Broadband Survey Highlights Challenges for AOL

Broadband "is really perceived as an enhancement to an existing service, rather than an entirely new service," says Penhune. "It's about fixing the existing Internet experience, rather than installing a new paradigm for the Internet."

That perception, says Penhune, favors cable modems over DSL service. "As long as the market continues to be driven by these basic benefits, it's going to reinforce the status quo," he says. To improve their share, telcos will have to shift the selling point for broadband, he says. And they already are trying, he adds, as evidenced by SBC's alliance with Yahoo! (YHOO Quote), which changes the subject to content services and Yahoo!'s brand name, and Verizon's highly publicized price cuts, which change the subject to pricing.

The survey also hints at the continuing challenges that AOL Time Warner faces with its primary broadband strategy, which is to market a high-speed version of America Online as an add-on, content-only service for people who get their broadband Internet connection elsewhere.

In addition to consumers' focus on connectivity over content, AOL appears to suffer from relatively low popularity as a broadband Internet brand. Given a list of more than a dozen brands of media companies, 12% of respondents said they would be "very" or "somewhat" interested in receiving media or entertainment content from AOL. But that was far behind the top choices, such as the 34.1% who chose Fox (participants could select more than one outlet), the 33% who selected AOL Time Warner's CNN and the 32% who chose NBC.

In fact, AOL was low on the list of Internet brands, including retailer Amazon.com (AMZN Quote) (27.4%), Yahoo! (26.3%), the search engine Google (25.5%) and software titan Microsoft (MSFT Quote) (24%). "If ever there was sort of a content-free Web site, it's Google," says Penhune.

AOL wasn't the only content-oriented site to perform poorly in the rankings. RealNetworks (RNWK Quote), which in fact has 1 million subscribers to its subscription online media services, was cited as a media or entertainment source of interest by only 10% of people surveyed.