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OKOKOK, so it’s a survey that touts the fact that broadband users spend more time online than dialup users, but I had you fooled for a minute.

Broadband’s still only @ 21%. Blah. We suck.



Media A First: Broadband Beats Dial-Up Penelope Patsuris, 03.06.02, 1:04 PM ET

NEW YORK – For the first time ever, broadband Web surfers spent more time online than their dial-up counterparts, says Nielsen/NetRatings. That news should be a wake-up call to the many companies that have missed the opportunity so far to jumpstart broadband usage, which is still in only 21% of homes that are online, according to Nielsen/NetRatings.

The report showed that broadband users spent 1.19 billion hours online in the month of January, up 64% year over year, and that represents 51% of the total 2.3 billion hours consumers spent online. The study accounted for the “always-on” broadband connections by monitoring only active usage: If a PC went idle for 30 minutes, it was considered offline and those last 30 minutes were counted as just one minute.

Despite growing broadband use, the industry has yet to truly capitalize on the trend.

Microsoft (nyse: MSFT – news – people) for instance has just 100,000 broadband users on its MSN Internet service, according to Jupiter Research. Microsoft is partnered with the satellite company StarBand to offer high-speed access, and with the Baby Bells like SBC Communications (nyse: SBC – news – people) and Verizon Communications (nyse: VZ – news – people) to offer MSN-branded DSL. “They do have a deal with Qwest to migrate all of their DSL subscribers to MSN,” says Jupiter analyst Dylan Brooks, “and that should bring them up to 400,000 broadband subscribers.” Relative to the roughly 10 million broadband connections in the U.S., that’s not much.

Cable modems outnumber DSL connections two-to-one in the U.S., according to Jeffries & Co. analyst Frederick Moran, and that’s the key market Microsoft has been unable to crack.

AOL Time Warner (nyse: AOL – news – people) will of course have an easier time getting out AOL-branded cable modems since it owns Time Warner cable. So far the conglomerate currently has 1.9 million subscribers on its Road Runner service, according to CIBC analyst Michael Gallant. “They only just started rolling out AOL-branded cable modems in the fourth quarter,” he says, “so it’s too early to tell how that’s going.” Gallant says AOL also has agreements to sell DSL through some Baby Bells, but by the end of the year it will have just 300,000 subscribers.

Both AOL and Microsoft’s broadband products have been hindered by the extreme reluctance of cable companies to permit Internet service providers to offer services using their lines. “This news just reinforces the point that the cable guys have got to come up with some agreements,” says Bernstein analyst Tom Wolzien. “It’s in the cable companies’ best interest to offer multiple ISPs, just as it is for them to offer multiple premium cable channels like HBO.” They bring in more money.

AOL Time Warner was forced to open its lines to EarthLink (nasdaq: ELNK – news – people) as a condition of its merger, and in 1995 Microsoft invested $1 billion in Comcast (nasdaq: CMCS – news – people), which gives them a kind of “most favored nation” status with the cable operator. But beyond that there haven’t been any really big deals, says Wolzien.

When cable finally does open itself to ISPs, it will then be up to the likes of AOL and Microsoft–or their suppliers–to generate the kind of content that will spur broadband usage.

Wolzien argues that broadband’s evolution is mirroring that of cable television, which didn’t get past the plateau of 20% household penetration until the industry began offering better content that gave consumers a reason to spend the money on cable. “Things didn’t pick up until HBO, ESPN and Turner came along, and it will be the same with broadband,” he says. “People don’t buy technology for technology’s sake, and they don’t need broadband for e-mail. It’s ultimately going to be up to Microsoft and AOL to show people why they need broadband.”