Technology

In the Internet's High-Speed Lane


It has been a while since 18-year-old Abe Hassan read a book of fiction or went to bed before 10 p.m. After his parents signed up for broadband Internet access, Hassan began making daily rounds of the social-networking Web site LiveJournal.com, where he can talk to any of its 6.6 million other members. "It has been a complete transformation of my lifestyle," he says. "Now, I am up until 1 or 2 a.m. or later, because there's always someone around [on the site]."

Hassan's social life revolves around LiveJournal.com. He celebrates important events like National Pi Day with fellow online math enthusiasts, and his virtual friends give him suggestions on what music to buy. "These are people I spend most of my days with," says Hassan, now a freshman at the University of Illinois at Urbana-Champaign. Indeed, Hassan's LiveJournal.com buddies make up half of his 40 or so friends and live as far away as Australia.

That's hardly unusual nowadays. As broadband adoption skyrocketed in the past year, teens such as Hassan became more immersed in all things Internet than ever before. Today, half of American households with teenagers have broadband access, up from 35% a year ago, according to market researcher Teenage Research Unlimited (TRU).

"WIDE-SCALE SHIFT." And because these fast, always-on connections allow people to check e-mail and surf the Web around-the-clock without hogging phone lines, Americans with broadband access tend to spend 50% more time online than their dial-up counterparts, estimates Geoff Ramsey, CEO of consulting company eMarketer. This has helped spark an explosion of social-networking sites as people check in with friends and make new connections online through a variety of interests.

Younger users, particular teenagers, are leading the way in this new broadband lifestyle. Experts say they're often the first adopters and trendsetters. In fact, today's Internet-savvy youth could be as influential to popular culture as baby boomers were in the 1960s. Already, 28% of teens keep blogs, the Web logs that are fast becoming a prominent alternative source of news and commentary, while only 16% of adults do the same, according to market researchers Jupiter Research.

Some pundits call the under-25 crowd the super-communicators. They love instant messaging (IM) and spend more money on their cell phones than on cigarettes, candy, or music. They like to be in touch with their friends while at school, the mall, or home. Thanks to high-speed connections, they can do just that: They can learn, shop, play games, exchange photos and video clips, and talk with friends online. As a result, they're "doing more and more of their interpersonal communications virtually," says Rob Callender, trends director at TRU. "This is a wide-scale shift."

I'M IN! The impact of that shift on the high-tech industry, telecom and cable compaines, Hollywood, and the entire publishing industry will be profound. While it's hard to put an exact dollar figure on this transformation, it's safe to say the creators and designers of every high-tech or electronics product being built today are thinking about how their goods can benefit from broadband Net access. At the same time moviemakers, musicians, and, yes, journalists, wonder whether it means they'll find new ways to reach customers or get swindled by more copyright scofflaws.

Ubiquitous broadband access represents a change in consumer behavior that the business world is just starting to grasp. Already, traffic to Web sites that cater to the broadband-enabled generation is multiplying (see BW Online, 3/16/05, "LinkedIn Expands Its Connections"). While the social network MySpace.com didn't even figure in the top 50 of the most trafficked Web sites for teens last fall, it's now one of their top 10 most visited sites, according to TRU. It's also the 23rd most visited English-language site in the world, according to traffic researcher Alexa, a property of Amazon.com (AMZN). MySpace.com allows for music and photo downloads, which broadband access makes much speedier and easier.

These social-networking sites, it seems, have become a salve for the difficult teen years. "If you don't get along with the people in your school, the teen years can be very trying," says Callender. "These sites build a sense of community for people who don't feel like they belong." Teens can join a group of young shop-a-holics, Lord of the Rings fans, or Japanese comic-book addicts. As a last resort, there's Outcasted.com, where users with names like "Tarnished Silver" and "Pretty on the Inside" rail at the unfairness of it all.

