US Home Broadband Audience will Double to 108 Million by 2009

April 13, 2005-The US home broadband audience will double from about 55 million individuals in 2004 to about 108 million by 2009. However, decreasing average access revenue and increasing competition will force providers to seek new revenue streams from value-added services.

The report, Merchandising Value-Added Services: Effectively Crafting and Marketing Premium Service Bundles, tells us that U.S. broadband service providers must significantly improve the premium services they offer subscribers in 2005. Broadband services that fail to entice their customers to utilize premium features not only leave revenue on the table, but also risk creating a market ruled by harsh price competition.

The burgeoning broadband population has boosted the fortunes of cable and telephone companies, but competition between the two classes of firms is increasing as well. During the year 2004, broadband service providers differentiated their offerings in terms of price and speed.

However in 2005, these two factors will grow less meaningful, as telephone carriers will deploy faster broadband services and cable operators will offer cheaper broadband tiers.

The report found that premium service packages from broadband service providers can both differentiate broadband access offerings and generate ancillary revenues. In the consumer survey highlighted in the report, 47% of broadband consumers expressed a willingness to pay an additional monthly fee for bundles of entertainment or security services.

Premium services include security features, like firewalls or anti-virus solutions, as well as entertainment services, like online games or music. Although some broadband service providers have offered such features in the past, they have only recently started to package these features into attractive bundles, and to market such bundles effectively to broadband subscribers.