Access, Demographics & Usage, February 2002

North America Online: Access, Demographics & Usage February 2002

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Table of Contents 3 Methodology 7

The eMarketer Difference 8

The Beneﬁts of eMarketer’s Aggregation Approach 9

“Benchmarking” and Future-Based Projections 9 I Introduction 11

A. Key Findings - Then and Now 13 II Internet Users 17

A. Worldwide Internet Users 20

B. Internet Users in the US 22

C. Who is Not Online and Why? 28 III Internet Households 35

A. Comparative Estimates: Online Households in the US 38

B. Households Online by Technology 40

Broadband Users 55

Satellite 60

Fixed Wireless 61 IV Internet Access Devices: PC, TV and Mobile Devices 63

A. PCs 66

B. TV 71

C. Mobile Phones & PDAs 73 V Online Demographics 77

A. Gender 82

B. Age 90

C. Income 96

D. Education 104

E. Race & Ethnic Origin 109

F.Region 117 VI Usage 119

A. Time Online 120

B. Location – Work, Home & School 127

C. Activities 136

eMarketer Master Grid for Consumer Online Buying 148

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VII Special Trends 149

A. Kids, Teens & College Students 150

B. Seniors Online 156

C. Black Americans 158

D. Hispanics 161

E. Broadband Users 164

F.Mobile Internet Users 168 VIII Canada Online 173

A. Internet Users 174

B. Internet Households 180

C. Households Online, by Technology 183

Cable 188

DSL 189

Fixed Wireless 190

Satellite 190

D. PC Penetration 192

E. Online Demographics 194

Kids & Teens Online 206

Seniors online 209

F.Usage 216

G. Mobile Internet Users and Usage 232

H. Summary of Findings 236 Index of Charts 237

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February 2002

Welcome to eMarketer

Dear Reader:

Ben Macklin Senior Analyst, eMarketer TM [email protected] The February 2002 North America Online Report is a comprehensive analysis of internet users in the United States and Canada. The report provides answers to four critical questions: eMarketer, inc. 821 Broadway How many North Americans are online now, and how many will be online in the future? New York, NY 10003 T: 212.677.6300 What devices and technologies are being used by internet users to get online? F: 212.777.1172 What are the demographic characteristics of those online? What are the most popular online activities of North American internet users?

eMarketer has drawn on the latest research from dozens of leading research ﬁrms, including Forrester Research, Jupiter Media Metrix, Nielsen//NetRatings, Ipsos Reid, International Data Corporation, Statistics Canada as well as The US Department of Commerce’s recently released report: A Nation Online: How Americans are Expanding Their Use of the Internet, February 2002. Combined with eMarketer’s latest projections and analysis, this report will provide readers with the necessary information to make informed decisions about the online population in North America. As a valuable accompaniment to this report, eMarketer also has available the The eGlobal ReportTM, January, 2002, which examines the demographic and usage patterns of internet users from a global perspective; The Europe Online ReportTM, November 2001, which examines the European internet sector; eCommerce B2C & Demographics ReportTM, September 2001 which provides a detailed analysis of the business-to-consumer eCommerce sector in the US and; Marketing Online To Kids & TeensTM May 2001, which provides a detailed analysis of kids and teens online in the US. The eMarketer eStat Database also contains thousands of additional statistics on virtually every aspect of the internet and e-business. If you have any questions or comments concerning eMarketer or any of the material in this report, please call, fax or send an e-mail.

Ben Macklin Senior Analyst

Written by Ben Macklin

Also contributing to this report: Reuse of information in this document, without prior authorization, Steven Butler, analyst is prohibited. If you would like to license this report for your Nevin Cohen, analyst organization, please contact David Iankelevich at Noah Elkin, analyst [email protected], or 212.763.6037. Yael Marmon, researcher Andrew Raff, researcher Tracy Tang, researcher Allison Smith, senior editor Dana Hill, production artist James Ku, data entry & production assistance

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North America Online

Methodology 7 The eMarketer Difference 8 The Beneﬁts of eMarketer’s Aggregation Approach 9 “Benchmarking” and Future-Based Projections 9

I Introduction

II Internet Users

III Internet Households

IV Internet Access Devices: PC, TV and Mobile Devices

V Online Demographics

VI Usage119

VII Special Trends

VIII Canada Online

Index of Charts

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Methodology eMarketer’s approach to market research is founded on a philosophy of Introduction aggregating data from as many different sources as possible. Why? Because Internet Users there is no such thing as a perfect research study and no single research Internet Households

Internet Access Devices: source can have all the answers. Moreover, a careful evaluation and PC, TV and Mobile Devices weighting of multiple sources will inevitably yield a more accurate picture Online Demographics

Usage than any single source could possibly provide.

Special Targets

Canada Online Index of Charts The eMarketer Difference eMarketer does not conduct primary research. Neither a research ﬁrm nor a consultancy, eMarketer has no testing technique to defend, no research bias and no client contracts to protect. eMarketer prepares each market report using a four-step process of aggregating, ﬁltering, organizing and analyzing data from leading research sources worldwide.

Aggregate

Analyze Filter

Organize

Using the internet and accessing a library of electronically-filed research reports and studies, the eMarketer research team first aggregates publicly available e-business data from hundreds of global research and consultancy firms. This comparative source information is then filtered and organized into tables, charts and graphs. Finally, eMarketer analysts provide concise and insightful analysis of the facts and figures along with their own estimates and projections. As a result, each set of findings reflects the collected wisdom of numerous research firms and industry analysts.

“I think eMarketer reports are extremely useful and set the highest standards for high quality, objective compilation of often wildly disparate sources of data. I rely on eMarketer’s research reports as a solid and trusted source.” — Professor Donna L. Hoffman, Co-Director, eLab, Vanderbilt University

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Methodology The Beneﬁts of eMarketer’s Aggregation Introduction

Internet Users Approach Internet Households Objective: information is more objective than that provided by any single Internet Access Devices: PC, TV and Mobile Devices research source Online Demographics Comprehensive: gathered from the world’s leading research ﬁrms, Usage consultancies and news organizations Special Targets Authoritative: quoted in leading news publications, academic studies and Canada Online

Index of Charts government reports All in one place: easy to locate, evaluate and compare Readily accessible: so you can make quick, better-informed business decisions Above the hype: accurate projections that business people can use with conﬁdence Time saving: there’s no faster way to ﬁnd internet and e-business stats, online or off Money saving: more information, for less, than any other source in the world

“Benchmarking” and Future-Based Projections Until recently, anyone trying to determine which researcher was most accurate in predicting the future of any particular aspect of the internet did not have a definitive source with which to do this. For instance, over 10 firms predicted e-commerce revenues for the fourth quarter 1998 online holiday shopping season, and yet no single source could be identified after the fact as having the “correct” number. In the Spring of 1999, however, the US Commerce Department finally began measuring e-commerce B2C activity so business people and others could have a benchmark with which they could compare and evaluate projections. eMarketer has adapted its methodology to recognize that certain government and other respected, impartial sources are beginning to provide reliable numbers that can be consistently tracked over time. Most of these established sources, however, only measure past results; typically, they do not make future-based predictions.

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Methodology Today, eMarketer formulates its Essential E-Business Numbers by ﬁrst Introduction identifying the most established, reputable source for a given sector being Internet Users measured and then adopting that organization’s ﬁgures as benchmarks for Internet Households

Internet Access Devices: the historical/current period. For instance, eMarketer’s US internet user PC, TV and Mobile Devices ﬁgures will be based on a combination of the most recent data from the US Online Demographics

Usage Census Bureau (August, 2000 survey) and the International

Special Targets Telecommunication Union (ITU). Using this data as the benchmark for Canada Online 2000, eMarketer will make projections for subsequent years based on the Index of Charts following factors: a comparative analysis of user growth rates compiled from other research ﬁrms additional benchmark data from internet rating ﬁrms, e.g., Nielsen//NetRatings and Jupiter Media Metrix, which use panels to measure internet user activity on a weekly and monthly basis an analysis of broader economic, cultural and technological trends in the US Similarly, US e-commerce revenues are being “benchmarked” using historical data from the US Department of Commerce, and broadband household and penetration rate forecasts are being built off baseline data from the Organization for Economic Cooperation and Development (OECD). Through this benchmarking process, eMarketer will be holding itself – and our projections – accountable.

“When I need the latest trends and stats on e-business, I turn to eMarketer. eMarketer cuts through the hype and turns an overabundance of data into concise information that is sound and dependable.” — Mark Selleck, Business Unit Executive, DISU e-business Solutions, IBM

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Methodology I Introduction 11 A. Key Findings - Then and Now 13

II Internet Users

III Internet Households I IV Internet Access Devices: PC, TV and Mobile Devices V Online Demographics

VI Usage

VII Special Trends

VIII Canada Online

Index of Charts

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Methodology The US online population continues to grow and transform. With over 100 Introduction million people regularly online, the US market is by the far the largest Internet Users single internet market in the world. With such widespread adoption, the ‘e’ Internet Households

Internet Access Devices: in e-business is now less relevant than it was in the past, and the former PC, TV and Mobile Devices niche audience of those online is now an audience that largely mirrors the Online Demographics

Usage wider population.

Special Targets A thorough understanding of the demographic and usage characteristics Canada Online of one’s customers can help marketers, retailers and business decision- Index of Charts makers better target their resources, while at the same time extracting greater revenues from existing customers. This report will provide business decision-makers with the knowledge to make informed decisions about the online population. Speciﬁcally this report will outline: Who is online now in North America and how will the mix of users shift in the future? Who is not online and why? What is the demographic proﬁle of the North American internet user? How many individuals and households are online now and in the future? What are the important trends to look out for? Where are they accessing the internet from? Why are they accessing the internet? What devices are being used to access the internet? Who and how many are broadband internet users? What are the most popular activities conducted by internet users? What segments of the online population are growing strongly?

For related analysis and statistics, readers are advised of three other eMarketer reports: eGlobal Report, Jan, 2002; eCommerce B2C, September, 2001; and Marketing and Selling Online to Teens & Kids, May 2001.

eMarketer’s last North America Online report (formerly called eDemographics and Usage Patterns) highlighted the growing ubiquity of internet access across all segments of the North American population. The report indicated that with widespread adoption of the internet, demographic factors such as age, sex, income, education and ethnicity were beginning to become less signiﬁcant in indicating who was online or not. This was in stark contrast to previous years when demographic characteristics were heavily skewed towards white, upper-income males with a penchant for technology.

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Methodology To quote the author of the 2000 report: Introduction

Internet Users “The internet, formerly the playground of techies Internet Households

Internet Access Devices: and the wealthy, is slowly becoming reﬂective of PC, TV and Mobile Devices the multi-cultural tapestry of America.” Online Demographics

Usage –eDemographics Report, eMarketer, September 2000

Special Targets Canada Online The trends highlighted in the 2000 report have progressed further. With Index of Charts over 50% of North American households online at the end of 2001, the characteristics of the online population mirror very closely the wider population as a whole. But before exploring this further, it is worthwhile re-visiting some of the key ﬁndings of the 2000 report in order to set a benchmark for this current analysis. This will enable us to identify, more clearly, changes in the make-up of the current online population and the trends that are now emerging. A. Key Findings - Then and Now

Key Findings: North American Online Demographics, September 2000 & January 2002 Then (September 2000) Now (January, 2002) US dominance declines US dominance continues to In 1999 the US was home to 45% decline of the world's internet users. At eMarketer estimates, that at the end the end of 2000, the US share will of 2001 North American internet shrink to 38%. users made up only 30% of the world's internet users, compared to Europe's 31%, Asia-Pacific's 33% and Latin America's 5%. Women are close to parity Women surpass the number of with men online men online Most research firms in 2000 Most research firms at the end of estimated that it would be at 2001 indicate that women have least one year before there was actually surpassed the number of parity between men and women men online in the US, reflecting the online in the US. make-up of the general population. Teens online create Teens and Kids are two of the opportunities and challenges fastest growing online segments Teens have the highest penetration They continue to pose challenges rate of any age group, but there for marketers and retailers trying to are challenges for marketers and reach them, but it is increasingly retailers trying to reach them. worth it. Teens and Kids are showing an increasing ability and willingness to spend online. Seniors flock online Seniors continue to flock online Although Seniors have been the in numbers outpacing any other age most reluctant group to enter the group, but they are still one of the world wide web, they have the least represented online. Those that highest projected growth rate do go online, however, are voracious among all age groups. users.

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Methodology

Introduction Income gap closes The income gap continues to As PC costs and internet access close Internet Users fees become less prohibitive; more Lower PC prices and an increasing Internet Households lower and middle-income availability of alternative internet Internet Access Devices: households are joining the net. access devices and technologies are PC, TV and Mobile Devices providing wider sections of the Online Demographics population with the means to get Usage online. Lower income groups are

Special Targets purchasing PCs at a faster rate than any other socio-economic group. Canada Online

Index of Charts Income, not race, creates digital A combination of factors explains divide the digital divide It is becoming clear that income, The reasons for the continuing not race, is carving the chasm existence of the digital divide are far between those online and those more complex than income alone. not online. The fact that Black and Hispanic households in the highest income brackets have a significantly lower internet penetration than Whites or Asian households in the same income bracket means that other factors are at play as well. The line between work and The line between work, home home is blurring and 'on-the-road' is becoming "Work" and "home" usage can be blurred defined by two different measure- The emergence of wireless devices, ments: the location of net access such as pocket PCs and web and the purpose of net usage. enabled cell phones, means that Because people work at home, and users are able to conduct many of play and shop at work, the distinc- their work and personal internet tion between work and home usage activities wherever and whenever is increasingly difficult to measure. they wish. High-speed access lures users High-speed users spend almost to stay online longer twice as long online and download a great deal more rich media Moreover, this is a rapidly growing online segment. E-Mail is still the killer app E-mail continues to be the killer app Despite high-speed internet becoming more widespread, e-mail and general web browsing continue to be the most popular internet activities. Internet users consume less Internet users continue to traditional media consume less traditional media but are often consuming more than one medium at a time. Source: eMarketer, 2002 035935 ©2002 eMarketer, Inc. www.eMarketer.com

The Department of Commerce, in February 2002, released a comprehensive report on the internet use of Americans. A Nation Online: How Americans Are Expanding Their Use of the Internet, September 2001 clearly illustrates the widespread adoption of the internet across all sections of the population.

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Methodology The following chart shows the signiﬁcant increase in internet use, across all Introduction demographic segments, between August 2000 and September 2001. Internet Users Internet Households Internet Penetration in the US within Demographic Internet Access Devices: PC, TV and Mobile Devices Segment, August 2000 & September 2001 Online Demographics August 2000 September 2001 Usage Gender Special Targets

Canada Online Male 44.6% 53.9% Index of Charts Female 44.2% 53.8% Race/origin

White 50.3% 59.9% Black 29.3% 39.8% Asian American and Pacific Islander 49.4% 60.4% Hispanic 23.7% 31.6% Employment status Employed (2) 56.6% 65.4% Not employed (2) 28.9% 36.9% Family income

<$15,000 18.9% 25.0% $15,000-$24,999 25.5% 33.4% $25,000-$34,999 35.7% 44.1% $35,000-$49,000 46.5% 57.1% $50,000-$74,999 57.7% 67.3% $75,000 and above 70.1% 78.9% Educational attainment < High school (1) 8.8% 12.8% High school diploma/GED (1) 30.6% 39.8% Some college (1) 54.2% 62.4% Bachelors degree (1) 72.5% 80.8% Beyond Bachelors degree (1) 78.5% 83.7% Age group

Age 3-8 15.3% 27.9% Age 9-17 53.4% 68.6% Age 18-24 56.8% 65.0% Age 25-29 55.4% 63.9% Male 54.1% 61.8% Female 56.5% 66.0% Age 50+ 29.6% 37.1% Male 32.7% 39.9% Female 26.9% 34.6%

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Methodology Geographic location Introduction

Internet Users Rural 42.5% 52.9% Internet Households Urban 45.0% 54.2% Internet Access Devices: PC, TV and Mobile Devices Urban not central city 47.9% 57.4% Online Demographics Urban central city 40.6% 49.1% Usage Household type Special Targets

Canada Online Married Children w/children under 18 years 50.6% 62.0% Index of Charts Male householder w/children under 18 years 34.5% 45.8%

Female householder w/children under 18 32.9% 45.3%

Family Household without children under 18 41.4% 50.5%

Additional Findings of the 2002 Report:

More women are online than men and perhaps more importantly for retailers and marketers, between 55%-60% of all online shoppers are women. Blacks and Hispanics are still the least represented online, but they are getting online faster than any other racial or ethnic group. A new Digital Divide has emerged – between dial-up and Broadband Users. Comparing the demographic proﬁle of a broadband and dial-up user today is like comparing an average American internet user in 1996 with an average non-user. The increasing variety of different technologies that allow internet access, will make the net more affordable and available to greater numbers of people. By 2004 nearly half of all online households in the US will be broadband. A growing percentage of the population over the next three years will access the internet through a device other than the PC. Affordable PCs are bridging the ‘digital divide’ in the US. 68% of new PC buyers in 2001 had incomes below $35,000. Kids and Teenagers are growing quickly online and increasingly spending money online. In Canada, there will be more broadband households than dial-up by 2003. Canadians have a penchant for online banking and ﬁnancial sites, and are increasingly changing from online window shoppers to online purchasers.

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Methodology

I Introduction II Internet Users 17 A. Worldwide Internet Users 20 B. Internet Users in the US 22 C. Who is Not Online and Why? 28 IIIII Internet Households IV Internet Access Devices: PC, TV and Mobile Devices

V Online Demographics

VI Usage

VII Special Trends

VIII Canada Online

Index of Charts

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Methodology Before we can measure or forecast the number of internet users, we ﬁrst Introduction have to answer a basic question: What is an internet user? Internet Users Research ﬁrms, analysts, consultancies and other trusted sources disagree Internet Households

Internet Access Devices: on how to answer this seemingly simple question. Part of the meaning of an PC, TV and Mobile Devices internet user has to do with how frequently the person goes online. Online Demographics

Usage eMarketer identiﬁes four general levels of internet usage:

Special Targets

Canada Online Four Levels of Internet Usage

Index of Charts

Anyone with internet "access "

"Ever used" or Currently use" the internet

Accessed the internet in the "last 30 days"

Accessed the internet in the "last 7 days" or "weekly access"

Source: eMarketer, 2001

Estimates of total internet users at each level vary widely:

Internet Users in the US, by Four Levels of Internet Usage, 2001 (in millions)

Anyone with Internet Access 156.0

"Ever Used" or "Currently Use" the internet 127.9 Used the internet in last 30 days Accessed the internet in 119.0 the last 7 days "weekly access" 89.5

Some researchers, such as Jupiter Media Metrix, include as internet users those who do not necessarily get online but simply have “access”. However the deﬁnition of internet “access” is not the same as internet “usage.”

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Methodology For example, Nielsen//NetRatings, in December 2001, estimated that there Introduction were 174.6 million people with internet access. During the month of Internet Users December, 104.7 million logged on, and during the week of Dec 31-Jan 6, Internet Households

Internet Access Devices: 78.1 million people logged on to the internet. PC, TV and Mobile Devices Online Demographics Internet Users in the US, by Access Frequency, Usage December 2001 (in millions) Special Targets Canada Online Online from home in the past week Index of Charts 78.1

Online in the past 30 days 104.7

Have “access” 174.6

Source: Nielsen//NetRatings, December 2001 035937 ©2002 eMarketer, Inc. www.eMarketer.com The Department of Commerce, in their recently released report, A Nation Online September, 2001 examined internet use from a number of perspectives. For example, in September 2001, they indicated 43.6% of the population were using the internet at home, yet 56.7% of the population had internet access at home. This clearly illustrates that different deﬁnitions, mean different results.

Household and Internet Use in the US, December 1998, August 2000 & September 2001 65 56.7% 53.9% 50.5% 46.7% 43.6% 44.4% 41.5% 39 35.7% 32.7% 30.0%

22.3% 22.6%

Persons using Household Person using Persons with home access internet internet internet subscriber- anywhere access at ship home 1998 2000 2001 Source: US Department of Commerce, February 2002 036359 ©2002 eMarketer, Inc. www.eMarketer.com

eMarketer looks at all four deﬁnitions when aggregating and ﬁltering data from various sources, but concentrates on levels two and three when analyzing the numbers.

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Methodology For the purposes of examining and comparing internet users on a global Introduction basis, eMarketer adopts International Telecommunication Union (ITU) Internet Users estimates. The ITU subscribes to a level three deﬁnition of an internet user – Internet Households

Internet Access Devices: someone aged 2 years old and above, who went online in the past 30 days. PC, TV and Mobile Devices

Online Demographics

Usage Methodology Update: Identifying Benchmarks to Track Projections

Special Targets eMarketer has adapted its forecasting methodology to recognize that Canada Online for certain online markets and key metrics, government and other Index of Charts non-proﬁt organizations have begun to provide reliable, objective numbers that can be consistently tracked over time. eMarketer is now using ﬁgures from these selected organizations to serve as benchmarks for tracking its own projections (as well as those of other researchers. As such, eMarketer will be holding itself - and its projections - accountable to other, independent sources. In the case of internet users, eMarketer’s year 2000 baseline is from the International Telecommunication Union’s estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days

A. Worldwide Internet Users Using the ITU’s 2000 figures as a baseline, eMarketer estimates that at the end of 2001 there were in excess of 445 million internet users worldwide. The Asia- Pacific region accounted for 145.9 million users, Europe, 139.3 million followed by North America at 133.4 million. While Latin America and Africa are relatively small markets, eMarketer predicts these regions will grow at a significantly faster rate over the next few years than the more developed markets.

Internet Users Worldwide, by Region, 2000-2004 (in millions) 2000* 2001 2002 2003 2004 CAGR** 2000-2004 North 108.1 133.4 152.0 169.3 184.5 14.3% America*** Europe 100.9 139.3 170.7 196.2 221.1 21.7% Asia- 123.3 145.9 168.0 205.0 232.1 17.1% Pacific Latin 15.8 22.0 32.0 43.4 60.6 39.9% America Africa 4.1 5.3 7.2 9.0 10.9 27.7% Total 352.2 445.9 529.9 622.9 709.1 19.1% Worldwide Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days; **Compound Annual Growth Rate; ***North America includes the US and Canada. Mexico is included in Latin America Source: eMarketer, December 2001 034873 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology “The US may have more people online than any Introduction other country in the world, but its share of global Internet Users

Internet Households users is shrinking as the internet enters its ‘post- Internet Access Devices: revolutionary’ phase.” –Ipsos-Reid, May 15 2001 PC, TV and Mobile Devices

Online Demographics

Usage Currently, North America, Europe and Asia-Paciﬁc account for an almost equal Special Targets share of total worldwide internet users at around 30%. eMarketer forecasts this Canada Online division of internet users will remain about the same over the next few years, Index of Charts but North America’s share will fall to 26% by 2004, and Latin America will make up nearly 9% of the world’s internet users by the same date.

Internet Users Worldwide, by Region, 2000-2004 (as a % of total internet users worldwide) 2000* 2001 2002 2003 2004 North America** 30.7% 29.9% 28.7% 27.2% 26.0% Europe 28.6% 31.2% 32.2% 31.5% 31.2% Asia-Pacific 35.0% 32.7% 31.7% 32.9% 32.7% Latin America 4.5% 4.9% 6.0% 7.0% 8.5% Africa 1.2% 1.2% 1.4% 1.4% 1.5% Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days; **North America includes the US and Canada. Mexico is included in Latin America Source: eMarketer, December 2001 034878 ©2001 eMarketer, Inc. www.eMarketer.com

Recent data from IDC shows there are similar proportions of internet users in the different world regions at the end of 2001.

Internet Users Worldwide, by Region, 2001

ROW 12.5% Japan Western Europe 9.6% 29.8%

Asia-Pacific 18.9% US 29.2%

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Methodology While Europe and Asia-Paciﬁc may garner a greater number of internet Introduction users than North America, the penetration rate is far lower in Europe and Internet Users Asia-Paciﬁc. The US and Canada are both well-developed internet markets, Internet Households

Internet Access Devices: so that by 2004, 58% of the region’s population will be online. In Europe, PC, TV and Mobile Devices however, there is a greater disparity between the leading countries and the Online Demographics

Usage rest of the region – including the much less developed Eastern Europe. In

Special Targets Asia, too, China’s and India’s huge populations and relatively tiny number Canada Online of internet users skew the overall penetration rate downward, to give the Index of Charts region as a whole an internet penetration rate of only 6.4% by 2004.

Internet Users Worldwide, by Region, 2000-2004 (as a % of each region’s total population) 2000* 2001 2002 2003 2004 North America** 35.2% 43.1% 48.6% 53.7% 58.0% Europe 10.4% 14.3% 17.4% 19.9% 22.3% Asia-Pacific 3.5% 4.1% 4.7% 5.7% 6.4% Latin America 3.0% 4.2% 6.0% 8.0% 11.1% Africa 0.5% 0.6% 0.9% 1.0% 1.2% Total worldwide 5.8% 7.2% 8.5% 9.9% 11.1% Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days; **North America includes the US and Canada. Mexico is included in Latin America Source: eMarketer, December 2001 034880 ©2001 eMarketer, Inc. www.eMarketer.com

B. Internet Users in the US

“The speed of adoption of the internet has been unprecedented. It will have taken the internet less than seven years to be adopted by 30 percent of Americans, compared to 13 years for PCs, 17 for television, and 38 for telephones. And just like other major technologies, wealthier and more- educated consumers are the early adopters.” –The New Economy Index, 1997

eMarketer forecasts the US will have 165 million internet users by 2004, rising from 95 million at the end of 2000. This equates to a compound annual growth rate of approximately 15%. However, as the market reaches a saturation point in the later years, it is expected that the growth of new internet users will slow.

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Methodology

Introduction Internet Users in the US, 2000-2004 (in millions)

Internet Users

Internet Households 2000* 95.4

Internet Access Devices: PC, TV and Mobile Devices 2001 119.0

Online Demographics 2002 136.0 Usage

Special Targets 2003 151.8

Canada Online 2004 165.5 Index of Charts Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days Source: eMarketer, 2001 035719 ©2002 eMarketer, Inc. www.eMarketer.com

Compared to other countries within the G-7 group of nations, Japan is a distant second to the US in terms of sheer numbers of internet users at the end of 2001 with approximately 51 million. Germany and the UK follow Japan with 33 million and 21 million internet users, respectively. eMarketer expects France and Italy to be the two fastest growing markets within the G-7 in 2004, as these countries did not embrace the internet as readily in the 1990s as other countries.

Internet Users in G-7 Countries, 2000-2004 (in millions) 2000* 2001 2002 2003 2004 CAGR** 2000-2004 Canada 12.7 14.4 16.0 17.5 19.0 10.6% France 8.5 11.7 15.0 18.2 21.5 26.1% Germany 24.0 33.1 42.3 45.6 47.9 18.9% Italy 6.0 8.3 10.6 12.9 15.2 26.1% Japan 47.1 51.7 56.4 61.0 65.7 8.7% UK 15.4 21.3 23.4 25.7 28.3 16.4% US 95.4 119.0 136.0 151.8 165.5 14.8% Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days; **Compound Annual Growth Rate Source: eMarketer, December 2001 034874 ©2001 eMarketer, Inc. www.eMarketer.com

At the end of 2001, Canada had the highest internet penetration rate of any country in the G-7 at 45.6% of its population, followed by the US at 42.8% and Japan (with its high mobile internet penetration) at 40.8%. By 2004, eMarketer expects Canada to continue to have the highest internet penetration at 58.4% followed by the US 58%, Germany at 57.3% and Japan at 51.6%.

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Methodology

Introduction Internet Users in G-7 Countries, 2000-2004 (as a % of

Internet Users each country’s total population) Internet Households 2000* 2001 2002 2003 2004 Internet Access Devices: PC, TV and Mobile Devices Canada 40.6% 45.6% 50.2% 54.3% 58.4% Online Demographics France 14.3% 19.7% 25.0% 30.3% 35.7% Usage Germany 29.0% 39.9% 50.8% 54.7% 57.3% Special Targets

Canada Online Italy 10.4% 14.4% 18.3% 22.3% 26.2%

Index of Charts Japan 37.2% 40.8% 44.4% 48.0% 51.6% UK 25.9% 35.6% 39.1% 42.9% 47.1% US 34.6% 42.8% 48.5% 53.6% 58.0% Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days Source: eMarketer, December 2001 034879 ©2001 eMarketer, Inc. www.eMarketer.com

Comparative Estimates: Internet Users in the US The differences in deﬁnitions of an internet user between research ﬁrms makes comparing data a challenging task. eMarketer has sorted through numerous estimates to compare users at each of the four levels: “access,” “currently use,” “last 30 days,” and “last 7 days”. At level 1 – those with internet access - eMarketer estimates that at the end of 2001, 156 million people had internet access, rising from 140 million in 2000.

Comparative Estimates: Americans with Access to the Internet, 2001 (in millions)

World Bank 112.8

Jupiter Media Metrix 141.5

Mediamark Research 142.0

eMarketer 156.0

Netsizer: Telcordia Technologies 173.0

Nielsen//NetRatings 176.5

Adams Media Research 186.2

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Methodology The US Department of Commerce deﬁnition of an internet user is those who Introduction deﬁne themselves as being “current” users of the internet. They estimated Internet Users 142.8 million internet users in the US in September 2001. Other researchers Internet Households

Internet Access Devices: adopt a similarly lose deﬁnition, such as those who claim to “ever use” the PC, TV and Mobile Devices internet. Note that different cut-offs for age groups make comparisons less Online Demographics

Usage than pure. eMarketer estimates that at the end of 2001, 128 million people

Special Targets would deﬁne themselves as internet users.

Canada Online Index of Charts Comparative Estimates: Americans Who Have "Ever Used" or "Currently Use" the Internet, 2001 (in millions)

Pew Internet & American Life Project 110.0

Mediamark Research 111.0

Adams Media Research 123.3

Scarborough Research 125.0

eMarketer 127.9

Within the ‘level 3” deﬁnition, comparative estimates are more tightly grouped. eMarketer’s projections are anchored on the baseline ITU estimate of 95.4 million internet users at the end of 2000. In 2001, we estimate, 119 million internet users accessed the net in the last 30 days.

Comparative Estimates: Americans Who Have Accessed the Internet in the Past 30 Days, 2001 (in millions)

NetValue (Last month) 82.7

Cyber Dialogue (Age 18+ last month) 87.3

Mediamark Research (Age 18+ last month) 101.1

Jupiter Media Metrix (Last 30 days) 102.1

Nielsen//Netratings (December 2001) 104.2

Ipsos-Reid (Age 18+ last month) 108.0

Scarborough Research 117.0

eMarketer (Age 2+ last month) 119.0

ComScore/Diameter (All locations) 130.6

Gartner G2 (Last month) 140.9

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Methodology Nielsen//NetRatings provides weekly updates on the number of internet Introduction users. From these numbers, eMarketer determined a “drop-off” factor to Internet Users compare users who have been online in the past 30 days to users who have Internet Households

Internet Access Devices: accessed the internet in the past week. PC, TV and Mobile Devices Online Demographics Internet Users in the US, by Access Frequency, Usage December 2001 (in millions) Special Targets

Canada Online Have “access” Index of Charts 174.6

Online in the past 30 days 104.7

Online from home in the past week 78.1

Drop-off factor (index of weeekly vs. last 30 days) (1) (75.2)

If the equivalent “drop-off” factor is applied to eMarketer’s 2001 internet user estimate of 119 million, then there were 90 million users online each week in 2001 in the US.

Internet Users in the US, by Four Levels of Internet Usage, 2001 (in millions)

Anyone with Internet Access 156.0

"Ever Used" or "Currently Use" the internet 127.9 Used the internet in last 30 days Accessed the internet in 119.0 the last 7 days "weekly access" 89.5

Putting the variety of comparative estimates together highlights the disparity between research firms. A significant amount of the variance between estimates is a result of definitional differences.

