Users moving from service companies to ISPs, survey finds

US online service companies like America Online and CompuServe are losing out to Internet service providers.

More US households have Internet accounts with an Internet service provider (ISP) than with commercial online service companies, according to a survey released this week. Of the 2000 people surveyed, 48% of the households use an ISP and 35% use a commercial online service for Internet access, the Homefront survey from Odyssey found.

Six months ago, 54% used commercial online services and only 30% used ISPs, according to Odyssey, an independent market research firm. Meanwhile, 14% of US households are online, with most choosing quality of access as being more important to them than the quality of proprietary content.

"Commercial online services have to convince consumers that they are better on some dimension that's important -- if not proprietary content, then ease-of-use, or content packaging or customization or something," Odyssey president Nick Donatiello says.

"Pathetically slow Internet gateways and pricing schemes that seem to ignore the fact that they are now competing directly with ISPs just make it harder," according to Donatiello.

Of the online service providers, America Online's share of the US market was 18% in July 1996, compared to 5% for CompuServe, 4% for Prodigy, 1% for Microsoft Network and 1% for CompuServe's WOW!, which is targeted at Internet newcomers. The survey also found that the ISP market is fragmented, with Netcom Online Communications garnering only 8% of the ISP market. AT&T WorldNet attracted 7% and MCI and PCI/Pipeline each had 4% market share.

Meanwhile, the survey confirms the dominance of Netscape Navigator in the browser arena. Netscape Navigator is used by 54% of the households, compared to the 6% that use Microsoft's Internet Explorer, according to the survey. Forty-eight percent of the Navigator users rate it "very good", while 25% of the Internet Explorer users give their browser that rating.

The research for the survey was based on interviews with 2000 consumers using a random-digit-dial, computer-generated sample that closely matches the US census, according to Odyssey.

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