ExciteAtHome Picks Up Speed

SAN FRANCISCO (08/24/2000) - Excite@Home Inc., the largest U.S. provider of high-speed Internet access, says it now has more than 2 million subscribers who access its service from home, making it the sixth-largest ISP when measured against other pay-for-service providers.

The company's announcement comes at a time when broadband services are experiencing strong growth. The number of new subscribers to high-speed cable modem and DSL services increased by 24 percent during the second quarter, according to Telecommunications Reports International.

Although this growth is almost neck-and-neck with top dialup service providers such as America Online Inc. and EarthLink, which collectively had a 25 percent increase overall in new users over the same period, the gains soon may prove to be coming at the expense of dialup ISP providers.

Clearly, many dialup users are migrating to high-speed services. ExciteAtHome, whose subscriber base has increased by more than one-third since April, says that 86 percent of those users switched from a dialup ISP.

Still, the market for broadband remains small. Fewer than 7 percent of Internet households - 3.1 million homes - subscribe to high-speed access services. But as many as one-fourth of households may use high-speed services in the next three years, according to Jupiter Communications. Researchers estimate that broadband subscription fees soon may account for half of all Internet access revenue.

Despite their smaller numbers, high-speed subscribers represent a key target audience for advertisers. Twenty-one percent of broadband users have household incomes over US$100,000, and broadband users are twice as likely to make online purchases than their dialup counterparts, according to Jupiter.

Though the higher price of such service is always a factor, the continued growth of high-speed home access is dependent on the ability of providers to roll out services. Less than 30 percent of the country is wired for broadband access, according to the Yankee Group, as many cities still lack the infrastructure needed to deliver high-speed services. And even within areas that have the technical capacity, providers have found it difficult to provide the staffing resources needed to meet growing demand.

ExciteAtHome's new subscriber figures do not include users of the Netherlands-based broadband provider Chello, which ExciteAtHome acquired in July.

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