Skip to main content

Consumers Are Griping Over High Access Fees

NEW YORK -Cheaper monthly prices and marketing messages that more clearly sell the attributes of high-speed access are the key to generating large increases in cable-modem penetration, analysts at Jupiter Research's Media Forum told cable operators.

"While awareness grows, intent to purchase remains limited," because of price and marketing hurdles, said Jupiter senior analyst Joe Laszlo.

Some 73 percent of consumers interested in broadband access want to pay $25 or less, Laszlo said, citing research conducted by Jupiter. Only 20 percent were interested in paying between $26 and $35 and only 6 percent were willing to pay between $36 to $50. As consumers become more aware of broadband, Laszlo said, "price sensitivity will replace supply constraints."

Broadband companies also need to become better marketers, Laszlo said.

"There needs to be a shift in how broadband is marketed to consumers," he said. "Applications are very key to conveying the value proposition."

Consumers ranked cable-modem service's always-on feature and fast Web page loading as its top two attributes, at 59 percent and 56 percent, respectively.

Viewing high-quality video and audio were cited by only 26 percent and 15 percent of users, respectively.

According to McKinsey & Co. research, broadband users are spending more time online, largely at entertainment and gaming sites. But Joe Berchtold, co-head of McKinsey's Broadband Special Initiative, said "broadband isn't driving as much change in consumer behavior as commonly believed."

One reason, he said, "is that content is stuck in the middle.Existing content doesn't have wide appeal and new content is uneconomic, given broadband's limited reach."

McKinsey's research on price mirrored Laszlo's findings. Although 55 percent of consumers in McKinsey's consumer poll were interested in broadband, most of that group only wanted to pay $20 a month, Berchtold said.

"Present pricing retards growth," he said.

But interesting patterns of behavior have emerged among those who do switch to broadband from narrowband, he said. McKinsey tracked narrowband users who switched to broadband in 2000.

That set of narrowband users spent 15.9 hours online in March, but their usage jumped to 21.4 hours in September, after they acquired broadband connections. Although that's not as high as in other studies, "it's still a very solid increase," Berchtold said.

"They go to the same sites as narrowband," Berchtold continued, citing sites operated by eBay Inc., America Online Inc., Microsoft Corp. and iWon Inc. "These sites have the first chance to win in broadband."

McKinsey found narrowband users spent 14 percent of their time on entertainment sites. When those users switched to broadband, that number jumped to 35 percent, or 4.6 hours of the overall 21.4 hours spent online.

Gaming activities made up 75 percent of the 4.6 hours spent on entertainment. But it wasn't all the fast-paced, young adult game.

Highly interactive, role-playing games accounted for 40 percent of all game usage. The other 60 percent were plain old-fashioned parlor games, Berchtold said.

"The good news is broadband users more actively use rich content," Berchtold said. Some 57 percent of broadband users said they listened to streaming audio and 51 percent download audio. In narrowband, those figures were 33 percent and 29 percent.