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Internet Service Provider Market - US Report

   by Mintel International Group Ltd.

    01 July, 2001


   Available for download now

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Editorial description(s):

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Nearly one out of two US households currently has Internet connections, according to BBC News, and by 2003 Forrester Research projects that more than half of all US households will have Internet access. In Mintel's original consumer research, nearly three out of five respondents reported having access to the Internet from home. Current research suggests that there are over 65 million households using the Internet in the US in 2001, a number that is forecast to exceed 80 million by 2005. By 2003 only around 37% of US homes will not be connected to the Internet, making interactive services that include e-commerce, marketing and communications, a central part of everyday life in America similar to newspapers, magazines, radio and television. In fact, according to the Morgan Stanley Research Group, it took the telephone 38 years to reach 30% penetration in the US population, the television 17 years, PCs 13 years and the Internet only 7 years. Increases in online access equate to increases in ISP usage. Technically consumers could connect to the Internet backbone without the use of an ISP, yet the logistics are complicated and according to industry sources, the cost would exceed $15,000. Between 2000 and 2003 the number of paying ISP subscribers is expected to increase from around 51 million to 78 million. Similarly, Internet usage among business is also rapidly increasing, from 6.3 million in 1999 to 8.3 million by 2004. Even public institutions like schools are becoming increasingly connected. In 1994 only 3% of instruction rooms like labs, classrooms and libraries had Internet access compared with 63% in 1999. According to the USIC, 90% of high poverty schools have Internet connections. Not only are more people going online, but the amount of time people spend online is also increasing. According to ISP giant AOL Time Warner, in 2001 their average customer spent about 70 minutes a day online, compared with 63 minutes per day in 2000 and only 14 minutes per day in 1996. Research by Nielsen NetRatings found that Americans surfing the Internet spend an average of 54 seconds per page and the average US surfer browses 678 Web pages per month or about 35 pages per session. People go online for a wide range of reasons that include research, game playing and communication with others via email. Forrester Research estimates that around 135 million people use email in 2001, and according to eMarketer, 84% of people that use the Internet receive and send email on a regular basis. What does this new communication medium mean for US society and for the global economy? The future implications have yet to be fully grasped, but it is uncontestable that the Internet is transforming many Americans' daily lives. As of June 11, 2001, Newsbytes News Network reported that around 429 million people in 27 nations have Internet access. According to RiderWeb, by the end of 1999 there were 2.4 million Internet-related jobs in the US. This is more than the communications, insurance and public utilities industries and two times more than the airline, legal and real estate industries. Whether or not Internet access is actually making people's lives easier is contestable, but it is definite that Internet access is an increasingly popular tool. As Internet access becomes more commonplace throughout all strata of American society, new divisions are appearing in the Internet field, not around connection, but rather, around connection type. In the years ahead, Internet users will be divided more by the type of Internet connections to which they have access than by whether or not they have access at all. Connection quality, encompassing speed, reliability and dependability, greatly affects the entire user experience. To fully utilize the good that the Internet has to offer, high-speed connections are essential. Net users who upgrade to high-speed connections spend more time online, upwards of five more hours a month, according to McKinsey & Compan
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