As the cost of high-speed Internet service declines and connection speeds become more important, high-speed service overtakes dial-up in market share for the first time, according to the recently-released J.D. Power and Associates 2006 Internet Service Provider (ISP) Residential Customer Satisfaction Study(SM).
The study found that 56 percent of residential ISP customers subscribe to high-speed Internet service-an increase of 11 percentage points from 2005. Correspondingly, market share of dial-up service has dropped from 55 percent in 2005 to 44 percent in 2006. This trend is expected to continue, as the intent to switch service providers among dial-up customers has increased by 3 percentage points from 2005 to 21 percent in 2006, while switching intent among high-speed customers has essentially remained flat since 2003 at 11 percent.
The average amount subscribers report spending per month for high-speed Internet service has steadily decreased since 2004???down by $1.99 to $42.13 in 2006. During the same time period, the average amount dial-up service subscribers report spending has also declined; however, the drop is less significant???falling $0.69 from 2004 to $18.45 per month in 2006.
"Although high-speed Internet service is still considerably more expensive than dial-up, bundling high-speed with other products, such as telephone and video service, has made it an increasingly attractive option for many customers," said Steve Kirkeby, executive director of telecommunications and technology research at J.D. Power and Associates.
"This is not to say that dial-up services are completely out of the picture, as dial-up still holds a significant portion of the market. More specifically, customers are often willing to pay more for faster Internet speeds, provided they are getting other services for less. Our research shows that customers are increasingly expecting offerings and incentives that recognize their loyalty, and high-speed Internet is a critical piece of the most attractive bundled offers."
For more information on this new study, check out the press release J.D. Power and Associates Reports: High-Speed Internet Overtakes Dial-Up in Market Share as Bundling Makes Services More Affordable.