DOGGY IN THE WINDOW. The experience can be exhilarating. "It's amazing to see how many people think about the same things as me," says Jason Berman, a 23-year-old New Yorker and a regular on social-networking powerhouse Friendster.com. Berman recently blogged about his insomnia, and people from as far off as the Philippines flooded him with advice, ranging from taking melatonin to reading a calculus book at bedtime. A fellow New Yorker wrote to say she saw a Halloween picture of Berman in an Indiana Jones get-up on his blog, and that she's a huge Jones fan, too. The two then met and went to the movies.

Marketers are jumping onto the social-networking bandwagon as well. "We see a lot of interest in marketing soft drinks, fast food, cereal, and health and beauty products to teens," says Charlie Barrett, vice-president for advertising sales at Friendster.com. That's why the site, which caters to an over-18 crowd, is currently developing a special site for minors.

Pioneers such as Neopets.com, which offers children the opportunity to create and care for a "virtual pet" as well as correspond with more any of more than 9 million other virtual pet owners, have earned revenues from advertising sponsors such as McDonald's (MCD) and Disney (DIS). Marketing on Neopets.com has been linked directly to purchases of the sponsors' products. Plus, sponsors can sell merchandize such as music downloads or books directly through the free site. Neopets.com is now working on providing access to its site via cell phones with fast connections.

GLOBAL CLASSROOM. Educational Web sites are also seeking to take maximum advantage of the speed, social-networking possibilities, and technological wizardry afforded by broadband. Consider that 40% of parents who sign up for broadband access do so with the intention of helping their kids with schoolwork, according to research firm Grunwald Associates in Bethesda, Md. Examining the move from dial-up to broadband, Grunwald found that 13% of parents and 23% of youngsters report that students earned better grades as a result of the broadband connection, according to Grunwald's 2003 study of 2,300 students, ages 6 to 17. The study also showed that, with broadband, children end up spending 20% more time doing homework, despite all that online chatting.

Expect to see continuing major improvements in distance learning, too. Computer-networking gearmaker Nortel (NT) is developing a system that will allow students to watch, say, an archeologist located at a dig site across the world in real time, says Walt Megura, the company's general manager of broadband networking. They would be able to talk with the professor and fellow students as freely as they would have done in a real-life classroom.

Thanks to the drive to socialize, gaming is also becoming much more interactive. For several years now, gamers could play against each other over broadband connections to their PCs or video-game consoles such as Microsoft's (MSFT) Xbox. This year could also see a rise of broadband games for cell phones and TVs hooked to the Web. Already, gaming developer Tournament One is testing its multiplayer golf, fishing, and bowling games with wireless carrier Sprint (FON) and cable operator Comcast (CMCSA). The games will allow users to chat via IM while playing.

"MILLIONS OF SOCIAL NETWORKS." That's just the beginning. In a few years, kids might play a football game within one window on their TV screen, watch an actual game in another, and check to see which of their friends are watching which shows in a third window, says Michael O'Hara, general manager of service-provider business at Microsoft in Redmond, Wash.

As youngsters embrace online social networks, adults likely won't be far behind, and the number of social networks, now pegged at 350, is expected to surge. "We won't have a million people in 10 social networks," says Marc Canter, CEO of social-portals design consultancy Broadband Mechanics. "We'll have millions of social networks with 10 people in each."

Of course, setting up social networks, especially for young people, isn't quite that simple. To protect young users, Neopets.com had to develop special, patent-pending software that catches bad words in e-mail. In addition, its team of human moderators constantly reviews e-mail for content the software finds questionable.

BIG BUCKS. Still, as more and more young people flock online, such problems will be solved. And plenty of entrepreneurs are working overtime to transform the way everyone shops, learns, plays games -- and, of course, socializes.

In this special report, BusinessWeek Online explores the changes in lifestyle, technologies, and communications wrought by expanding broadband access, and it explains how everyone from cable companies and telcos to Microsoft and Madison Avenue ad gurus are seeking to take advantage of this transformation, which promises above all to be highly lucrative.

Tomorrow: BusinessWeek Online looks at how broadband Internet access is changing the way cable and telecom companies compete and explains why broadband adoption in the U.S is falling behind the rest of the industrialized world. By Olga Kharif in Portland, Ore.


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