offering new $9.95 service plans.

One Florida man, Arnold Zimmerman, 66, said that after his work hours got reduced and his stock portfolio tanked he was looking to make cuts.

"I didn't think I would ever go back," the Tribune article quoted Zimmerman as saying. "It was terrible. But with this economy, you got to look to cut wherever you can."

For several years, Internet users have been ditching dial-up Internet service for broadband service. But executives from United Online, which owns dial-up providers NetZero and Juno, said they saw the percentage of people dropping the company's Internet service hit a new low of 4.3 percent during the fourth quarter of 2008.

Still, broadband services have been growing strong for cable and phone companies. And even though some higher-speed services are pricey, consumers can still find cheaper alternatives, especially if they are able to get DSL service.

For example, Verizon Communications offers a 1 megabit per second service for $17.99 with a one-year contract. Subscribers must also have a Verizon phone line. But if they don't they can get the service for $19.99.

AT&T is offering a special promotion for its 768 kilobits per second service for $9.99 a month. The special offer applies only to new AT&T DSL customers. And subscribers must also have an AT&T phone line, sign up for the service online, and agree to a one- year contract. Current AT&T customers can get the service with the same restrictions for $19.95 per month.

But I'm not entirely convinced people will cut back at all on their broadband even as the recession worsens. As CNET News has reported previously, some consumers are actually increasing the speed of their broadband connections to access more entertainment at home. Instead of cutting broadband services, these consumers are cutting their cable or satellite services and are using their fast broadband connections to watch free TV from the Net. They're also watching some TV for free from over-the-air broadcast stations.

If you've got tips for saving costs by cutting back on technology, I'd love to hear from you. Please send me an e-mail at maggie.reardon@cbs.com.

Time Warner Cable took a hit from a weak economy and growing competition from phone companies in the fourth quarter as subscriber growth slowed.

Time Warner Cable, the second largest cable operator in the U.S. behind Comcast, met financial expectations on Wednesday for the fourth quarter, but it added fewer subscribers during the quarter.

CEO Glenn Britt cited a weak economy and growing competition from phone companies AT&T and Verizon Communications.

The cable operator only gained about 49,000 new lines for a total of 34.2 million during the quarter. And basic video subscriptions decreased by 197,000, to 13.1 million. This drop was attributed to customers ending their service, but was also due to the fact that Time Warner Cable sold some properties.

Even though the company saw subscriptions slow and even decline in some areas, it still managed to increase its revenue, mostly due to higher prices. In video, it increased revenue by about 4 percent to $2.65 billion. Revenue for its high-speed data service also increased 11 percent, to $1.08 billion. And voice revenue increased 29 percent, to $435 million.

Meanwhile, Verizon Communications, which competes head-to-head with Time Warner in several markets, including New York City, had its best quarter yet in terms of signing up new Fios broadband and TV subscribers. For the fourth quarter, Verizon added 303,000 Fios TV customers and 282,000 Fios Internet customers. Verizon ended the year with 1.9 million Fios customers, doubling its base in 2008.

AT&T, which also sells broadband and TV service, also had a strong quarter. It added a total of 264,000 new TV subscribers in the fourth quarter, up from 232,000 added in the third quarter of 2008. The company now has more than 1 million subscribers for this service.

AT&T's U-Verse broadband service also helped push growth in the company's IP data services. In total, AT&T grew its consumer IP data revenue, which includes broadband and AT&T U-Verse services, by 21.4 percent.

Time Warner Cable also wrote off a big portion of its investment in the high-speed wireless network being built by Clearwire. The company took a noncash impairment of about $367 million on its $550 million investment. The company expects to roll out wireless service with Clearwire in at least one city in 2009.

Meanwhile, Time Warner Cable's parent company, Time Warner, also reported a loss of $16.03 billion for the fourth quarter of 2008, compared with last year's profit of $1.03 billion. Much of the loss came from $24.2 billion in writedowns, a big portion of which came from the cable operator.

In addition to the phone companies, so far it looks like cable operators are also in good shape to weather the current economic downturn.

On Thursday, Comcast, the largest cable operator in the U.S., reported solid earnings for the third quarter of 2008. The company's net income for the third quarter rose 38 percent to $771 million compared with the same period a year ago. Revenue was up 10 percent to $8.55 billion

Thanks to reduced capital spending, Comcast also improved its cash flow by 77 percent to $928 million. Comcast is now expecting to exceed its free cash flow target for 2008 of $2.3 billion. This is largely due to a reduction in capital spending, as the current housing crunch has lessened the need for new cable equipment.

