The Cat Fight over "Web Hog" Broadband Ads
SBC's DSL campaign has cable-modem providers riled. Will the spat turn off potential customers?
Mudslinging to gain market share is, of course, as American as Pepsi and Coke. But a new report from Jupiter Communications suggests that the bitter tone of a cat fight between two telecom companies could hurt them both and slow growth of the market for high-speed Internet access.
The brouhaha began on fictional, formerly friendly Laurel Lane. Then people began using cable modems for superfast Web surfing, and things got ugly. As more Internet users signed on, the service -- whose lines are shared among users -- slowed to a crawl. Neighbors turned nasty, defiling property and calling each other "Web hogs." A frightened postman lamented, "I used to use this Mace for dogs."
The scene is part of the "Web hog" TV-ad campaign launched by telecom giant SBC Communications as a lighthearted way to tout the advantages of its high-speed digital subscriber line service. Like cable modems, DSL allows users to surf the Net 50 to 100 times faster than conventional dial-up connections. But Excite@home, the nation's biggest cable-modem provider, didn't appreciate the ads, which ran this spring in several major markets in the West. Saying the spots were misleading, Excite@home threatened to sue, which forced SBC to add a disclaimer that its service also had shared components.
That hasn't been enough to stop Excite@home, Cox Cable, Charter Communications, and other cable outfits from fighting back with their own campaigns. For example, Cox is devoting a section of its Web site to dispelling "10 myths about cable and DSL technologies."
WAITING FOR A WINNER. The problem is that by waging war, both sides could end up shooting themselves in the feet. "Consumers may conclude that neither of the two broadband technologies is sufficiently stable and may wait for a single winner to emerge," says Jupiter Communications analyst Joe Laszlo. Indeed, despite rapid growth in cable modem and DSL subscriptions, Jupiter's research shows that the number of online households expressing no interest in broadband has risen slightly.
It would be far better, analysts say, for both sides to trumpet broadband's advantages -- connections that are always on and faster speeds that open up a new world of bandwidth-intensive content like streaming video. That message would resonate particularly well with mainstream Internet users. Even though they're expected to make up the next wave of broadband subscribers, many remain clueless about what would justify fees of some $35 to $70 a month.
What's more, the technical differences between cable modem and DSL services are of little significance to the average residential consumer. Cable modems usually offer higher peak speeds, but they are more prone to slowing down when the number of users in a neighborhood increases. And DSL lines guarantee minimum speeds but have a hard time matching cable modem's top speeds.
BILLIONS AT STAKE. But for popular consumer applications such as streaming video, these differences are overshadowed by the limitations of the Internet itself. "Nobody can guarantee you more than 200 to 500 kilobits per second given [the] congestion on Web servers and the Internet backbone," says Michael W. Harris, president of market researchers Kinetic Strategies in Phoenix.
With telephone and cable-TV companies investing billions in a market that could transform Internet usage and yield huge e-commerce revenues, it's possible that the companies could still choose competition over cooperation. Jupiter predicts that by 2003, broadband-access revenues will grow tenfold, to $6 billion annually, accounting for nearly half of all access revenues.
The backbiting campaign hasn't been a complete bust, however. SBC says its "Web hog" ads are so popular that viewers have asked for videotapes.
By Steven V. Brull in Los Angeles
EDITED BY BETH BELTON
businessweek.com
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So nobody can guarantee 200-500K. Sheesh. Wonder how much they dug to support that fact.
Jack |