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Methodology

Introduction Recent data from the Department of Commerce, (released at the

Internet Users publication of this report), indicated there were 142.8 million internet Internet Households users in the US in September 2001. Internet Access Devices: PC, TV and Mobile Devices

Online Demographics

Usage Comparative Estimates: Internet Users in the US,

Special Targets 1999-2005 (in millions) Canada Online 1999 2000 2001 2002 2003 2004 2005 Index of Charts Adams Media Research 69.2 111.0 123.3 135.7 145.8 163.1 160.8 Boston Consulting Group – 123.0 – – – – – (BCG) Computer Industry – 114.4 – – – – – Almanac (CIA) comScore/Diameter – – 130.6 – – – – Cyber Dialogue – 77.0 87.3 – – – – eMarketer* – 95.4 119.0 136.0 151.8 165.5 – eTForecasts 111.0 135.7 – 169.0 – – 214.0 GartnerG2 – 127.0 140.9 – – – – Harris Poll – 121.0 130.5 – – – – International Data – 122.7 – – – 176.0 194.1 Corporation (IDC) Ipsos-Reid – – 108.0 – – – – Jupiter Media Metrix 104.0 122.0 138.0 153.0 168.0 182.0 194.0 Mediamark Research Inc. – 85.8 101.1 – – – – (MRI) Morgan Stanley Dean 76.0 91.0 107.0 125.0 144.0 – – Witter Netsizer: Telcordia – – 172.4 – – – – Technologies NetValue** – 84.7 82.7 – – – – Nielsen//Netratings – 100.3 115.2 – – – – PC Data – 95.6 – – – – – Pew Internet & American – 107.0 110.0 – – – – Life Project Rasmussen Research – 126.3 – – – – – Strategis Group – 106.0 – – – – – US Department of – 116.5 – – – – – Commerce World Bank 85.4 99.8 112.8 125.4 138.9 153.3 166.2 Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days; **home internet usage only Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034899 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology C. Who is Not Online and Why? Introduction Internet Users As internet markets mature, the remaining off-line population consists of Internet Households those least likely to feel the need to use the internet. Indeed, surveys show Internet Access Devices: PC, TV and Mobile Devices that those who currently do not use the internet say that they have no Online Demographics compelling need to do so. According to data collected by Ipsos-Reid, Usage illustrated below, 40% of those non-users surveyed worldwide said that Special Targets they have “no need for” the internet. One quarter reported no interest in Canada Online

Index of Charts getting online.

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Methodology

Introduction Barriers to Internet Usage Worldwide, 2001 (as a % of

Internet Users respondents)

Internet Households No need for it Internet Access Devices: PC, TV and Mobile Devices 40% Online Demographics

Usage Don’t have a computer

Special Targets 33%

Canada Online Not interested in it Index of Charts 25%

Don’t know how to use it 16%

Cost (general) 12%

Not enough time to use it 8%

Not able/too old 7%

Don’t know how to get it 3%

Current PC/terminal can’t access web 2%

Content not of interest/use/relevant 2%

Not my choice/decision at work 2%

Content not in my language 1%

Cost for internet ISP/subscripition/access cost 1%

Cost-local telephone and toll service charges 1%

All other reponses 4%

Unsure 2%

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Methodology In the Ipsos-Reid survey, a third of all respondents said that the lack of a Introduction computer was a barrier to internet use. As the following data from a recent Internet Users UCLA survey of Americans shows, the greatest barrier to using the internet Internet Households

Internet Access Devices: – and the most common reason why individuals stop using the internet - is PC, TV and Mobile Devices also lack of a computer. Of course, the reason some people don’t have a Online Demographics

Usage computer may be because they don’t see the need for it.

Special Targets These data suggest that policies, programs, and innovative business Canada Online models that help individuals gain access to hardware are likely to increase Index of Charts internet use rates substantially. The UCLA survey indicated that Americans do not currently use the internet in 2001 for the following reasons:

Reasons Why Americans* Do Not Use the Internet, 2001 (as a % of respondents)

No computer 25.5%

No interest 21.4%

Do not know how to use 6.9%

Fear of technology 5.6%

Internet is not useful 3.5%

Too expensive 2.6%

Consumes too much time 1.6%

Privacy/security concerns 1.6%

Didn’t use it enough 1.4%

Computer is not good enough 1.2%

Moved and didn’t install 0.8%

Not appropriate for children 0.8%

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Methodology The Yankee Group reviewed the reasons why people with PCs at home do Introduction not have internet access for its “Technologically Advanced Family Survey.” Internet Users It found that the reasons vary according to annual household income. Internet Households

Internet Access Devices: While 72% of low-income PC owners say net access is too expensive, 12% PC, TV and Mobile Devices say they already have it at school or at work. Online Demographics

Usage

Special Targets Reasons Why US Households with PCs Do Not Have

Canada Online Internet Access, 2002 (as a % of households with

Index of Charts annual income of less than $25,000)

Expense 72%

Already have access at work or school 12%

Do not want to tie up phone line 10%

Do not want children online 6%

Difficulty of use 4%

For households making more than $75,000 each year, 47% say they have net access at work or at school, and 11% say they have no interest in the world wide web.

Reasons Why US Households with PCs Do Not Have Internet Access, 2002 (as a % of households with annual income of more than $75,000)

Already have access at work or school 47%

Expense 21%

Do not want to tie up phone line 12%

Difficulty of use 11%

Lack of interest in the web 11%

While small, there is also a certain percentage of internet non-users who were once users. The primary reason given by ‘drop-outs’ for not using the internet is the same as the general response of those who do not currently use the internet: “no computer available.” Other major reasons for dropping out are “no interest,” “privacy concerns,” and “too expensive,” according the UCLA Center for Communication Policy.

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Methodology

Introduction Reasons Why US Internet Users “Stopped” Using the

Internet Users Internet, 2001 (as a % of respondents)

Internet Households No computer Internet Access Devices: PC, TV and Mobile Devices 21.2% Online Demographics No interest Usage

Special Targets 16.7%

Canada Online Privacy/security concerns Index of Charts 10.0%

Too expensive 4.9%

Internet consumes too much time 4.0%

Internet is not useful 3.8%

Didn’t use it enough 3.5%

No access at new job 3.0%

Don’t know how to use 2.9%

Too difficult to get connected 2.2%

Too difficult to find things on the internet 1.1%

While the UCLA survey points out that nearly 30% of their survey respondents were not internet users, nearly half of them (44.4%) indicated that they were likely or very likely to get online in 2002. If this data is anything to go by, then one could suggest that internet penetration in the US will reach a maximum when 85% of the population is online. The remaining 15% will never get online.

Likelihood that US Non-Users Will Become Users in 2002, 2001 (as a % of respondents who are not online)

Not likely at all 55.6%

Somewhat likely 31.3%

Very likely 13.1%

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Methodology In the Department of Commerce’s September 2001 study, they indicated Introduction that with successively higher income categories, fewer households report Internet Users that cost is a barrier. Households with incomes below $15,000 volunteered Internet Households

Internet Access Devices: cost as a barrier to home internet subscriptions 34.7% of the time. Among PC, TV and Mobile Devices that income category, the share of the population without home internet Online Demographics

Usage subscriptions declined by only 6% between August 2000 and September

Special Targets 2001. At the other end of the spectrum, only 9.6% of households with Canada Online incomes of at least $75,000 said that they were deterred by cost. That Index of Charts income level saw a 34% reduction in the share of households without home internet access between August 2000 and September 2001.

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North America Online

Methodology

I Introduction

III Internet Users III Internet Households 35 A. Comparative Estimates: Online Households in the US 38 B. Households Online by Technology 40 IIIIV Internet Access Devices: PC, TV and Mobile Devices V Online Demographics

VI Usage

VII Special Trends

VIII Canada Online

Index of Charts

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Methodology The US Census Bureau ﬁnds that, as of 2000, there were 105.5 million Introduction households in the US. This number is likely to rise to over 111 million by Internet Users 2004 based on current growth rates. Using data from the Department of Internet Households

Internet Access Devices: Commerce and the Organization for Economic Cooperation and PC, TV and Mobile Devices Development (OECD) eMarketer has determined that of the 105.5 million Online Demographics

Usage households in 2000, 49 million of them had internet access. This will rise to

Special Targets over 77 million households by 2004.

Canada Online Index of Charts Internet Households in the US, 2000-2004 (in millions)

2000 49.0* 105.5

2001 57.4 107.8

2002 64.3 108.9

2003 70.8 110.0

2004 77.3 111.1

Online households Total households** Note: *eMarketer's online household 2000 baseline figure is based on the US Department of Commerce - August 2000 figure (44 million) and OECD data on broadband households at the end of 2000; **Total households in 2000 is 105.5 million as recorded by the US Census Bureau. Following years are eMarketer estimates, based on previous growth rates Source: eMarketer, 2001 035715 ©2002 eMarketer, Inc. www.eMarketer.com

At the end of 2001, more than 53% of households had internet access and nearly 70% of all households will have internet access by 2004.

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Methodology

Introduction Internet Household Penetration in the US, 2000-2004

Internet Users (% of total households)

Internet Households

Internet Access Devices: 2000 46.6% PC, TV and Mobile Devices

Online Demographics 2001 53.2% Usage 2002 59.0% Special Targets

Canada Online 2003 64.4%

Index of Charts 2004 69.6%

According to the Department of Commerce, there were 27 million households online in 1998. By 2001, there were more households online than were not. By 2004, eMarketer predicts that only about 30% of households will not be online.

Internet Households in the US, 1998*, 2000, 2002 & 2004 (in millions)

Online households Households 27.2 not online 56.0 Online households Households not online 49.0 76.5

1998 (1) 2000

House- Household holds not online not online 44.6 33.8

Online Online households households 77.3 64.3

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Methodology A. Comparative Estimates: Online Introduction

Internet Users Households in the US

Internet Households

Internet Access Devices: PC, TV and Mobile Devices “We predict continued PC penetration, fueled Online Demographics partially by sub-$1000 systems, the increased use Usage of WebTV- style devices, and the likely introduction Special Targets of digital set-top boxes in a small percentage of US Canada Online

Index of Charts homes, will lead to 23% of all US households going online by year end 1998.” –Jill Frankle, program manager, IDC 1997

Jill Frankle’s prediction in 1997 of 23% of US households online by 1998, was not far off the mark (it was 26.2% according to the Department of Commerce), but it is interesting, in retrospect, to examine her reasons for the prediction. Web TV was certainly at its zenith in 1998 and 1999 but never really surpassed 1 million subscribers. PC systems under $1000 were available, but few and far between, and digital set-top boxes, which allow internet access, are still only available to a handful of households in the US. There are a wide range of estimates for total US households online for 2000. eMarketer’s number of 49 million online households at the end of 2000 is based on the Department of Commerce’s August 2000 ﬁgure of 44 million online households, in conjunction with data from the Organization for Economic Co-operation and Development (OECD).

The Department of Commerce reports that 56.7% of the population had internet access at home in September, 2001.

In August, 2000 there were 38.9 million dial-up households and 4.6 million broadband households totaling 44 million online households, according to the Department of Commerce. The latest OECD data indicates that there were 6.2 million broadband households in the US at the end of 2000.

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Methodology

Introduction Comparative Estimates: US Households Online, 2000 &

Internet Users 2001 (in millions) Internet Households 2000 2001 Internet Access Devices: PC, TV and Mobile Devices Cahner’s In-stat 62 - Online Demographics PC Data 56 - Usage Gartner Group 56 62.7 Special Targets

Canada Online Nielsen//NetRatings 56 -

Index of Charts Jupiter Media Metrix 55 - eMarketer 49 57.4 The Strategis Group 47 - PricewaterhouseCoopers 47 54.3 Roper Starch 46 - Veronis, Suhler & Associates 45 - US Department of Commerce (August) 44 - Employment Policy Foundation 44 - Ernst & Young 43 - Forrester Research 40 - Yankee Group 35 - Telecommunications Reports International (TRI) - 70.7 Source: eMarketer, 2001; various, as noted, 2000 031993 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology B. Households Online by Technology Introduction Internet Users Recent new technologies are allowing internet users to access the internet Internet Households at higher speeds than were previously possible through the traditional Internet Access Devices: PC, TV and Mobile Devices phone line. Cable modems, which take advantage of the cable TV network, Online Demographics provide internet access at speeds 10 – 20 times greater than traditional dial- Usage up access. Digital Subscriber Line (DSL) is an alternative broadband Special Targets technology to cable modems, which enhances the existing telephone line Canada Online

Index of Charts and provides comparable access speeds to cable modems. Cable companies, local phone companies and existing ISPs are all vying for dominance in the growing broadband access market. Wireless technologies such as satellite and the so-called ﬁxed wireless technologies are also becoming more widely available as internet access technologies. These technologies are giving those out of reach of traditional telecommunications services with the opportunity to access the internet. This has the potential to greatly increase internet access for those in rural and regional areas.

Important Trend: The increasing variety of different technologies that allow internet access will make the net more affordable and available to greater numbers of people, wherever they are.

eMarketer has broken down its online household forecasts by technology. What is clear is that while new technologies are emerging, dial-up access through the phone line will continue to be the favored means of internet technology in the home for some time.

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Methodology Of total US households, only 6 million had broadband access at the end of Introduction 2000. By 2004, the number of broadband households will out number those Internet Users households with no internet access at all. This will epitomize the extreme of Internet Households

Internet Access Devices: a new digital divide – those with broadband access versus those with no PC, TV and Mobile Devices access at all. Online Demographics Usage Online Households in the US, by Internet Access Special Targets Technology, 2000, 2002 & 2004 (in millions) Canada Online

Index of Charts

Not online Dial-up 56.0 Dial-up 46.7 42.8 Not online 44.6

Broadband Broad- 6.2 band 17.6 2000* 2002

Not online Dial-up 33.8 42.6

Broadband 34.7

2004 *eMarketer's year 2000 baseline figures are from the US Department of Commerce and the Organization for Economic Cooperation and Development (OECD) Source: eMarketer, 2001 035718 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology While broadband made up only 12% of online households in 2000, Introduction eMarketer expects broadband to make up 45% of online households by 2004. Internet Users

Internet Households Online Households in the US, by Dial-Up and Internet Access Devices: PC, TV and Mobile Devices Broadband, 2000-2004 (in millions) Online Demographics

Usage 2000*

Special Targets 42.8 Canada Online 6.2 Index of Charts 49.0

2001 46.0 11.4 57.4

2002 46.7 17.6 64.3

2003 45.2 25.6 70.8

2004 42.6 34.7 77.3

Dial-up Broadband Total online households Note: *eMarketer's year 2000 baseline figures are from the US Department of Commerce and the Organization for Economic Cooperation and Development (OECD) Source: eMarketer, 2001 035720 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology International consulting ﬁrm, PricewaterhouseCoopers, has also forecast Introduction online households to 2005. Their broadband household projections are Internet Users slightly more conservative than eMarketer’s. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Online Households in the US, by Dial-Up and Online Demographics Broadband, 2000-2005 (in millions) Usage

Special Targets 2000

Canada Online 42.7 Index of Charts 3.8 46.5

2001 46.1 8.2 54.3

2002 47.0 13.2 60.2

2003 46.5 18.3 64.8

2004 45.0 23.1 68.1

2005 43.0 27.5 70.5

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Methodology In 2004, dial-up households will still outnumber broadband households, Introduction but in the years following, it is likely that the majority of online households Internet Users will be broadband. That is, of course, if the current growth continues and Internet Households

Internet Access Devices: broadband becomes more affordable than it is currently. PC, TV and Mobile Devices Online Demographics Online Households in the US, by Dial-Up and Usage Broadband, 2000, 2002 & 2004 (as a % of total online Special Targets households) Canada Online

Index of Charts

Broadband 12.7% Broadband 27.4%

Dial-up Dial-up 87.3% 72.6%

2000* 2002

Broadband 45.0%

Dial-up 55.0%

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Methodology

Introduction The Department of Commerce reported, that in September 2001, 80%

Internet Users of online households in the US used a dial-up connection, 12.9% cable Internet Households modem, and 6.6% DSL Internet Access Devices: PC, TV and Mobile Devices

Online Demographics

Usage US Online Households, by Access Technology,

Special Targets September 2001 (% of online households)

Canada Online

Index of Charts DSL Other 6.6% 0.5% Cable modem 12.9%

Dial-up 80.0%

Breaking down the variety of access technologies further, eMarketer estimates that by 2004, dial-up households will decline to 42.1 million households from 45 million in 2001. Likewise, WebTV subscribers will decline from a peak of one million households in 2000 to half that in 2004. Cable, DSL, Fixed- wireless, Satellite and iTV-broadband should all grow strongly.

Online Households in the US, by Internet Access Technology, 2000-2004 (in millions) 2000 (1) 2001 2002 2003 2004 Dial-up 41.8 45.2 46.1 44.7 42.1 WebTV (2) 1.0 0.8 0.6 0.5 0.5 iTV (broadband) (3) - - 0.5 1.5 3.0 Cable 3.7 6.8 9.9 13.3 16.6 DSL 2.4 4.1 6.2 8.5 11.5 Other broadband 0.1 0.5 1.0 2.3 3.6 (4) Total online households 49.0 57.4 64.3 70.8 77.3 Note: (1) eMarketer's year 2000 baseline figures are from the US Department of Commerce and the Organization for Economic Cooperation and Development (OECD); (2) WebTV includes Microsoft's MSN TV product (formerly called WebTV) and AOL TV; (3) ITV Broadband includes those households whose only means of internet access at home is through their TV set-top box using a cable or DBS connection. To prevent double counting, these numbers do not include those households who may have both an existing dial-up/broadband connection as well as an ITV service; (4) other broadband includes fixed wireless, fiber and satellite Source: eMarketer, December 2001 035723 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Gartner Dataquest has likewise broken down its online household Introduction projections by access technology. Like eMarketer, they predict that by 2004, Internet Users dial-up will still be the most popular means of internet access, above all Internet Households

Internet Access Devices: other alternatives. PC, TV and Mobile Devices Online Demographics Households in the US, by Internet Access Technology, Usage 2000-2004 (in millions of households) Special Targets

Canada Online 2000 2001 2002 2003 2004 Index of Charts Dial-up 50.9 49.8 46.7 42.3 38.3 ISDN 1.0 1.1 1.1 1.0 0.8 DSL 1.9 3.4 5.5 7.7 9.6 Cable modem 4.0 7.7 11.6 15.6 18.7 Satellite 0.1 0.5 1.0 1.7 2.6 Fixed wireless 0.1 0.2 0.4 0.8 1.3 Source: Gartner Dataquest, October 2001 035725 ©2002 eMarketer, Inc. www.eMarketer.com

In 2004, 54% of online households in the US will access the internet via dial-up modem, over 20% of households will access the internet via cable modems and 15% will use DSL.

Online Households in the US, by Internet Access Technology, 2000-2004 (as a % of total online households) 2000 2001 2002 2003 2004 (1) Dial-Up 85.3% 78.7% 71.7% 63.1% 54.5% WebTV (2) 2.0% 1.4% 0.9% 0.7% 0.6% iTV 0.0% 0.0% 0.8% 2.1% 3.9% (broadband) (3) Cable 7.6% 11.8% 15.4% 18.8% 21.5% DSL 4.9% 7.1% 9.6% 12.0% 14.9% Other 0.2% 0.9% 1.6% 3.2% 4.7% Broadband (4) Note: (1) eMarketer's year 2000 baseline figures are from the US Department of Commerce and the Organization for Economic Cooperation and Development (OECD); (2) WebTV includes Microsoft's MSN TV product (formerly called WebTV) and AOL TV; (3) iTV Broadband includes those households whose only means of internet access at home is through their TV set-top box using a cable or DBS connection. To prevent double counting, these numbers do not include those households who may have both an existing dial-up/broadband connection as well as an iTV service; (4) other broadband includes fixed wireless, fiber and satellite Source: eMarketer, December 2001 034907 ©2001 eMarketer, Inc. www.eMarketer.com

Recent data from UCLA’s Center for Communication Policy conﬁrms the trend in household access technology. Dial-up and Web TV are falling; broadband access through cable modems, DSL and Satellite, is rising.

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Methodology

Introduction US Internet Access, by Access Type, 2000-2001 (as a %

Internet Users of respondents)

Internet Households Telephone modem Internet Access Devices: PC, TV and Mobile Devices 88.1% Online Demographics 81.3% Usage

Special Targets Cable modem Canada Online 8.0% Index of Charts 11.5%

Web TV 3.9% 1.7%

DSL 1.2% 3.7%

ISDN 0.6% 0.5%

Satellite 0.1% 0.4%

Other 2.6% 2.3%

Important trend: Nearly half of all online households in the US in 2004 will be broadband.

Dial-Up Despite considerable growth in broadband access over the last two years, dial-up access, using a modem of 56kbps or less, will continue to be the most popular means of accessing the internet for the foreseeable future. The fundamental reason for this is cost. At an average of $50 per month, broadband access is twice as expensive as a dial-up connection and, to date, most households have not found a compelling reason to ‘trade-up’.

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Methodology eMarketer forecasts that dial-up access will continue to grow in 2002 but Introduction will begin to decline in 2003 and 2004 as broadband becomes more Internet Users widespread and more affordable. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Dial-Up Households in the US, 2000-2004 (in millions) Online Demographics Usage 2000* 41.8 Special Targets

Canada Online 2001 45.2 Index of Charts 2002 46.1

2003 44.7

2004 42.1

Note: *eMarketer dial-up household baseline 2000 figure (end of year) is based on the US Department of Commerce - August 2000 figure (38.9 million) projected forward to the end of year Source: eMarketer, 2002 036069 ©2002 eMarketer, Inc. www.eMarketer.com

Comparative Estimates: Dial-Up Households in the US, 2000-2004 (in millions) 2000 2001 2002 2003 2004 Adams Media Research 40.2 43.2 45.4 45.9 44.5 eMarketer 41.8 45.2 46.1 44.7 42.1 Forrester Research 46.0 48.3 47.0 45.3 – PricewaterhouseCoopers LLP (PwC) 42.7 46.1 47.0 46.5 45.0 Gartner Dataquest 50.9 49.8 46.7 42.3 38.3 Harris Interactive 35.3 – – – – International Data Corporation (IDC) – – 49.6 – – Jupiter Research 48.4 51.3 52.6 52.9 52.1 Morgan Stanley 45.4 49.6 54.2 56.1 – Ovum 33.1 39.3 39.4 43.9 48.3 US Department of Commerce, 38.9 – – – – August 2000 Yankee Group 41.2 48.8 55.9 64.1 – Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034911 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology The current US dial-up market is dominated by a handful of large national Introduction ISPs among the 7,000 or so nationwide, with AOL Time Warner at the top Internet Users of the tree. Internet Households

Internet Access Devices: It is estimated that, as of September 2001, AOL had in excess of 26 PC, TV and Mobile Devices million US internet subscribers. While AOL has begun to offer broadband Online Demographics

Usage access (cable, DSL and Satellite), the vast majority of AOL’s current

Special Targets subscribers access the internet by dial-up modem. Canada Online As can be seen from the chart following, AOL is far and away the largest Index of Charts ISP in the US with nearly four times as many subscribers than its nearest rival – MSN. Using eMarketer’s active internet user estimate of 119 million at the end of 2001, we have estimated that there were 113 million active internet users at the end of September 2001. From this ﬁgure, we have determined the approximate market share of the top 20 ISPs.

US Internet Service Providers, by Number of Subscribers*, Q3 2001 (in millions and as a % of market share**)

AOL 26.3 (23.3%)

MSN 7.0 (6.2%)

United Online (NetZero + Juno online) 6.1 (5.4%)

Earthlink 4.9 (4.3%)

@Home 3.7 (3.3%)

Prodigy (plus SBC Narrowband) 3.5 (3.1%)

CompuServe (AOL owned) 1.8 (1.6%)

Gateway.net (AOL Alliance) 1.7 (1.5%)

RoadRunner (AOL Owned) 1.6 (1.4%)

AT&T WorldNet 1.4 (1.2%)

AT&T Broadband 1.3 (1.2%)

continued on page 50

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Methodology Verizon Introduction 1.0 (0.9%) Internet Users Internet Households Comcast Internet Access Devices: 0.8 (0.8%) PC, TV and Mobile Devices Online Demographics Cox Cable Usage 0.8 (0.7%) Special Targets

Canada Online PeoplePC Index of Charts 0.6 (0.5%)

Charter Cable 0.5 (0.5%)

Bell South 0.5 (0.4%)

Cablevision 0.4 (0.3%)

Bluelight 0.1 (0.1%)

Note: *Red signifies broadband subscribers only; **these percentages were generated using the eMarketer estimate of 113 million active internet users as of September 2001 Source: www.isp-planet.com, eMarketer, 2001 035729 ©2002 eMarketer, Inc. www.eMarketer.com

Telecommunications Reports International examined the US ISP market in the ﬁrst half of 2001 and counted 70.6 million household subscribers. Their data indicated that paid dial-up was still growing strongly (faster than cable), yet Free ISPs were losing ground. Satellite and DSL internet access grew particularly strongly.

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Methodology

Introduction US Households Online, by Access Technology, Q2 2001 Internet Users Technology Customers Growth in Q2 2001 Internet Households Paid dial-up ISP 52,186,220 5.2% Internet Access Devices: PC, TV and Mobile Devices Free ISPs (active subscribers) 9,100,000 -11.3% Online Demographics Cable modems 4,935,542 0.5% Usage

Special Targets iTV 1,223,000 1.6%

Canada Online DSL 3,117,000 29.7% Index of Charts Satellite 114,000 52% Total 70,675,764 3.2% Source: Telecommunications Reports International (TRI), 2001 032752 ©2001 eMarketer, Inc. www.eMarketer.com

Broadband

eMarketer Broadband Deﬁnition: An internet connection with a downstream speed of greater than 200kbps (FCC)

Over the last two years there have been some very high profile casualties in the US broadband access market. DSL start-ups Rythms Net Connections and North Point, who blazed the DSL trail in the late 1990s, found they couldn’t survive when capital investment spending dried up. Covad, another prominent DSL provider, also recently filed for bankruptcy, but is now back on its feet. On the cable front, the largest broadband ISP, Excite@Home, recently filed for bankruptcy and its subscribers are being transferred to alternative broadband networks. Despite the incredible volatility over the last few years, the US has more high-speed internet subscribers than any other country. With its advanced cable and telecommunications infrastructure, coupled with a population that has embraced the internet, broadband growth has been steady, while not being spectacular.

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Methodology eMarketer forecasts that there will be 34 million broadband households by Introduction 2004, rising from 6 million in 2000. Internet Users Internet Households Broadband Households in the US, 2000-2004 (in Internet Access Devices: PC, TV and Mobile Devices millions)

Online Demographics

Usage 2000* 6.2

Special Targets 2001 11.4 Canada Online Index of Charts 2002 17.6

2003 25.6

2004 34.7

Note: *eMarketer broadband household baseline 2000 figure (end of year) is based on the Organization for Economic Cooperation and Development (OECD) data Source: eMarketer, 2001 035956 ©2002 eMarketer, Inc. www.eMarketer.com

Comparative Estimates: Broadband Households in the US, 2000-2004 (in millions) 2000 2001 2002 2003 2004 Adams Media Research, May 2001 5.9 10.7 16.8 22.2 27.1 BDRC/European Union, August 2001 5.2 9.7 17.2 22.64 – eMarketer, December 2001 6.2 11.4 17.6 25.6 34.7 Forrester Research, October 2000 5.0 11.0 18.9 27.7 37.0 Gartner Dataquest, August 2000 5.1 9.8 16.1 21.9 27.6 Harris Interactive, September 2001 – 14.9 – – – International Data Corporation (IDC), – – – 20.0 – July 2001 Jupiter Research, December 2000 5.2 8.6 13.3 18.5 23.8 Morgan Stanley Dean Witter, July 2000 4.6 9.2 14.1 19.9 – Net Profit, August 2001 6.5 14.4 22.4 30.4 42.5 Ovum, October 2000 5.4 15.0 20.2 26.6 33.7 Parks Associates, September 2001 – 10.7 – – 30.6 Paul Kagan Associates, July 2000 6.0 11.8 20.0 26.4 31.9 Photo Marketing Association 4.4 8.1 13.8 21.2 29.2 International, August 2000 Pioneer Consulting, July 2000 5.9 13.5 21.9 30.3 – Strategis Group, January 2001 6.1 11.6 17.6 23.5 29.6 US Department of Commerce, 4.7 – – – – October 2000 Yankee Group, October 2001 – 10.7 – – – Note: (1) eMarketer broadband household baseline 2000 figure (end of year) is based on the Organization for Economic Cooperation and Development (OECD) data Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034910 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology At the end of 2001 there were 6.8 million broadband households using Introduction cable modems, 4.1 million using DSL and about 500,000 households Internet Users accessing the internet through ﬁxed-wireless and satellite. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Broadband Households in the US, by Access Online Demographics Technology, 2000-2004 (in millions) Usage 2000 2001 2002 2003 2004 Special Targets

Canada Online Total broadband households 6.2 11.4 17.6 25.6 34.7 Index of Charts Cable 3.7 6.8 9.9 13.3 16.6 DSL 2.4 4.1 6.2 8.5 11.5 Other broadband* 0.1 0.5 1.0 2.3 3.6 iTV (broadband)** ––0.5 1.5 3.0 Note: *Other broadband includes satellite, fixed-wireless and fiber to the home; ** iTV broadband includes those households whose only means of internet access at home is through their TV set-top box using a cable or DBS connection. To prevent double-counting, these numbers do not include those households who may have both an existing dial-up/broadband connection as well as an iTV service Source: eMarketer, 2001 035730 ©2002 eMarketer, Inc. www.eMarketer.com

eMarketer forecasts that cable modems will continue to dominate the US broadband landscape, garnering 48% of the broadband market in 2004. DSL, due to its slow roll-out, will play second fiddle to cable modems, making up 33% of the total broadband market in 2004. Considerable growth will come from alternative broadband technologies such as fixed- wireless, satellite and fiber, but they will be strictly complementary technologies to cable modems and DSL for the near future.

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Methodology The new version of ‘Web TV’, which will utilize digital set-top boxes and Introduction the cable network, and be attractive to those without a PC, will be a Internet Users signiﬁcant factor by 2004. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Broadband Households in the US, by Access Online Demographics Technology, 2000 & 2004 (as a % of all broadband Usage households) Special Targets iTV (broadband)** Canada Online 0% Index of Charts Other iTV broad- (broadband* band)** 4.4% 8.6% DSL 35.9% DSL 33.1% Cable Cable 47.8% 59.6% Other broadband* 200110.4% 2004 Note: *Other broadband includes satellite, fixed-wireless and fiber to the home; ** iTV broadband includes those households whose only means of internet access at home is through their TV set-top box using a cable or DBS connection. To prevent double-counting, these numbers do not include those households who may have both an existing dial-up/broadband connection as well as an iTV service Source: eMarketer, 2001 035731 ©2002 eMarketer, Inc. www.eMarketer.com

Within the G-7 group of nations, the US ranks second to Canada in terms of household broadband penetration.

Broadband Penetration in G-7 Countries, 2000-2004 (as a % of total households) 2000* 2001 2002 2003 2004 Canada 11.8% 19.5% 30.3% 44.3% 61.9% France 0.8% 2.7% 5.6% 11.9% 18.6% Germany 0.7% 4.1% 7.7% 15.5% 23.6% Italy 0.5% 2.2% 6.2% 11.2% 20.9% Japan 1.4% 3.6% 8.1% 13.7% 23.4% UK 0.2% 1.2% 3.0% 8.5% 19.4% US 5.8% 10.6% 16.2% 23.3% 31.3% Note: *eMarketer's year 2000 baseline is from the Organization for Economic Cooperation and Development (OECD) Source: eMarketer, December 2001 034905 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology Globally however, the US ranks only an equal eighth with The Netherlands Introduction in terms of household broadband penetration at the end of 2001. South Internet Users Korea is far and away the country with the highest broadband penetration, Internet Households

Internet Access Devices: approaching 50% of all households. PC, TV and Mobile Devices Online Demographics Top Ten Countries Ranked by Broadband Penetration, Usage End of 2001 (as a % of all households) Special Targets Canada Online South Korea 44.8% Index of Charts Singapore 24.4%

Hong Kong 20.0%

Canada 19.5%

Sweden 13.6%

Taiwan 12.1%

US 10.6%

Netherlands 10.6%

Belgium 7.3%

Austria 7.2%

Broadband Users While ‘broadband households’ is the most common metric used when examining the broadband market, it does not necessarily reﬂect the true size of the broadband market. One can safely surmise that one broadband connection in the home will service more than one user. With the growing prevalence of home networks and homes having more than one internet access point (e.g., multiple PCs and internet-enabled TVs), this will increasingly be the case.

