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The Honolulu Advertiser

.Posted on: Friday, February 11, 2005

Isles No. 1 in broadband

By Sean Hao
Advertiser Staff Writer

When you live on an island several time zones from the Mainland, you tend to depend more on the Internet.

BROADBAND PENETRATION

Honolulu ranked No. 1 for broadband Internet usage in a recent survey.

Designated marketing area
Pct. of broadband home users*
1. Honolulu
52%
2. Austin, Texas
47
3. San Diego, Calif.
46
4. Boston
46
5. San Francisco/
Oakland/San Jose
45
6. Las Vegas
43
7. New York
43
8. Rochester, N.Y.
41
9. Orlando/Daytona
Beach/Melbourne
41
10. Kansas City, Mo.
39

* Accessed the Internet in the past 30 days.

Source: Scarborough Research

That seems to be the conclusion of a new study that shows Honolulu has a higher percentage of Internet users with broadband connections and they spend more money online per month than high-speed surfers in other major U.S. cities.

More than half of Internet users in Honolulu have broadband connections, which was the highest percentage among 75 other major metropolitan areas in a recently released survey. The city's high-speed surfers also were willing to spend more money each month online for items ranging from airline tickets to clothing, according to a survey of 1,318 homes conducted by Scarborough Research.

Fifty-two percent of homes, or a projected 316,380 people in Honolulu, access the Internet via a pricier broadband connection, compared with a national average of 33 percent. It's the second time Honolulu has ranked No. 1 in broadband use on the survey conducted by the New York-based media research firm. The survey's margin of error was about plus or minus 3 percentage points.

Hawai'i's geographic isolation likely plays a role in the adoption of the technology, which makes it easier to surf the Web, said Gary Meo, head of Scarborough's Internet services division. Other possible explanations include socioeconomic factors such as education and income levels.

"For people in the Islands, it's a good communications tool," Meo said. "People who have broadband connections tend to be higher educated, better employed and have higher incomes and as a general rule, they tend to spend more. And the longer people are online they tend to spend more money."

According to the study, digital subscriber line technology is gaining in popularity. Fully 21 percent of broadband users surveyed subscribed to a DSL service, which was up from 6 percent on a survey released in 2003.

The population of cable broadband subscribers remained flat at 34 percent of Internet users over that same period, according to the study.

However, Oceanic Time Warner Cable said yesterday that the number of subscribers to its Road Runner high-speed Internet service rose in the double-digit percentage range to about 140,000 customers.

"We had a good last year," said Alan Pollock, vice president of marketing for Oceanic. "Admittedly, DSL is growing faster, but that's because they have a smaller pool" of customers.

The percentage of dial-up subscribers fell to 37 percent from 51 percent on Scarborough's 2003 survey.

In terms of cost, dial-up continues to be the cheapest way to access the Internet, with rates often $20 or less per month. That's followed by DSL, which Verizon Hawaii offers as cheap as about $30 a month when sold with long-distance phone service. The lowest price for Road Runner is about $35 a month when bundled with other services.

The higher cost for broadband is the main reason retired computer programmer Bill Russell, 73, still uses a dial-up connection.

"I would have broadband, but it costs more and I really don't do enough to justify the cost," said Russell, a Kailua resident.

In an effort to attract and retain customers, Verizon Hawaii and Oceanic are rolling out new services and offering lower prices when high speed Internet services are bundled with other products.

For example, this year Oceanic is introducing Digital Phone, which for an added fee provides flat-rate local and long-distance calling.

Verizon also offers a flat-rate long-distance calling service called VoiceWing.

Both companies also provide free content such as anti-virus software and parental controls. For example, Verizon DSL service comes with MSN Premium software that provides parental controls, virus protection and a pop-up advertisement guard.

Increased content, expanded availability and rising awareness are among the major factors driving the increasing popularity of DSL in Honolulu, said Verizon spokeswoman Ann Nishida.

"The increase the survey shows in local DSL subscribers is in line with what we see at Verizon Hawaii," she said.

However, even at today's prices, broadband isn't necessarily a must-have item, even for Internet shoppers.

Slower dial-up speeds don't keep Russell from shopping online for a variety of goods including a microwave from Amazon.com.

"It was half the cost, and I got them to pay for shipping," he said. "So you can find better deals even on large items than you can locally."

Russell isn't alone in buying bigger-ticket items online.

Ten percent of Honolulu's broadband users spent $2,500 or more in the past year, compared with a national average of 9 percent. Seventeen percent of local broadband users spent between $1,000 and $2,499 a month, versus 15 percent nationally, according to Scarborough.

The most shopped-for items by Honolulu users were: airline tickets, clothing or accessories, books, computer hardware and software, and CDs, tapes and other music.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.