Jupiter Research: Value-Adds Key to Broadband Revenues

A report by Jupiter Research looks into who would be willing to pay broadband providers for extras.

by Sean Michael Kerner of internetnews.com [February 18, 2005]

Value added services are key to driving new revenues for broadband providers, according to a Jupiter Research report.

Customers also show a willingness to pay for those services, the report added.

Broadband use has been growing at a torrid pace for the past few years and is expected to continue to do so for at least five more. Jupiter Research has forecast that the U.S. home broadband user base will be 108 million people by 2009, double the 55 million it counted in 2004.

However, that growth also means increased competition and decreased average revenue among broadband service providers (BSPs).

In a recent Jupiter Research report titled, "Merchandising Value-Added Services", analyst Joe Laszlo detailed how value added services may be able to help fill providers' revenue gaps.

According to Jupiter Research, 47 percent of surveyed broadband consumers would be willing to pay for a value added service (VAS) bundle that would include security or entertainment services.

The survey also said respondents would pay for either type of service, which suggests that for customers, the issue is not which service they want but rather whether they would pay for a VAS at all.

The report also said those who have been online for less than year were more interested in paying for VAS (60 percent of whom were willing to pay) than those who have been online for longer periods of time.

Users with children were also more likely to pay for a bundle (54 percent said they would pay) as opposed to those without kids (only 45 percent). The younger the consumer, the more likely he or she would pay for a bundle: 59 percent of 18-24 years olds reported they would pay for a VAS, compared to 38 percent of the survey in the 45 to 54 age group.

The report concluded that better bundling and marketing tactics would increase demand for VAS. Currently BSP's rely on a broadband start page placement to promote VAS. But according to Jupiter Research's finding, this approach is not likely to yield great success. In a survey of broadband subscribers, only 15 percent indicated any awareness of a VAS offer from their start page.

(Jupiter Research is owned by the parent company of this publication.)

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