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Methodology Nielsen//NetRatings is one of the few ﬁrms who record the number of home Introduction broadband users in the US market. They estimate that in November 2001 Internet Users there were over 21 million broadband users. This is almost double the Internet Households

Internet Access Devices: number at the same time the previous year. If we relate this number to PC, TV and Mobile Devices eMarketer’s broadband household number (11.4 million) we can see that Online Demographics

Usage one broadband connection equates to nearly two broadband users.

Special Targets

Canada Online Broadband Users in the US, November 2000 &

Index of Charts November 2001 (in millions)

Broadband users 11.2 21.3

Active internet universe* 95.4 105.5

Cable Modem Cable modems are the most popular means of broadband access in the US. Due to a high penetration of cable throughout the US and the customer service difﬁculties experienced by DSL providers, cable modem access has a head start over alternative broadband access providers. This is likely to continue to 2004, as multiple service operators offer combined packages of premium TV and high-speed internet. eMarketer estimates over 16 million households in the US will have cable modem internet access by 2004.

Cable Modem Broadband Households in the US, 2000-2004 (in millions)

2000* 3.7

2001 6.8

2002 9.9

2003 13.3

2004 16.6

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Methodology

Introduction Comparative Estimates: Cable Modem Households in

Internet Users the US, 2000-2004 (in millions) Internet Households 2000 2001 2002 2003 2004 Internet Access Devices: PC, TV and Mobile Devices Adams Media 4.0 6.4 8.6 10.8 13.1

Online Demographics Research Usage BDRC/European 3.4 6.0 9.5 11.5 – Special Targets Union Canada Online Computer 4.9 8.9 14.1 20.2 – Index of Charts Economics Deutsche Banc 4.5 9.0 14.0 18.0 – Alex. Brown eMarketer 3.7 6.8 9.9 13.3 16.6 Federal 2.2 –––– Communications Commission (FCC) Forrester 3.7 7.8 11.4 15.8 19.4 Research Forward 3.4 5.7 7.9 10.5 14.5 Concepts* Gartner Dataquest 3.4 5.9 8.8 11.5 13.7 Goldman Sachs 4.0 8.0 12.5 17.0 – Harris Interactive 2.4 –––– Insight Research – 3.2 – 6.3 – International Data – 4.4 – 9.0 – Corporation (IDC) Jupiter Research 3.4 5.5 7.9 10.1 12.1 Morgan Stanley 2.9 5.5 8.5 12.0 – Net Profit 3.9 8.1 11.2 14.3 16.6 Organization for 3.7 –––– Economic Cooperation and Development (OECD) Ovum 2.8 6.9 8.5 9.6 11.1 Pioneer 1.9 3.1 4.6 6.2 – Consulting Strategis Group 4.1 7.1 9.6 11.9 14.2 US Department of 2.4 –––– Commerce Veronis Suhler 2.2 3.5 5.0 6.8 – WR Hambrecht + 4.0 7.0 11.0 – – Co. Yankee Group – 3.9 – 7.6 – Note: *includes Canada Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034913 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology Digital Subscriber Line Introduction DSL has suffered in the past in the US with something of a public relations Internet Users

Internet Households problem. Customer complaints, installation delays, combined with some Internet Access Devices: high-proﬁle company bankruptcies have all made DSL something of a hard PC, TV and Mobile Devices

Online Demographics sell to the US public. Despite its initial setbacks, however, the DSL industry

Usage has now attracted over 4 million subscribers and this is likely to grow to Special Targets over 11 million by 2004. Canada Online Index of Charts DSL Broadband Households in the US, 2000-2004 (in millions)

2000* 2.4

2001 4.1

2002 6.2

2003 8.5

2004 11.5

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Methodology

Introduction Comparative Estimates: DSL Households in the US,

Internet Users 2000-2004 (in millions) Internet Households 2000 2001 2002 2003 2004 Internet Access Devices: PC, TV and Mobile Devices Adams Media Research 2.2 4.5 7.1 9.6 11.6 Online Demographics BDRC/European Union 1.7 3.2 6.4 8.8 – Usage Cahners In-Stat Group 1.8 – – – – Special Targets

Canada Online eMarketer 2.4 4.1 6.2 8.5 11.5 Index of Charts Federal Communications Commission 0.8 – – – – (FCC) Forrester Research 1.3 3.0 6.6 10.1 14.1 Forward Concepts* 2.0 3.4 5.0 7.4 10.5 Gartner Dataquest 1.5 3.0 5.3 7.5 9.8 Harris Interactive 0.9 – – – – Insight Research – 2.6 – 7.8 – International Data Corporation (IDC) 2.3 – – – 26.0 Jupiter Research 1.2 2.5 4.4 6.8 9.3 Morgan Stanley 1.9 5.8 10.2 14.4 – Net Profit 2.5 5.9 9.8 12.9 20.3 Organization for Economic 2.4 – – – – Cooperation and Development (OECD) Pioneer Consulting 1.9 4.6 7.6 10.6 – RHK 2.2 – – – 18.6 Strategis Group 1.9 4.2 6.9 9.4 11.9 Telechoice 2.3 5.7 9.7 14.5 17.4 US Department 1.6 – – – – of Commerce Veronis Suhler 0.6 1.0 1.5 3.5 – Yankee Group – 2.0 – 5.0 – Note: *includes Canada Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034912 ©2001 eMarketer, Inc. www.eMarketer.com

Alternative Broadband Alternative broadband technologies include satellite, ﬁxed-wireless, ﬁber, Ethernet, powerline technology and other technological variations. This market has not been able to compete with cable modems and DSL in the consumer market, but there is potential, particularly in the wireless technologies, to provide those in rural and regional areas with high-speed access.

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Methodology

Introduction Alternative Broadband Households in the US,

Internet Users 2000-2004 (in millions)

Internet Households

Internet Access Devices: 2000 0.1 PC, TV and Mobile Devices

Online Demographics 2001 0.5 Usage 2002 1.0 Special Targets

Canada Online 2003 2.3

Index of Charts 2004 3.6

Comparative Estimates: Alternative Broadband* Households in the US, 2000-2004 (in millions) 2000 2001 2002 2003 2004 Allied Business Intelligence** 0.2 0.9 2.0 3.9 – eMarketer 0.1 0.5 1.0 2.3 3.6 Federal Communications Commission (FCC) 0.1 –––– Forrester Research 0.0 0.3 0.9 1.9 3.5 Gartner Dataquest 0.2 1.0 2.0 2.9 4.1 Jupiter Research 0.2 0.5 1.0 1.7 2.4 Morgan Stanley** 0.2 0.6 1.0 1.5 – Ovum 1.3 2.6 5.3 12.3 20.3 Strategis Group 0.1 0.3 1.1 2.3 3.5 US Department of Commerce 0.1 –––– WR Hambrecht + Co.** 0.0 0.5 1.5 – – Note: *alternative broadband includes: fixed wireless, satellite, and fiber; **fixed wireless only Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034914 ©2001 eMarketer, Inc. www.eMarketer.com

Satellite In the past, satellite technology has not been ideally suited to internet access because it has essentially been a one-way service. Although download speeds can be very high, users have had to use the phone line to transmit their upstream data. New products that have just entered the market, however, may change all that. Two-way satellite services from providers such as Starband and DirecPC (whose parent companies, EchoStar and DirecTV, are now about to be merged) may provide genuine competition to other broadband access providers. Starband promises download speeds of 500 Kbps and upload speeds of 150 Kbps. DirecPC, a subsidiary of DirecTV, the leading satellite television provider in the US, says it can deliver up to 400 Kbps downstream and 128 Kbps (possibly 256 Kbps) upstream. While a satellite dish and installation may cost over $500, DirectPC’s AOL Plus service has a comparable monthly rate ($42/month) to cable and DSL internet services.

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Methodology

Introduction Comparative Estimates: Satellite Internet Households

Internet Users in the US, 2000-2005 (in millions)

Internet Households 2000 Internet Access Devices: PC, TV and Mobile Devices 0.1 Online Demographics 0.02 Usage

Special Targets 2001

Canada Online 0.3 Index of Charts 0.1

2002 1.2 0.3

2003 1.7 0.7

2004 2.2 1.3

2005 2.7 1.9

Fixed Wireless Sometimes referred to as wireless local loop, fixed wireless offers an alternative to copper or fiber-optic cable in the local loop. Fixed wireless broadband is the transmission of data by way of microwave transmission links sending data back and forth through fixed antennas. While the data being sent is at extremely high frequencies, it has a limited travel distance, and most variations of the technology cannot be sent through obstacles, rendering the services limited to a line-of-sight transmission. This has been one of the real drawbacks to fixed wireless in the US. While new fixed- wireless systems are being developed that are not restricted by line-of-sight issues, it seems apparent that fixed wireless will continue to be more suited to the business sector and only be a complementary broadband technology to cable and DSL in the consumer space.

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Methodology

Introduction Comparative Estimates: Broadband Fixed Wireless

Internet Users Internet Households in the US, 2000-2005 (in millions)

Internet Households 2000 Internet Access Devices: PC, TV and Mobile Devices 0.01 Online Demographics 0.1 Usage

Special Targets 2001

Canada Online 0.1 Index of Charts 0.3

2002 0.8 1.1

2003 1.1 2.4

2004 1.4 4.3

2005 1.7 6.1

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Methodology

I Introduction

II Internet Users

III Internet Households IV Internet Access Devices: PC, TV and Mobile Devices 63 A. PCs 66 B. TV 71 C. Mobile Phones & PDAs 73 IVV Online Demographics VI Usage

VII Special Trends

VIII Canada Online

Index of Charts

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Methodology Connecting to the internet through a phone line, via a personal computer, has Introduction been, until very recently, the only way one could access the internet. In short, if Internet Users you didn’t have either a phone line or a PC, you could not access the internet. Internet Households

Internet Access Devices: Not so today. One of the major trends in 2002 and beyond for the online sector PC, TV and Mobile Devices is the growing prevalence of people accessing the internet through devices Online Demographics

Usage other than the personal computer – namely, mobile devices and the TV.

Special Targets In September 2001, there were 7.6 million households containing an internet Canada Online access device other than a PC, according to the Department of Commerce. Of Index of Charts those 7.6 million households, 5.1 million were contained an internet-enabled cell phone or pager, 1.9 million contained an internet-enabled personal digital assistants (PDAs) or handhels, and 600,000 households had an internet- enabled television. What the Department of Commerce further added however, was that nearly all of those with an alternative internet access device to a PC, also had an internet enabled PC as well.

Number and Percent of US Households Containing an Internet Access Device Other Than a Computer, September 2001 (in millions and % of total households)

Television 0.6 (0.6%)

PDA or other handheld device 1.9 (1.8%)

Cell phones or pagers 5.1 (4.8%)

Total 7.6 (7.2%)

Of all households with internet access in September 2001, only 1.5% did not have a computer according to the Department of Commerce. This would indicate that nearly 1 million people in the US only access the internet through either the TV, cell phone or PDA.

Percent of US Households with Home Internet Access without a Computer, September 2001

Without a computer 1.5%

With a computer 98.5%

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Methodology Gartner projects that, by 2005, 37% of the US population will use a phone Introduction to access the internet and 16.5% will use the TV. Additionally, 42% of Internet Users internet users will use more than one device to access the internet. This will Internet Households

Internet Access Devices: be a vast change from 2000, when very few people could access the PC, TV and Mobile Devices internet with anything other than a PC. Online Demographics

Usage

Special Targets US Interactive Platform Penetration, 2000 & 2005 (as a

Canada Online % of total population)

Index of Charts PC Internet internet phone 67.5% 4.6% 4.4% 61.1% 0.1%

0.1%

1.9% 0.0%

0.8% None iTV 31.6% 2.9% 2000

PC Internet internet phone 72.6% 37.0% 28.9% 30.8% 1.4%

6.3%

6.6% 0.4%

Important Trend – A growing percentage of the population over the next three years will access the internet through a device other than the PC.

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Methodology A. PCs Introduction Internet Users What Gartner’s data also clearly indicates, however, is that while other Internet Households devices capable of internet access will be available, the primary internet Internet Access Devices: PC, TV and Mobile Devices access device now and in the future will continue to be the personal Online Demographics computer. PCs are the primary means for internet users to get online and Usage also the reason most often cited by non-internet users for why they are not Special Targets online. According to the Yankee Group’s annual Technologically Advanced Canada Online

Index of Charts Family survey, 93% of households who own a PC also have internet access. One of the main reasons, perhaps, why internet access devices other than the PC have been slow to become available in the US market is the widespread adoption of PCs. The ITU indicates that at the end of 2000 there were 58.5 PCs per 100 inhabitants.

PCs per 100 Inhabitants in North America, 2000

US 58.5

Canada 39.0

A variety of research ﬁrms independently conclude that household PC penetration in the US is approximately 62% as of 2001.

Comparative Estimates: PC Penetration in the US, 2001

Forrester Research 62%

Global Industry Analysts 62%

Statistical Research 61%

The Department of Commerce showed in September 2001, that 56.5% of households had a computer compared to 51% in August 2000.

Percent of US Households with a Computer, August 2000 & September 2001 (% of total households)

August 2000 51.0%

September 2001 56.5%

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Methodology Global Industry Analysts forecast household PC penetration to continue to Introduction rise in 2002 to over 63% of North American households. Internet Users

Internet Households Percent of North American Households Owning One Internet Access Devices: PC, TV and Mobile Devices or More Desktop PCs, 1998-2002 (as a % of the Online Demographics population) Usage

Special Targets 1998 48.7%

Canada Online 1999 54.8% Index of Charts 2000 60.1%

2001 62.3%

2002 63.5%

In a recent survey of 9,355 North American households, Forrester Research found that PC penetration reached 62% of homes in 2001, with 19% of households having more than one computer. Among those households that did not have a computer, slightly less than 20% said that they intended to buy a computer within the next year, while an additional 20% indicated that they planned on buying a PC, but not within the next year.

North American Household PC Penetration, 2001 (as a % of total households)

Four or more computers Two computers 2% 13% Three computers 4%

None One computer 38% 43%

Education level plays a signiﬁcant role in PC ownership and use. In August 2000, The Department of Commerce found 76% of homes in which someone had a college degree or higher education had a computer. Penetration rates for homes with a high school diploma stood at 39.6% in 2000, while just over 18% of families in which the head of the household does not hold a high school diploma had a computer.

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Methodology

Introduction PC Penetration among US Households, by Education

Internet Users Level, 2000 (in millions and as a % of population)

Internet Households

Internet Access Devices: Less than high school diploma 3.2 (18.2%) PC, TV and Mobile Devices

Online Demographics High school diploma/GED 12.8 (39.6%) Usage Some college 16.8 (60.3%) Special Targets

Canada Online Bachelors degree or more 20.9 (75.7%)

The US Census Bureau also found that Asian and Paciﬁc Islander families had the highest PC penetration rates at 65.1% of households. Black and Hispanic families trailed behind other racial groups in America by nearly half, with PC penetration rates at about one third for those families in 2000.

PC Penetration among US Households, by Race, 2000 (in millions and as a % of population)

White 46.8 (53.4%)

White non-Hispanic 43.8 (55.7%)

Black 4.3 (32.8%)

Asian and Pacific Islander 2.3 (65.1%)

Hispanic (of any race) 3.2 (33.7%)

As conﬁrmation of the fact that personal computers remain out of the reach of many families that cannot afford a PC, there is a high correlation between PC penetration rates and household income. All categories of families that earn less than $35,000 per year were below the national PC penetration rate of 51% in 2000, with households earning less than $15,000 per year being the least likely to own a computer. As PC ownership corresponds closely to internet access, income is also the most important demographic factor when examining internet access.

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Methodology

Introduction PC Penetration among US Households, by Family

Internet Users Income, 2000 (in millions and as a % of population)

Internet Households

Internet Access Devices: Under $15,000 1.8 (23.4%) PC, TV and Mobile Devices

Online Demographics $15,000-$19,999 1.0 (30.9%) Usage $20,000-$24,999 1.4 (34.4%) Special Targets

Canada Online $25,000-$34,999 4.0 (47.1%)

Index of Charts $35,000-$49,999 6.1 (61.8%)

$50,000-$74,999 9.4 (75.1%)

$75,000+ 13.2 (87.8%)

Despite the unquestionable correlation between household income and PC ownership, there does also seem to be a correlation related to race and ethnic origin. What is clearly illustrated from the data below is that even among the highest income brackets, Black and Hispanic households do not feel PC ownership to be as necessary as White and Asian & Paciﬁc Islander households. This would indicate that Black and Hispanic families would prefer to spend their disposable income in other areas, and that income is not necessarily the only reason for Black and Hispanic households having a lower penetration of PCs.

US Households with a Computer at Home, by Income and Race/Ethnic Origin, 2000 <$15,000 $15,000- $35,000- $75,000+ $34,999 $74,000 White 22.8% 40.8% 68.7% 87.0% Black 11.5% 27.3% 52.7% 83.4% Asian American and 39.4% 53.5% 72.4% 86.9% Pacific Islander Hispanic 12.5% 27.8% 55.9% 76.1% Source: US Department of Commerce, August 2000 035736 ©2002 eMarketer, Inc. www.eMarketer.com

Although Hispanic households have a lower PC penetration than other households, data from the Consumer Electronics Association indicate that it may not be for too much longer. Their data suggests that 45% of Hispanics who currently do not own a PC plan to purchase one in the next two years and 60% of those within the age group 35-49 will do so.

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Methodology

Introduction Hispanics* Who Do Not Own a Computer but Plan to

Internet Users Buy One in the Next Two Years, by Age Group, 2001

Internet Households (as a % of respondents)

Internet Access Devices: PC, TV and Mobile Devices All 45% Online Demographics

Usage 18-24 46%

Special Targets 25-34 58% Canada Online

Index of Charts 35-49 60%

50+ 17%

Since there is a strong correlation between income and PC ownership and, likewise, a strong correlation between PC ownership and internet access, the fact that PC prices are falling is helping bridge the digital divide. Since the 2000 Census, PCs in the United States are steadily becoming more affordable. According to Banc of America Securities’ estimates, average selling prices for PCs in the US fell by 7.2% in 2000, and another 3.7% in 2001. It also appears that PC vendors have begun to take note of the lower- income family market as well. In Global Industry Analysts’ proﬁle of the consumer PC market in 2001, the research ﬁrm estimated that approximately 40% of manufactured PCs will be targeted at new users. The majority of these users - at 68% of new-buyers – will have incomes below $35,000, with 75% of those buyers not having had access to computers in the workplace. US PC sales data gathered by NPD Intelect found that in the third quarter of 2001, PCs selling in the $500 to $1500 price range were selling the best, with $800 PCs selling the best of all.

PC Unit Average Selling Price in the US, 1997-2002

1997 $2,235

1998 $2,058

1999 $1,783

2000 $1,655

2001* $1,594

2002* $1,495

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Methodology

Introduction Important trend – affordable PCs are helping to bridge the ‘digital

Internet Users divide’ in the US. 68% of new PC buyers in 2001 had incomes below Internet Households $35,000. Internet Access Devices: PC, TV and Mobile Devices

Online Demographics

Usage Special Targets B. TV Canada Online

Index of Charts Accessing the internet through the TV has been available in the US for many years now, but has never really attracted anything but a niche audience. So-called WebTV, offered by Microsoft, and AOL Time Warner, allows users to access the web and e-mail through the television. WebTV reached its zenith in 1999 and 2000 with over 1 million subscribers but it has slowly lost its attraction. The initial target audience were those households who didn’t have or couldn’t afford a personal computer, but nevertheless wanted basic web surﬁng and e-mail. With falling PC prices, however, the attraction of the limited and clumsy WebTV service is expected to diminish. Interestingly, The Department of Commerce showed in September 2001 that of those with an internet-enabled TV, 44.4% did not have a computer. This would indicate that there continues to be a certain section of the US population who is not interested in the intricacies of the PC, but rather just wants simple e-mail and web surﬁng functionality.

Percent of US Internet-enabled TV Households with a Computer, September 2001

With a computer 56.60%

Without a computer 44.40%

eMarketer forecasts that this segment of the online population, who have no need for a PC and just want simple internet functionality will be attracted to the emerging digital set-top boxes and interactive TV services coming on the market. These interactive TV (iTV) services will take advantage of the high-speed cable line and not only enhance existing TV programs, but provide basic e-mail, e-commerce and web services through the TV. eMarketer predicts that there will be 3 million households in the US by 2004 whose only means of internet access will be through advanced set- top boxes providing high-speed internet services through the TV.

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Methodology Forrester Research forecasts that by 2006 there will be 24.4 million Introduction households with advanced set-top boxes capable of high-speed internet Internet Users access. Most of these households, of course will be existing internet Internet Households

Internet Access Devices: households that also have access to the internet via a PC, but millions of PC, TV and Mobile Devices households will use the TV as their primary means of internet access. Online Demographics

Usage US Digital Cable and Satellite Penetration, 2001-2006 Special Targets (in millions) Canada Online

Index of Charts 2001 2002 2003 2004 2005 2006 Satellite 18.1 19.7 20.7 21.3 21.9 22.4 Analog cable 53.3 46.0 41.8 38.7 36.2 33.7 Basic digital 15.0 20.7 21.7 18.8 16.0 13.6 Advanced STB* 0.1 2.0 6.1 12.8 18.8 24.4 Total digital cable (millions) 15.1 22.6 27.9 31.6 34.8 38.0 Note: *advanced set-top box is STB with cable modem Source: Forrester Research, 2001 033529 ©2001 eMarketer, Inc. www.eMarketer.com

Game Consoles Game consoles have been entrenched in US homes for years now, but a new breed of “next generation” consoles entered the market in 2001, enabling users to connect to the internet at high-speed. Both Microsoft’s Xbox and Sony’s Play Station 2 (PS2) consoles have this capability and promise a future where gamers can play against each other from distant corners of the earth. According to the Digital Gaming in America Survey by Ziff Davis, while 80% of gamers already have internet access and 63% play online games for an average of 4.4 hours a week, 48% of respondents to the survey said they would pay for internet access strictly through their consoles. With International Development Group predicting an installed base of internet-capable gaming consoles in the US to near 50 million homes by 2004, this is not an insigniﬁcant market.

Installed Base of Major Gaming Consoles in US Homes, 1998-2004 (in millions) 1998 1999 2000 2001 2002 2003 2004 Nintendo 64 9.8 13.2 15.7 17.0 17.8 – – Nintendo GameCube –––1.1 5.6 10.8 16.6 Sony Playstation 16.0 21.9 25.0 27.4 28.8 29.4 29.9 Sony Playstation 2 ––1.0 6.2 13.8 21.9 30.3 Microsoft Xbox –––1.1 6.0 11.8 18.8 Source: International Development Group, September 2001 034201 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology C. Mobile Phones & PDAs Introduction Internet Users Mobile internet services are only now beginning to take a ﬁrm hold in North Internet Households America. All North American wireless operators have launched wireless web Internet Access Devices: PC, TV and Mobile Devices offerings on mobile phones, and internet enabled handheld devices are also Online Demographics increasing in popularity. Compared to countries such as Japan, however, where Usage mobile internet has been available and widely adopted for many years, mobile Special Targets

Canada Online internet has only recently become an option for North Americans.

Index of Charts Mobile Internet User Forecasts According to the US Federal Communications Commission (FCC) at the end of 2000, over 2.5 million people, or about 2.3% of all mobile telephone subscribers in the US, used wireless web services. Additionally, they indicated that there were over 1.2 million advanced messaging subscribers accessing e- mail and other messaging services via handheld devices. eMarketer estimates that there were approximately 9 million mobile internet users in the US at the end of 2001 accessing the internet via mobile phones, two-way pagers and PDAs. This will rise to over 60 million users by 2004. Mobile internet users are not new to the internet — the vast majority of mobile internet users will also have access to the internet via a PC or other device.

Mobile and Total Internet Users in the US, 2000-2004 (in millions)

2000 4.0 95.4

2001 8.9 119.0

2002 22.5 136.0

2003 43 151.8

2004 63.5 165.5

Mobile internet users Total internet users Note: Total internet users covers all users accessing the internet at home, work and with any device. Mobile users are defined as those users accessing the internet and advanced messaging services (other than SMS) through mobile phones, PDAs, and two-way pagers Source: eMarketer, November 2001 035738 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Research ﬁrm eTForecasts estimates that, by 2002, over 10% of all internet Introduction users in the US will be wireless internet users. This will rise to nearly 40% Internet Users by 2005. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Internet Users and Wireless Internet Users in the US, Online Demographics 2000, 2002 & 2005 (in millions and as a % of total Usage internet users) Special Targets 2000 2002 2005 Canada Online

Comparative estimates for mobile internet users vary considerably for this nascent sector. While all research ﬁrms predict mobile internet users will grow to reach vast numbers, there is less consensus about how fast this will occur. eMarketer’s forecasts are based on the assumption that between 25% and 35% of those with mobile devices in 2004 will actually subscribe to an internet service with this device.

Comparative Estimates: Mobile Internet Users in the US, 2000-2005 (in millions) 2000 2001 2002 2003 2004 2005 eMarketer, December 2001 4.0 8.9 22.5 43.0 63.5 – ETForecasts, February 2001 2.0 – 18.0 – – 83.0 Federal Communications 2.5 – – – – – Commission (FCC)*, July 2001 International Data Corporation 5.0 – – – – 84.0 (IDC), November 2001 InfoTech Trends, August 2000 9.0 15.0 23.0 37.0 65.0 – Intermarket Group, October 2001 2.0 – – – 89.0 – Jupiter Research, 2001 4.0 – – – – 96.0 Morgan Stanley, November 2001 3.4 6.9 – – – – Strategis Group, November 2000 – – – – 17.0 – Yankee Group, 2001 1.1 2.9 12.6 – – 57.0 Note: *cellphones only Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034915 ©2001 eMarketer, Inc. www.eMarketer.com

International Data Corporation (IDC) predicts 84 million wireless internet users in the US by 2005. The majority of them however, will be business users.

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Methodology

Introduction US Wireless Internet Users, 2000-2005 (in millions)

Internet Users 2000 Internet Households

Internet Access Devices: 5.0 PC, TV and Mobile Devices 2.6 Online Demographics

Breaking down mobile internet subscribers by device type, internet access through cell phones will be the most favored mobile internet access device. eMarketer predicts only about 20% of mobile internet subscribers will use a PDA or advanced two-way pager to access the internet in 2004.

Mobile Internet Subscribers in the US, by Device, 2000-2004 (in millions)

2000 2.5 1.5 4.0

2001 6.5 2.4 8.9

2002 18.0 4.5 22.5

2003 35.0 8.0 43.0

2004 50.0 13.5 63.5

Mobile phones with Handheld devices other internet access than mobile phones* Total mobile internet subscribers Note: *this includes PDAs and advanced two-way pagers Source: eMarketer, 2001 035739 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Morgan Stanley’s wireless data numbers clearly indicate explosive growth Introduction in the US. Internet Users Internet Households Wireless Data Subscribers in the US, by Device, Internet Access Devices: PC, TV and Mobile Devices 1999-2001 (in millions)

Online Demographics 1999 Usage

Special Targets 0.2

Canada Online 0.1 Index of Charts 0.3

2000 2.9 0.5 3.4

2001 (Q3) 6.1 0.8 6.9

Jupiter Media Metrix predicts the number of US wireless web users will total nearly 100 million by 2005 but mobile phones that support internet access will garner the greatest share of users at 74.9 million - over three quarters of all wireless web users. Jupiter suggests that the use of interactive mobile handsets will begin to take off in 2003 as the majority of mobile carriers start to offer packet data services, color displays become more commonplace, and services mature.

Projected US Wireless Web Users, by Device, 2005 (in millions of users)

Voice-centric handsets 74.9

Data-centric handsets 7.3

Online PDAs 4.4

Offline PDAs 9.4

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Methodology

I Introduction

II Internet Users

III Internet Households

IV Internet Access Devices: PC, TV and Mobile Devices V Online Demographics 77 A. Gender 82 B. Age 90 C. Income 96 V D. Education 104 E. Race & Ethnic Origin 109 F.Region 117

VI Usage

VII Special Trends

VIII Canada Online

Index of Charts

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Methodology Census 2000 data indicates that the total population in the US at the end of Introduction 2000 was 281.4 million and over 285 million at the end of 2001. There was Internet Users a population increase of 13.1% between 1990 and 2000. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Total Population and Internet Users in the US, 2000 & Online Demographics 2001 (in millions) Usage

Special Targets 2000 Canada Online 95.4 Index of Charts 281.4

2001 119.0 285.5

There were approximately 107.8 million occupied households in the US in 2001, of which eMarketer estimates 57 million had internet access.

Total Households and Online Households in the US, 2000 & 2001 (in millions)

2000 49.0 105.5(1)

2001 57.4 107.8

The average internet user has changed quite markedly over the last ﬁve years from a young, well educated, wealthy, white male to any man or woman that you would see “on the street.” If the famed FBI criminal proﬁling unit was on the look-out for a criminal today, whose only known characteristic was that they were a regular US internet user, then this clue would not provide them with any real sense of who they were looking for among the wider US population.

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Methodology The Department of Commerce, in their recently released report: A Nation Introduction Online, paints a picture of the American internet user in September 2001. Internet Users

Internet Households Demographic Profile of US Internet User, September Internet Access Devices: PC, TV and Mobile Devices 2001 Online Demographics Number Distri- Pene- Usage (millions) bution tration Special Targets Total internet users 142.8 Canada Online

Index of Charts Gender Male 69.6 48.7% 53.9% Female 73.2 51.3% 53.8% Race/origin White 111.9 78.4% 59.9% Black 13.2 9.2% 39.8% Asian American and Pacific Islander 6.5 4.5% 60.4% Hispanic 10.1 7.1% 31.6% Employment status Employed (2) 88.4 75.6% 65.4% Not employed (2) 28.5 24.4% 36.9% Family income <$15,000 7.8 6.3% 25.0% $15,000-$24,999 8.9 7.1% 33.4% $25,000-$34,999 12.6 10.1% 44.1% $35,000-$49,999 20.6 16.5% 57.1% $50,000-$74,999 30.1 24.2% 67.3% $75,000 and above 44.5 35.7% 78.9% Educational Attainment Less than high school (1) 3.5 3.8% 12.8% High school diploma (1) 22.8 24.5% 39.8% Some college (1) 28.3 30.5% 62.4% Bachelors degree(1) 24.7 26.6% 80.8% Beyond Bachelors degree (1) 13.6 14.6% 83.7% Age group Age 3-8 6.6 4.6% 27.9% Age 9-17 25.5 17.9% 68.6% Age 18-24 17.7 12.4% 65.0% Age 25-49 65.1 45.6% 63.9% Age 50+ 27.9 19.5% 37.1% Geographic location Rural 35.8 25.0% 52.9% Urban 107.1 75.0% 54.2%

continued on page 80

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Methodology Household type Introduction

Internet Users Married children w/children under 18 yrs 64.7 45.3% 62.0% Internet Households Male householder w/children under 18 yrs 3.4 2.4% 45.8% Internet Access Devices: PC, TV and Mobile Devices Female householder w/children under 18 13.1 9.2% 45.3% Online Demographics Family household without children under 18 41.4 29.0% 50.5% Usage

Special Targets Non-family household 20.1 14.1% 47.6% Canada Online Note: (1) Age 25 and older; (2) Age 16 and Older Index of Charts Source: US Department of Commerce, February 2002 036349 ©2002 eMarketer, Inc. www.eMarketer.com

Mediamark Research has been examining the online population since 1997 and their data shows signiﬁcant changes in the age, sex and income of the average American adult internet user since 1997.

US Adult Internet Users, by Age, Gender and Income, 1997-2001 1997 1998 1999 2000 2001 Male 57% 54% 51% 50% 49% Female 43% 46% 49% 50% 51% 18-34 46% 43% 41% 40% 39% 35-54 46% 49% 49% 48% 47% 55+ 8% 9% 10% 13% 14% Income <$50,000 34% 32% 32% 34% 33% $50,000-$75,000 26% 28% 28% 26% 26% $75,000-$150,000 34% 33% 34% 33% 33% $150,000+ 7% 8% 7% 8% 8% Source: Mediamark Research Inc. (MRI), 2001 034384 ©2001 eMarketer, Inc. www.eMarketer.com

While the American online population is increasingly looking like the wider population as a whole, there are still certain sections of America that have only just recently discovered the internet. These so called, internet “newbies” are some of the fastest growing segments of the online population.

