"Most office workers already use high-speed internet connections and many browse the internet from their desks for personal as well as business reasons. Thanks to this, more than half of all sessions on Yahoo! are already made over broadband connections, says Mr Blodget.
Yet, for most home users, slow dial-up access will continue to dominate the online industry for the foreseeable future."
The reason dial up continue to dominate is the promise of ADSL which never arrived. For exapmple: USWEST was busy installing pair gain system to supply second phone line and LU was hell-bent o selling more 5ESS ports.
In Europe operators saw an opportunbity to see a payback for their ISDN capable switches. Broadband (residential) has a lot going against it!!!
See, please, article below from the FT for some illustration:
Web has diminishing returns
By Richard Waters in New York
Published: November 19 2000 19:58GMT | Last Updated: November 20 2000 03:27GMT
The internet is going through something of a mid-life crisis. Almost daily, the parade of dotcom disappointment brings news of another potentially world-changing business model heading for the scrap heap.
This is not only the result of investors' over-optimism. It is also because the internet's first, heady rush of growth is coming to an end. Despite its youth, the online business is showing signs of reaching maturity. Meanwhile, the forces that were meant to unleash a second phase of rapid expansion are taking longer to develop than many had expected.
"What we're experiencing is the end of the beginning," says Henry Blodget, internet analyst at Merrill Lynch, who was one of the most strident optimists of the early online years. Most internet companies will not survive the transition to the next phase, he adds.
For America Online, the company that came to dominate the internet's opening act as a consumer medium, this transition represents yet another turning point. AOL has been through them before: it survived the arrival of the internet, which threatened to kill off proprietary online services altogether, and it overcame the quality problems that accompanied its switch to flat-rate pricing, when it was derided as "America On Hold".
Now, seemingly on the verge of completing an acquisition of Time Warner, it is getting ready for the next transition. With Time Warner's cable television systems and its extensive media and entertainment content, AOL is widely seen as the internet company that is best prepared for the arrival of broadband.
Except that the broadband age has not yet dawned. The broadband internet was supposed to be carried into the home on cable television networks, high-speed DSL telephone lines and satellite links. But the use of these technologies has been slower to develop than many had expected.
The logistical complexity of re-engineering networks that were not designed for broadband interactive services lies behind this disappointment, says Eric Benhamou, chairman of 3Com. With the capital markets now wary of pouring more money into the communications industry, the pace of development could be in jeopardy, he adds.
"Selling broadband has been a struggle for the cable companies," concedes Barry Shuler, head of interactive services at AOL. According to Mr Shuler, however, the pace at which broadband services develop will not be the only factor that determines the fate of AOL - and the rest of the young internet industry. "It's only one piece of the puzzle," he says.
AOL, which accounts for about half the US consumer internet market, is still signing up new users for its standard, low-speed service at a rate of about 4m a year - roughly the total number of all the broadband users across the country at the moment. That suggests dial-up access over a personal computer will remain the dominant method of reaching the internet for the foreseeable future.
"You can't write the epitaph for narrowband until there are more people buying broadband - and we think that's years away," says Mr Shuler.
There is one big exception to this. Most office workers already use high-speed internet connections and many browse the internet from their desks for personal as well as business reasons. Thanks to this, more than half of all sessions on Yahoo! are already made over broadband connections, says Mr Blodget.
Yet, for most home users, slow dial-up access will continue to dominate the online industry for the foreseeable future. That points to something of a "growth gap", as one online medium approaches maturity while the next has yet to arrive.
What Mr Blodget calls the "hyper-growth" of the early narrowband years is over. The clearest sign that the dial-up internet is beginning to mature lies in the size of its audience. In the US, where it emerged first, the number of people online surpassed 100m early this year and the rate of growth is slowing. Given rapid growth rates elsewhere, a similar maturing of the internet audience is likely to follow in western Europe and parts of Asia over the next two years.
The number of new narrowband users in the US may grow by only 10 per cent a year for the next few years, says Charles Betty, chief executive of EarthLink, the second largest US internet-access company. The best chance of picking up large numbers of new customers comes from the prospect that other companies that offered free internet access will go bust, he adds.
There are also signs that the internet's encroachment into people's lives is slowing. Some surveys, such as one conducted recently by PricewaterhouseCoopers, suggest that people are spending less time online than they were, though most indicate that online usage is still rising.
To make matters worse, new consumers arriving on the internet generally have lower disposable incomes and make a less attractive market for online advertising and e-commerce. "It's the law of diminishing returns," says Mr Blodget.
The end of hyper-growth has been painful for stock market investors, as valuations based on the internet's early expansion give way to valuations based on more moderate expectations.
It is also painful for many internet companies, which are having to learn to deal with a maturing market at the same time that they prepare for the second act, which will take the internet from the desktop computer on to a wider range of broadband and wireless devices.
And it is particularly unfortunate for the internet advertising business. Partly because of the parlous financial state of many dotcom companies, which were themselves big buyers of online advertising, spending on this new medium will slow from 80 per cent this year to 15-20 per cent in 2001, predicts Mr Blodget.
Falling "click-through" rates, as fewer people bother to look at online advertisements, has led to a crisis of confidence in the online advertising industry, which had promised a new level of personalisation and effectiveness. "Folks do become inured to the banners," says Mr Betty at EarthLink.
For its part, AOL has proved more capable than most in generating more advertising and e-commerce per user each year. While subscriptions remain its biggest source of income, advert-ising and e-commerce revenues are now nearly large enough to cover all of its operating costs.
Finding new things to bring more people on to the narrowband internet and keep them there longer will remain AOL's biggest challenge in the future, even after the likely Time Warner merger, says Mr Shuler.
Eventually, though, even the mighty AOL machine cannot resist the law of large numbers. With 25m users, its overall growth rate is slowing, even as it continues to add 4m users a year.
That is why, like the rest of the internet industry, it ultimately depends on broadband becoming a mass medium.
That day will not arrive until the internet is a more common and useful tool around the home, according to many industry executives. This means extending its reach from the family PC on to other devices, including the several television sets found in most American homes and easy-to-use counter-top appliances designed for kitchen use.
Home networking "will stimulate huge growth in the next stage of this market", says Mr Shuler.
But home networking depends, in turn, upon the possibility of having several different online devices operating around the home, all hooked to the internet at once. Even the industry's evangelists, such as Mr Benhamou at 3Com, concede that this will take some time to happen on a large scale.
"You'll see it start developing in 2001 and really explode in 2002 and 2003," adds Mr Betty at EarthLink.
In internet time, that is a very long wait.
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