Cable modem usage is increasing at a faster rate than DSL usage among Internet subscribers, according to the J.D. Power and Associates’ 2008 Internet Service Provider (ISP) Residential Customer Satisfaction Study.

The study measures the customer satisfaction of high-speed and dial-up Internet service providers based on five factors: performance and reliability, cost of service, customer service, billing, and offerings and promotions.

The study found that the percentage of Internet customers who subscribe to cable modem service has increased to 41 percent in 2008, from 36 percent in 2007. DSL penetration among Internet customers has also increased – from 27 percent in 2007 to 30 percent in 2008.

But the share of Internet users that still subscribe to dial-up service has continued to decrease and now accounts for only 25 percent of Internet subscribers, a decline of 10 percentage points since 2007.

"Customers now view Internet service as a necessity – not a luxury – and they're looking for faster products capable of handling higher bandwidth," said Frank Perazzini, director of telecommunications at J.D. Power and Associates. "As more movies, television shows and videos are being offered online, Internet users are looking for faster, higher-quality connections to view content. With both cable modem and DSL service providing faster Internet capabilities than dial-up, users are interested in finding the best service, at the best speed, between the two connection types."

The number of Internet service customers who consider themselves loyal to their provider has decreased significantly among high-speed customers – from 42 percent in 2007 to 30 percent in 2008 – and among dial-up users – from 51 percent in 2007 to 36 percent in 2008. The main reason that they would consider switching service providers is cost savings, according to 69 percent of high-speed Internet subscribers and 40 percent of dial-up subscribers.

"Even when customers aren't necessarily dissatisfied with their current provider, they're willing to switch to another provider if they find a better deal," Perazzini said. "With the current economic uncertainty and the introduction of several competitively priced high-speed service offerings, building customer loyalty should be at the forefront of every Internet provider's 2009 initiatives."

The study also found the following information:

• Customers who use online billing experience fewer billing errors and have higher satisfaction scores compared with the average customer. Overall satisfaction among dial-up customers who receive online bills is 47 points higher, on average, than among those who receive only paper bills. Similarly, the satisfaction scores of high-speed customers who receive online bills are 21 points higher, on average, than those who receive paper bills.
• Among Internet customers, 65 percent report bundling their Internet service with one or more telecommunications services, compared with 52 percent in 2007.

In the 2008 study, high-speed Internet providers were examined in four regions. Here are the standings for those four regions:

High-Speed Providers: East Region (based on a 1,000-point scale)

East Region includes: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts,
New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia and West Virginia.

High-Speed Providers: South Region (based on a 1,000-point scale)

South Region includes: Alabama, Arkansas, Florida, Georgia, Kansas, Kentucky, Louisiana,
Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee and Texas.

High-Speed Providers: North Central Region (based on a 1,000-point scale)

North Central Region includes: Illinois, Indiana, Michigan, Ohio and Wisconsin.

High-Speed Providers: West Region (based on a 1,000-point scale)

West Region includes: Arizona, California, Colorado, Idaho, Iowa, Minnesota, Montana,
Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming.

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