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Methodology According to Jupiter Media Metrix, the number of kids online between the Introduction ages of 5 to 12 will grow at a rate of 155% from the period 1999 to 2002. Internet Users During the same period teens online will grow 97%. Internet Households

Internet Access Devices: During the three-year period from 1998 to 2001, The Media Audit says PC, TV and Mobile Devices ‘Retired Households’ and ‘Homemakers’ have come online faster than any Online Demographics

Usage other demographic segment at a compound annual rate of 80% over the

Special Targets period. Closely following this group are ‘Blue Collar Workers’ (52% Canada Online growth), Households with residents over 50 years old (51%) and Hispanic Index of Charts Households (45%).

“What we are seeing in the latest research are the late arrivals.” –Bob Jordan, co-chairman of The Media Audit, May 2001

Fastest Growing Segments of the Online Population in the US, 1998-2001 (as % growth over three year period) Kids (5-12) (1) 155% Teens (13-18) (1) 97% Retired households 80% Homemakers 80% Blue collar workers 52% Households with residents 50+ 51% Hispanic households 45% Women 18+ 44% Working mothers 43% African american households 41% Working women 37% Men 18+ 26% Asian households 11% Source: The Media Audit, May 2001; (1) Jupiter Media Metrix, 1998-2002 035745 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology A. Gender Introduction Internet Users In most emerging internet markets around the world, male users far Internet Households outweigh female users. Wealthy, young males are the classic early adopters Internet Access Devices: PC, TV and Mobile Devices of technology, and this was no different in the US internet market in days Online Demographics past. Widespread adoption of the internet however has seen women reach Usage parity with men online today. Special Targets Census 2000 ﬁgures indicate that, 49.1% of the total US population were Canada Online

Index of Charts male and 50.9% female. Of those 18 years or older (‘adults’) the ratio of men to women is even further skewed toward women with 52% of the adult population female compared to 48% male. This ratio reﬂects, almost exactly, the online population.

US Online Population by Gender, 2001 (in millions and as a % of total population)

Total population (1) 140.2 (49.1%) 145.3 (50.9%) 285.5

Adult population (18+) (1) 101.0 (48.0%) 108.1 (52.0%) 209.0

Internet User Profile (2) 58.3 (49.0%) 60.7 (51.0%) 119.0

The US Department of Commerce in August 2000, in its comprehensive demographic study “Falling through the Net: Toward Digital Inclusion,” gave a clear indication of the trend which has seen greater numbers of women coming online. In 1998 there were more male internet users than female, compared to 2000 when the opposite was true.

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Methodology

Introduction US Internet Users (Age 3+), by Gender, 1998 & 2000 (in

Internet Users millions)

Internet Households

Internet Access Devices: PC, TV and Mobile Devices

Online Demographics Male Male Usage 43.0 57.0 Special Targets

Canada Online Index of Charts Female Female 41.6 59.5

In their 2001 study, The Department of Commerce shows little change between the ratio of men and women online, compared to a year earlier.

Internet Users in the US, by Gender, September 2001 (in millions)

Male 69.6

Female 73.2

As can be seen from the comparative estimates below, the majority of research ﬁrms agree there were more female internet users than male in 2000.

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Methodology

Introduction Comparative Estimates: US Internet Users, by Gender,

Internet Users 2000

Internet Households US Department of Commerce/eMarketer Internet Access Devices: PC, TV and Mobile Devices 49% Online Demographics 51% Usage

Special Targets Insight Express Canada Online 49% Index of Charts 51%

AdRelevance 48% 52%

Jupiter Media Metrix 50% 50%

Media Audit 52% 48%

Mediamark Research 50% 50%

NetValue 49% 51%

ACNielsen eRatings.com 48% 52%

Nielsen//NetRatings 48% 52%

PC Data 49% 51%

Pew Research 49% 51%

Strategis Group 49% 51%

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Methodology Research conducted in 2001, however, still indicates that a number of Introduction research ﬁrms believe that males outnumber females online. Internet Users Internet Households Comparative Estimates: US Internet Users in the US, Internet Access Devices: PC, TV and Mobile Devices by Gender, 2001 (as a % of online population) Online Demographics Jupiter Media Metrix Usage

Special Targets 49.7%

Canada Online 50.3%

Index of Charts Nielsen//NetRatings 47.0% 52.0%

eMarketer 49.0% 51.0%

Harris Interactive 51.0% 49.0%

Scarborough Research 51.0% 49.0%

Mediamark Research 49.0% 51.0%

In 2001, Jupiter Media Metrix indicated no real change from its 2000 surveys, i.e., that there were more female internet users than male.

US Internet Users, by Gender, August 2001

Males 49.7%

Females 50.3%

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Methodology Nielsen//NetRatings indicated in July 2001 that females make up 52% of the Introduction population and males 47% (it is a mystery where the missing 1% is). Internet Users Internet Households US Home Internet Users, by Gender, July 2001 (as a % Internet Access Devices: PC, TV and Mobile Devices of total population) Online Demographics

Usage Male 47.3%

Two research ﬁrms believe adult males outnumber adult females - Harris Interactive and Scarborough Research. They contend that 51% of the adult online population is male.

US Adult Internet Users, by Gender, 2001 (as a % of total population)

Male Male 48% 51%

Female Female 52% 49%

US Adult Internet Users, by Gender, 2001 (as a % of total population)

Male 51%

Female 49%

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Methodology Mediamark’s study of online demographics between 1997 and 2001 Introduction provides a clear trend, which has resulted in the ratio of men and women Internet Users online in 2001 exactly matching the ratio within the general population. Internet Households

Internet Access Devices: PC, TV and Mobile Devices US Adult Internet Users, by Gender, 1997-2001 (as a % Online Demographics of online population) Usage

Special Targets 1997

Canada Online 57% Index of Charts 43%

1998 54% 46%

1999 51% 49%

2000 50% 50%

2001 49% 51%

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Methodology UCLA’s recent survey does not indicate any major disparity between the Introduction sexes online until the age of 55, when a signiﬁcantly greater percentage of Internet Users senior men are online compared to women. Internet Households

Internet Access Devices: PC, TV and Mobile Devices US Internet Users, by Age and Gender, 2001 (as a % of Online Demographics respondents) Usage

Special Targets <16

Canada Online 93.0% Index of Charts 88.1%

16-18 98.3% 99.0%

19-24 81.3% 80.7%

25-35 80.0% 80.9%

36-45 78.4% 83.5%

46-55 76.2% 76.8%

56-55 66.7% 53.2%

>65 34.2% 29.2%

Data from Nielsen//NetRatings shows that females continue to get online more quickly than males. Nielsen//NetRatings recorded a 9% growth in the female unique audience between December 2000 and December 2001; males only grew 3%. This would give further credence to the fact that more females are online than males.

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Methodology

Introduction Growth of US Home Internet Users, by Gender,

Internet Users December 2000 & December 2001 (in millions and %

Internet Households growth)

Internet Access Devices: PC, TV and Mobile Devices Unique audience, December 2000 Online Demographics 50.4 Usage 48.2 Special Targets

Canada Online Unique audience, December 2001

Index of Charts 55.0 (9%) 49.8 (3%)

What is emerging as an important demographic characteristic, and one, which marketers and retailers should take, note of, is that an increasingly larger share of online shoppers are women than men. Pew Internet & American Life Project’s annual internet survey shows that in 2000 more men than women purchased online, but a year later the trend was reversed with 52% of online purchasers being women.

Online Shoppers Who Have Purchased Online, by Gender, 2000 & 2001 (as a % of online shoppers)

2000 52% 48%

2001 48% 52%

The survey also reveals that 58% of those who bought gifts online during the 2001 holiday shopping season were women. In a recent keynote address, AOL Time Warner Chief Operating Ofﬁcer Robert Pittman2 noted that over 65% of all online shoppers within AOL were women. E-tailers take note! This shouldn’t be a great surprise, considering that women control up to 80% of all household purchasing decisions, they shop ofﬂine more than men, and there are now more women online than men.

Important Trend: Between 55%-60% of all online shoppers are women

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Methodology B. Age Introduction Internet Users In 1990 the average American was 33.7 years of age. Census 2000 data Internet Households shows that the median age now is 35.3 and with the Baby Boomer Internet Access Devices: PC, TV and Mobile Devices generation getting older, coupled with increased longevity, the average Online Demographics American is only going to get older. The age group that makes up the Usage greatest share of the total population is between 35 and 44. Special Targets Canada Online US Population, by Age Group, 2000 (in millions and as Index of Charts a % of total population)

<5 19.2 (6.8%)

5-9 20.5 (7.3%)

10-14 20.5 (7.3%)

15-19 20.2 (7.2%)

20-24 18.9 (6.7%)

25-34 39.9 (14.2%)

35-44 45.1 (16.0%)

45-54 37.7 (13.4%)

55-59 13.5 (4.8%)

60-64 10.8 (3.8%)

65-74 18.4 (6.5%)

75+ 16.6 (5.9%)

While internet users remain younger than the rest of the population, the user base is growing older as the online population increasingly mirrors the wider population. eMarketer predicts that children online (3 to 8 years) will be one of the fastest growing segments and total 6.7 million by 2004 - over double the number in 2000. This growth however will be exceeded by those aged 55 and over, who will number over 21 million by 2004, from only 9.8 million in 2000 – a compound annual growth rate of nearly 130%!

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Methodology

Introduction US Internet Users, by Age Group, 2000-2004 (in

Internet Users millions) Internet Households 2000 2001 2002 2003 2004 Internet Access Devices: PC, TV and Mobile Devices 3-8 3.0 3.5 4.1 5.2 6.7 Online Demographics 9-17 16.1 20.7 23.8 26.1 29.3 Usage

Special Targets 18-34 30.1 37.0 41.0 44.4 47.5 Canada Online 35-54 36.4 43.9 51.3 57.4 60.6 Index of Charts 55+ 9.8 13.8 16.2 18.5 21.5 Total 95.4 119.0 136.0 151.8 165.5 Note: figures based on internet access within the last 30 days Source: eMarketer, 2002 035753 ©2002 eMarketer, Inc. www.eMarketer.com

eMarketer estimates there were 24 million internet users in the US under the age of 18 in 2001, a penetration rate of 34% for that age group. The bulk of internet users were in the age group 18-54 which totaled 81 million in 2001, a 54% penetration. The age group over 55 years had the lowest penetration of any segment at 23%, and totaled 13.8 million in 2001.

US Internet Users, by Age Segment and Penetration, 2001 (in millions) Under 18 18-54 55+ Internet Users (1) 24.2 80.9 13.8 Total population (2) 72.0 149.7 59.3 Penetration 33.6% 54.0% 23.3% Source: (1) eMarketer, 2002; (2) US Census Bureau, 2001 035975 ©2002 eMarketer, Inc. www.eMarketer.com

The internet penetration rate amongst various age groups varies considerably. Those aged 9-17 have the highest internet penetration at 56.3% in 2001, followed by those aged 18-34.

US Internet Penetration, by Age Group, 2001 (as a % of total population)

3-8 14.3%

9-17 56.3%

18-34 54.5%

35-54 52.0%

55+ 23.3%

Overall 42.8%

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Methodology The Department of Commerce in 2001, reported there were 142.8 million Introduction internet users in the US. Their deﬁnition of internet users is slightly broader Internet Users than eMarketer which pegs the number at 119 million in 2001. These Internet Households

Internet Access Devices: differences in deﬁnitions, are reﬂected in the differences in the number of PC, TV and Mobile Devices internet users by various age groups. Online Demographics

Usage Their data indicates that the 9 -17 year-old age group has the highest

Special Targets internet use penetration above all others at 68.6%, followed by 17 – 24 Canada Online year olds at 65%. Index of Charts Internet Users in the US, by Age Group, September 2001 (and as a % of total population)

Age 3-8 6.6 (27.9%)

Age 9-17 25.5 (68.6%)

Age 18-24 17.7 (65.0%)

Age 25-49 65.1 (63.9%)

Age 50+ 27.9 (37.1%)

Scarborough Research’s data indicates a far higher internet penetration across all age groups compared to the Department of Commerce or eMarketer’s estimates. Different deﬁnitions of access and internet users would account for different penetration rates.

US Internet Penetration, by Age Group, 2001

18-24 71%

25-34 70%

35-44 70%

45-54 65%

55-64 51%

65+ 30%

Over the next few years, eMarketer expects seniors over 55 years of age not only to grow by signiﬁcant numbers but also to gain a signiﬁcantly larger share of the overall online population than they currently enjoy.

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Methodology

Introduction US Internet Users, by Age Category, 2000-2004 (as a %

Internet Users of total internet users)

Internet Households 2000 Internet Access Devices: PC, TV and Mobile Devices 20.0% Online Demographics 70.0% Usage 10.0% Special Targets Canada Online 2001 Index of Charts 20.3% 68.0% 11.6%

2002 20.5% 67.9% 11.9%

2003 20.6% 67.1% 12.2%

2004 21.8% 65.3% 12.9%

It is not easy putting different research ﬁrms’ estimates side by side, as each measures a slightly different age bracket.

Comparative Estimates: Internet Users, by Age Group, 2001 (as a % of total internet users) 0-17 18-24 25-34 35-44 45-54 50+ 55+ eMarketer 20.3% –––– –11.6% Scarborough Research – 14.0% 22.0% 25.0% 20.0% – 18% Jupiter Media Metrix 19.2% 14.4% 19.2% ––17.3% – Mediamark Research ––––––14.0% Harris Interactive –––––25.0% – Source: eMarketer, various, as noted, 2001 & 2002 035979 ©2002 eMarketer, Inc. www.eMarketer.com

In August 2001, 30% of internet users were between 35 and 49 years of age according to Jupiter Media Metrix, with adults 18 years and over making up 80.8% of the total online population.

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Methodology MediaMark’s historical data reveals that adults over 55 years of age made up Introduction 14% of the online adult population in 2001, compared to only 8% in 1997. This Internet Users coincides with eMarketer’s projections, which predict a growing percentage of Internet Households

Internet Access Devices: those 55+ making up the online population in the years to come. PC, TV and Mobile Devices Online Demographics Distribution of US Adult Internet Users, by Age Group, Usage 1997-2001 (as a % of adults online) Special Targets Canada Online 1997 Index of Charts 46% 46% 8%

1998 43% 49% 9%

1999 41% 49% 10%

2000 40% 48% 13%

2001 39% 47% 14%

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Methodology Research ﬁrm Harris Interactive pointed out in November 2001 that, while Introduction 18 to 29 year olds make up only 22% of the total adult population, they Internet Users make up 28% of the online adult population. Conversely, seniors aged over Internet Households

Internet Access Devices: 65 make up 16% of the general population but only make up 7% of the PC, TV and Mobile Devices online population. Online Demographics

Usage Online Adults in the US, by Age Group, November 2001 Special Targets (as a % of the population 18+) Canada Online Index of Charts 18-29 22% 28%

30-39 22% 23%

40-49 20% 23%

50-64 18% 18%

65+ 16% 7%

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Methodology C. Income Introduction

Internet Users Internet Households August 2000 Internet Access Devices: PC, TV and Mobile Devices “Although computers and internet access are Online Demographics coming down in price, they are still sufﬁciently Usage expensive that household income remains an Special Targets important factor in home internet access.” Canada Online

Index of Charts –Department of Commerce, Falling through the Net: Toward Digital Inclusion, August 2000.

September 2001 “While notable differences remain in internet use across income categories, internet use has grown considerably among people in lower income households.” –Department of Commerce, A Nation Online: How Americans are expanding their use of the internet, September 2001

Individuals who live in high-income households are more likely to be a computer and internet user than those who live in low –income households. The Department of Commerce has recorded this relationship since 1997 when they first started examining the sector. Falling internet costs and increasing incomes, for certain sections of the population, are making internet access more affordable to greater numbers of people, but there is still a significant digital divide between rich and poor. The relationship between internet access and level of income, however, should not be overstated. While the correlation between levels of income and internet access is without dispute, education and racial/ethnic elements in combination with income are also important. As the chart below clearly illustrates, even at the top income bracket, Black and Hispanic households have significantly lower internet penetration rates than either White or Asian American households. This clearly confirms that other elements are at play in addition to income.

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Methodology

Introduction US Household Internet Penetration, by Income and

Internet Users Race/Ethnic Origin, 2000

Internet Households <$15,000 Internet Access Devices: PC, TV and Mobile Devices 16.0% Online Demographics 6.4% Usage 33.2% Special Targets 5.2% Canada Online Index of Charts $15,000-$34,999 31.0% 17.9% 43.8% 17.7%

$35,000-$74,999 56.7% 38.7% 60.7% 41.5%

$75,000+ 78.6% 70.9% 81.6% 63.7%

According to a Census Bureau report released in September 2001, the median family household income in the US in 2000 was $42,148. Asian & Paciﬁc Islanders have a median household income $13,000 above the average, at $55,525. Both White and White non-Hispanic households are also above the average. eMarketer estimates the median household income for internet households in 2001 to be approximately $52,000.

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Methodology

Introduction Median Household Income in the US, by Race/Ethnic

Internet Users Origin, 2000

Internet Households

Internet Access Devices: Asian & Pacific Islander $55,525 PC, TV and Mobile Devices

Online Demographics Internet households (2001) $52,000 Usage White (not hispanic) $45,904 Special Targets

Canada Online White $44,226

Index of Charts All households $42,148

Hispanic origin $33,455

Black $30,436

While Black and Hispanic households have incomes considerably less than the overall average, the Census Bureau points out that Black household income has grown 5.5% since 1999 and Hispanic income 5.3%. By comparison, there has been no signiﬁcant increase in either White or Asian & Paciﬁc Islander households over the same period. The ‘digital divide’, as it relates to income and race has been discussed at length since the Department of Commerce released its demographic study of internet use in 2000. There is little dispute that household income closely correlates to household internet access. The Department of Commerce indicated in 2000 that of those households with incomes $75,000 and above, 77 % had internet access. Conversely, less than 21% of households were online in households with income $25,000 or less.

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Methodology

Introduction US Household Internet Penetration, by Income, 1998 &

Internet Users 2000

Internet Households <$15,000 Internet Access Devices: PC, TV and Mobile Devices 7.1% Online Demographics 12.7% Usage

Special Targets $15,000-$24,900

Canada Online 11.0% Index of Charts 21.3%

$25,000-$34,999 19.1% 34.0%

$35,000-$49,999 29.5% 46.2%

$50,000-$74,999 43.9% 60.9%

$75,0000+ 60.3% 77.7%

What the chart also shows is that there has been signiﬁcant growth in internet access within the lower socio-economic groups between 1998 and 2000. Of those income groups below $35,000, the internet penetration rate has grown by at least 75%. In contrast, all three income ranges over $35,000 increased by 17%. The Department of Commerce’s recent report further indicates the relationship between income and internet use. The chart shows internet use among the lowest income group has doubled since August 2000.

Internet Users in the US, by Family Income, September 2001 (in millions and penetration) Less than $15,000 7.8 25.0% $15,000 - $24,999 8.9 33.4% $25,000 - $34,999 12.6 44.1% $35,000 - $49,999 20.6 57.1% $50,000 - $74,999 30.1 67.3% $75,000 & above 44.5 78.9% Source: US Department of Commerce, February 2002 036353 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology More recent data from Nielsen//NetRatings also conﬁrms this trend. In Introduction February 2001, the web tracking ﬁrm recorded that internet users within Internet Users the lowest income group grew the most quickly compared to all other Internet Households

Internet Access Devices: income groups, at 46%. PC, TV and Mobile Devices Online Demographics Growth of US Internet Users, by Income, February Usage 2000 vs. February 2001 (in millions and % growth) Special Targets Canada Online $0-$24,999 Index of Charts 4.3 6.3 (46%)

$25,000-$49,999 18.8 26.4 (40%)

$50,000-$74,999 21.4 30.4 (42%)

$75,000-$99,999 12.3 16.2 (32%)

$100,000-$149,000 7.8 10.4 (34%)

$150,000+ 3.8 4.8 (28%)

The correlation of internet access to income is conﬁrmed by Pew Internet & American Life Project, who indicate that only 38% of those earning less than $30,000 are online compared to 82% for those earning $75,000 or more.

US Internet Penetration, by Income, 2000

Less than $30,000 38%

$30,000–$50,000 64%

$50,000–$70,000 72%

$75,000 and up 82%

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Methodology This correlation is also re-enforced by Scarborough Research data. Introduction Internet Users US Internet Penetration, by Income, 2001 (as a % of Internet Households each income bracket) Internet Access Devices: PC, TV and Mobile Devices

Online Demographics <$25,000 37% Usage $25,000-$50,000 53% Special Targets

Canada Online $50,000-$74,9999 69%

Index of Charts $75,000+ 79%

Presenting the comparative data together, we can see that there is a signiﬁcant degree of divergence between research ﬁrms. For example, the percentage of the online population earning less than $50,000 ranges from 31% to 55%. eMarketer estimates that the median income of internet users in 2001, i.e., the number where 50% are above, and 50% below, is approximately $52,000.

Comparative Estimates: Online Population in the US, by Income, 2001 <$25,000 $25,000- <$50,000 $50,000- $75,000+ $50,000 $74.999 Mediamark ––30.9% 25.3% 43.8% Research Harris 19.0% 23.0% 55.0% – – Interactive Nielsen// 7.0% 27.9% 34.6% 32.2% 33.2% NetRatings (eMarketer interpolation) Scarborough 11.0% 34.0% 44.0% 22.0% 34.0% Research Note: Numbers to do not add up to 100% due to the fact that <$50,000 metric means there is double counting. Source: eMarketer, 2002; various, as noted, 2001 035982 ©2002 eMarketer, Inc. www.eMarketer.com

Mediamark, in their Fall 2001 survey, indicated that only 30.9% of the online population were in households with income below $50,000. This despite the fact that 51.6% of the total adult population are in this income group.

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Methodology

Introduction US Adults with Home internet Access, by Income,

Internet Users 2001 (as a % of adult population)

Internet Households <$50,000 Internet Access Devices: PC, TV and Mobile Devices 51.6% Online Demographics 30.9% Usage

Special Targets $50,000-$75,000 Canada Online 20.4% Index of Charts 25.3%

$75,000-$150,000 22.3% 34.4%

>$150,000 5.7% 9.4%

Jupiter Media Metrix estimated in August 2001 that 28.4% of internet users were earning between $60,000 and $100,000. Those earning under $60,000 made up 53% of the online population; those earning under $40,000 made up only 27.8% of internet users.

US Internet Users, by Income, August 2001

$100,000+ 18.1% Under $40,000 27.8%

$60,000-$100,000 28.4% $40,000-$60,000 25.8%

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Methodology Harris Interactive indicated in November 2001 that, while households in the Introduction US with an income of less than $25,000 make up 25% of all households, Internet Users this income group makes up only 19% of online households. Similarly, Internet Households

Internet Access Devices: households with incomes over $50,000 make up 32% of the total PC, TV and Mobile Devices households in the US but they make up 45% of online households. Online Demographics

Usage Distribution of Households Online in the US, by Special Targets Income, 2001 Canada Online Index of Charts <$25,000 25% 19%

$25,000-$50,000 29% 23%

>$50,001 32% 45%

Despite the falling hardware and internet access costs, the current data clearly suggests that there still exists a digital divide when it comes to income. eMarketer estimates that the median household income for the internet population to be approximately $52,000, which while still considerably higher than the median for the overall population at $42,148, nevertheless has fallen signiﬁcantly in the last two years.

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Methodology D. Education Introduction Internet Users Better educated adults are more likely to have internet access than those Internet Households less well educated. This reﬂects the fact that income and education levels Internet Access Devices: PC, TV and Mobile Devices are highly correlated as well as the fact that the internet is primarily an Online Demographics information medium, rather than an entertainment medium, and therefore Usage relatively more appealing to those with higher educational attainments. Special Targets According to the US Census Bureau, 52.6% of the US population in 2000 had Canada Online

Index of Charts a least some high school education. A further quarter of the population had a least some college and about one in ﬁve had a Bachelor’s degree or better.

US Population Age 15+, by Educational Attainment, 2000 (as a % of total population)

Bachelor's degree or more 21.9% High school or less 52.6% Some college 25.5%

The following chart clearly illustrates the relationship between education and internet access. Those householders with a Bachelor’s degree or more are three times more likely to have internet access than those with only a high school education. One of the main reasons for this, of course, is that education level is often related to income level, but it is also the case that better educated adults are more likely to use and become familiar with computers and the internet at work or through their school experiences.

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Methodology

Introduction US Households Internet Penetration, by Education of

Internet Users Householder, 1998 & 2000

Internet Households Less than high school Internet Access Devices: PC, TV and Mobile Devices 5.0% Online Demographics 11.7% Usage

Special Targets High school Canada Online 16.3% Index of Charts 29.9%

Some college 30.2% 49.0%

Bachelor’s degree 46.8% 64.0%

Post graduate 53.0% 69.9%

In September 2001, The Department of Commerce showed increases in internet users across all educational attainment levels. Those with less than high school education increased the least. Those with high school diploma and some college, were two of the fastest growing segments between August 2000 and September 2001.

Internet Users in the US, by Educational Attainment, September 2001 (in millions and penetration)

High school diploma/GED (1) 22.8 (39.8%)

Some college (1) 28.3 (62.4%)

Bachelors degree (1) 24.7 (80.8%)

Beyond Bachelors degree (1) 13.6 (83.7%)

While over 50% of the US population has a high school education or less, the comparative estimates would indicate that only about 30% of this population segment are internet users in 2001.

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Methodology

Introduction Comparative Estimates: Online Population in the US,

Internet Users by Education, 2001 (as a % of total population)

Internet Households Total population Internet Access Devices: PC, TV and Mobile Devices 52.0% Online Demographics 26.0% Usage 22.0% Special Targets Canada Online Mediamark Research Index of Charts 29.5% 34.5% 36.1%

eMarketer 28.7% 34.6% 36.6%

Scarborough Research 32.0% 39.0% 28.0%

Harris Interactive 38.0% 30.0% 32.0%

Scarborough Research data shows a clear relationship between educational attainment and internet use. Three-quarters of those who are college graduates or have advanced degrees are online. In contrast, only 50% of high school graduates are online.

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Methodology

Introduction US Internet Penetration, by Educational Attainment,

Internet Users 2001 (as a % of each segment)

Internet Households Less than high school graduate Internet Access Devices: PC, TV and Mobile Devices 37% Online Demographics High school grad Usage

Special Targets 50%

Canada Online Some college Index of Charts 65%

College grad/Post grad 77%

The recent UCLA internet study which compared internet access by education in both 2000 and 2001 showed that, at each education level, internet penetration rose. The segment with the highest growth in the period was those who had some college education.

US Internet Users, by Education Level, 2000 & 2001 (as a % of respondents)

High school graduate 53.8% 59.4%

Some college 70.3% 79.4%

College graduate 86.3% 89.2%

Advanced/ Prof. degree 86.1% 88.8%

The relationship between education and income as it relates to internet access is an interesting one. Which element, on its own, is more important?

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Methodology As previously discussed, even at the top income levels, Black and Hispanic Introduction households had a lower incidence of internet penetration than Whites or Internet Users Asian American households. Likewise, even in the lower income groups, Internet Households

Internet Access Devices: Asian American families had signiﬁcantly higher internet penetrations PC, TV and Mobile Devices than the other racial/ethnic groups. Online Demographics

Usage The following chart would suggest that education may in fact be a more

Special Targets important element than income when it comes to who is online.

Canada Online Index of Charts Population with College Degrees in the US, by Race, 2000 (as a % of population group)

Overall* 22%

White 25%

Black 15%

Hispanic 11%

Asian-American 42%

Note: *US Census Bureau Source: The Kiplinger Washington Editors, 2000

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Methodology E. Race & Ethnic Origin Introduction Internet Users The US Census Bureau indicates that Whites made up 75% of the US Internet Households population in 2000. Hispanics or Latinos, who can be of any race, made up Internet Access Devices: PC, TV and Mobile Devices 12.5 %, and Black or African Americans 12.3%. Asians made up only 3.6% Online Demographics of the total population. Usage Special Targets US Population, by Race, 2000 (in millions and as a % of Canada Online total population) Index of Charts White 211.5 (75.1%)

Hispanic* 35.3 (12.5%)

Black 34.7 (12.3%)

Asian 10.2 (3.6%)

American Indian or Alaskan native 2.5 (0.9%)

Native Hawaiian and other Pacific Islander 0.4 (0.1%)

Some other race 15.4 (5.5%)

Note: *Hispanics may be of any race, thus they are included in all applicable race categories which may cause the percent column to not add up to 100% Source: US Census Bureau, 2001 035766 ©2002 eMarketer, Inc. www.eMarketer.com

Since Hispanics are not categorized as a race per se, they are also included in other applicable race categories. Non-white Hispanics make up approximately 10% of the total population – approximately 28 million people.

Adult and Total Population in the US, by Race/Ethnic Origin, 2001 (in millions)

White 156.8 211.5

Black 25.7 34.7

Hispanic (not white) 21.0 28.1

Asian 7.5 10.7

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Methodology eMarketer has determined that, at the end of 2001, of the119 million active Introduction internet users, 91 million were White, 12 million Black, 10.7 million non- Internet Users white Hispanic and 5.1 million were of Asian & Paciﬁc Islander descent. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Internet Users in the US, by Race/Ethnic Origin, 2001 Online Demographics (in millions) Usage Special Targets White 91.3 Canada Online

Index of Charts Black 12.3 Hispanic 10.7

Asian 5.1

Total internet users 119.4

In terms of penetration, Asian & Paciﬁc Islanders have a higher penetration within their population segment than any other racial or ethnic group at 48% of the population of their community, and 68% their adult population. Whites have a penetration of 58% of the adult population at the end of 2001, Blacks 48% and non-white Hispanics 51% of adults.

Internet Penetration in the US, by Race/Ethnic Origin, 2001 (as a % of adult and total population)

White 43.2% 58.2%

Black 35.4% 47.8%

Hispanic 38.1% 50.9%

Asian 47.7% 68.0%

According to the Department of Commerce, of the 142.8 million internet users in the US in September 2001, 119 million were White, 13.2 million were Black, 6.4 million Asian American and Paciﬁc Islanders and 10.1 million Hispanic internet users.

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Methodology They also indicated that Asian American and Paciﬁc Islanders had the Introduction highest internet penetration at 60.4%. The racial group with the lowest Internet Users internet penetration were Hispanics at 31.6%. Internet Households

Internet Access Devices: Scarborough Research indicates a higher penetration rate among all PC, TV and Mobile Devices ethnic groups, particularly Asians at 80% in 2001. Online Demographics

Usage US Internet Penetration, by Race/Ethnic Origin, 2001 Special Targets (as a % of each race/ethnic segment) Canada Online

Index of Charts White 61%

Black 53%

Hispanic 51%

Asian 80%

Jupiter Communications, indicated in 2000 that Blacks had an internet penetration of 36% but predicted a rise to 64% by 2005. Likewise, Hispanics had an internet penetration in 2000 of 41%, rising to 68% by 2005.

Percent of Households Online in the US, by Race/Ethnic Origin, 2000 & 2005

Black 36% 64% 28%

Hispanic 41% 68% 27%

White 54% 76% 22%

Asian American 69% 84% 15%

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Methodology Examination of the various estimates shows a range of numbers. Introduction Differences in deﬁnitions of internet access, location of access and Internet Users population segments all contribute to the variety of numbers. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Comparative Estimates: Internet Users in the US, by Online Demographics Race/Ethnic Origin, 2001 (in millions) Usage White Black Hispanic Asian Special Targets

Canada Online Nielsen//NetRatings - logged on – 8.2 – – at home (Aug 2001) Index of Charts Pew Internet & American Life 90.9 11.0 11.0 5.0 Project -Adults (Feb 2001) eMarketer (2002) 91.4 12.3 10.7 5.1 Forrester Research - access – – 17.3 – (Sept 2001) Cyber Dialogue (Aug 2001) – 9.4 – – Harris Interactive (Nov 2001, 101.7 16.0 13.4 – eMarketer interpolation) Market Segment - online from 108.2 15.7 9.9 6.3 anywhere (Sept 2001) Market Segment - online from 86.1 11.2 6.9 5.3 home (Sept 2001) Scarborough Research 97.1 12.9 11.7 3.5 Source: eMarketer, 2002; various, as noted, 2001 035776 ©2002 eMarketer, Inc. www.eMarketer.com

.Harris Interactive estimated in November 2001 that Blacks make up 12% of the total population, while they only make up 10 percent of the online population. They showed that Whites and Hispanics made up an equal proportion of the online population as they do among the total population.