While an impending recession could still ultimately spell trouble for Comcast in the next several quarters, it appears the subscription TV, phone, and broadband businesses are largely resilient. For many Americans cable TV and high-speed broadband service are seen as must-haves now in addition to home phone service, even when times are tough.

Verizon Communications' CEO Ivan Seidenberg suggested earlier this month at a conference that he believed his company and others that provide home entertainment services, like TV and broadband, could actually do slightly better during an economic downturn because people are more likely to stay home and watch TV and surf the Internet.

Still, the economic crunch is also likely to increase competition between cable and phone companies especially when it comes to price. Consumers may look for better deals and could be more likely to buy the triple-play package of services at a competitive price.

So far Comcast appears to be winning the battle to win new customers, especially when it comes to high-speed Internet. During the quarter, Comcast reported it lost 147,000 basic cable subscribers, but it added 382,000 broadband customers. Compare that to Verizon Communications' and AT&T's results. Verizon added about 225,000 fiber Internet subscribers, and AT&T added only about 148,000 broadband connections.

Despite feeling confident that they will weather the economic storm, Comcast's executives still said they plan to be cautious. The company said it might curtail its stock buy-back program. It said last year it planned to buy back $7 billion in stock. It still has $4.1 billion worth of stock to go.

A number of Telstra's major broadband rivals have said they have no immediate plans to follow the telecommunications company's lead and use the Twitter microblogging service to monitor service outages and contact customers about support plans, though a closer look shows Optus to be one of the only large carriers not using the tool.

Telstra launched the offering over the past several weeks, garnering a mixed response from Australian users of the service, but rivals Optus, iiNet and Internode said they weren't as keen to offer an official Twitter-based service.

iiNet did admit that it had already dabbled in the tool and had an unofficial Twitter account. But the Internet service provider didn't intend on extending the channel to offer Twitter support in an official capacity, according to a company representative.

"For now, we're interested in informally participating in the commodity-free, open-conversation platform that Twitter encourages," iiNet said.

Despite its unofficial nature, answers to iiNet customer queries have been posted on the Twitter stream since the first post, on September 30. In reply to one tweet on whether responses would be coming 24-7, the company said, "Not at this stage, no. For now, it's proof of concept, hurtling towards a greater destiny! We hope."

The iiNet account's opening follows that of competitor Internode, which existed despite the ISP's managing director, Simon Hackett, saying the company was happy with its current use of broadband information site Whirlpool to communicate with customers.

"We're quite open to the idea (of using Twitter), but to date, we're finding that being open and accountable on Whirlpool has served us well for many years and continues to do so," Hackett said.

He said many senior staffers, including himself, were active on Twitter. Recently, when Internode had an outage, Hackett made multiple posts on threads discussing the problems.

Internode's Twitter stream has been in operation since midway through last year. Optus, however, seems to be the odd one out, with no Twitter account, official or otherwise.

"At this point in time, we're not using Twitter. However, we are always looking at emerging technologies and tools to improve the way in which we communicate with our customers," an Optus representative said.

Suzanne Tindal of ZDNet Australia reported from Sydney.

Results from a new customer survey suggest consumers would rather subscribe to a triple play bundle of services from a phone company than from a cable operator.

On Tuesday the market research firm CFI Group released results from a customer satisfaction study that indicated that almost twice as many consumers are interested in buying a bundle of phone, broadband and TV service from a phone company than from a cable operator. But because phone companies haven't completed rolling out TV and upgraded broadband services to all their customers, more consumers buy the bundle from the cable company. Only about 2 percent of those surveyed subscribe to TV service from a phone company.

Using the American Customer Satisfaction Index created by the University of Michigan, CFI surveyed more than 1,200 consumer households to examine customer satisfaction with video, broadband Internet access and wireless communications services. The group concluded that consumers are more dissatisfied with cable operators than they are with phone companies, which could give phone companies a big advantage in vying for customers.

According to the study, consumers said that high cable rates and poor customer service were the two biggest reasons they would consider leaving a cable provider. And customers also cited faster Internet speeds as a top reason to switch from cable to a phone company's service.

