Online Newsroom Investment - 2006 Annual Report

For years, experts have argued that the future of online news audience and economics will hinge on the development of broadband technology. With broadband will come speed, video, more interactivity, better graphics, and more.

What is broadband? A simple answer is that it means higher-speed Internet :35 36

Broadband connections generally use either a cable modem or DSL (digital subscriber line) which together make up an estimated 95% of the residential and small - business broadband market.37

But it should noted that what is of ten meant as broadband in the United States is almost a generic term for any connection faster than dial - up. In many other developed countries, by contrast, broadband refers to much faster connections with more capability. The frankly vague way that broadband is defined in most discussions in the U .S , some critics argue, clouds both the demand and the po tential.

How many Americans are accessing the Internet through a broadband connection? The data vary on the exact figure, but it is clearly growing and is more prevalent in the workplace than at home. For residential use, the figure ranges from 33% to 48% of the population, depending on the survey. (The Pew Internet project reported that as of December 2005, 72 million Americans, or 61% of those who go online from home, had high-speed connections at home. This is up from 5 million in June 2000.)38

In the workplace, broadband access appears to be even higher. Pew Internet reports that 70% of employed Internet users use a high-speed connection at work compared to just 10% who use dial - up. The rest say they do not know what type of connection their employer has.39

While U.S. broadband use is growing, it still lags behind other parts of the world, particularly Asia and Western Europe, and there are signs that growth in other regions is outpacing growth here at home. According to December 2004 data published by the Organization for Economic Cooperation and Development, the U . S . has dropped two slots since 2003 and now ranks 12th overall in the number of broadband subscribers.

What’s more, there is reason to believe that growth may slow in coming years. Kagan Research has projected 9.3 million new broadband subscribers in 2005 , down from growth of 9.5 million in 2004.40

Slower growth is significant because of the economic ramifications for the online industry. Various surveys suggest broadband users are more likely than dial-up users to perform these online activities:

• Go to more news pages
• Download more video
• Spend more money
• Spend more time online
• Play games
• Do banking
• Use search engines
• Access product info
• Access financial info
• Perform work-related research
• Browse for fun
• Access weather info
• Access sports info
• Get skills or training to help in their jobs 41

Online video use is expected to grow as broadband penetration increases. So far it appears that regular online video use is limited to a very small percentage of the overall population, and while spending on it continues to grow, it is still a nascent media platform for Madison Avenue.

In addition to investment in online video, there are even larger economic implications for increased broadband penetration. One estimate is that “widespread” adoption of broadband access would create 1.2 million new jobs and add as much as $500 billion to the national economy. 42