Jeff Kagan: Why Home Internet is on the Decline

Jeff Kagan  |

If you think Internet Service Providers or ISP’s keep signing up more homes, year after year, you would have been right...until now, that is. Now, for the first time since this Internet bandwagon began in the 1990’s, home Internet service has dropped from 70 percent to 67 percent. Let me explain why this trend will continue, and how to correct it.

There are many reasons home Internet service is starting to decline. I will outline some of the big reasons which need serious attention.

A Self Inflicted Wound

The first reason for this decline is a self-inflicted wound. Advertisers and Internet advertising companies keep developing more in-your-face and intrusive ads. This turns off most users. Now, these over the top ads - which are like watching television commercials on your computer screen - have crossed the line. Not only are these distracting on every page we click on, but they are starting to cost users money. ISPs are starting to charge users extra each month if they use more bandwidth than their plan offers.

Costing Users Money

Suddenly, users are getting hit with extra charges just for the privilege of watching these commercials, which they did not choose and never pay attention to anyway. So the Internet advertising companies and agencies, and the advertisers themselves have shot themselves in the foot with this overreach.

Ad blocking software, which saves the customer from this usage abuse, could be adding to the stress Internet advertising companies face. Since ad blocking software steps in and saves the customer by blocking these ads, the advertiser and the entire Internet advertising business is being impacted financially.

Two Sides to Every Coin

This is understandable. However there are two sides to every coin. If advertising stayed like it was a couple years ago - before sd blocking software was needed - there wouldn’t be a problem. However, advertising created the problem. That was the big bang that started this whole revolution.

Now I am reading that web sites like Yahoo! (YHOO) are blocking user email retrieval if they use ad blocking software. If this is true, then they are damaging their own brand relationship with the marketplace. This is like a tennis match with the ball going back and forth. However, we should remember that this all started with abuse by the advertising community. This forced the creation of ad blocking software as the first two steps in this new war.

So as users get extra bills from ISP’s, they look for ways to cut their bills. Not every company is doing this. I would assume the companies that charge extra for this usage are ticking customer off and they will be losing market share.

Unlimited Internet Bandwidth Would Solve Problem

One solution would be to not charge users for this extra bandwidth. Users don’t like to pay the bill for advertisers that they don’t want to see, anyway. So an unlimited bandwidth Internet service seems to make sense. And there are other reasons why home Internet service now seems to have crested, as well...

Other Reasons Home Internet is Dropping

One, we could not keep sales at the same pace forever. We are already at the 70 percent level...and that’s just about it. This is the same limit the cable television industry reached years ago.

Many homes don’t have the money to sign up. Many don’t have a computer. Many homes don’t have interest. So there is a limit to the number of homes any technology can attract.

Many young and single users don’t need a wire line and wireless Internet connection. One is always in use and the other is always sitting unused. So to save money, many choose wireless and use it all the time. Especially now that wireless connections are lighthing fast. Paying for one plan vs. two saves money.

Riding the Wave

It seemed we just kept signing up Internet homes and that would go on forever. However, every industry reaches it’s peak. Every growth wave rises, crests and falls. That’s when the strategic marketing plan must shift from phase one to phase two. Now, instead of signing up new users, competitors will start to compete.

That means we will be able to choose based on price or speed or a blend of services. This is good for the user, since carriers will have to work harder to win and keep our business. So there are many reasons, however the advertising problem is a big one - a growing one that is totally self-inflicted. Because of that, I wouldn’t feel sorry for the advertising community.

They can solve this problem. Back off from the in-your-face ads that are designed to attract attention, but really tick customers off who get distracted by all the commotion on every single page.

This is a problem that can and should be fixed quickly and easily. The question is...will it? You will have to ask the players in the advertising business. The ISP’s, the advertising agencies, the advertisers and so on. Let’s hope this get’s fixed, because the right kind of advertising is actually helpful to the user and to the advertiser. I don’t think users want to ban ads like the ad blocking software does. However, that’s what they have to turn to for a little quiet.

However, I do think users want to be able to control the intrusiveness of the ads they see. Ads should be welcomed, not endured. Is anybody listening? columnist Jeff Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst and consultant. He shares thoughts on the changing industry, which he's been following for 25 years. He follows what's hot, what's not, why and what's coming next. Email him at

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:



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