Only 4 percent of online users in Europe have broadband Internet access, a Forrester Research report found, despite increased usage of the types of applications made for broadband.
Forrester’s report is based on a survey of consumers in 13 European countries. It found that three types of applications benefit most from broadband access: media sharing, entertainment information, and what Forrester calls “snacking” activities — short, frequent spells of online activity.
File sharing will see the largest broadband effect, while the uptake of MP3 downloads, software downloads and online games will also increase significantly. Broadband’s always-on, call-charge-free model encourages “snacking” communication applications like SMS, chat, instant messaging, newsgroup participation and free email. And broadband facilitates access to entertainment content like magazine and entertainment sites, movie information sites and gambling due to the rich media experience made possible by higher bandwidth.
“Broadband consumer behavior is uniform across Europe, and users exhibit classic early-adopter demographics: They are male, young, and with a penchant for entertainment and buying consumer technology,” said Paul Jackson, a Technographics analyst at Forrester. “These high-end consumers have fewer financial commitments and are more prone to discretionary spending, so buying broadband would seem like a relatively small expense for them. In addition, entertainment-motivated individuals like these focus only on cool new content and communication, not business and educational content. Finally, they are naturally drawn to online shopping and banking.”
Broadband access doesn’t contribute to an increase in the number of online shoppers, Forrester found, but it does increase by 20 percent the likelihood of a consumer spending more than 80 Euros per online transaction. Broadband users find two of the top eight online retail categories most attractive — DVDs/videos and computer hardware. Retailers specializing in categories like clothing and travel are expecting to cash in on consumers with broadband because of the potential for more sophisticated consumer interfaces. But Forrester found that broadband access does not influence the purchase of such goods.
“Broadband access will increase the worries of large media groups fighting to protect their copyrights,” Jackson said. In response, Jackson expects record companies will launch high-performance, easy-to-use, mass-market services that will make buying and downloading music far easier than stealing it. Consumers that become familiar with file sharing and downloading files, will also become aware of the security dangers of constant connections and open file sharing. Microsoft can then capitalize on this by pushing Windows XP as a packaged solution to allay consumers’ security concerns. Finally, Jackson said, two camps of consumers will emerge: The do-it-yourselfers who will source separate access providers, content aggregators and streaming media sites; and the more “packaged” broadband users — who will get broadband as part of a bundle of television and communications services. Media conglomerates such as Vivendi Universal or AOL Time Warner will heavily support the latter group, which allows for tighter control of content.
The development of the European broadband market will be an issue worth watching in 2002. Belgium (12 percent) and Sweden (18 percent) currently lead the way with the highest proportion of homes in Europe with broadband connections, according to Jupiter MMXI.
Britain and Italy are expected to see the most growth in the number of broadband households during 2002, with each country experiencing a threefold increase by the end of the year. Despite this, Jupiter MMXI does not expect broadband penetration in Europe to reach critical mass (15 percent) until 2006. Even then, it could be helped by two-way satellite, fiber-to-the-home and fixed wireless broadband access alternatives, which should being to make a dent in the market in 2002.
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