High Speed Data: Challenges & Opportunities.

Data from High Speed Data, Challenges and Opportunities, a just-completed survey of the market for tiered and premium broadband Internet Services, show that 22% of current dial-up subscribers in markets where cable modems are available are considering the switch to High Speed, either through a cable modem or a DSL line. Potential penetration of High Speed Data could soon reach 67% of all Internet homes if those who say they are likely or very likely to subscribe actually do so.

The findings of the study, a joint venture of Horowitz Associates, Inc. and Livingston and Company, were presented by Howard Horowitz at a CTAM Broadband Opportunity Conference Panel during NCTA in Chicago. The survey of 505 High Speed Data households and 501 dial-up households– in markets where cable modems are available– studies the current market, positioning and potential of High Speed Data (HSD) and assesses the market for new applications, added-revenue content and tiered services.

It is clear from study findings that HSD providers have attracted a core segment of consumers that value basic features of HSD such as speed, “always on” capabilities and not having to tie up the phone line to access the Internet. As cable providers and telcos vie for new subscribers in the same markets, applications, content and price-point tiers will play an important role in acquiring, retaining and upgrading customers. “Unlike the early days of cable, the market for HSD is competitive at the outset.” commented Howard Horowitz, president of Horowitz Associates, Inc., “New applications and premium content will be crucial for attracting and retaining consumers in a competitive environment.”

Market Potential Strong for New Applications

One of the most interesting findings in the survey is consumers’ interest in applications such as home networking, firewall and security, and parental controls. Seven out of ten (70%) of all current HSD subscribers express interest in at least one of the applications tested, and one in four (23%) express willingness to pay upwards of $10 more than the standard price for HSD for such applications. Potential is also strong among the next wave of High Speed adopters with 82% expressing interest in add-on applications and 32% willing to pay more than the current $45 average monthly cost for HSD service.

Interest for Premium Content High Among Key Consumer Segments

Many, not most, current and potential HSD customers will also pay more to access premium content such as streaming and downloadable music and video, news, sports, and content for children. Two out of five (45%) current HSD subscribers are interested in at least one premium content offerings covered in the survey, and one in four (27%) are willing to pay extra for access to a bundle of premium content. Among the next wave of HSD subscribers, 65% express interest in premium content, with 13% willing to pay. Interest in premium content is particularly high among young, 18-34 year old High Speed adopters, and among households with children.

Speed and Byte-based Tiers of Service Attract Some Consumers to Lower Prices

Tiering– allowing consumers more control over the price of HSD service with choices based on speed, bytes, and game capabilities– will also play a role in driving HSD. Almost half (45%) of those considering HSD are interested in some type of tiered service, with 13% willing to pay more for higher capacity tiers, and 11% choosing to pay less for a lower capacity tier.

“Continually improving the value equation is critical to maintaining growth in any market,” comments Ted Livingston, co-producer of the study. “Our High Speed Data: Challenges and Opportunities study provides operators, content and technology companies the information required to develop successful marketing, pricing and packaging strategies for enhanced products.”

For more information at http://www.horowitzassociates.com