Distribution of US Online Population, by Race/Ethnic Origin, 2001 (as a % of total population)

White 76% 76%

Black 12% 10%

Hispanic 10% 10%

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Methodology Scarborough Research, on the other hand, indicated in 2001 that Whites Introduction make up 83% of the online population, Blacks 11%, Hispanics (all races) Internet Users 10% and Asians 3%. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Distribution of Total Internet Users in the US, by Online Demographics Race/Ethnic Origin, 2001 Usage Special Targets White 83% Canada Online

Index of Charts Black 11% Hispanic 10%

Asian 3%

Other 3%

Household penetration differs from population penetration. eMarketer estimates that 45 million White households were online in 2001, equating to 57%. Only 43% of Black households were online, and 42% of Hispanic households were online. Asian households had a household internet penetration of 74%.Projecting forward, White online households will grow

Households Online in the US, by Race/Ethnic Origin, 2001 (in millions and household penetration)

White 44.8 (56.9%)

Black 5.6 (42.7%)

Hispanic 4.1 (42.3%)

Asian 2.5 (73.5%)

Total online households 57.4 (53.2%)

to over 58 million in 2004 from 45 million at the end of 2000. There will be approximately 8 million online Black households, 6.2 million Hispanic households and 2.7 million Asian & Paciﬁc Islander households in 2004.

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Methodology

Introduction Internet Households in the US by Race/Ethnic Origin,

Internet Users 2001 & 2004 (in millions)

Internet Households White (not hispanic) Internet Access Devices: PC, TV and Mobile Devices 44.8 Online Demographics 58.2 Usage

Special Targets Black Canada Online 5.6 Index of Charts 8.1

Hispanic 4.1 6.2

Asian and Pacific Islander 2.5 2.7

Total online households 57.4 77.3

2000 (1) 2004 Source: eMarketer, 2002; (1) US Department of Commerce, 2001 035992 ©2002 eMarketer, Inc. www.eMarketer.com There is a degree of convergence among various research ﬁrms when examining households online by race/ethnic origin.

Comparative Estimates: Households Online in the US, by Race/Ethnic Origin, 2001 (in millions)

Media Audit 45.6 5.8 4.1 2.6

eMarketer 44.8 5.6 4.1 2.5

Jupiter Communications 42.5 4.7 4.0 2.3

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Methodology eMarketer predicts that, by 2004, 76% of Asian Households, over 70% of Introduction White households, over 60% of Hispanic households and 58% of Black Internet Users households will be online. Internet Households

Internet Access Devices: PC, TV and Mobile Devices US Households Online, by Race/Ethnic Origin, 2000 & Online Demographics 2004 (as a % of housholds within racial/ethnic group) Usage

Special Targets White (not hispanic) Canada Online 50.9% Index of Charts 70.0%

Black 26.7% 58.3%

Hispanic 26.8% 60.2%

Asian and Pacific Islander 61.7% 76.0%

Asian and Pacific Islander households are better educated, have a higher household income and are the most internet connected racial segment in the United States. This fact has not changed since 1998, when the Department of Commerce first recorded results in this area. What has also not changed is that Black and Hispanic households have a significantly lower household internet penetration rate than the average. Media Audit in May 2001 released findings which indicated that 44% of African American households were online in 2000, up 45% during the period since 1998. Usage among Hispanic households increased to 42% (a 45% gain), while Asian usage grew from 63% in 1998 to 70% in 2000.

US Households Online, by Race/Ethnic Origin, 2000 (as a % of households)

African American 44%

Hispanic 42%

Asian 70%

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Methodology In 2001, comScore Network indicated that over 50% of Black households Introduction had internet access. This was a steep rise from a year earlier when only 38% Internet Users of Black households were online. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Black Households with Internet Access in the US, Online Demographics April 2000 & April 2001 Usage Special Targets April 2000 37.9% Canada Online

Index of Charts April 2001 51.0% (+35%)

While Black and Hispanic households are lagging behind the other racial and ethnic groups in terms of internet access in the US, they are the fastest growing group.

Important trend: Blacks and Hispanics are still the least represented online, but they are getting online faster than any other racial or ethnic group.

According to a recent study done by Pew Internet & American Life Project, 44% of new Black internet users logged on for the ﬁrst time within the last year, as did 41% of Hispanic users. In addition, 22% of Black users and 19% of Hispanic users accessed the internet for the ﬁrst time in the last six months, indicating that, despite a slow start, Blacks and Hispanics are catching up.

Percent of US Internet Users, by Ethnicity and Online Experience, 2001 Overall Asian- Whites African- Hispanics population Americans Americans Less than 14% 6% 12% 22% 19% six months A year ago 19% 14% 19% 22% 22% Two or three 33% 31% 34% 30% 32% years ago More than 34% 49% 35% 26% 27% three years ago Note: n=13,978; margin of error is+ or -1% Source: Pew Internet & American Life Project, December 2001 035127 ©2001 eMarketer, Inc. www.eMarketer.com

Pew Internet further says that more Hispanic and Black women are coming online for the ﬁrst time than their male counterparts.

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Methodology F.Region Introduction Internet Users With such widespread internet adoption within the United States, regional Internet Households differences are not massively signiﬁcant. According to the Census Bureau, Internet Access Devices: PC, TV and Mobile Devices the West has the highest penetration of internet households in the country Online Demographics at 46.6% in 2000. The South had the lowest at 37.9%. Usage Special Targets US Households Online, by Region, 2000 (as a % of total Canada Online households within each region) Index of Charts Northeast 43.0%

Midwest 40.9%

South 37.9%

West 46.6%

The Department of Commerce showed in 2000 that those in rural areas actually had a higher household internet penetration rate than those living in central cities.

US Households with Internet Access, by Geographic Residence, December 1998 & August 2000 50 42.3% 38.9% 37.7%

30 27.5% 24.5% 22.2%

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Methodology

Introduction Recent data from The Department of Commerce shows, internet

Internet Users penetration among those in rural America is only marginally less than Internet Households those living in urban America. Internet Access Devices: PC, TV and Mobile Devices

Online Demographics

Usage Internet Users in the US, by Geographic Residence,

Special Targets September 2001 (in millions and penetration)

Canada Online

Index of Charts Rural 35.8 (52.9%) Urban 107.1 (54.2%)

Forrester Research recently suggested that San Francisco was the most wired city in the US at almost 80% of households online. In contrast, Scarborough Research said that Austin, Texas, was the most wired.

Comparative Estimates: Top 20 Online Cities in the US, 2001 (as a % of households) Forrester Research Scarborough San Francisco, CA 79% 69% Hartford, CT 74% 63% Austin, TX 73% 71% Raleigh-Durham, NC 70% 60% Columbus, OH 69% 60% Salt Lake City, UT 69% 64% Washington D.C. 68% 69% Orange County, CA** 68% 63%* Seattle, WA 67% 70% San Jose, CA 67% 69% Dallas, TX 66% 63% Boston, MA 66% 67% Nashville,TN 66% 55% Central NJ 65% – Orlando, FL 65% 63% Phoenix, AZ 65% 59% Kansas City, MO 64% 64% Las Vegas, NV 64% 58% Newark, NJ 64% – New Haven, CT 64% 63% Note: *Scarborough's definition includes at-work or at-home subscribers to an ISP; **Los Angeles only Source: Forrester Research, Scarborough Research*, 2001 035773 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology

I Introduction

II Internet Users

III Internet Households

IV Internet Access Devices: PC, TV and Mobile Devices

V Online Demographics VI Usage 119 A. Time Online 120 B. Location – Work, Home & School 127 C. Activities 136 VIVII Special Trends VIII Canada Online

Index of Charts

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Methodology A. Time Online Introduction Internet Users Are internet users spending more time online than in the past? Pew Internet Internet Households & American Life Project recently indicated that, for the majority of internet Internet Access Devices: PC, TV and Mobile Devices users, they are spending about the same time online as they were six Online Demographics months ago. Usage Special Targets “There is no evidence that the amount of time spent Canada Online

Index of Charts online is dramatically increasing or decreasing.” –Pew Internet & American Life Project, July 16, 2001

Change in US Internet Usage in the Last Six Months, July 2001 (as a % of respondents)

Same amount 54%

More 29%

Less 17%

eMarketer estimates that users are, on average, spending about ﬁve hours 20 minutes per week online

Average Time Spent Online for US Internet Users, 2001 (in hours and minutes) 2001 Hours per day 00:46 Hours per week 05:21 Hours per month 21:24 Source: eMarketer, 2002 035994 ©2002 eMarketer, Inc. www.eMarketer.com

Estimates from various research ﬁrms indicated that, on average, US internet users spent between 4.2 hours and 7.5 hours online per week in 2001.

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Methodology

Introduction Comparative Estimates: Average Time Spent Online

Internet Users per Week for US Internet Users, 2001 (in hours)

Internet Households

Internet Access Devices: Jupiter Media Metrix 4.9 PC, TV and Mobile Devices

Online Demographics Nielsen//NetRatings* 4.8 Usage eMarketer 5.2 Special Targets

Canada Online UCLA Center for Communication Policy 7.5

Index of Charts PricewaterhouseCoopers** 4.2

Looking back on Nielsen//NetRating’s estimates shows that, if there has been an increase in usage, between 2000 and 2001, it has been marginal at best.

Monthly Home vs. Work Internet Use in the US, October 2000 vs. November 2001 October 2000 November 2001 Home Work Home Work Number of 19 43 19 45 sessions per month Number or 10 31 44 88 unique sites visited Time spent per 10:04:05 23:11:18 10:35:55 25:33:56 month Time spent 0:31:53 0:32:34 0:32:54 0:34:22 during surfing session Duration of a 0:00:50 0:00:56 0:00:53 0:00:57 page viewed Source: Nielsen//NetRatings, November 2001 035996 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Looking at some recent data from Nielsen//NetRatings which compares the Introduction internet usage in a week in January 2001 with that of a week in 2002, Internet Users clearly shows a substantial increase in usage. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Weekly* Internet Usage in the US, January 2001 & Online Demographics January 2002 Usage January 2001 January 2002 Special Targets

Canada Online Home Work Home Work Index of Charts Number of sessions per week 5 11 613 Number of unique sites visited 5 13 19 32 Time spent per week 2:45:35 5:39:53 3:30:16 6:52:44 Time spent during surfing 0:30:49 0:32:08 0:32:29 0:32:33 session Duration of a page viewed 0:00:56 0:01:00 0:00:53 0:00:54 Note: *for the week ending 13 January Source: Nielsen//NetRatings, January 2001 & 2002 035997 ©2002 eMarketer, Inc. www.eMarketer.com

An interesting ﬁnding from UCLA, indicated that broadband users were spending about 45 % longer online per week than dial-up users.

Time Spent on the Internet, by Access Type in the US, 2001 (hours per week)

Telephone modem 7.1

Broadband 10.3

For those spending more time online, 29% cited the reason as needing the internet more for school or work. One in ﬁve respondents indicated they found more things to do online. Only 5% indicated they were spending more time online because of their faster internet connection.

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Methodology

Introduction Top Five Reasons for Using the Internet More in the

Internet Users Last Six Months in the US, July 2001 (as a % of

Internet Households respondents)

Internet Access Devices: PC, TV and Mobile Devices Need to use the internet more for school or work Online Demographics 29% Usage

Special Targets Found more things to do on the internet

Canada Online 21%

Index of Charts More access to a computer or internet than before 14%

Have learned how to use the internet and more comfortable with it 13%

Faster internet connection 5%

For those spending less time online now than six months ago, the top survey response was that they were simply not as interested now.

Top Eight Reasons for Using the Internet Less in the Last Six Months in the US, July 2001 (as a % of respondents)

Not as interested 19%

Don't have time 16%

No longer need for school or work 11%

Not useful or worthwhile 11%

No longer have access or less access 8%

Internet too slow 5%

Can do things more quickly now online than before 4%

Faster internet connection 1%

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Methodology While average internet usage may have declined between 2000 and 2001, Introduction certain sections of the online population are more likely to spend more Internet Users time online. Internet Households

Internet Access Devices: The UCLA Center for Communication Policy’s recent internet study, PC, TV and Mobile Devices which compared internet use across different income groups between 2000 Online Demographics

Usage and 2001 indicated that, in general, the higher the income, the greater the

Special Targets internet usage. Canada Online The study also indicated that usage increased across the board except for Index of Charts the income group $50,000 to $80,000. This income group, which also happens to be the income group where the majority of internet users lie, reduced their time online by about 4% between 2000 and 2001.

Time Spent on the Internet in the US, by Income Level, 2000 & 2001 (in average hours per week)

$1-30,000 4.6 4.8

$30,001-$50,000 6.8 6.9

$50,001-$80,000 7.4 7.1

$80,001-$100,000 9.5 9.9

>$100,000 7.2 10.1

Jupiter Media Metrix also recently assessed the internet usage of users within different income groups and their ﬁndings more or less correspond with UCLA’s i.e., the greater the income, the greater the internet usage. However, they did indicate that, in August, those earning under $40,000 spent longer online than those earning between $40,000 - $60,000. Translating their minutes into hours, the average time spent online per month across the various income groups was 16.7 hours.

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Methodology

Introduction Average Monthly Internet Usage in the US, by Income,

Internet Users August 2001 (in minutes)

Internet Households

Internet Access Devices: Under $40,000 1,298.9 PC, TV and Mobile Devices

Online Demographics $40,000-$60,000 1,117.5 Usage $60,000-$100,000 1,297.9 Special Targets

Canada Online $100,000+ 1,313.1

What is also apparent from the UCLA study is that the more experienced internet users spend far more time online than ‘newbies’.

Time Spent on the Internet in the US, by Online Experience, 2001 (in average hours per week)

<1 year 6.5

1 to 2 years 7.5

2 to 4 years 8.8

4 to 5 years 11.1

5+ years 13.2

The age group that spends the most time online in a month is between 25 and 34 according to Jupiter Media Metrix. They spend over 27 hours per month online.

Average Monthly Internet Usage in the US, by Age, 2001 (in minutes)

Age 2-17 605.7

Age 18-24 925.9

Age 25-34 1,642.4

Age 35-49 1,496.2

Age 50+ 1,398.8

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Methodology Men spend longer online than women overall, except for the age group Introduction between 18 and 24. Internet Users Internet Households Average Monthly Internet Usage in the US, by Gender Internet Access Devices: PC, TV and Mobile Devices and Age, August 2001 (in minutes)

Online Demographics Age 2-17 Usage

Special Targets 581.9

Canada Online 631.4

Index of Charts Age 18-24 872.5 994.3

Age 25-34 1,732.3 1,552.6

Age 35-49 1,689.8 1,338.6

Age 50+ 1,572.4 1,235.7

Total 1,320.8 1,184.4

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Methodology B. Location – Work, Home & School Introduction Internet Users While the majority of internet users in the US access the internet from home, Internet Households many internet users access the internet from an alternative location as well. Internet Access Devices: PC, TV and Mobile Devices According to Forrester Research, more than half of internet users have Online Demographics both home and work internet access. One third of internet users have only Usage home internet access and 11% only work access. Special Targets Canada Online At-Home vs. At-Work Internet Users in North America, Index of Charts July 2001 (as a % of total survey respondents)

Connect at work and at home 55%

Connect at home, not at work 33%

Connect at work, not at home 11%

Connect neither at home nor work 2%

The Department of Commerce reported that nearly 25% of the US population in September 2001 accessed the internet from both home and some alternative location. This was a signiﬁcant rise from 1998, when only 6.5% of the population used the internet at home as well as outside of the home.

US Internet Use, by Location, 1998 & 2001 (% of total population) Home and outside Home of home Does not Home only 6.5% use the only 15.8% internet 19.1% 46.1% Home and Outside outside of of home home Does not use 24.5% the internet only 67.2% Outside 10.3% of home only December 1998 10.5% September 2001 Source: US Department of Commerce, February 2002 036362 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Scarborough Research suggests that 82% of all internet users accessed the Introduction internet from home in the last 30 days. Only 38% of internet users accessed Internet Users the net from work during the last 30 days and 16% accessed the net from Internet Households

Internet Access Devices: another location. PC, TV and Mobile Devices Online Demographics US Internet Access*, by Access Location, 2001 (as a % Usage of all internet users) Special Targets Canada Online Home 82% Index of Charts Work 38%

Other 16%

Recent data from the UCLA Center for Communication Policy indicated that, compared to 2000, more people are accessing the internet at school and out of the home.

US Internet Access, 2000 & 2001 (as a % of the population)

Total Americans who use the internet 66.9% 72.3%

% of students who use the internet at school 55.3% 64.3%

% of employed who use the internet at work or outside the home 42.3% 51.2%

Harris Interactive has been monitoring the location of internet access since 1995, and their data points out that in 1996 16% of US adults accessed the internet from both work and home. They estimate that, in 2001, 52% of the population accessed the internet at home, 28% from work and 19% from other locations.

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Methodology

Introduction US Adults Online from Home, Work or Other Location,

Internet Users 1995-2001 (as a % of all adults) Internet Households All adults Online Online Online Internet Access Devices: at home at work at other PC, TV and Mobile Devices location Online Demographics September/ 9% ––– Usage November 1995 Special Targets

Canada Online June/ 17% 16% 16% – September Index of Charts 1996 May/June 30% 16% 18% – 1997 January/ 35% 22% 22% – February 1998 December 56% 46% – – 1999 April/May 57% 45% 24% 15% 2000 October/ 63% 49% 29% 17% November 2000 March/April 64% 53% 27% 20% 2001 September/ 64% 52% 28% 19% October 2001 Source: Harris Interactive, November 2001 034134 ©2001 eMarketer, Inc. www.eMarketer.com

According to the UCLA Center for Communication Policy over 64% of students use the internet at school and over 51% use the internet outside the home.

US Internet Access, 2000 & 2001 (as a % of the population)

Total Americans who use the internet 66.9% 72.3%

% of students who use the internet at school 55.3% 64.3%

% of employed who use the internet at work or outside the home 42.3% 51.2%

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Methodology Those internet users accessing the internet from home spend twice the time Introduction online as those accessing from work, according to UCLA Center for Internet Users Communication Policy. Internet Households

Internet Access Devices: PC, TV and Mobile Devices US Internet Access, by Access Location, 2001 (in hours Online Demographics per week) Usage Special Targets At home 6.0 Canada Online

Index of Charts At work 3.7 At school 2.2

At friend’s or relative’s home 0.4

Via wireless device 0.3

At public library 0.2

Other 0.1

At-Work Internet User eMarketer estimates that the number of people accessing the internet from work will total 63 million in 2004, rising from 42 million in 2000. Internet access, and particularly electronic mail, has become an integral part of most businesses and the distinction between work and home usage has become blurred. People shop, play games and watch streaming media at work as readily as they do at home. With many businesses having high- speed internet connections, many more at-work users are able to experience a far superior internet service at work.

Comparative Estimates: US At-Work Internet Population, 2000-2002 (in millions)

2000 45.2 41.7

2001 52.8 52.1

2002 57.7 62.6

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Methodology Nielsen//Netratings clearly shows that Work internet users spend more than Introduction twice the amount of time online versus home users. Work internet users Internet Users have twice the number of sessions per month and visit twice as many Internet Households

Internet Access Devices: unique sites. PC, TV and Mobile Devices Online Demographics Monthly Home vs. Work Internet Use in the US, Usage November 2001 Special Targets

Canada Online Home Work Index of Charts Number of sessions per month 19 45 Number of unique sites visited 44 88 Time spent per month 10:35:55 25:33:56 Time spent during surfing session 0:32:54 0:34:22 Duration of a page viewed 0:00:53 0:00:57 Active internet universe 105,517,549 40,310,873 Current internet universe estimates 174,198,244 43,905,986 Source: Nielsen//NetRatings, December 2001 035800 ©2002 eMarketer, Inc. www.eMarketer.com

The Online Publishers Association showed in November 2001 that an internet user who has access at work spends more minutes per day on the net than any other media category – four percentage points more than TV. Those who don’t have internet at work still spend 26% of their media time on the internet.

US Media Consumption by At-Work and Non-Work Users, by Media Type, 2001 (as a % of at-work and non-work users*)

News- News- paper paper 4% 5% Magazine Magazine Radio Radio 6% 7% 18% 26% Internet 34% TV 44% TV Internet 30% 26%

At-work users Non-work users Note: *n=755 at-work users and 272 non-work users Source: Millward Brown Intelliquest, Online Publishers Association (OPA), November 2001 035433 ©2002 eMarketer, Inc. www.eMarketer.com

The Online Publishers Association put together a demographic proﬁle of the typical at-work internet user and there were some interesting ﬁndings. It seems the typical at-work user is young, well educated wealthy, and female.

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Methodology

Introduction US At-Work and Non-Work Internet Users, by Gender,

Internet Users Age and Education, 2001 Internet Households At-work Non-work Internet Access Devices: PC, TV and Mobile Devices Male 45% 49% Online Demographics Female 55% 51% Usage 18-34 45% 26% Special Targets

Canada Online 35+ 55% 74%

Index of Charts Bachelors degree or higher 70% 50% Note: n=755 at-work users and 272 non-work users Source: Millward Brown Intelliquest, Online Publishers Association (OPA), November 2001 035425 ©2002 eMarketer, Inc. www.eMarketer.com

The most popular websites for work users were news sites. The second most popular website category was retail shopping.

Popular Websites for US At-Work vs. US Non-Work Internet Users, 2001 (as a % of respondents)

News 57% 55%

Retail shopping 45% 34%

Financial services 44% 34%

Computer/software 43% 33%

Special interests/hobbies 42% 44%

Games 39% 45%

Educational 33% 32%

Travel related 33% 23%

continued on page 133

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Methodology Food/cooking Introduction 31% Internet Users 36% Internet Households Internet Access Devices: Sports PC, TV and Mobile Devices

Online Demographics 27%

Usage 23%

Special Targets Health/fitness Canada Online

Index of Charts 26% 24%

Job listings 24% 20%

Home improvement 16% 18%

Music only 16% 10%

Radio stations 16% 10%

Popular culture 14% 10%

Automobiles 11% 10%

Parenting/babies 11% 11%

At-work user Non-work user Note: n=755 at-work users and 272 non-work users Source: Millward Brown Intelliquest, Online Publishers Association (OPA), November 2001 035802 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology

Introduction Important Trend: Online shoppers at work spend more money than

Internet Users those at home.

Internet Households

Internet Access Devices: PC, TV and Mobile Devices Recent e-retail sales data from comScore, who monitors the online

Online Demographics browsing and buying activity of a cross-section of 1.5 million internet Usage users, indicates that at-work internet users spend, on average, more money Special Targets per month than at-home or at-school users. At-work buyers spent an Canada Online average of $229 per month in 2001 whereas at-home buyers spent $165 Index of Charts and college buyers spent $146.

Average Amount Spent Online Monthly in the US, by Access Location, 2001 (per buyer)

From work $229

From home $165

From college/university $146

School Access Statistics released in 2001 showed that 98% of US public schools had internet access. This was a signiﬁcant rise from 1996 when only 65% of schools had access.

US Public Schools with Internet Access, 1994-2000 (as a % of all public schools)

1994 35%

1995 50%

1996 65%

1997 78%

1998 89%

1999 95%

2000 98%

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Methodology More important, perhaps, in the fall of 2000 the ratio of students to instructional Introduction computers in public schools decreased to 5 to 1, the ratio that “many experts Internet Users consider…a reasonable level for effective use of computers within schools.” Internet Households

Internet Access Devices: Similarly the ratio of students to instructional computers with internet access in PC, TV and Mobile Devices public schools improved from 9 to 1 in 1999 to 7 to 1 in 2000. Online Demographics

Usage One of the reasons a growing number of children and teens are now

Special Targets internet users is that internet access is available at school after regular Canada Online hours and sometimes even on the weekends. Index of Charts Percent of US Public Schools Allowing Students Internet Access after Regular School Hours , 2001 (% of all public schools)

After school 98%

Before school 84%

On weekends 16%

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Methodology C. Activities Introduction Internet Users According to the UCLA Center for Communication Policy the primary Internet Households reason internet users began using the internet in 2001 was ’to get Internet Access Devices: PC, TV and Mobile Devices information more quickly.’ E-mail ranked third.

Online Demographics Usage Primary Reasons Why US Internet Users Began Using Special Targets the Internet, 2001 (as a % of respondents) Canada Online

Index of Charts To get information quickly 25.0%

For work 11.6%

To get e-mail 10.6%

It seemed to be new and interesting 9.3%

For school 8.8%

My friends 4.6%

To learn more about things that interest me 4.5%

To be up-to-date 3.8%

Was given access 3.1%

The study did indicate, however, that e-mail and web surﬁng are the two most popular internet activities for Americans. Online shopping was the third most popular activity.

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Methodology

Introduction Most Popular Internet Activities among US Internet

Internet Users Users, 2001 (as a % of respondents)

Internet Households E-mail and instant messaging Internet Access Devices: PC, TV and Mobile Devices 87.9% Online Demographics

Usage Web surfing or browsing

Special Targets 76.3%

Canada Online Buying online Index of Charts 48.9%

Finding entertainment information 47.9%

Reading news 47.6%

Scarborough Research examined the activities of internet users closely and found that, while e-mail and general information gathering are the most popular activities, there are a wide range of activities such as shopping, playing games, and using ﬁnancial services, that many internet users also participate in.

Top 20 Internet Activities of US Internet Users, 2001 (as a % of internet users)

E-mail 92%

Research/education 45%

Shopping 43%

News 40%

Work-related use 32%

Financial information/services 31%

Games 31%

Local information 26%

continued on page 138

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Methodology Purchase item or service Introduction 26% Internet Users Internet Households Sports scores/updates Internet Access Devices: PC, TV and Mobile Devices 22% Online Demographics Automobile information Usage 22% Special Targets Canada Online Medical services/information Index of Charts 21%

Other use 21%

Job/employment search 21%

Read a newspaper 18%

Chat or community site 18%

Listen to audio programming/radio station 15%

Newspaper site 15%

Real estate listings 14%

Radio station site 9%

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Methodology Most Popular Web Properties Introduction Unsurprisingly, the major portals – AOL, Yahoo and MSN — are Internet Users

Internet Households consistently ranked the most popular web sites visited by US internet users. Internet Access Devices: The ﬁrst non-portal web site on the list is auction site eBay. PC, TV and Mobile Devices Online Demographics Top 25 Websites at Home, by Property, August 13-19, Usage 2001 Special Targets

Canada Online Top 25 Unique Time per

Index of Charts properties audience person at home (000) (hh:mm:ss) AOL Time Warner 37,730 0:16:07 Yahoo! 30,382 0:29:25 MSN 29,149 0:21:58 Microsoft 10,091 0:05:04 Excite@Home 8,453 0:11:39 Lycos Network 8,165 0:09:21 eBay 7,968 0:39:52 Walt Disney Internet Group 5,983 0:14:52 eUniverse Network 5,759 0:08:11 About Primedia 5,665 0:06:16 Google 5,284 0:06:52 Amazon 5,269 0:07:59 CNET Networks 4,369 0:06:08 InfoSpace 4,185 0:04:31 ClassMates Online 3,916 0:04:12 AT&T 3,658 0:11:11 Vivendi Universal 3,563 0:08:59 Ask Jeeves 3,207 0:04:36 iWon 3,155 0:25:59 Earthlink 3,130 0:06:47 Gator.com 2,787 0:08:44 GoTo.com 2,755 0:02:16 EA Online 2,632 0:55:59 Viacom International 2,507 0:11:44 NBC Internet 2,495 0:05:30 Note: Rankings are based on audience measurement of people who have access to the internet at-home and at-work. Work rankings are based on persons at work who have access to a non-shared personal computer. A property is defined as a consolidation of multiple domains and URLs owned by a single entity. Reach is a measure of the unduplicated audience that visits a property. The data are expressed as the percentage of the total universe of internet users who logged onto the internet at least once during the reporting period Source: Nielsen//NetRatings, 2001 031627 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology Instant Messaging Introduction Instant Messaging (IM) has been a phenomenon over the last few years. Internet Users

Internet Households From a purely consumer service at its inception, it is now used extensively Internet Access Devices: among organizations in the US and elsewhere as a valuable PC, TV and Mobile Devices

Online Demographics communications tool.

Usage Jupiter Media Metrix’s data below shows the rapid growth in the number of Special Targets IM users. They estimate 94 million IM at-home users in September 2001. Canada Online Index of Charts US Home Users of Instant Messenger and Chat Applications, September 2000 & September 2001 (in millions) September September % change Visitor 2000 2001 change Total www and 76.4 93.9 23% 17.5 digital media Unduplicated 41.9 53.7 28% 11.7 total of AOL, Yahoo! and MSN messaging Unduplicated 34.4 41.6 21% 7.1 total of AOL messaging* AOL proprietary 14.9 18.6 24% 3.6 messenger AOL instant 18.5 24.9 35% 6.4 messenger (AIM) Standalone ICQ Chat 8.3 7.2 -13% -1.0 Yahoo! 9.5 11.9 25% 2.3 messenger MSN messenger 9.5 18.5 94% 8.9 Note: *includes AOL Proprietary Messenger, AOL Instant Messenger and ICQ Chat Application Source: Jupiter Media Metrix, 2001 034482 ©2001 eMarketer, Inc. www.eMarketer.com

Work users of Instant Messaging have actually grown more rapidly than home users, totaling over 34 million in September 2001, according to Jupiter Media Metrix.

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Methodology

Introduction US Work Users of Instant Messenger and Chat

Internet Users Applications, September 2000 & September 2001 (in

Internet Households millions) Internet Access Devices: September September % change Visitor PC, TV and Mobile Devices 2000 2001 change Online Demographics

Usage Total WWW and 27.6 34.3 25% 6.9 Digital Media Special Targets

Canada Online Unduplicated 9.9 13.3 34% 3.4

Index of Charts Total Of AOL, Yahoo! and MSN Messaging Unduplicated 7.6 8.9 17% 1.2 Total of AOL Messaging* AOL Proprietary 3.0 2.9 -3% -84 Messenger AOL Instant 4.4 6.0 35% 1.6 Messenger (AIM) Standalone ICQ Chat 1.1 1.2 9% 104.0 Yahoo! 1.9 3.4 83% 1.6 Messenger MSN Messenger 2.6 4.9 88% 2.2 Note: *Includes AOL Proprietary Messenger, AOL Instant Messenger and ICQ Chat Application Source: Jupiter Media Metrix, 2001 034495 ©2001 eMarketer, Inc. www.eMarketer.com

Online Brokerage and Banking International Data Corporation (IDC) reports that in 2001, 43% of all US brokerage customers used the internet to trade, monitor markets, check investments, track account balances and obtain financial advice. IDC finds that annual e-trading activity in the US, per year, is broken down as follows: 38% of online brokerage customers make between one and five transactions, 31% make between six and 20 transactions, 20% make 21 or more and 11% make no online transactions. eMarketer estimated that there were 12.2 million US online banking consumers in 2001.

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Methodology

Introduction Comparative Estimates: US Online Banking

Internet Users Consumers, 2000-2005 (in millions) Internet Households 2000 2001 2002 2003 2004 2005 Internet Access Devices: PC, TV and Mobile Devices eMarketer 8.8 12.2 14.5 15.9 18.3 – Online Demographics International Data Corporation (IDC) 9.9 14.7 17.1 20.4 22.8 – Usage Jupiter Media Metrix 14.6 ––––43.5 Special Targets

Canada Online Gomez Advisors 21 ––48.3 – –

Online Entertainment The internet is not an entertainment medium for most users according to survey data from UCLA Center for Communication Policy. They surveyed people in both 2000 and 2001, and only 33.6% of respondents in 2001 reported that the internet was “moderately important” as a source of entertainment. Those that indicated the internet was “extremely important” as an entertainment source actually declined from the previous year.

