Surfs Up: More Than 50 Million Consumers Now Online Up 11% In First Quarter And 62% Year Over Year
Online Providers Go On a Promotions Spree to Capture Customers
DSL, Cable Modem Usage Soar, But High Speed Access Still Uncommon
(WASHINGTON, D.C., May 2, 2000) More than 5 million U.S. consumers joined the
online world during the first quarter of this year, an increase of 11 percent since the
end of 1999, and a whopping 62 percent more than a year ago, according to TRs
Online Census, compiled by Telecommunications Reports International (TRI), the leading
telecommunications publisher and a unit of CCH INCORPORATED (CCH). According to the
quarterly tally of online subscribership, the nations largest Internet service
providers (ISPs) now reach nearly 50.3 million customers, including those who access the
Internet via television, digital subscriber line (DSL) service and cable modems.
TRs Online Census, conducted quarterly by Telecommunications Reports since
1980, is the definitive survey on online access methods and trends.
"From rebates to free Internet access, this last quarter was marked by aggressive
promotions on the part of ISPs that want to capture greater market share," said Amy
Fickling, managing editor for Telecommunications Reports. "The increased availability
of high-speed services via cable modem and DSL also has enticed additional consumers to
Online Growth by Category
The most popular access method remains dial-up ISP. While that now accounts for nearly
46.7 million customers, the 10-percent growth rate in that segment during the first
quarter was modest compared to growth in the emerging high-speed access marketplace. For
example, TRs Online Census reports access via cable modems increased by 44
percent while subscriptions to DSL service soared 183 percent.
However, both of these emerging markets have a lot of ground to cover to catch up with
ISPs: cable modem providers captured just 2.3 million customers and DSL is getting its
feet wet with under 200,000 customers. Access via Internet TV saw a slight decline in
subscribers to just over 1.1 million.
Online Growth by Category
Number of Customers
Growth During 1Q 2000
|Digital Subscriber Line
Source: TRs Online
Telecommunications Reports International
Whos Ahead: Wooing Customers and Then Keeping Them
Heated competition, mergers and acquisitions and alternative business models have
continued to have an impact on the top-tier ISP marketplace during the first quarter of
this year. TRs Online Census found that while America Onlines dominance
remains intact, NetZero jumped into the number-two spot, thanks in part to an aggressive
promotions campaign for its ad-supported free access service. EarthLink also climbed up to
the number three spot after completing its merger with MindSpring.
According to the census results, the six largest ISPs now account for 73 percent of the
total online audience. These ISPs are America Online, NetZero, EarthLink, CompuServe, MSN
Internet Access and AT&T WorldNet.
"Free-access service providers continue to give traditional fee-based dial-up ISPs
a run for their money," said Fickling, adding that some fee-based ISPs are responding
with rebate offers in an attempt to attract and keep their subscribers loyal.
In addition to NetZero, other free-access providers emerging as strong competitors
include Juno Online Services, which registered 2 million free web-enabled subscribers
during the first 15 weeks after launching its service in December 1999. Also, 1stUp.com
Corp., which has entered into a number of reseller arrangements most recent among
them Excite@Home FreeLane, AltaVista, Lycos and GTE Internetworking emerged as a
CompuServe, MSN Internet Access and Prodigy were among the traditional ISPs offering
rebates during the first quarter to attract subscribers. Such rebate offers typically
provided PC buyers with a $400 rebate for signing up for three years of online service
with the ISP.
High Speed Access Heats Up: Cable Modem vs. DSL
While the dial-up ISPs duke it out over market share, the ultimate competition may come
from the still-emerging high-speed access providers.
"As more customers turn to high-speed access, the dial-up ISP market may see
significant changes in its demographics and services as premium customers and features
move to the high-speed platforms," said Fickling.
Adoption of cable modem access was strong during the first quarter, with 2.8 million
subscribers now signed up more than triple the number of subscribers just a year
ago, according to the tally. Leading the cable modem market are At Home, followed by Road
Runner, which in total accounted for nearly 98 percent of the overall cable modem market.
In the still nascent DSL market, which saw aggressive growth of 183 percent in the
first quarter, TRs Online Census found much of this growth attributable to
the aggressive deployment and promotion of DSL by the Bell companies. For example, Bell
Atlantic now has 900 of its more than 2,300 central offices equipped for DSL and SBC
Communications has launched a $6 billion initiative to expand DSL availability in its
markets. The top three DSL providers now are SBC, U S West and GTE.
Internet TV Holds its Own
While all other online categories reported an increase in subscribers, the quarterly
report found that Internet TV providers saw their subscriber bases decline negligibly, by
.2 percent during the first quarter. Microsofts WebTV is the undisputed leader in
this market, with more than 98 percent of the subscribers, according to the online census.
To Obtain TRs Online Census
Annual subscriptions to the quarterly online census are available for an introductory
price of $149 by calling 1-800-822-6338.
About TRI and CCH INCORPORATED
Telecommunications Reports International, based in Washington, D.C., is the most
respected provider of telecommunications industry news and analysis. Since 1934,
executives and policy-makers have relied on TRIs comprehensive coverage and analysis
of major industry issues and events. TRI is part of the Business and Finance Group at CCH
INCORPORATED, a leading provider of tax and business law information and software. The TRI
web site can be accessed at www.tr.com.
CCH has served more than four generations of business professionals and
their clients, covering a wide range of legal and compliance topics including securities,
insurance, banking, telecommunications, trade regulations and government contracting. CCH
is a wholly owned subsidiary of Wolters Kluwer. The CCH web site can be accessed at www.cch.com. The CCH Business and Finance
Group web site can be accessed at http://business.cch.com.
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EDITOR'S NOTE: For more information about TRs Online Census contact:
Leslie Bonacum at 847-267-7153 or Mary Dale Walters at 847-267-2038. Available to members
of the press:
- A copy of TRs Online Census
- Charts and graphs depicting the survey data
This release is posted in the CCH Press Center: www.cch.com.