Broadband subscribers still don't seem too excited about online entertainment in general, or AOL Time Warner ( AOL) in particular. Such is the takeaway from a recent survey conducted by technology research and consulting firm Strategy Analytics. Polling 525 subscribers to high-speed, or broadband, Internet service, Strategy Analytics found that media-intensive applications of broadband -- downloading music, streaming video and swapping digital photographs -- remain low on the priority list of people who sign up for high-speed service. Furthermore, AOL Time Warner -- the media and entertainment conglomerate that seeks to translate America Online's domination of the dial-up Internet market into broadband Internet success -- has a surprisingly weak brand name among media-hungry customers, according to the survey. While not definitive, Strategy Analytics' survey indicates the challenges facing major players in broadband -- among them AOL Time Warner and telcos such as Verizon ( VZ) and SBC Communications ( SBC), which are trying to gain share from the cable TV operators that dominate the high-speed Internet connectivity market. At the end of March, 17.5 million households subscribed to high-speed Internet service via a major cable operator or telco, according to market research firm Broadband Intelligence. That subscriber count, up more than 50% from year-earlier figures, breaks down to roughly two-thirds cable modem subscribers and one-third DSL customers. While the broadband subscriber count has climbed, the motivations behind its adoption has surprisingly stayed the same, says Strategy Analytics analyst James Penhune. When survey participants were asked to identify important factors behind their switching to broadband, they led with connectivity and price issues, not premium content or advanced features, says Penhune. By a large margin, the top reasons subscribers cited were faster access, freeing up a phone line and an always-on connection. The most popular media-related factor -- downloading music -- was ranked seventh on the list, behind not needing a dedicated phone line and multiple PC access.
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), 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) (27.4%), Yahoo! (26.3%), the search engine Google (25.5%) and software titan Microsoft ( MSFT) (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), 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.