US Internet Users' Attitudes towards the Internet as a Source of Entertainment, 2000 & 2001 (as a % of respondents)

Extremely important 10.1% 8.1%

Very important 14.8% 13.0%

Moderately important 28.9% 33.6%

Somewhat important 15.7% 20.6%

Not important 30.5% 24.6%

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Methodology In contrast, most did feel the internet was extremely or very important as a Introduction source for information. Internet Users Internet Households US Internet Users' Attitudes towards the Internet as Internet Access Devices: PC, TV and Mobile Devices a Source of Information, 2000 & 2001 (as a % of Online Demographics respondents) Usage Extremely important Special Targets

Canada Online 26.9%

Index of Charts 29.2%

Very important 26.7% 30.8%

Moderately important 23.6% 30.8%

Somewhat important 5.6% 6.2%

Not important 17.2% 3.0%

Despite the fact that the majority of internet users do not regard the internet as a primary entertainment medium, there are millions of people going online for just this purpose.

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Methodology Online Pornography Introduction Viewing pornography is certainly one of the more popular activities of Internet Users

Internet Households internet users. According to data from Media Metrix, the number of visitors Internet Access Devices: to adult sites grew from 22 million to 28 million between December 1999 PC, TV and Mobile Devices

Online Demographics and February 2001.

Usage Zogby International polled a random sampling of 1,031 American adults, Special Targets including both internet users and non-users. Zogby found that 20.8% of Canada Online Americans had visited a sexually-oriented web site. In total, 31.9% of US Index of Charts males and 10.5% of US females have gone to an adult content website.

US Internet Pornography Users and Total Internet Users, December 1999 & February 2001 (in millions and as a % of total users)

December 1999 104 (100%) 22 (21.3%)

February 2001 138 (100%) 28 (20.2%)

Online Gaming Playing games is a popular activity for millions of internet users. In October 2001, Jupiter Media Metrix indicated that 47 million people had played a PC-based game application in January 2001. According to one of the most popular games websites, Pogo.com, 5.4 billion minutes are spent each month playing online games, more than any other online activity. The activity is not conﬁned to young males. According to PC Data, females make up over 50% of online gamers.

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Methodology

Introduction Online Game Preferences in the US, by Gender, 2000

Internet Users Board games Internet Households

Internet Access Devices: 51% PC, TV and Mobile Devices 78% Online Demographics

Usage Gambling games Special Targets 26% Canada Online 36% Index of Charts Quiz, puzzle and trivia 25% 55%

First-person shooting games 38% 12%

Real-time strategy 33% 11%

Real-time sports 30% 10%

Online Gambling While there continue to be legal hurdles for gambling websites trying to base themselves in the US, that does not stop US internet users from gambling on other international sites. Datamonitor estimates there were nearly 2 million online gamblers in the US in 2001.

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Methodology Online Shopping Introduction E-retailers have found it particularly tough going over the last 18 months, Internet Users

Internet Households but online shopping is still one of the most popular online activities for US Internet Access Devices: internet users. According to Scarborough Research, 45% of US internet PC, TV and Mobile Devices

Online Demographics users bought online in the last 12 months.

Usage

Special Targets US Internet Users who Bought Online in the Last 12

Canada Online Months, 2001

Index of Charts

Did not buy 45%

Bought online 55%

Scarborough Research indicated that books were the most popular category for online purchasers, followed by airline tickets and music CDs or tapes.

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Methodology

Introduction Percent of Internet Users Purchasing Online, by

Internet Users Category, 2001

Internet Households Books Internet Access Devices: PC, TV and Mobile Devices 23% Online Demographics Airline tickets Usage

Special Targets 19%

Canada Online CDs, tapes or other music Index of Charts 16%

Clothing or accessories 14%

Other products or services 12%

Computer software 12%

Other travel reservations 11%

Tickets to cultural events, sporting or other events 11%

Toys or games 8%

Computer hardware 8%

Flowers 6%

Sporting goods 6%

Groceries, candy or other food items 5%

Collectibles 5%

Other electronic equipment 5%

Medicine (prescription or over the counter) 4%

Jewelry 3%

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Methodology eMarketer Master Grid for Consumer Online Buying Introduction While B2C e-commerce is not the focus of this report, eMarketer has Internet Users created a master grid of US consumers shopping and buying online. Internet Households

Internet Access Devices: PC, TV and Mobile Devices US Consumer Online Buying and Shopping Grid, Online Demographics 2000-2004 (in millions and % penetration) Usage 2000 2001 2002 2003 2004 Special Targets

Canada Online Internet users* Index of Charts US population aged 221.3 223.2 225.6 228.0 230.5 14+ (US Census ) Total US internet 95.4 119.0 136.0 151.8 165.5 users Internet users aged 86.6 108.0 123.4 137.8 150.2 14+ Online penetration 39.1% 48.4% 54.7% 60.4% 65.2% among population aged 14+ Shoppers % Internet users aged 73.0% 77.0% 79.0% 81.0% 82.0% 14+ Shoppers aged 14+ 63.2 83.2 97.5 111.6 123.2 Buyers % Internet users aged 48.5% 53.2% 55.8% 58.3% 59.9% 14+ Buyers aged 14+ 42.0 57.5 68.9 80.3 90.0 Average annual $969.02 $880.67 $1,089.21 $1,248.48 $1,400.47 purchase per online buyer Total US B2C $40,700 $50,600 $75,000 $100,300 $126,000 e-commerce revenues (incl. online travel)** Note: *eMarketer's internet user figures are based on the International Telecommunication Union (ITU) baseline figure of 95.4 million internet users for 2000; the age 14+ group represents roughly 90% of all users according to the August 2000 US Department of Commerce survey; **eMarketer benchmarks its B2C retail revenue figures against US Department of Commerce data, for which the last period measured was Q4 2001; the travel component was formulated based on aggregated data Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034922 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology

I Introduction

II Internet Users

III Internet Households

IV Internet Access Devices: PC, TV and Mobile Devices

V Online Demographics

VI Usage VII Special Trends 149 A. Kids, Teens & College Students 150 B. Seniors Online 156 C. Black Americans 158 VIID. Hispanics 161 E. Broadband Users 164 F.Mobile Internet Users 168

VIII Canada Online

Index of Charts

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Methodology Certain sections of the online population deserve special attention because Introduction of their unique characteristics, whether age, race or ethnic background, or Internet Users even where and how they access the internet. eMarketer has chosen a few Internet Households

Internet Access Devices: segments of the online population which present opportunities — but also PC, TV and Mobile Devices unique challenges — for those trying to reach them. Online Demographics

Usage

Special Targets

Canada Online Index of Charts A. Kids, Teens & College Students The vast majority of kids, teenagers and college students today are as comfortable surfing the web as they are surfing channels on the TV. It has become an important daily part of their lives and will continue to be so. They are accessing the internet from home as well as at school. Whether for chatting, playing games, or researching homework, or downloading music, the internet is a medium where age is now no longer a barrier to the variety of options and activities open to them. The Department of Commerce provided a detailed demographic profile of the US internet user under 18 years of age, as of September 2001.

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Methodology

Introduction US Home Computer and Internet Users 3 to 17 Years

Internet Users of Age, September 2001 (in millions and % of

Internet Households population segment ) Internet Access Devices: Total 3-17 Home Home Outside PC, TV and Mobile Devices year olds computer internet home Online Demographics use internet Usage use Special Targets Total 60.9 70.7% 41.2% 38.9% Canada Online Age Index of Charts 3-4 years 7.9 61.7% 11.5% 5.4% 5-9 years 20.1 68.0% 28.3% 25.3% 10-13 years 16.9 88.5% 51.1% 49.8% 14-17 years 16.0 75.7% 61.4% 60.7% Gender Male 31.2 70.3% 41.1% 38.7% Female 29.7 71.1% 41.2% 39.0% Race/Hispanic origin White non-Hispanic 38.2 82.7% 50.2% 44.5% Black 9.5 45.8% 24.7% 31.8% Asian/Pacific Islander 2.6 81.3% 51.6% 37.3% Hispanic (any race) 9.9 46.6% 20.1% 24.5% Household type Married couple 42.8 79.1% 46.6% 40.0% household Male householder 3.1 57.2% 33.0% 37.8% Female householder 14.2 49.0% 26.8% 35.9% Nonfamily household 0.7 55.0% 31.7% 32.7% Family income Under $15,000 7.3 33.3% 14.3% 25.9% $15,000-$24,999 6.1 48.0% 21.4% 31.5% $25,000- $34,999 6.8 59.7% 28.9% 33.6% $35,000 - $49,999 8.6 75.7% 42.4% 41.7% $50,000 - $74,999 10.8 86.9% 52.1% 44.0% $75,000+ 13.6 94.9% 63.4% 48.3% Not reported 7.6 62.6% 37.1% 34.4% Source: US Department of Commerce, February 2002 036366 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Jupiter Media Metrix estimated in August 2001 that internet users under 18 Introduction spend about 10 hours online per month, with females spending almost 1 Internet Users hour longer online than males. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Monthly Internet Usage by US Internet Users Ages Online Demographics 2-17, August 2001 (in hours and minutes) Usage Males 09:12 Special Targets

Jupiter Media Metrix also indicated in 2001 that Kids and Teens were two of the fastest growing online segments of the population.

Kids and Teens Online in the US, 1998 & 2002 (in millions and % increase)

Kids (5-12) 8.6 21.9 (155%)

Teens (13-18) 8.4 16.6 (97%)

Interestingly, Kaiser Family Foundation indicated that the most popular activity for US internet users between the ages of 15 and 24 was searching out health information online.

Online Activities of Young People in the US, September-October 2001 (as a % of internet users between the ages of 15 and 24)

Searched for health information 75%

Played games 72%

Downloaded music 72%

Participated in chats 67%

Shopped 50%

Checked sports scores 46%

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Methodology Pew and American Life Project surveyed the most popular activities of Introduction teenage girls. E-mail was number one; having fun online was number two. Internet Users

Internet Households Internet Activities of US Teenage Girls, 2000 Internet Access Devices: PC, TV and Mobile Devices Send or receive e-mail Online Demographics 95% Usage Go online for fun Special Targets

Canada Online 85%

Index of Charts Visit websites about movies, TV shows, music groups or sports stars 85% Use instant messaging 78% Look for news 70% Look for hobby information 62% Listen to music online 59% Play or download games 57% Visit a chat room 56% Research items that they might like to buy 55% Download music 47% Visit websites for clubs, activities, or sports teams of which they are members 38% Visit websites where they can express their opinions about things 38% Look for sports scores 32% Looking for dieting, health or fitness information 30% Go to a website where people trade or sell things 20% Create their own websites 19% Go online to find information that is hard to talk about with other people 17% Source: Pew Internet & American Life Project, June 2001 026084 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology Recent evidence would suggest that teens and kids are an increasingly Introduction attractive demographic to target, because they are spending more money Internet Users online. According to Jupiter Communications, online spending by teens Internet Households

Internet Access Devices: will increase to $1.3 billion by 2002 and kids will account for $100 million PC, TV and Mobile Devices of e-commerce dollars spent. According to SpectraCom’s recent study of Online Demographics

Usage kids on the internet, 60% of the kids they surveyed have asked their parents

Special Targets to buy things they’ve seen online. Additionally, a quarter of parents say Canada Online their kids have made a purchase on the internet, while another third say Index of Charts their kids have helped with ﬁnding or researching purchases in the internet.

For a detailed analysis of Kids & Teens Online check out the eMarketer Report, Marketing and Selling Online to Kids and Teens, May 2001

The Zandl Group, which specializes in the study of kids and teens, reported in December 2001 on the differences in online purchasing between girls and boys. Girls between the ages of 8 and 24 seem most interested in purchasing clothes, books and CDs. Boys, however, have more marked differences by age. Boys aged 8-12 purchased collectible cards and gameboy games; 13-17 year old boys bought clothes and sporting equipment; and 18-24 year old boys bought plane and concert tickets, car accessories and movies.

Most Recent Online Purchase for US Internet Users Ages 8-24, by Gender, December 2001 Ages 8-12 Ages 13-17 Ages 18-24 Male Female Male Female Male Female Collectible Books Clothes Clothes Tickets- Clothes cards plane/ concert Gameboy CDs Sports Books Car CDs games equipment accessories WWF Swimsuit Books CDs Movies Movies Smackdown t-shirt ––CDs Puppy Clothes Household care kit items ––Car – Paintball Books parts gun ––Magic – CDs Plane cards tickets ––––Games – Source: Zandl Group, 2001 036012 ©2002 eMarketer, Inc. www.eMarketer.com

Kids and Teens are among the most internet savvy group online and are an audience worth targeting for e-commerce dollars.

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Methodology College students have long been voracious internet users. The Department of Introduction Commerce indicates that over 80% of 18 to 24 year olds in school or college Internet Users have a home computer, and 68% have home internet access. This is in stark Internet Households

Internet Access Devices: contrast to those within this age group who are not at school or college. PC, TV and Mobile Devices Online Demographics US Home Computer and Internet Users 18 to 24 Years Usage of Age, 2001 (in millions and as a % of population Special Targets segment) Canada Online

Index of Charts Total 18-24 Home Home Outside year olds computer internet home use internet use In school or college 11.0 80.7% 68.0% 71.9% Not in school or college 16.1 52.4% 24.0% 13.3% Gender Male 5.2 81.9% 69.4% 73.7% Female 5.8 89.1% 66.8% 70.3% Race/Hispanic origin White non-Hispanic 7.5 86.5% 74.3% 76.2% Black 1.5 58.9% 47.0% 59.7% Asian/Pacific Islander 0.7 89.6% 77.5% 72.5% Hispanic (any race) 1.3 66.8% 49.7% 61.1% Household type Married-couple 3.3 88.3% 73.8% 69.3% household Male householder 0.3 66.7% 53.8% 69.3% Female householder 1.1 60.0% 46.5% 58.7% Nonfamily household 1.9 78.6% 68.6% 81.4% Family income Under $15,000 1.6 69.2% 56.1% 73.9% $15,000-$24,999 0.9 68.7% 53.8% 65.2% $25,000- $34,999 1.0 68.4% 56.1% 73.0% $35,000 - $49,999 1.2 81.8% 37.5% 67.8% $50,000 - $74,999 1.8 87.7% 34.5% 74.0% $75,000+ 3.1 93.8% 83.0% 75.6% Not reported 1.5 71.2% 62.8% 64.7% Source: US Department of Commerce, February 2002 036367 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology B. Seniors Online Introduction Internet Users In 2002 there are over 60 million people in the US over 55 years of age, 35 Internet Households million of whom are over 65, according to US Census 2000 ﬁgures. Like Internet Access Devices: PC, TV and Mobile Devices most developed nations around the world, the US senior population is Online Demographics growing faster than any other age demographic. By 2003 there will be 63 Usage million Americans over 55 years of age and by 2010 this number is Special Targets expected to climb to over 75 million. Canada Online

Index of Charts In September 2001, the US Census Bureau reported that 12.8% of seniors had used the internet at home in 2000. Pew Internet & American Life Project pegged the rate at 15%. Scarborough Research recently showed that 30% of the 65+ age group were internet users.

Comparative Estimates: Seniors (65+) Online in the US, 2001 (as a % of population 65+)

US Census Bureau* (Sept, 2001) 12.8%

Pew Internet & American Life Project (Sept, 2001) 15.0%

Scarborough Research (2001) 30.0%

Pew Internet and American Life Project data makes clear that internet penetration decreases as age increases.

Internet Penetration among US Seniors (50+), by Age Group, 2001 (as a % of population within each group)

50-54 52%

55-59 43%

60-64 34%

65-69 23%

What Pew goes on to say, however, is that while only a small fraction of the elderly are online, those that are, are voracious users. Nearly 70 % of online seniors over 65 go online in a typical day, compared to 56 % for all internet users. Typically, seniors go online to check e-mail and to seek information about their hobbies, news, and health and medical information. Wired seniors also love to play games, according to Pew – 32 % of them.

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Methodology “Online seniors’ enthusiasm for games is exceeded Introduction only by that of 18-19 year old internet users, 44% of Internet Users

Internet Households whom play games online.” –Pew Internet and American Life

Internet Access Devices: Project, Wired Seniors, 2001 PC, TV and Mobile Devices

Online Demographics

Usage The demographic proﬁle of the online senior is an attractive one for Special Targets marketers. They have considerably more money than their ofﬂine Canada Online counterparts, are more likely to be married and are better educated. Index of Charts Demographics of US Seniors, by Online Status, 2000 Gender All seniors Wired seniors Male 43% 60% Female 57% 40% Race/ethnicity White 86% 92% African-American 8% 3% Hispanic 4% 3% Marital status Married (or living as) 47% 74% Divorced/seprated 10% 9% Widowed 39% 18% Never been married 3% 1% Income Under $30,000 63% 24% $30,000-$50,000 21% 33% $50,000-$75,000 8% 19% $75,000+ 8% 25% Education Less than high school 29% 4% High school graduate 34% 21% Some college 20% 30% College graduate or more 16% 46% Source: Pew Internet & American Life Project, March-December 2000 032259 ©2001 eMarketer, Inc. www.eMarketer.com

Another important element for marketers to consider is that the age group behind the seniors – 50 to 54 year olds - are a very wired bunch. As this group gets older, they will be bringing their internet experience with them, and will demand products and services tailored to them.

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Methodology C. Black Americans Introduction

Internet Users Internet Households “Compared to the number of African Americans Internet Access Devices: PC, TV and Mobile Devices reﬂected in the total US population, Online Demographics representation of the African American group on Usage the internet has room for growth.” –T.S Kelly, Principal Special Targets Analyst, NetRatings, Sept, 2001 Canada Online

Index of Charts According to research ﬁrm Packaged Facts, the buying power of the African American Market is expected to increase nearly 30% to $682 billion in the next ﬁve years.5 In 2000, Black households had $543 billion in earned income with spending in the area of consumer electronics and housewares showing big growth from the previous year. eMarketer expects the Black American audience online to grow from approximately 9 million in 2000 to 20 million in 2004. Nielsen//NetRatings recorded in August that African American internet users are growing at a faster rate than the overall online population. The overall population registered a 14% growth rate during the past year compared to the African American population at 19%.

US African American At-Home Internet Users, August 2000 & August 2001 (in millions and year-over-year % growth)

August 2000 6.9

August 2001 8.2 (19%)

Pew Internet and American Life, in their study of Hispanics and African Americans online, showed that more Hispanic and Black women are coming online for the ﬁrst time than their male counter parts. Additionally, their study pointed out that Black females are having a growing inﬂuence in consumer and purchasing decisions in Black households and present a strong new marketing opportunity. The Nielsen//NetRatings survey of web sites visited by African Americans gives a clear indication that this population segment is interested in content relevant to their particular racial and ethnic group.

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Methodology

Introduction Top Five Websites* Visited by US African American

Internet Users At-Home Internet Users, August 2001 (in thousands of

Internet Households unique visitors)

Internet Access Devices: PC, TV and Mobile Devices BlackPlanet.com 929 Online Demographics

Usage BET.com 593

Special Targets CollegeClub.com 213 Canada Online

Index of Charts Aaliyah2001.com 150

Ohhla.com 137

According to Access Worldwide, Hispanics, no matter what their internet experience, seem more inclined to purchase products online than African Americans. For both groups, however, there is a strong correlation between level of internet experience and willingness to purchase online.

Wired African Americans and Hispanics Purchasing Products Online, 2000 (as a % of both groups and their years of online experience)

3 or more 40% 42%

3 or less 19% 26%

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Methodology In August 2001, the Cultural Access Group indicated that both Hispanics Introduction and African Americans are less inclined to research and purchase products Internet Users online than those in the wider population. Internet Households

Internet Access Devices: PC, TV and Mobile Devices US Online Product Researchers and Purchasers, Online Demographics by Race, January 2001 (as a % of internet users in Usage each category) Special Targets

Canada Online Research

Index of Charts 74% 59% 54%

Purchase 69% 32% 31%

This ﬁnding is also conﬁrmed by Pew Internet & American Life Project, which showed that Whites are far more likely to purchase online than Blacks or Hispanics.

Ethnic Groups Purchasing Online, 2001

Hispanics 41%

Whites 49%

Blacks 40%

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Methodology D. Hispanics Introduction Internet Users With a population over 34 million in the US, Hispanics are the largest Internet Households ethnic minority. In January 2001, Cheskin Research reported that 47% of Internet Access Devices: PC, TV and Mobile Devices their Hispanic respondents had a computer.

Online Demographics Usage Hispanic Households with a Computer, Q1 2000 vs. Q4 Special Targets 2000 (as a % of respondents) Canada Online Index of Charts Q1 2000 42%

Q4 2000 47%

eMarketer estimates that the non-white Hispanic audience online will grow from approximately 9 million in 2000 to over 22 million by 2004. Roslow Research Group reported in June 2001 that only 43% of US Hispanics had accessed the internet in the past 30 days from March 2001.

US Hispanic Internet Usage, March 2001 (as a % of Hispanic internet users)

No use in past thirty days 20% Used in the past 30 days 43%

No internet use 37%

According to Pew Internet & American Life survey in July 2001, 50% of Hispanics who are 18 and older have used the internet. Overall, they point out 11 million Hispanic adults have accessed the internet. This was a 25% increase from their previous measurement in March 2000. According to the proﬁle of Hispanic internet users painted by Pew, there is a predominance of young people who earn less than $50,000 per year. They are also well educated and there is parity between men and women online.

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Methodology

Introduction Hispanic and General Internet Population

Internet Users Demographics, 2001 Internet Households Total Hispanic Internet Access Devices: Internet Internet PC, TV and Mobile Devices Population Users Online Demographics Gender Usage Special Targets Male 50% 50% Canada Online Female 50% 50% Index of Charts Age 18-24 17% 30% 25-34 24% 31% 35-44 26% 23% 45-54 19% 11% 55-64 9% 3% 65+ 4% 2% Income Under $30,000 38% 50% $30,000-$50,000 27% 25% $50,000-$75,000 17% 14% $75,000+ 18% 12% Education Less than high school 6% 9% High school graduate 27% 33% Some college 31% 32% College graduate 37% 26% Source: Pew Internet & American Life Project, 2001 030712 ©2001 eMarketer, Inc. www.eMarketer.com

According to Cheskin Research, the top web properties favored by US Latinos are the portals – Yahoo and MSN. A recent survey by the Association of Hispanic Advertising Agencies found that roughly half of Hispanic internet users spoke Spanish as their primary language. A demographic survey conducted by the Cultural Access Group also revealed that only 14% of the Hispanics within their survey group were born in the US, compared to Blacks at 95% and their General Market respondents at 92%. This gives a clear indication that language is a signiﬁcant factor when trying to reach the Hispanic online population. A lack of relevant Hispanic/Spanish content may be holding Hispanics back from greater internet access and use. In June 2001, Roslow Research Group reported that US Hispanic internet users still spend a great deal of their internet time using Spanish. This is an important consideration to marketers trying to reach this group.

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Methodology

Introduction Time US Hispanic Internet Users Spend Online Using

Internet Users English and Spanish, March 2001 (as a % of Hispanic

Internet Households internet users)

Internet Access Devices: PC, TV and Mobile Devices

Online Demographics

Usage Special Targets Spanish Canada Online 39%

Index of Charts English 61%

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Methodology E. Broadband Users Introduction Internet Users The broadband user is attractive for marketers because typical household Internet Households income is far higher than the average dial-up user – not surprising, since Internet Access Devices: PC, TV and Mobile Devices broadband is approximately twice as expensive as dial-up. The Online Demographics demographic proﬁle of the broadband user is very much that of the ‘early Usage adopter’ proﬁle – male, well educated, with higher than average income. Special Targets

Canada Online Characteristics of a Broadband User in the US, 2000 Index of Charts Broadband Narrowband Male 75% 49% Mean age 37 38 College or graduate degree 40% 21% Married 62% 40% Household income $65,000 $40,000 Internet experience > 3 years 60% n/a Hours spent online per week 22hrs 12hrs Made an internet purchase in the last year 44% 27% Source: [email protected]; Network33.com, 2000 022451 ©2001 eMarketer, Inc.022451 www.eMarketer.com

Not surprisingly, there is a strong correlation between household income and broadband.

Households with Broadband Access in the US, by Income, 2000

Under $15,000 7.7%

$15,000–$19,000 7.3%

$20,000–$24,999 7.7%

$25,000–$34,999 9.9%

$35,000–$49,999 8.8%

$50,000–$74,999 10.3%

$75,000 and over 13.8%

A new Digital Divide has emerged – between dial-up and Broadband Users. Comparing the demographic proﬁle of a broadband and dial-up user today is like comparing an average American internet user in 1996 with an average non-user.

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Methodology As Asian & Paciﬁc Islander households have a signiﬁcantly higher median Introduction income and internet penetration than any other racial or ethnic groups, it is Internet Users not surprising they top the list of broadband subscribers by race. Internet Households

Internet Access Devices: PC, TV and Mobile Devices US Broadband Penetration Rates, by Race/Ethnic Online Demographics Origin, 2000 Usage Special Targets Asian American 11.7% Canada Online

Index of Charts Pacific Islander 11.7% White 10.8%

Black 9.8%

Hispanic 8.9%

The 30 million afﬂuent households Spectrem Group predicts will be in the US by 2004 will be most likely to adopt broadband the fastest.

Affluent Households in the US, 2000--2004 (in millions)

2000 20.3

2001 22.5

2002 25.0

2003 27.8

2004 31.0

According to Forrester Research, San Francisco has the highest penetration of broadband users among its internet population, with one in ﬁve San Franciscan internet households having a broadband connection.

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Methodology

Introduction Top 20 Online (via Broadband) Cities in the US, 2001

Internet Users (as a % of households)

Internet Households

Internet Access Devices: San Francisco, CA 22% PC, TV and Mobile Devices

Online Demographics San Jose, CA 21% Usage Boston, MA 19% Special Targets

Canada Online Nashville, TN 17%

Index of Charts New Haven, CT 17%

Austin, TX 16%

Columbus, OH 16%

Seattle, WA 16%

Orlando, FL 15%

Orange County, CA 14%

Phoenix, AZ 14%

Central NJ 12%

Kansas City, MO 12%

Newark, NJ 12%

Raleigh-Durham, NC 12%

Dallas, TX 11%

Hartford, CT 11%

Washington DC 9%

Las Vegas, NV 8%

Salt Lake City, UT 4%

What is clear from recent Department of Commerce data is, that there are far fewer broadband households in rural America than within cities and urban centers. This is, no doubt, a reﬂection of the lack of broadband access, or the slow roll-out of high-speed networks outside of major urban centers.

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Methodology

Introduction US Broadband Households, by Geographic Residence,

Internet Users 2000 & 2001 (as a % of online households)

Internet Households US Internet Access Devices: PC, TV and Mobile Devices 10.7% Online Demographics 19.1% Usage

Special Targets Central cities Canada Online 12.2% Index of Charts 22.0%

Urban (not central cities) 11.8% 21.2%

Rural 7.3% 12.2%

Two of the important usage characteristics of broadband users are that they spend more time online and they download and access more streaming media than dial-up users. As the following chart illustrates, broadband users are an increasingly large proportion of the streaming user market. In 2000, broadband users made up only 19% of the total number of streaming media users. In November 2001, however, they made up 30% of all streamers.

Growth of Streaming Media Users in the US, by Access Speed, November 2000 & November 2001 (in millions of users)

Broadband users 6.6 12.7

Narrowband users 27.8 28.1

Total number of streamers 34.4 40.7

November 2000 November 2001 Source: Nielsen//NetRatings, December 2001 035798 ©2002 eMarketer, Inc. www.eMarketer.com Further evidence of the different usage patterns between dial-up and broadband users is presented below. Broadband users are more likely to listen to music online, watch videos online, conduct online banking and stock-related activity than dial-up users, according to Jupiter Media Metrix.

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Methodology

Introduction Online Activities of Broadband vs. Dial-Up Internet

Internet Users Users, 2001

Internet Households Listen to music Internet Access Devices: PC, TV and Mobile Devices 48% Online Demographics 30% Usage

Special Targets Download music Canada Online 46% Index of Charts 26%

Watch video 36% 18%

Conduct personal banking 48% 30%

Conduct stock related activity 35% 23%

F.Mobile Internet Users While mobile internet access has only recently become available in the US, the potential user base is expected to become quite large. eMarketer expects mobile internet users to grow to 64 million by 2004 from only 4 million in 2000. According to Taylor Nelson Sofres, wireless web device owners tend to be young, affluent males, 18 to 34 years of age, with household income of $100,000 or more. Their profile reflects the early internet adopters who were seen five years ago when the Internet was still in its fledgling stages. Their study further showed 11% of all adults surveyed said they, or someone in their household, plan to buy a wireless web device to access the internet this year. Forrester Research painted a picture of the wireless data user in 2000. Like Taylor Nelson Sofres’ findings, the profile is that of an early technology adopter – young, male, well educated, and earning more than average.

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Methodology

Introduction Profile of Americans Who Are and Aren't Interested in

Internet Users Wireless Data, 2000 Internet Households Of those not interested Of those who are interested Internet Access Devices: PC, TV and Mobile Devices 72% are 40 or over 52% are under 40 Online Demographics 57% are female 52% are male Usage 76% earn less than $50,000 40% earn more than $50,000 Special Targets

“While the primary market will continue to attract those 18 to 34 years of age, this technology is quickly gaining popularity with the 35 to 44 year old population.” –Taylor Nelson Sofres, 2001

Of those wireless internet users, Taylor Nelson Sofres found that 83% use the device for personal use.

General Uses for Wireless Internet among US Device Owners, 2001

Personal use 83%

Work use 49%

School use 30%

The business sector is one area where wireless and mobile internet will be particularly popular according to the International Data Corporation (IDC). They expect that over 50% of all wireless internet users will be from the business sector by 2005. Similarly, Cahners In-Stat suggests in their October 2001 report that, demographically, the largest markets for wireless data services over the next ﬁve years will be the consumer and large business markets.

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Methodology They also forecast that the number of wireless data subscribers in small Introduction businesses will grow from 765,000 in 2000 to more than 7.3 million in 2005. Internet Users Internet Households US Wireless Internet Users, 2000-2005 (in millions) Internet Access Devices: PC, TV and Mobile Devices 2000 Online Demographics

Usage 5.0 Special Targets 2.6

Canada Online 2005 Index of Charts 84.0 49.0

As on the wired web, e-mail is the most popular activity for wireless internet users.

Top 10 Wireless Internet Activities for Wireless Internet Device Owners in the US, 2001 (as a % of owners)

E-Mail 69% Research 32% Games 26% News 25% General entertainment 24% Shopping/buying 21% Sports scores 20% Travel arrangements 19%

Stock quotes 19% Paying bills 8%

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Methodology Of those applications and content desired by wireless internet users, Introduction downloading digital music is extremely desirable to 18 to 24 year olds; less Internet Users so to 25 to 36 year olds. The greatest desire for the so-called Gen-X group Internet Households

Internet Access Devices: is map and directions. PC, TV and Mobile Devices Online Demographics Wireless Data Applications Desired by Young Adults Usage in the US, 2001 Special Targets Canada Online Downloading digital music Index of Charts 15% 5%

GPS services 9% 10%

Instant messaging 8% 4%

Web browsing 7% 8%

Fax services 7% 5%

Maps/directions 6% 12%

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North America Online

Methodology

I Introduction

II Internet Users

III Internet Households

IV Internet Access Devices: PC, TV and Mobile Devices

V Online Demographics

VI Usage

VII Special Trends VIII Canada Online 173 A. Internet Users 174 B. Internet Households 180 C. Households Online, by Technology 183 VIIID. PC Penetration 192 E. Online Demographics 194 F.Usage 216 G. Mobile Internet Users and Usage 232 H. Summary of Findings 236

Index of Charts

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Methodology Canada has been one of the most ‘wired’ nations for some years now. In Introduction 2000, the Internet Industry Almanac ranked Canada ﬁrst in the world in Internet Users internet use, with 428 users for every 1000 people, and in 2001 the Internet Households

Internet Access Devices: Organization for Economic Cooperation and Development (OECD) ranked it PC, TV and Mobile Devices second only to South Korea in broadband penetration. An educated, Online Demographics

Usage relatively afﬂuent population living predominantly in major metropolitan

Special Targets areas, combined with good ﬁxed infrastructure and high usage of other Canada Online media has been a good recipe for widespread internet use in Canada. The Index of Charts fact that it shares a border with the largest internet market in the world has not hurt its internet development, either.