"The cable companies are asleep at the wheel if they don't see the threat from the telecoms," said Phil Doriot, program director for CFI Group. "But the network upgrades aren't going to happen overnight, so cable companies still have the opportunity to improve their customer service and cover their Achilles heel."

Verizon Communications and AT&T have thrown the first blows in an impending broadband pricing war.

Last week, Verizon Communications said it will offer six months of free DSL service to new customers who sign up for a one-year contract and also use the company's traditional landline voice service. The promotion is available until the end of October.

Verizon's DSL service typically costs between $19.99 per month for 768Kbps downloads and $42.99 a month for 7.1Mbps downloads. Add traditional telephone service, and subscribers can get high-speed DSL and phone service for as little as $45 a month versus $65 a month.

AT&T has also upped the ante with a new promotion that guarantees customers its current pricing, which ranges from $20 to $55, for two years, the Wall Street Journal reported Tuesday.

The promotions come as broadband operators saw a sharp decline in new subscriber growth in the second quarter of 2008. Twenty of the largest cable operators and phone companies in the U.S. only signed up about 887,000 new subscribers during the quarter, the lowest level of growth seen in the past seven years, according to Leichtman Research Group.

Phone companies appeared to be the hardest hit by the slowdown, only adding about 23 percent of the customers they added during the same quarter a year ago. Specifically, Verizon lost 133,000 DSL subscriptions in the second quarter as its existing customers upgraded to its Fios network and new broadband users went to cable competitors.

Meanwhile, cable companies, such as Comcast and Time Warner Cable, have fared much better. In total, cable companies added about 75 percent of all new customers in the second quarter.

Comcast, the largest cable operator in the U.S., added 278,000 high-speed Internet subscribers during the second quarter. Comcast executives have said that about two-thirds of its new broadband customers had switched from DSL. And about one-fifth of these customers are signing up for the triple play bundle.

As a result, cable operators haven't felt compelled to lower prices or offer more for less. But as the broadband market gets tighter, a cable response is likely.

Today about 60 percent of U.S. households already have high-speed Internet connections. And of all people who regularly use the Internet, about 90 percent of them already subscribe to broadband service as opposed to dial-up. This means that there is a smaller pool of people using dial-up who may switch to broadband services, a fact that is also likely impacting growth in the broadband market.

Comcast is already starting to see its edge weakening. During the second quarter, the cable operator added about 18 percent fewer customers during the quarter than it did a year ago.

It will be interesting to see what kind of affect the phone companies' new pricing terms will have on the market in the third quarter. Stay tuned.

This broadband war could lead to some good deals for consumers. But bargain shopping consumers will have to read the fine print on these deals. Pesky service contracts with early termination fees that are common in the wireless industry could show up more regularly in the broadband market. Verizon's six-month free DSL promotion requires a one-year commitment. And the company is charging a $79 fee for people who cancel the service early.

The average download and upload speeds for broadband services across the U.S. have remained relatively unchanged over the past year as the U.S. continues to lag behind other countries in terms of broadband speeds, according to a report published by the Communications Workers of America labor union.

The report, released Tuesday, consists of data from 230,000 online speed tests across the U.S. In its Speed Matters blog announcing the study's results, the group highlighted that the average download speeds increased only 0.4 megabits per second to 2.3Mbps. By contrast, the average download speed in Japan is 63 Mbps and in South Korea the average download speed is 49 Mbps.

As for upload speeds, the average in the U.S. was only 435 kilobits per second.

The CWA is using the report to lobby lawmakers to develop a national broadband policy. Specifically, the union is backing a Senate bill called the Broadband Data Improvement Act (S.1492) that calls for the government to define advanced telecommunications services so that the Federal Communications Commission can more accurately define broadband conditions in the U.S.

The union's president, Larry Cohen, said that improving broadband service is critical for the U.S. to remain competitive in the global market.

"This isn't about how fast someone can download a full-length movie," he said in the blog. "Speed matters to our economy and our ability to remain competitive in a global marketplace. Rural development, telemedicine and distance learning all rely on truly high-speed, universal networks."

Of course, Cohen's union has a vested interest in whether companies such as AT&T and Verizon Communications upgrade their networks to handle faster broadband speeds. The more than 700,000 members of the CWA union are workers who would help build these networks.

That said, there have been other studies that have shown the U.S. lagging behind other countries in terms of broadband penetration and speeds. Other groups have highlighted this research to also push for a national broadband policy.