Monday, March 2, 2009

Broadband nears saturation in US

There are clear signs that broadband adoption is nearing its saturation point in the United States. According to Steve Rago, an analyst with iSuppli, new subscriber additions amounted to 3.1 million in 2008 million, down 56.1 percent from 6.5 million in 2007. Since economic conditions worsened so dramatically in the 3rd and 4th quarters, it's tempting to attribute such a slowdown to the recession. But remember two things. First, the early part of the year was fairly robust, with no talk of layoffs, credit crises, or even skyrocketing oil prices. Secondly, the bundling of service offerings by cable and phone companies, which made broadband very consumer-friendly, really took off in 2005. Nowadays, the coupling of cable and internet is -- almost -- a foregone conclusion. And that type of mindset is normally indicative of a highly mature product.

So, over the next 18 months I think we can expect that internet access fees for consumers will become more competitive... especially with fiber offerings from the phone companies (like FiOS) expanding into more and more neighborhoods. We can expect to see more information-oriented content being delivered to end-users directly from their web sites, bypassing -- to a limited extent -- traditional media ... especially television. This is different from marketing content, and I suspect consumers will reject over-the-top marketing pitches that show up on their computer screens.

And finally, information content that is truly interactive will gain tremendous traction very quickly. Contrast your computer-use posture with your television viewing posture. We even use different vocabulary: We watch TV... but we use the computer.

So we need to focus some creative energy on building applications that our customers can use to actually do business. Doing so will do more for customer loyalty than all the promotions, call centers, and CRM applications combined.

More information about broadband adoption: The Broadband S Curve

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