A. Internet Users With a population density of only eight people per square mile and the largest territory of any country in the Western hemisphere, Canadians have always put a premium on communications across great distances. Not surprisingly, Canadians have eagerly embraced the internet, and lead the G7 group of nations in internet penetration at an impressive 45.6% in 2001. The number of internet users is expected to rise from 14.4 million in 2001 to 19 million in 2004.

Internet Users in Canada, 2000-2004 (in millions)

2000* 12.7

2001 14.4

2002 16.0

2003 17.5

2004 19.0

Note: *eMarketer's year 2000 baseline figure comes from the ITU's estimate of internet users aged 2 years and over who have accessed the internet in the last 30 days Source: eMarketer, 2001 035803 ©2002 eMarketer, Inc. www.eMarketer.com

eMarketer expects a compound annual growth rate between 2000 and 2004 of nearly 11%, which is signiﬁcantly lower than most of the other countries within the G7 due to Canada’s already high penetration rate.

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Methodology

Introduction Internet Users in G-7 Countries, 2000-2004 (in millions) Internet Users 2000* 2001 2002 2003 2004 CAGR** Internet Households 2000-2004 Internet Access Devices: PC, TV and Mobile Devices Canada 12.7 14.4 16.0 17.5 19.0 10.6% Online Demographics France 8.5 11.7 15.0 18.2 21.5 26.1% Usage Germany 24.0 33.1 42.3 45.6 47.9 18.9% Special Targets Italy 6.0 8.3 10.6 12.9 15.2 26.1% Canada Online

Index of Charts Japan 47.1 51.7 56.4 61.0 65.7 8.7% UK 15.4 21.3 23.4 25.7 28.3 16.4% US 95.4 119.0 136.0 151.8 165.5 14.8% Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days; **Compound Annual Growth Rate Source: eMarketer, December 2001 034874 ©2001 eMarketer, Inc. www.eMarketer.com

Near neighbor the United States has long played second ﬁddle to Canada in terms of internet penetration, and this is likely to continue for the foreseeable future. It is expected that more than half of all Canadians will be regular (online at least once every 30 days) internet users in 2002 and nearly 60% by 2004. Comparative estimates from a number of research ﬁrms suggest that already more than 50% of the population are internet users.

Internet Users in Canada, 2000-2004 (as a % total population)

2000 40.6%

2001 45.6%

2002 50.2%

2003 54.3%

2004 58.4%

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Methodology

Introduction Internet Users in G-7 Countries, 2000-2004 (as a % of

Canada Online Italy 10.4% 14.4% 18.3% 22.3% 26.2%

Comparative Estimates: Internet Users in Canada eMarketer uses the International Telecommunication Union’s 2000 estimate of 12.7 million users as its baseline metric to formulate its projections, which also corresponds well with Statistics Canada’s estimate of 13 million users in 2000.

Comparative Estimates: Internet Users in Canada, 1999-2004 (in millions) 1999 2000 2001 2002 2003 2004 Computer Industry Almanac (CIA) – 13.1 –––– eMarketer* – 12.7 14.4 16.0 17.5 19.0 eTForecasts – 15.2 –––– International Data Corporation (IDC) 11.0 12.7 –––23.7 Jupiter Media Metrix – 12.0 14.2 ––– Netsizer: Telcordia Technologies ––24.5 ––– Nielsen//NetRatings ––14.4 ––– Statistics Canada – 13.0 –––– Note: *eMarketer's year 2000 baseline is from the International Telecommunication Union's estimate of internet users aged 2 years and older, who have accessed the internet within the previous 30 days Source: eMarketer, December 2001; various, as noted, 2000 & 2001 034891 ©2001 eMarketer, Inc. www.eMarketer.com

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Methodology In December 2001, Nielsen//NetRatings released ﬁgures that suggested Introduction there were 10.3 million active home internet users in Canada and an Internet Users estimated 17 million Canadians with internet access from all locations. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Canadians with Home Internet Access and Active Online Demographics Internet Users, December 2001 (in millions) Usage Special Targets Active internet users 10.3 Canada Online

Index of Charts Home internet access 17.1

PricewaterhouseCoopers’ May 2001 Global Internet and Media Report projects that there were 14 million internet users in Canada in 2001, rising to 21 million by 2005. This equates to a penetration of the population of 45.9% in 2001 rising to over two-thirds of the population by 2005.

Internet Users in Canada, 2000-2005 (in millions and penetration rate)

2000 11.9 (39.3%)

2001 14.0 (45.9%)

2002 15.8 (51.5%)

2003 17.6 (57.0%)

2004 19.3 (62.1%)

2005 21.0 (67.1%)

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Methodology Putting the variety of comparative estimates in one chart helps illustrate the Introduction massive divergence between different research ﬁrms. Different deﬁnitions of Internet Users internet users or internet access, or home internet access, or sample size, all Internet Households

Internet Access Devices: mean that research ﬁrms are measuring slightly different metrics. PC, TV and Mobile Devices Online Demographics Comparative Estimates: Internet Access in Canada, Usage 2001 (as a % of population) Special Targets Canada Online Jupiter Media Metrix 44.9% Index of Charts eMarketer 45.6%

Pricewaterhouse Coopers 45.9%

Nielsen//NetRatings 55.0%

NFO CFgroup (at home access) 56.0%

AC Nielsen (in 2000) 57.0%

Taylor Nelson Sofres 60.0%

Ipsos-Reid (2000) 60.0%

NFO CFgroup (all locations) 69.0%

Netsizer Telcordia Technologies 78.8%

AC Nielsen, one of the few local research ﬁrms that have examined the Canadian internet sector for some time, indicate in their latest internet survey that 57% of Canadians, 12 years of age and above, were accessing the internet in 2000. The Electronic Commerce Branch of Industry Canada refer to the AC Nielsen ﬁgures within its publications.

Canadian's Accessing the Internet, 1996-2000 (as a % of total population)

1996 23%

1997 31%

1998 37%

1999 49%

2000 57%

Taylor Nelson Sofres’ recent global study of internet and e-commerce use suggests that 60% of the Canadian population are internet users. Their deﬁnition of an internet user is someone who has personally used the internet in the last 30 days.

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Methodology

Introduction Internet Users in Canada, 2001 (as a % of the

Internet Users population)

Internet Households

Internet Access Devices: PC, TV and Mobile Devices

Online Demographics Usage Non user Special Targets 40% Canada Online Internet user Index of Charts 60%

Source: Taylor Nelson Sofres, 2001 030318 ©2001 eMarketer, Inc. www.eMarketer.com This corresponds well with Ipsos-Reid’s global internet study which showed that, in 2000, 60% of the Canadian population accessed the internet in the last 30 days.

Percent of Population that Accessed the Internet in the Last 30 Days in Canada, 1999 & 2000 (as a % of total population)

1999 56%

2000 60%

Angus Reid & Columbus Group suggest that 70% of Canadian adults had internet access in 2000, rising a full 15 percentage points from 1999. Those adult users who go online at least one hour per week totaled 52% of the adult population.

Internet Use of Canadian Adults, 1999 & 2000

Canadian adults with internet access 55% 70%

Users who go online at least one hour per week 41% 52%

Recent data from the NFO Group indicates that 69% of Canadian adults had internet access in November 2001. Their deﬁnition covers internet access from any location.

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Methodology B. Internet Households Introduction Internet Users The Canadian Government’s Statistics Bureau – Statistics Canada - has Internet Households increased its scope and analysis of the Canadian internet sector over the Internet Access Devices: PC, TV and Mobile Devices last 12 months and they released a number of ﬁndings during 2001. Their Online Demographics data shows that of the 11.8 million households in the country in 2000, there Usage were 6.9 million households containing at least one member who had Special Targets accessed the internet in their lifetime. Further, 6.1 million households (51%) Canada Online

Index of Charts contained at least one regular (accessed in last 30 days) internet user, accessing the internet from any location. This was a signiﬁcant advance from 42% in 1999, the last time the survey was taken.

Canadian Households with an Internet User, 1999 & 2000 (in millions)

1999 11.6 4.9

2000 11.8 6.1

All households Households with a regular internet user, any location (last 30 days) Note: 33,832 households responded to Statistics Canada's survey in January 2001 Source: Statistics Canada, 2001 035808 ©2002 eMarketer, Inc. www.eMarketer.com

This is somewhat of a curious measure the government body has come up with, as it would be incorrect to state that 51% of Canadian households in 2000 were online. Their data indicates that 51% of Canadian households contain an internet user who accesses the internet from any location. Nevertheless, one can see the impressive growth since 1998 when only 36% of Canadian households contained an internet user.

Canadian Households with an Internet User, 1998-2000 (as a % of total households)

1998 35.9%

1999 41.8%

2000 51.3%

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Methodology Statistics Canada’s 2000 Internet Survey further breaks down the number Introduction of households by the type of internet user contained within. For example: Internet Users a “home-use household” is deﬁned as one containing an internet user Internet Households

Internet Access Devices: accessing the internet in the last month. PC, TV and Mobile Devices an “internet shopper” is a home-user who engaged either in window- Online Demographics

Usage shopping or e-commerce within the last 12 months

Special Targets a “window shopper” is a someone who browsed goods and services but Canada Online did not place orders over the Internet Index of Charts an “e-commerce households” are those that placed at least one order over the Internet from home, regardless of whether or not they paid online an “ePayment household” is one which has made an online payment for at least one of their transactions (this is a subset of e-commerce households).

Of the 6.1 million households containing a regular internet user in 2000, only 4.8 million households contained an internet user who said that they accessed from home. From these ﬁgures, we can draw the conclusion (however perilous) that at least 41% of Canadian households were online in 2000. This is a signiﬁcant increase from 1999 when only 28.4% of households contained a home internet user. Furthermore, of the 4.8 million households containing a home internet user, only 1.2 million (25%) actually purchased something online.

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Methodology

Introduction Canadian Households with an Internet User, by Type

Internet Users of User, 1999 & 2000 (in millions)

Internet Households Internet user from any location Internet Access Devices: PC, TV and Mobile Devices 4.9 Online Demographics 6.1 Usage

Special Targets Home-use households Canada Online 3.3 Index of Charts 4.8

Internet shopper 1.8 2.6

Window shopper 0.98 1.1

E-commerce 0.81 1.5

E-payment 0.61 1.2

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Methodology C. Households Online, by Technology Introduction Internet Users Statistics Canada suggests that in 2000 there were 3.7 million households Internet Households with a dial-up connection and 1 million households with a cable modem Internet Access Devices: PC, TV and Mobile Devices connection. Data from the Organization for Economic Cooperation and Online Demographics Development (OECD) indicate that at the end of 2000 there were Usage additionally 400,000 digital subscriber line (DSL) households in Canada. Special Targets This indicates that there were 5.1 million households in Canada with Canada Online

Index of Charts internet access at the end of 2000. Putting all the data together, eMarketer estimates online households in Canada will rise from 5.1 million in 2000 to 7.6 million in 2002.

Dial-Up and Broadband Households in Canada, 2000-2002 (in millions)

Dial-up 3.7 4.2 4.0

Broadband (cable and DSL) 1.4 2.6 3.6

Total online households 5.1 6.8 7.6

This equates to 44% of Canadian households online in 2000, rising rapidly to 63.8% of all households by the end of 2002.

Canadian Households Online, 2000-2002 (as a % of total households)

2000 44.0%

2001 58.1%

2002 63.8%

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Methodology Dial-Up Introduction

Internet Users

Internet Households “Dial-up isn’t dead yet: Two-thirds of internet users Internet Access Devices: stick to the old standby.” –Mark Evans, Financial Post – Canada PC, TV and Mobile Devices

Online Demographics Nov 19, 2001

Usage Special Targets Despite having one of the highest broadband penetrations in the world, Canada Online more Canadians are still accessing the internet through dial-up than a Index of Charts high-speed connection, but this may not last much longer. Toronto-based Convergence Consulting Group, suggests that dial-up will continue to be attractive to many, particularly those in rural and regional areas where high-speed access is not available or is too expensive. As in other countries around the world, broadband is still twice as expensive as dial-up (averaging CAD$40-$45), and few people can justify the outlay if their major internet activities are casual web surﬁng and e-mail. One of the fastest growing ISPs in Canada is AOL Canada, which has seen its dial-up subscriber base double to 400,000 in the year ending 2001 according to Convergence Consulting Group. eMarketer forecasts that, by 2003, there will be more broadband households in Canada than dial-up.

“What I am looking for is mostly sports, news and e- mail. I’m not really concerned about how fast I get there.” –Ky Shim, Canadian casual internet user, 2001

Broadband At the end of 2000, Canada was ranked second only to South Korea in the OECD in terms of overall broadband penetration. In the OECD’s report, released in November 2001, they estimated there were 1.4 million broadband households in Canada at the end of 2000 and over 1.9 million in June 2001. eMarketer forecasts that by the end of 2002 there will be 3.6 million broadband households, rising to 7.5 million by 2004.

Broadband* Households in Canada, 2000-2004 (in millions)

2000** 1.4

2001 2.3

2002 3.6

2003 5.3

2004 7.5

Note: *cable and DSL; **eMarketer's year 2000 baseline is from the Organization for Economic Cooperation and Development (OECD) Source: eMarketer, December 2001 035813 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology eMarketer’s baseline 2000 estimate is drawn from the OECD which has Introduction analyzed the broadband markets across the 30 member countries. Internet Users

Internet Households Comparative Estimates: Broadband Households in Internet Access Devices: PC, TV and Mobile Devices Canada, 2000-2002 (in millions) Online Demographics 2000 2001 2002 Usage Kinetic Strategies (2000) 0.98 - - Special Targets

Canada Online Statistics Canada (2001)* 1.0 - - Index of Charts Ovum (2000) 1.3 1.89 2.14 OECD (2001)** 1.4 1.9 - eMarketer 1.4 2.3 3.6 Convergence Consulting (2001) - 2.6 3.9 Note: *cable only; **estimate to June 2001 Source: eMarketer, 2002; various, as noted, 2000 & 2001 035814 ©2002 eMarketer, Inc. www.eMarketer.com

Comparing broadband penetration in Canada to the US, one can clearly see that broadband has been adopted by a far greater percentage of households in Canada. One of the main reasons for this has been aggressive promotion and low prices from the broadband providers. Many industry analysts question, however, how long broadband providers will be able to subsidize their broadband offerings while still meeting proﬁt goals. Recent price hikes by a number of providers may indicate that the honeymoon period for broadband is over in Canada.

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Methodology

Introduction Broadband Penetration in Canada and the US,

Internet Users 2000-2004 (as a % of total households)

Internet Households 2000 Internet Access Devices: PC, TV and Mobile Devices 11.8% Online Demographics 5.8% Usage

Special Targets 2001 Canada Online 19.5% Index of Charts 10.6%

2002 30.3% 16.2%

2003 44.3% 23.3%

2004 61.9% 31.3%

Canada US Note: eMarketer has determined its forecasts based on end of year 2000 figures from the Organization for Economic Cooperation and Development (OECD) Source: eMarketer, 2001 035815 ©2002 eMarketer, Inc. www.eMarketer.com

Canada’s impressive head start in broadband adoption sees it lead the G7 in broadband household penetration.

Broadband Household Penetration in G-7 Countries, 2000-2004 2000 2001 2002 2003 2004 Canada 11.8% 19.5% 30.3% 44.3% 61.9% US 5.8% 10.6% 16.2% 23.3% 31.3% Japan 1.4% 3.6% 8.1% 13.7% 23.4% Germany 0.7% 4.1% 7.7% 15.5% 23.6% UK 0.2% 1.2% 3.0% 8.5% 19.4% France 0.8% 2.7% 5.6% 11.9% 18.6% Italy 0.5% 2.2% 6.2% 11.2% 20.9% Note: eMarketer has determined its forecasts based on end of year 2000 figures from the Organization for Economic Cooperation and Development (OECD) Source: eMarketer, 2001 035816 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Globally, however, Canada ranked only fourth in broadband penetration at Introduction the end of 2001. Considering the vast expanse of Canada compared to Internet Users countries such as South Korea, Singapore and Hong Kong, the fact that the Internet Households

Internet Access Devices: supply of broadband networks are so widespread in Canada is a PC, TV and Mobile Devices phenomenon in itself. Online Demographics

Usage Top Ten Countries Ranked by Broadband Penetration, Special Targets End of 2001 (as a % of all households) Canada Online

Index of Charts South Korea 44.8%

Singapore 24.4%

Hong Kong 20.0%

Canada 19.5%

Sweden 13.6%

Taiwan 12.1%

US 10.6%

Netherlands 10.6%

Belgium 7.3%

Austria 7.2%

With a very well developed ﬁxed-line telecommunications infrastructure and widespread cable TV penetration throughout the country, a variety of broadband technologies are available to wide sections of the Canadian population. This has meant there has been competition both on product and price, which is one of the main reasons for the fast adoption of broadband in Canada. Cable providers have had a head start over DSL providers, but aggressive pricing and bundling of telephony products with high-speed internet have made DSL increasingly popular.

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Methodology

Introduction Broadband Households in Canada, by Access

Internet Users Technology, 2000-2004 (in millions)

Internet Households 2000* Internet Access Devices: PC, TV and Mobile Devices 1.0 Online Demographics 0.4 Usage 1.4 Special Targets Canada Online 2001 Index of Charts 1.4 0.9 2.3

2002 2.0 1.6 3.6

2003 3.0 2.3 5.3

2004 4.0 3.5 7.5

Cable DSL Total Note: *eMarketer's year 2000 baseline is from the Organization for Economic Cooperation and Development (OECD) Source: eMarketer, December 2001 035817 ©2002 eMarketer, Inc. www.eMarketer.com

Cable Extensive upgrades of the cable television network over the last 2 years has meant that all major cable operators are offering cable internet services to the vast majority of their subscribers. Recent ﬁgures indicate that Shaw Communications is the leading cable provider in Canada with over 2.8 million cable TV subscribers at the end of 2001, followed by Rogers with 2.3 million.

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Methodology

Introduction Canadian Cable TV Subscribers, by Provider, 2001 (in

Internet Users thousands)

Internet Households

Internet Access Devices: Shaw 2,846 PC, TV and Mobile Devices

Online Demographics Rogers 2,280 Usage Videotron 1,552 Special Targets Canada Online Cogeco 892

Index of Charts ExpressVU 847

Cable has taken an early lead over other broadband technologies in Canada. Aggressive pricing from Shaw Communications and Rogers has made broadband reasonably affordable to wide sections of the population.

Cable Modem Broadband Households in Canada, 2000-2004 (in millions)

2000* 1.0

2001 1.4

2002 2.0

2003 3.0

2004 4.0

DSL With high ﬁxed-line telephone penetration, a competitive telecom environment and an early rollout of DSL services, Canadians are embracing DSL services at a faster rate than cable modems. eMarketer expects the number of DSL subscribers to match cable in the next few years.

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Methodology

Introduction DSL Broadband Households in Canada, 2000-2004 (in

Internet Users millions)

Internet Households

Internet Access Devices: 2000* 0.4 PC, TV and Mobile Devices

Online Demographics 2001 0.9 Usage 2002 1.6 Special Targets Canada Online 2003 2.3

Index of Charts 2004 3.5

Fixed Wireless Fixed wireless is an alternative to cable and DSL that utilizes microwave technology. Auctions for fixed-wireless spectrums in Canada took place in 1998 and 1999, with a number of commercial offerings following shortly afterward. While broadband fixed wireless will predominantly be a last- mile solution targeted at businesses, the market in Canada is expected to grow rapidly in the coming years and may well suit regions where cable or fixed-line infrastructure is less developed.

Satellite Both Bell Canada Enterprises and Shaw Communications have plans to offer two-way satellite access in the coming years. Shaw has been licensed to place its own Ka-band satellite into the 107.3 degrees west orbital slot. This commercial satellite, the first not owned by Bell Canada, will allow two-way speeds between 300 to 500 Kbps. It is expected to be in service in 2004. The sheer size of Canada means that fixed-line services will not be available to all rural areas. Satellite internet offers a viable means of internet access for many of those not serviced by cable or DSL. Satellite may help bridge the ‘digital divide’ experienced by some in rural regions. Ovum is one research firm that is predicting that alternative broadband technologies such as fixed-wireless, satellite and even fiber, will garner significant subscribers in the next few years in Canada.

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Methodology

Introduction Subscribers to Broadband by Alternative

Internet Users Technologies in Canada, 2000-2004 (in millions)

Internet Households

Internet Access Devices: 2000 0.12 PC, TV and Mobile Devices

Online Demographics 2001 0.21

Usage 2002 0.35 Special Targets Canada Online 2003 0.56

Index of Charts 2004 0.95

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Methodology D. PC Penetration Introduction Internet Users The personal computer is far and away the favored means of accessing the Internet Households internet in Canada and household PC penetration is growing rapidly. It is Internet Access Devices: PC, TV and Mobile Devices no real surprise that there is a strong correlation between PC ownership Online Demographics and internet access, AC Nielsen’s 2000 survey of internet usage suggests Usage that 79 per cent of computer-owning households had Internet access in Special Targets 2000—up from 68 per cent in 1999. Canada Online

Index of Charts Statistics Canada estimates 55% of households had a computer in 2000 with an almost equal amount having a modem as well.

Home Computer and Modem Penetration in Canada, 1998-2000 (as a % of households)

1998 45.0% 31.9%

1999 49.8% 38.5%

2000 54.9% 46.6%

The International Telecommunication Union estimates that there are 39 personal computers for every 100 inhabitants in Canada. Compared to the US, which has over 58 computers per 100 inhabitants, this is relatively low. One would assume there is a high percentage of the population in the US with multiple PCs.

PCs per 100 Inhabitants in North America, 2000

US 58.5

Canada 39.0

A study by Ipsos-Reid and Industry Canada, however, estimates that 62% of the population had access to a home computer in the third quarter of 2000.

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Methodology

Introduction Computer Access in Canada, Q3 2000 (as a % of the

Internet Users population)

Internet Households

Internet Access Devices: PC, TV and Mobile Devices

Online Demographics Usage No access Special Targets 38% Canada Online

Index of Charts Computer access 62%

Source: Ipsos-Reid/Canadian IT Review, 2000; Industry Canada, 2000 030955 ©2001 eMarketer, Inc. www.eMarketer.com That same study indicated that the Province of Alberta leads the country in home computer penetration, at 68%.

Canadians with Home Computers, by Province, Q3 2000 (as a % of the population)

Alberta 68%

British Columbia 67%

Manitoba/Saskatchewan 67%

Ontario 66%

Quebec 54%

Atlantic Canada 51%

AC Nielsen’s April 2001 survey of Canadian households shows that in 2000, 69% of households owned a PC, a rise of 8% from the previous year.

Percent of Canadian Households Who Own a PC, 1999 & 2000 (as a % of total households)

1999 61%

2000 69%

The AC Nielsen study also indicated that, when survey respondents were asked about the primary use of their PC, “accessing the internet” was the most common answer at 36%, up from 27% in the previous year’s study. The variety of estimates for PC penetration clearly suggests that at least 60% of households had access to a computer in 2001.

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Methodology E. Online Demographics Introduction Internet Users Statistics Canada estimates the population in 2001 was 31.1 million with Internet Households females being approximately 50.5% of the total. Internet Access Devices: PC, TV and Mobile Devices

Online Demographics Population in Canada, by Gender, 2001 (in millions)

Usage

Special Targets

Canada Online

Index of Charts Male 15.4

Female 15.7

In 2000, the median age was 36.8. Statistics Canada does point out, however, that by 2026 half the population will be over the age of 43.6 and, by 2051, the projected median age will be 46.2.

Population in Canada, by Age Group, 2001 (as a % of total population)

0-14 18.8%

15-19 6.7%

20-34 20.9%

35-54 31.6%

55+ 22.0%

The average household income is approximately CAD$42,300, but, as can be seen from the data below, lone-parent households have less than half that amount at their disposal.

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Methodology

Introduction Household Income in Canada, by Household Type,

Internet Users 1998 (in CAD $)

Internet Households

Internet Access Devices: Husband-wife $52,500 PC, TV and Mobile Devices

Although Canada’s overall connectivity is high and they are world leaders in the internet, evidence from a number of sources conﬁrms the existence of a “digital divide,” as seen in the US. To quote from the report of the National Broadband Taskforce report released in 2001,

“internet users differ from non-users in average age, education and income. Non-users of the internet are more likely to be older individuals and are more likely to have less education and lower household incomes than internet users. Non-users are more likely to be women than men in every age group. Francophones are less likely to use the internet than Anglophones, and those living in rural Canada are less likely to use the internet than urban dwellers.”

The report further adds that when non-users were asked to identify the greatest barrier that keeps them from using the internet, cost was cited by the largest percentage of people. Lack of access to computers or the internet was the second most often cited barrier. Non-users with the lowest incomes were most likely to report cost as a barrier to internet use. Of those with less than $20,000 household income, 42 % reported cost as a barrier to use, compared to the next income level, where 35 % reported cost as a barrier.

Canadian Households for Which Cost is the Main Barrier to Internet Use, 2001 (as a % of households with an annual income of less than CAD $30,000)

<$20,000 42%

$20,000-$29,999 35%

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Methodology At the other end of the scale, not having enough time is a major barrier for Introduction non-users earning over $50,000 and is reported by a higher percentage of Internet Users non-users earning more than $80,000 than any other income group. Internet Households

Internet Access Devices: PC, TV and Mobile Devices

Online Demographics

Usage Experience of Internet Users

Special Targets One of the distinctive characteristics of Canadians online is that they are Canada Online very experienced internet users. With a population that has embraced the Index of Charts internet from its inception in the mid 1990s, Canadians are some of the most experienced internet users in the world. The data below, which speciﬁes that 50% of Canadian internet users in 2000 have had internet access for three years or more, paints a clear picture of the level of experience.

Canadians with Internet Access, by Length of Access, Q3 2000 55 50%

22%

15% 13% 11

According to Ipsos-Reid & Industry Canada, the province that contains the most number of experienced internet users is Ontario.

Canadians that Have Had Internet Access for Three or More Years, by Region, Q3 2000

Ontario 55%

Atlantic Canada 49%

British Columbia 49%

Manitoba/Saskatchewan 46%

Alberta 46%

Quebec 45%

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Methodology The province with the least number of experienced internet users in 2000 Introduction was Quebec, but they also have the highest number of new internet users. Internet Users Internet Households Canadians that Have Had Internet Access for Less Internet Access Devices: PC, TV and Mobile Devices Than One Year, by Region, Q3 2000

Online Demographics

Usage Quebec 16%

Special Targets Manitoba/Saskatchewan 16% Canada Online Index of Charts Alberta 15%

British Columbia 14%

Atlantic Canada 12%

Ontario 10%

Location of Access The home is the most popular location from which to access the internet in Canada, but many internet users also access the net at work, school, public libraries and cyber cafes. In March 1999, Canada became the ﬁrst nation in the world to connect all its public schools and libraries to the internet. According to Statistics Canada, about 28% of households had someone who used the Internet at work in 2000, compared with 22% in 1999 and 23% in 1998. About one in ﬁve households had someone who regularly used the Internet at school, the third most popular location.

Canadian Households with At Least One Regular Internet User, by Access Location, 1998-2000 (as a % of households) 1998 1999 2000 Access from any location 35.9% 41.8% 51.3% At home 22.6% 28.7% 41.0% Work 23.3% 21.9% 27.5% School 12.1% 14.9% 19.2% Library 4.3% 4.5% 6.5% Other 2.6% 3.9% 3.2% Note: n=approximately 34,000 reporting households Source: Statistics Canada, 2001 035831 ©2002 eMarketer, Inc. www.eMarketer.com

Recent data from the NFO Group indicates that 56% of adult Canadians have internet access at home, 36% at work, 13% at school and 5% from other locations.

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Methodology

Introduction Internet Users in Canada, by Access Location, 2001 (as

Internet Users a % of adult population)

Internet Households

Internet Access Devices: At home 56% PC, TV and Mobile Devices

Online Demographics Work 36% Usage School 13% Special Targets Canada Online Other 5%

Geographic Region In many internet markets around the globe there is a signiﬁcant difference between the internet penetration of those living within metropolitan areas compared with those living in rural areas. One of the main reasons is that the telecommunications infrastructure is often far less developed in rural regions. As Canada is such a vast country, it would be surprising if this were not the case. NFO Group’s data suggests that Ontario is the province with the highest internet penetration rate of its adult population as of November 2001.

Internet Penetration in Canada, by Province, 2001 (as a % of each province's population)

Ontario 75%

British Columbia 70%

Prairies 68%

Quebec 63%

Atlantic 62%

AC Nielsen data, recording internet penetration in 2000, however, pegged the province of British Columbia as having the highest penetration among the provinces, at 65%.

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Methodology

Introduction Internet Access in Canada, by Province, 2000 (as a %

Internet Users of respondents in province)

Internet Households

Internet Access Devices: Atlantic 48% PC, TV and Mobile Devices

Online Demographics Quebec 49% Usage Manitoba/Saskatchewan 55% Special Targets Canada Online Alberta 55%

Index of Charts Canada 57%

Ontario 60%

British Columbia 65%

This coincides with Statistics Canada’s survey, which also ranked British Columbia, Ontario and Alberta as the provinces having the greatest percentage of households with at least one internet user in 2000.

Canadian Households with At Least One Regular Home Internet User, by Province, 1998-2000 (as a % of households in each province) 1998 1999 2000 British Columbia 27.9% 35.8% 45.9% Ontario 25.5% 32.0% 44.1% Alberta 27.7% 34.1% 44.1% Canada (all provinces) 22.6% 28.7% 41.0% Nova Scotia 23.6% 26.7% 38.5% Manitoba 19.8% 24.7% 35.4% Prince Edward Island 17.1% 20.1% 34.4% Quebec 15.6% 21.2% 33.2% New Brunswick 18.1% 23.6% 32.5% Saskatchewan 18.2% 23.6% 32.5% Newfoundland 15.3% 18.1% 30.6% Source: Statistics Canada, 2001 035832 ©2002 eMarketer, Inc. www.eMarketer.com

Quebec’s low internet penetration relative to other provinces in Canada may have something to do with language preferences. Just as a large Hispanic minority in the US is forced to surf in their second language, French Canadians may be underserved in the virtual world: according to eMarketer, only 2.96% of all web pages are in French. But while Spanish language sites can be expected to grow to accommodate demand in Latin America, there is certainly less cultural and geographic continuity between the Quebecois and the vast reserve of French content generated primarily across the pond.

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Methodology The Canadian government has effectively enforced bilingual content on its Introduction extensive and well-designed sites, and the Ofﬁcial Languages Act of 1969 Internet Users (mandating equal treatment and dissemination of both French and English) Internet Households

Internet Access Devices: also applies to the internet. However, the limited scope of the Francophone PC, TV and Mobile Devices market makes it less appealing to transnational players, online and off. Online Demographics

Usage Drilling down further, Statistics Canada indicates that Ottawa and

Special Targets Calgary are the two metropolitan areas with the greatest percentage of Canada Online households containing at least one internet user. Index of Charts Canadian Households with At Least One Regular Internet User, by Metropolitan Area, 1998-2000 (as a % of households in each area) 1998 1999 2000 Ottawa 55.3% 56.7% 65.2% Calgary 52.8% 60.1% 65.2% Halifax 50.2% 52.4% 64.1% Vancouver 45.7% 49.7% 60.0% Edmonton 43.9% 48.8% 59.5% London 40.4% 45.9% 59.2% Victoria 48.5% 56.4% 59.1% Toronto 42.0% 48.5% 57.9% Hamilton 41.2% 43.1% 54.9% Winnipeg 37.9% 42.1% 53.9% Kitchener 42.4% 43.7% 52.7% Quebec 28.6% 33.9% 50.3% Windsor 26.8% 33.6% 47.5% Montreal 31.6% 39.1% 46.6% St. Catharines-Niagara 29.3% 34.4% 46.0% Source: Statistics Canada, 2001 035833 ©2002 eMarketer, Inc. www.eMarketer.com

The province with the greatest percentage of households containing an internet user who accesses the net from work is Alberta, followed by Ontario. British Columbia, which ranks number one in home internet users, ranks only 7th when it comes to internet users accessing from work.

