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Consumers Want Their Internet Connections Fast: High-speed Access
Subscriptions Reach Record High In Third Quarter
Reality Hits Free ISP Market As Ad-Supported Providers Struggle to Keep
Their Customers Coming Back
(WASHINGTON, D.C., November 6, 2000) Consumers appear to be latching on to
the idea of high-speed access, with growth in new online customers during the third
quarter coming almost entirely from new digital subscriber line (DSL) and cable-modem
services, according to TRs Online Census. TRs Online Census is
compiled by Telecommunications Reports International (TRI), (www.tr.com), the leading telecommunications information publisher and a
unit of CCH INCORPORATED (CCH).
The number of consumer DSL subscribers more than tripled during the third quarter, with
more than 1.2 million customers having service. High-speed cable-modem access, which has
been an access option longer than DSL has been around, also continued to show healthy
growth. More than 3.5 million customers now have cable-modem online access, up 27 percent
from last quarter, according to the study. TRs Online Census, conducted
quarterly since 1980, is the definitive survey of online access methods and trends.
As for the overall market, the nations largest Internet service providers (ISPs)
now reach 63.2 million household customers, including those who access via traditional
dial-up, Internet television, digital subscriber line (DSL) and cable-modem services.
Thats just a 1.49-percent increase over last quarters survey results.
"While high-speed access only accounts for about 7 percent of the online market,
its far out-stripping the growth rates of the overall market," said Amy
Fickling, managing editor of TRs Online Census. "Theres a set of
consumers willing to pay a premium price for faster access, and the ISPs seem to be
responding, offering more high-speed packages and expanding access to more
Free ISPs Hit by Reality
During the second quarter, dial-up ISPs saw phenomenal growth, in large part fueled by
aggressive promotions from free ISP services to sign on more customers.
In the third quarter, however, reality set in for these free, ad-supported providers.
While theyve shown a tremendous capability to sign up new customers, many are now
acknowledging that only 40 percent to 50 percent of the customers that sign on are
"active" users. As a result, TRs Online Census has adjusted its
counting method for the third quarter to reflect active subscribers only for this
"The attractiveness of the ad-supported ISP model is that the barriers for
customers to sign on is virtually non-existent. It costs them nothing," said
Fickling. "However, the challenge for these ISPs is that beyond attracting new
customers, they have to figure out effective ways to retain them because advertisers
expect these customers to keep coming back."
Online Growth by Category
During 3Q 2000
|Digital Subscriber Line
Source: TRs Online Census,
Telecommunications Reports International
A Mixed Bag for Dial Up ISPs
The most popular access method remains dial-up ISPs, which accounts for more than 57
million customers. The decrease from last quarter reflects the adjustment in the survey to
count only active subscribers among free ISP customers.
Approximately 42.7 million of these subscribers use paid ISP services, while 14.6
million are active subscribers to free ISP services, according to TRs Online
Leading the paid dial-up ISP pack is America Online, with 24.5 million customers,
dominating the ISP industry by maintaining a 39-percent share of the overall consumer
base. EarthLink, MSN Internet Access, CompuServe and Prodigy round out the top five.
On the free dial-up ISP side, the survey reports Juno Web is the clear market leader
with 3.7 million active subscribers. Spinway, 1stUp.net, NetZero and AltaVista round out
the top five free ISP market leaders.
Growth in High-Speed Access Shores Up the Market
While free ISPs struggle to figure out how to keep customers coming back, high-speed
access providers are trying to keep pace with market demand.
The DSL market saw the greatest growth among all categories, with a 341-percent
increase in new customers. SBC now leads the DSL provider market with 435,000 subscribers,
followed by Covad, Qwest, Verizon and EarthLink, according to TRs Online Census.
Cable-modem providers also recorded continued growth, with nearly 27 percent more
subscribers signing on during the quarter. According to the survey, @home, carried by
AT&T, Comcast and Cox, remains the undisputed leader with 2.3 million subscribers,
nearly one-third of the overall market share. Road Runner, carried by Time Warner, reports
the second-highest subscriber base, with 1.1 million customers.
Internet TV Inches Forward
Breaking its two-quarter stall, Internet TV providers showed a very slight increase of
2.5 percent in subscribers during the third quarter, according to TRs Online
Census. Microsofts WebTV commands nearly the entire market. However, AOLTV,
available in only three pilot markets at the end of the third quarter, is expected to
expand and be promoted heavily during the upcoming holiday season. This could change the
face of the Internet TV market significantly in the months ahead.
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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EDITORS NOTE: For members of the press, a complimentary copy of TRs Online
Census is available by contacting Leslie Bonacum at 847-267-7153.