What Is Broadband?
Customers still learning, operators find
By Jeanie Stokes
from the March 19, 2001 issue of Broadband Week
The rollout of broadband Internet access in the United States and in Britain is creating important lessons for providers on both sides of the Atlantic.
U.K. cable television and telephony provider NTL hopes to snag 100,000 customers for its high-speed Internet cable modem service this year. But first, it has found out it is going to have to educate potential customers. A recent NTL survey found that 69 percent of those questioned hadn't ever heard the term "broadband." One-third of those who had heard the term thought it referred to radio.
The result: a $7.3 million campaign that will use press advertisements, posters and direct marketing to highlight applications that broadband technology makes possible. "We're not saying broadband is fast Internet. Our surveys show that people are not really turned on by that message," says Jerry Roest, NTL's broadband group managing director.
NTL, whose strategic investors include Microsoft, instead will highlight the always-on capability of broadband and that NTL customers can surf the Internet and use the telephone at the same time. A second phase will highlight expanding uses of applications, such as how video telephony is simply video conferencing for a wider audience. Later in the year, the company will be talking about what higher speeds do for the Internet experience in general.
To be sure, broadband services are in their infancy in the United Kingdom. NTL, which launched its service in November, has signed up only 21,000 subscribers so far. Most are Internet users who've been clamoring for access to cable modems and would sign up at any price, Roest says. Those are the potential customers NTL has targeted with its first print messages that highlight the importance of broadband to online gaming and for streaming video and audio.
The meaning of the term "broadband" is changing as the technology matures, says Bill Fu, marketing director for wireless equipment provider Adaptive Broadband Corp. As applications and the need for bandwidth grow, the broadband providers of yesterday, who delivered services slightly faster than today's cell phone data rates, are finding that their services aren't fast enough to meet today's definition of broadband.
The overall broadband rollout in Britain has been tepid at best, reports industry research firm The Yankee Group. British Telecommunications had connected just 15,000 of the estimated 100,000 signed up subscribers for its digital subscriber line service by year-end. Nine prospective DSL competitors have canceled their plans, citing unfair terms and conditions offered by BT for unbundled access to loops.
Roest admits that part of the reason for NTL's ad campaign is to counter some of the negative media attention BT's DSL service has generated.
Kinetic Strategies Inc. estimates that as of March 1 there were about 5.5 million North American cable modem subscribers, compared with about 2.3 million residential DSL customers, and a smattering of satellite and fixed wireless access subscribers.
Still, most of the U.S. broadband users would be considered early adopters of the technology, says Jupiter analyst Joseph Laszlo. The understanding of broadband as meaning fast Internet is beginning to fade.
"In recent Jupiter studies, the convenience of an always on, very reliable connection is slightly more valuable in consumers' eyes than speed or the ability to download files faster," Laszlo says. "The next phase is going to be what else do you get in terms of a richer online experience than people have had in the past."
U.S. broadband providers have yet to emphasize another bandwidth value: freeing up the phone line, a very important selling point in Britain, Laszlo adds.
NTL has taken one lesson from the problems encountered by DSL providers in both Britain and the United States, Roest says. The company is deploying engineers for every install, at least for now, to be sure the system delivers what is promised.
"The early adopters will be the ones who inform the late adopters. We're making sure that, despite the bad press about DSL, all the cable modem users just talk about how wonderful it is," Roest says.
NTL also is not promising quick installations, particularly in the 55 percent of its network that still needs to be upgraded to provide broadband bandwidth. The average time from order to install in the parts of the network that are upgraded is 28 days. As the company becomes more comfortable with the new technology, it gradually will move towards some sort of consumer installation program.
NTL has honed in on the importance of pricing its broadband product appropriately, Roest says. While BT is charging about $58 a month for DSL, NTL has priced its cable modem service at about half that for consumers who choose to buy their own equipment, which costs about $220. But most of the company's broadband customers are opting to pay $7.30 a month to rent the equipment, bringing their cost to about $36, Roest says.
How well will its pricing and marketing promotions help NTL educate its potential customer base? That's a lesson that may take some time to find out.
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