Broadband Boosts E-Commerce, New Media Adoption

Broadband adoption continues to advance the online experience, but each sector will begin find its own settling point according to a report published by Goldman Sachs, “Americas Technology: Internet,” which forecasts growth for broadband, e-commerce, new media and advertising.

Broadband reached a tipping point this year. Over 50 percent of households subscribe to high-speed Internet access. That number is expected to reach 59 percent by the end of 2005. The report points out 35 percent of narrowband subscribers plan to upgrade to broadband at the $35 price point, though the cost must drop below $29 for significant conversions from dial-up users, unless there’s a severe decline of narrowband functionality.

The gap between broadband and dial-up users is narrowing when it comes to e-commerce. Last year, the average broadband user spent 26 percent more online than their dial-up counterpart. This year, broadband users spend 17 percent more online.

Competition in the e-commerce space is leveling the playing field between smaller vendors and bigger e-commerce players. Lowered switching costs and more efficient navigation make search advertising a practicable platform.

Online media accounts for 20 percent of total consumption for broadband users, up from 16 percent in 2004. The report forecasts online advertising will rise 28 percent in 2005, bringing in $12.3 billion. Currently, four to five percent of ad spending is committed to the online space in the US. That figure is set to reach seven percent by 2009.

The new media sector is also expected to grow. Companies are starting to invest in new services like digital music, online games and video content to address a growing base of home broadband users.