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Methodology

Introduction Canadian Households with At Least One Regular Work

Internet Users Internet User, by Province, 1998-2000 (as a % of

Internet Households households in each province) Internet Access Devices: 1998 1999 2000 PC, TV and Mobile Devices

Online Demographics Alberta 31.7% 27.6% 36.1% Usage Ontario 25.6% 24.2% 30.9% Special Targets Canada (all provinces) 23.3% 21.9% 27.5% Canada Online

Index of Charts Prince Edward Island 21.9% 19.8% 27.5% Manitoba 22.1% 20.2% 27.4% Nova Scotia 22.8% 19.7% 27.0% Saskatchewan 21.4% 19.3% 26.4% British Columbia 26.7% 23.6% 26.2% New Brunswick 19.8% 19.2% 24.2% Newfoundland 17.1% 14.2% 22.0% Quebec 16.3% 17.2% 21.1% Source: Statistics Canada, 2001 035834 ©2002 eMarketer, Inc. www.eMarketer.com

Almost an equal number of households on Prince Edward Island have an internet user who accesses the net from school (25.1%) as accesses the net from home (34.4%). Households on Prince Edward Island also rank highly in terms of internet users who access from a public library. This would indicate that availability of home internet access is somewhat limited, probably due to the remote location on the province, and that users have had to seek public institutions in order to access the internet.

Canadian Households with At Least One Regular School Internet User, by Province, 1998-2000 (as a % of households in each province) 1998 1999 2000 Prince Edward Island 14.5% 19.0% 25.1% Alberta 17.6% 21.2% 24.5% Newfoundland 14.5% 18.0% 23.4% Nova Scotia 17.4% 14.5% 21.9% Ontario 12.6% 16.0% 20.6% Manitoba 12.5% 14.4% 19.9% Sascatchewan 13.9% 16.6% 19.3% Canada (all provinces) 12.1% 14.9% 19.2% British Columbia 13.1% 14.6% 17.8% Quebec 7.6% 11.2% 15.4% New Brunswick 12.3% 13.1% 14.8% Source: Statistics Canada, 2001 035835 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology Those using the Public Library to access the internet are Ontarians, above Introduction all others, according to Statistics Canada. Internet Users Internet Households Canadian Households with At Least One Regular Internet Access Devices: PC, TV and Mobile Devices Public Library Internet User, by Province, 1998-2000 Online Demographics (as a % of households in each province) Usage 1998 1999 2000 Special Targets Ontario 4.7% 4.9% 8.3% Canada Online

Index of Charts New Brunswick 4.7% 5.5% 7.9% British Columbia 5.6% 3.8% 7.0% Prince Edward Island 6.5% 6.4% 6.7% Alberta 4.8% 5.0% 6.5% Canada (all provinces) 4.3% 4.5% 6.5% Nova Scotia 2.4% 2.8% 6.1% Quebec 4.5% 3.6% 6.0% Newfoundland 3.7% 4.1% 5.7% Manitoba 2.8% 3.4% 4.3% Saskatchewan 2.3% 2.5% 3.9% Source: Statistics Canada, 2001 035837 ©2002 eMarketer, Inc. www.eMarketer.com

Ontario and Quebec contain 64% of all Canadian internet users, according to NFO Group in November, 2001.

Distribution of Adult Internet Users in Canada, by Province, 2001

Ontario 41%

Quebec 23%

Prairies 16%

British Columbia 13%

Atlantic 7%

Gender There is a plethora of conﬂicting data when it comes to the ratio of men and women online in Canada. eMarketer has come to the conclusion that in 2001, 51% of Canadian internet users were men, and 49% women.

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Methodology

Introduction Comparative Estimates: Internet Users in Canada, by

Internet Users Gender, 2001

Internet Households Taylor Nelson Sofres Internet Access Devices: PC, TV and Mobile Devices 60% Online Demographics 40% Usage

Special Targets Jupiter Media Metrix (2000) Canada Online 51% Index of Charts 49%

eMarketer 51% 49%

NFO CFgroup 50% 50%

Statistics Canada (2000) 52% 48%

Somewhat surprising, considering the high penetration of internet access in Canada, Taylor Nelson Sofres recorded a signiﬁcant disparity between men and women online in Canada in June 2001. The research ﬁrm indicated a 60/40 split between men and women online, respectively, in 2001.

Internet Penetration in Canada, by Gender, 2001

Male 60%

Female 40%

This data is put into question, however, by an earlier study by Media Metrix, which suggested there was no real difference between the sexes when it came to internet use in 2000. The Media Metrix study showed overall usage in both English and French speaking populations to be divided almost equally between men and women, although there were more French Canadian men online than French Canadian women.

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Methodology

Introduction At-Home Internet Users in Canada, by Gender and

Internet Users Language, 2000 (as a % of total users)

Internet Households

Internet Access Devices: PC, TV and Mobile Devices

Online Demographics

Usage Men Men Special Targets Women 18+ Women 18+ Canada Online 18+ 51% 18+ 56%

Index of Charts 49% 44%

Statistics Canada, in its 2000 General Survey on Internet Use, noted that in each age group, men are more likely to use the internet than women, and that the usage gap generally increases with age. They further indicated that approximately 56% of men use the internet and 50% of women. The most recent data available comes from NFO Group, which, in November 2001, reported a 50/50 split between the sexes online.

Age According to a Gallup poll conducted in 2000, 18 to 29 year olds are more likely to be online than any other age group.

Internet Users in Canada, by Age Group, 2000

65+ 2% Refused 6%

50–64 18–29 21% 26%

30–39 40–49 23% 23%

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Methodology Recent data from the NFO Group indicates that over one-third of Canadian Introduction adult internet users are between 35 and 49 years of age. Internet Users Internet Households Distribution of Internet Users in Canada, by Age Internet Access Devices: PC, TV and Mobile Devices Group, 2001

Online Demographics

Usage 18-24 20%

Special Targets 25-34 22% Canada Online Index of Charts 35-49 34%

50-64 21%

65+ 3%

Taylor Nelson Sofres reports that more than 75% of Canadians under the age of 34 are likely to be internet users. Those under 20 have the highest penetration of any age group at 82%, while less than one in ﬁve Canadians over 65 years are internet users. This is similar to the pattern seen in the US.

Internet Penetration in Canada, by Age Group, 2001

Under 20 82%

25-34 76%

35-44 69%

45-54 57%

55-64 43%

65+ 19%

NFO Group’s data also conﬁrms that, the older Canadians are, the less likely they are to have internet access. Penetration of internet in the age group 18-24 is almost 90%.

Internet Penetration in Canada, by Age Group, 2001

18-24 86%

25-34 77%

35-49 76%

50-64 64%

65+ 21%

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Methodology This stark difference between the young and the elderly online was Introduction conﬁrmed by Statistics Canada. Their survey indicated that 90% of Internet Users Canadians aged between 15-17 used the internet in 2000. In contrast, only Internet Households

Internet Access Devices: 13% of those aged over 60 did so. PC, TV and Mobile Devices Online Demographics Percent of Canadian Teens and Seniors Who Have Usage Used the Internet, 2000 (as a % of respondents) Special Targets Canada Online 15-19 years 90% Index of Charts 60+ years 13%

Kids & Teens Online According to Corus Entertainment, Inc., 72% of Canadian “tweens” - kids between the ages of 6 and 14 - went online from home as of 2001, up from 62% who did the same in 2000. A majority of Canadian tweens have their own e-mail address (up from 35% in 2000) and they spent more time online in 2001 compared to 2000 - an average of 4.9 hours per week compared to 3.8 hours per week. In fact, girl tweens spent 5 hours per week online and boys spent 4.8 hours per week in 2001.

Canadian Teens Online, 2000 (in millions)

Offline 0.4 (15%)

Canadian teens are also avid internet users, staying online for nearly 2 hours (or 20%) longer than their older countrymen every month.

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Methodology

Introduction Monthly Internet Use among Canadian Teens, 2000 (in

Internet Users minutes)

Internet Households

Internet Access Devices: All internet users 547.7 PC, TV and Mobile Devices

Online Demographics Teens (ages 12-17) 666.7

Index of Charts According to “Young Canadians in a Wired World,” a recent study from Environics Research Group, 99% of young people in Canada say they have used the internet to some extent. Of these, 79% say they have internet access at home.

Internet Access at Home among Young People in Canada, Feb.-March 2001 (as a % of young people in each age group)

9-10 Elementary 73%

11-12 Elementary 75%

11-12 Intermediate* 82%

13-14 Secondary 83%

15-17 Secondary 79%

Environics questioned 5,682 Canadians, aged 9 through 17 between 23 February and 28 March 2001. The study found that 57% go online to download music, 56% send and receive e-mail, 50% surf for fun, 48% play or download games, 41% get information for school work and 40% go online for instant messaging (IM). Interestingly, 71% go online for information on national events and 52% are interested in obtaining health information online.

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Methodology

Introduction Online Activities among Young People in Canada Who

Internet Users Have Used the Internet, Feb.-March 2001 (as a % of

Internet Households secondary school students and elementary school

Internet Access Devices: students*) PC, TV and Mobile Devices

Online Demographics Playing/downloading music Usage 42% Special Targets 65% Canada Online

Index of Charts Sending/receiving e-mail 47% 61%

Surfing 48% 52%

Playing/downloading games 62% 40%

Getting info. for school 40% 42%

IM 19% 51%

Chat rooms 27% 45%

Homework 38% 37%

Shopping/making purchase 4% 6%

Elementary students Secondary students Note: *Elementary refers to young people ages 9-12, excluding age 11-12 in Quebec, and secondary refers to young people ages 13-17 and the group of 11-12 year-olds in Quebec Source: Environics Research Group, 2001 009840 ©2001 eMarketer, Inc. www.eMarketer.com

Similar to young people in the US, 56% of Canadian kids go online for chat rooms, but 38% visit unmonitored chat rooms and 21% participate in monitored chat rooms.

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Methodology Seniors online Introduction

Internet Users

Internet Households “Canadians 60 and over may be in danger of being

Internet Access Devices: left behind as the internet increases in importance.” PC, TV and Mobile Devices –Statistics Canada,Aug 2001 Online Demographics

Usage

Special Targets According to ﬁndings from the 2000 Statistics Canada report, published in Canada Online August 2001, only 1 in 8 people aged 60 and over in Canada had used the Index of Charts internet in the past year — compared to 90% of the 15 to 17 year-old age group. The study also found that 368,000 Canadian men and 246,000 women, aged 60 and over, used the internet in 2000.

Canadians Seniors* Who Have Used the Internet, by Gender, 2000 (as a % of respondents)

Men 17%

Women 9%

The proﬁle of older people in the overall population is very different from that of older internet users according to Statistics Canada. For example, older internet users have higher levels of education and income than other seniors. Of the 6,178 people Statistics Canada surveyed who were age 60 and over, the study found a majority of such users go online to search for goods or services, but only 12% go online to purchase. Older Canadians who used the internet the previous month averaged 5.7 hours per week online.

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Methodology

Introduction Internet Activities among Internet Users Ages 60+ in

Internet Users Canada, 2000 (as a % who have used the internet in

Internet Households the previous month)

Internet Access Devices: PC, TV and Mobile Devices Search for information on goods or services Online Demographics 57% Usage Access online news sites Special Targets

Canada Online 54%

Index of Charts Search for health and medical information 38%

Play games 20%

Access information on government programs or services 19%

Electronic banking 19%

Purchase goods or services 12%

Subscribe to a news group or listserv 9%

Use online chat services 8%

Income As with other populations, Canada demonstrates a linear relationship between income and internet penetration. Usage favors high-income households, with middle-income groups claiming the largest proportion of users, primarily because these groups represent the largest segments of the population. The median income in Canada is approximately $42,300, yet, according to The Gallup Organization, over 52% (at least) of Canadian internet users have an income greater than $50,000.

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Methodology

Introduction Internet Users in Canada, by Income, 2000 Internet Users $20,000– Internet Households Under $29,900 Don't know/ 7% Internet Access Devices: $20,000 PC, TV and Mobile Devices refused 7% 16.1% Online Demographics $30,000– $39,900 Usage 10% Special Targets $40,000– Canada Online $70,000+ $49,900 8% Index of Charts 31% $50,000– $69,900 21%

Source: The Gallup Organization

This is further reinforced by Media Metrix, who indicate that those households with income below $40,000 (just below the median) make up only 29% of all internet users.

Internet Users in Canada, by Household Income, 2000

<$25,000 $100,000+ 12% 14%

$75,000-$100,000 $25,000-$40,000 15% 17%

$60,000-$75,000 15% $40,000-$60,000 27%

While middle-income groups dominate in absolute numbers of internet users, high-income groups still have the greatest internet penetration rates, with the richest Canadians more than three times as likely to be online as middle- and low-income individuals. This is clearly visible in the data following, which shows that those with household incomes in the 3rd and top income quartile had signiﬁcantly higher internet penetration than the overall average. Those in the bottom income quartile recorded a household penetration of 16.5%, compared to the national household penetration of 40.1%. What may provide some comfort for those wishing to bridge the ‘digital divide,’ however, is that those households in the bottom and 2nd quartiles had a higher growth in terms of internet penetration between 1999 and 2000 than the other income groups.

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Methodology

Introduction Household Internet Penetration in Canada, by

Internet Users Household Income, 1997-2000 (as a % of total

Internet Households households) Internet Access Devices: 1997 1998 1999 2000 PC, TV and Mobile Devices

Online Demographics All 16.0% 22.6% 28.7% 40.1% Usage Bottom quartile 5.5% 7.1% 10.9% 16.5% Special Targets 2nd quartile 8.9% 13.7% 18.0% 31.2% Canada Online

In November 2001, NFO Group reported that over half of Canadian internet users have an income between $35,000 and $75,000. They also indicated that, while only 21% of all Canadian households have a household income over $75,000, 28% of online households are in this income bracket.

Distribution of Adult Internet Users in Canada, by Income, 2001

<$35,000 21%

$35,000-$75,0000 51%

$75,000+ 28%

Among Canadians earning over $75,000, 92% are online according to NFO Group.

Penetration of Adult Internet Users in Canada, by Income, 2001 (in CAD$)

<$35,000 47%

$35,000-$75,000 77%

$75,000+ 92%

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Methodology Education Introduction With a strong relationship between educational levels and income, Internet Users

Internet Households Canadians with higher levels of educational attainment are well Internet Access Devices: represented among internet users. Widespread internet access in high PC, TV and Mobile Devices

Online Demographics schools and other educational institutions is making its mark.

Usage Statistics Canada reports that 59% of the population over 15 has at least Special Targets some high school education. A further 27% have conducted study after high Canada Online school, but only 8.8% have a Bachelor’s degree and only 4.4% a post- Index of Charts graduate degree.

Educational Attainment in Canada, 1996 (as a % of population 15+ years old)

No degree, certificate of diploma 36.7%

Secondary (high) school graduation certificate 23.0%

More than high school, less than bachelor 27.0%

Bachelor 8.8%

Post grad 4.4%

Internet Users in Canada, by Education, 2000 (highest level finished) Public/grade school Don't 3% know/ Secondary refused school 1% 22%

University 44% Post secondary/ non-university 31%

Source: The Gallup Organization, 2000

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Methodology What is interesting to note from the Statistics Canada data is that there is Introduction almost the same number of online households headed by someone with less Internet Users than a high school education as there are households in the bottom income Internet Households

Internet Access Devices: quartile that has an internet user, at 16%. Likewise, those households PC, TV and Mobile Devices headed by someone with a university degree also match those households Online Demographics

Usage with income in the top quartile at 65%. While it is not surprising to see a

Special Targets relationship between education, income and internet access, rarely does Canada Online one see it correlate so closely. Of course, it would be incorrect to assume Index of Charts that these are necessarily the same people. Many factors, including income, education, location, family type, etc., are all important elements when looking at who is online and who is not.

Household Internet Penetration in Canada, by Education of Household Head, 1997-2000 (as a % of total households) 1997 1998 1999 2000 All 16.0% 22.6% 28.7% 40.1% Less than high school 3.9% 6.6% 9.6% 16.1% High scool/college 16.0% 23.1% 29.6% 42.8% University degree 37.6% 46.7% 52.4% 65.1% Source: Statistics Canada, July 2001 035841 ©2002 eMarketer, Inc. www.eMarketer.com

The data from NFO Group clearly suggests that over half of all Canadian adult internet users have received a post secondary school degree.

Distribution of Adult Internet Users in Canada, by Educational Attainment, 2001

Some high school or less 11%

High school graduate 22%

Some post-secondary school 15%

Post-secondary school graduate 52%

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Methodology Family Type Introduction A larger share of all households used the internet in 2000 than in 1999, Internet Users

Internet Households although there remains a big difference in penetration rates across family Internet Access Devices: types. Single-family households with unmarried children aged 18 and PC, TV and Mobile Devices

Online Demographics under had the highest internet penetration rates. Nearly 70% of these

Usage households had internet access, according to Statistics Canada. They added Special Targets that access rates are particularly high among households with children Canada Online because many of these children access the internet from school. In Index of Charts fact, 40% of households with children had someone who used the internet at school, compared with only 11% of households without children. However, this does not imply that children are the only cause of differences in access rates from home. Other factors, such as level of education, income and use of the internet for work-related activities, may have as much to do with the differences in penetration rates for use from home.

Household Internet Penetration in Canada, by Family Type, 1997-2000 (as a % of total households) 1997 1998 1999 2000 All households 16.0% 22.6% 28.7% 40.1% Single family with children 21.7% 31.0% 40.6% 57.0% Single family no children 15.5% 22.5% 18.3% 37.8% One person 7.1% 10.5% 12.6% 19.0% Multi-family 24.7% 26.2% 36.7% 45.5% Source: Statistics Canada, July 2001 035842 ©2002 eMarketer, Inc. www.eMarketer.com

The NFO Group reported that 60% of Canadian internet users are married, 31% single.

Distribution of Adult Internet Users in Canada, by Marital Status, 2001

Other 9% Single 31%

Married 60%

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Methodology F.Usage Introduction

Internet Users Internet Households Time Online Internet Access Devices: PC, TV and Mobile Devices The importance of internet use in Canada is reﬂected in the amount of time Online Demographics that Canadians spend online. According to Statistics Canada, households Usage are accessing the internet more frequently and they are staying online Special Targets longer. According to their survey results released in July 2001, 65% of Canada Online

Index of Charts households in 1999 had at least one person who regularly used the internet from home a minimum of seven times a week. In 2000, that proportion was 71%. Similarly, in 1999, about 47% of households had someone who spent 20 hours or more a month on the Internet. In 2000, 61% of households had a member who was doing so. The comparative data suggest that, on average, Canadian internet users spend about 4 hours online per week.

Comparative Estimates: Average Time Spent Online At-Home per Week per User in Canada, 2001 (in hours and minutes) 2001 PricewaterhouseCoopers (2000) 05:12 Nielsen//NetRatings 02:55 Jupiter Media Metrix (April 2001) 03:53 Source: eMarketer, various, as noted, 2000-2002 036031 ©2002 eMarketer, Inc. www.eMarketer.com PricewaterhouseCoopers reported that Canadian internet users actually spent 1 more hour online than their American counterparts in 2000.

Time Spent Online At-Home Weekly per User in Canada and the US, 1999 & 2000 (in hours)

Canada 3.9 5.2

US 5.3 4.2

1999 2000 Source: PricewaterhouseCoopers, May 2001 035826 ©2002 eMarketer, Inc. www.eMarketer.com With a growing number of broadband households in the country, one may suspect that usage patterns are changing and users are spending an increasing amount of time online. Comparing Nielsen//NetRatings statistics from May 2000 to September 2001, we can see that Canadians are spending about 30 minutes longer online per week.

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Methodology

Introduction Time Spent Online Weekly by Home Internet Users in

Internet Users Canada, May 2000 vs. September 2001 Internet Households May 2000 September 2001 Internet Access Devices: PC, TV and Mobile Devices Number of sessions per week 5 6 Online Demographics Number of unique sites visited 5 10 Usage Time spent per week 2:23:00 2:55:24 Special Targets

Canada Online Time spent during surfing session 0:29:16 0:27:25

Jupiter Media Metrix released a report in April 2001 which showed that, since May 2000, the average time spent per Canadian internet user per month has grown 82%! In April 2001, online Canadians at home spent 932 minutes on the net, or 15.5 hours in the month, compared to 8.5 hours a year previously.

Average Minutes Spent Online Monthly per User in Canada, May 2000 & April 2001 (in minutes and % growth)

May 2000 513

April 2001 932 (82%)

Media Metrix went on to add that Canada tops the world in terms of time spent online, with the next nearest country, the US, spending on average 1 hour less online per month per user.

Top Five Countries Worldwide, by Average Minutes per User per Month Online, April 2001 (in minutes)

Canada 932

US 876

Germany 710

Japan 707

Brazil 621

In June 2001, Media Metrix Canada reported an increase in all facets of usage from the year before. Canadians surﬁng from home are visiting the web one more day out of the month, viewing more unique pages (up 38%) and spending more time online (up 48%).

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Methodology

Introduction Canadian Internet Usage, June 2000 vs. June 2001 Internet Users June 2000 June 2001 % change Internet Households Unique visitors (000) 11,992 14,198 18% Internet Access Devices: PC, TV and Mobile Devices Average usage days/month 11.6 12.7 10% Online Demographics Average unique page/visitor 406.8 561.3 38% Usage

Media Metrix also reported on the Canadian French language audience, which also recorded signiﬁcant usage increases from June 2000 to June 2001.

Canadian Internet Usage (French Language Audience), June 2000 vs. June 2001 June 2000 June 2001 % change Unique visitors (000) 2,670 3,436 29% Average usage days/month 12.0 12.3 3% Average unique pages/visitor 429.4 501.6 17% Average minutes spent/user 557.6 708.3 27% Source: Media Metrix Canada, 2001 036035 ©2002 eMarketer, Inc. www.eMarketer.com

Data from Canadian Business indicates two types of users in Canada: the heavy user who spends over 10 hours per week online at both home and at work; and the casual user who spends one to ﬁve hours per week, possibly just checking e-mail. The current available data suggests that Canadians are indeed spending more time online than in the past. There is strong evidence to suggest that broadband users spend nearly twice as long online as dial-up users and visit almost twice as many web pages, which may be a signiﬁcant reason for the increase in internet usage.

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Methodology Activities Online Introduction

Internet Users

Internet Households “We may share a common border with the US, but Internet Access Devices: we have more in common with Swedes than PC, TV and Mobile Devices

Online Demographics Americans when it comes to how and why we use

Usage the Internet. The online public in Canada and Special Targets Sweden, particularly the younger generation, is Canada Online pulling ahead of the US in their strong afﬁnity for Index of Charts Internet banking, music downloading and next generation wireless access.” –Bonnie Sherman, President of Ipsos Interactive Services

While Bonnie Sherman’s statement may very well be the case, the fact remains that the most popular two activities for the vast majority of household internet users continues to be e-mail and general web surfing. Survey after survey, past and present, shows no major internet usage changes for Canadian web surfers over the last three years. This despite the growing number of broadband connections, which lend themselves to greater amounts of time online and greater volumes of rich media downloaded. Having said that, the five things that stand out about the internet usage of Canadians are: Canadians love their e-mail Young Canadians are downloading music in great quantities Online banking & financial sites are extremely popular The many window shoppers in the past are now becoming online purchasers Canadians are very interested in health matters

The 2000 survey results from Statistics Canada indicate the two most popular internet activities for Canadians are e-mail and web browsing.

Top Five Internet Activities among Canadian Home Internet Users, 2000 (as a % of internet users)

E-mail 93.3%

General web browsing 90.1%

Accessing medical/health info 57.1%

Accessing travel info 54.8%

Accessing news 50.8%

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Methodology This is further conﬁrmed by an alternative study by Ipsos-Reid and Introduction Industry Canada. Internet Users

Internet Households Canadian Online Activities, Q3 2000 (as a % of Internet Access Devices: PC, TV and Mobile Devices Canadians with internet access) Online Demographics Browse the web Usage

Special Targets 91%

Canada Online Send or receive e-mail Index of Charts 91%

Download files or software 69%

Click on ad banners 53%

Comparison shop 45%

Download music or MP3 files 35%

Chat on discussion forums 35%

Online banking 35%

Purchase via the web 34%

Online trading 12%

Internet telephone calls 12%

They surveyed internet users across all Canadian provinces — and browsing the web and e-mail always came out on top.

“E-mail remains the number one online activity of Internet-enabled Canadians.” –Ipsos-Reid, Oct 29 2001

According to the Ipsos-Reid study, e-mail is accessed multiple times weekly by 88% of online Canadians and daily by 62%. This is up from 53% daily at the same time in 2000.

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Methodology

Introduction Top Five Online Activities in Alberta, Q3 2000 (as a %

Internet Users of Canadians with internet access)

Internet Households

Internet Access Devices: Browse the web 88% PC, TV and Mobile Devices

Online Demographics Send or receive e-mail 88% Usage Download files or software 62% Special Targets Canada Online Click on ad banners 50%

Index of Charts Comparison shop 40%

Top Five Online Activities in Atlantic Canada, Q3 2000 (as a % of Canadians with internet access)

Send or receive e-mail 91%

Browse the web 88%

Download files or software 76%

Click on ad banners 56%

Comparison shop 49%

Top Five Online Activities in Manitoba/Saskatchewan, Q3 2000 (as a % of Canadians with internet access)

Browse the web 92%

Send or receive e-mail 89%

Download files or software 67%

Click on ad banners 54%

Comparison shop 38%

Top Five Online Activities in Ontario, Q3 2000

Browse the web 95%

Send or receive e-mail 93%

Download files or software 74%

Click on ad banners 52%

Comparison shop 49%

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Methodology

Introduction Top Five Online Activities in Quebec, Q3 2000 (as a %

Internet Users of Canadians with internet access)

Internet Households

Internet Access Devices: Send or receive e-mail 89% PC, TV and Mobile Devices

Online Demographics Browse the web 87% Usage Download files or software 57% Special Targets Canada Online Click on ad banners 47%

Index of Charts Chat on discussion forums 41%

While e-mail and web browsing will remain popular activities, comparison shopping and online banking are two internet activities that Ipsos-Reid indicates more people are planning to participate in.

Top Six Growth Areas in Online Activities in Canada, Q3 2000 (as a % of Canadians with internet access)

Comparison shop 45% 66%

Online banking 35% 53%

Download music or MP3 files 35% 48%

Purchase via the web 34% 45%

Internet telephone calls 12% 25%

Online trading 12% 24%

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Methodology Comparing internet usage between Canadians and Americans, one striking Introduction difference is the number of Canadians conducting ﬁnancial transactions Internet Users online. According to Ipsos-Reid, 61% of Canadian internet users conducted Internet Households

Internet Access Devices: this activity compared to only 29% of US internet users. They add that 48% PC, TV and Mobile Devices of Canadian internet users who have been online for less than a year have Online Demographics

Usage already banked online, while just 13% of American newcomers to the

Special Targets internet have done so. Canada Online Another important difference is that US internet users made twice as Index of Charts many online purchases last year compared to their Canadian counterparts.

Internet Activities of US and Canadian Active Internet Users, 2001 Canadian internet US internet users users Have high-speed connection 31.0% 14.0% Conducted financial transactions 61.0% 29.0% Invested online 15.0% 10.0% Ever made a purchase online 68.0% 77.0% Number of online purchases last 6.5 14.0 year Purchased at domestic site 67.0% 93.0% Satisfied with selection when 61.0% 73.0% purchasing online Number of registered websites 5.0 14.0 signed up to receive e-mail Source: Ipsos-Reid, August 2001 035844 ©2002 eMarketer, Inc. www.eMarketer.com

As further evidence for Canadians’ penchant for business, banking and ﬁnancial sites, Media Metrix Canada released a report in February 2001 which showed that 43.1% of all Canadians on the web (5.6 million), visited a Business/Finance site — an increase in usage of more than 36% from July 2000. According to the web-tracking ﬁrm, each visitor to a Business/Finance site spent an average of 39 minutes in the month on a site or about 8 minutes on each of 5 different usage days. Demographically, Business/Finance site visitors were more likely to be adults over the age of 35. Business/Finance site visitors were also more likely to have an annual household income greater than $100,000.

“Canadians have embraced the idea of using the web as a resource and a vehicle for conducting their ﬁnancial affairs. This offers a great opportunity for the banking and ﬁnancial sites in Canada.” –Lisa Eaton, VP General Manager, Media Metrix

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Methodology Online shopping Introduction What percentage of internet users are actually purchasing goods or services Internet Users

Internet Households online in Canada? This is a question that a number of research ﬁrms have Internet Access Devices: answered, with estimates ranging from 1 in 3 to 1 in 8 internet users. PC, TV and Mobile Devices

Online Demographics Comparative Estimates: Percent of Canadian Internet Usage Users Who Purchase Online, 2001 Special Targets Canada Online Ipsos-Reid (ever purchased ) Index of Charts 68%

Ipsos-Reid (purchased in Q2 2000) 34%

Statistics Canada (ever purchased ) 13%

eMarketer (online purchaser in last 30 days) 20%

AC Nielsen (ordered online but didn't necessarily complete payment online) 31%

Taylor Nelson Sofres (actual purchase in last 30 days) 18%

According to AC Nielsen, the number of Canadian internet users who made an internet purchase in the last year has increased rapidly since 1996, but is still relatively low considering the experience of Canadian internet users. Their deﬁnition includes those that may have ordered online but did not complete payment online, so to this does not equate to actual internet purchasers.

Canadians Who Have Purchased Online, Q3 2000 (as a % of Canadians with internet access)

Have purchased online 34%

Have never purchased online 66%

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Methodology Statistics Canada found that 12.3% of Canadian households contained an Introduction internet user who actually completed an internet purchase in 2000. This Internet Users was almost double the number in 1999. Internet Households

Internet Access Devices: PC, TV and Mobile Devices Canadian Households that Made an Internet Online Demographics Purchase, 1999 & 2000 (as a % of households) Usage Special Targets 1999 6.9% Canada Online

Index of Charts 2000 12.3%

Ipsos-Reid reported in 2001 that 34% of Canadians had purchased online during the second and third quarter of 2000.

Canadians Who Have Purchased Online, Q3 2000 (as a % of Canadians with internet access)

Have purchased online 34%

Have never purchased online 66%

Taylor Nelson Sofres’ Global Report on e-Commerce indicated that 18% of Canadian internet users shopped (and purchased online) in the last 30 days of their May 2001 survey. They further indicated that an additional 15% of internet users are likely to be future online shoppers in Canada.

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Methodology

Introduction Online Shopping Behavior among Canadian Internet

Internet Users Users, 2001 (as a % of internet users and total

Internet Households population)

Internet Access Devices: PC, TV and Mobile Devices Online shoppers Online Demographics 18% Usage 11% Special Targets

Canada Online Online dropouts

Index of Charts 15% 9%

Offline shoppers 20% 12%

Future online shoppers 15% 9%

Non-shoppers 50% 30%

Ipsos-Reid’s study showed that British Columbia is the province with the most online shoppers in relation to the number of internet users. (Shoppers are not necessarily purchasers, however.) Quebec has the lowest percentage of online shoppers.

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Methodology

Introduction Online Shopping in Canada, by Province, Q3 2000 (as a

Internet Users % of Candians with internet access)

Internet Households British Columbia Internet Access Devices: PC, TV and Mobile Devices 48% Online Demographics 75% Usage

Special Targets Ontario Canada Online 49% Index of Charts 70%

Atlantic Canada 49% 66%

Alberta 40% 65%

Manitoba/Saskatchewan 38% 61%

Quebec 35% 53%

The narrower deﬁnition of online purchasers indicated that Alberta, at 16%, contained the greatest percentage of online purchasers in relation to internet users.

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Methodology

Introduction Canadian Online Purchasers, by Province, Q3 2000 (as

Internet Users a % of Canadians with internet access)

Internet Households Alberta Internet Access Devices: PC, TV and Mobile Devices 16% Online Demographics 28% Usage

Special Targets Ontario Canada Online 13% Index of Charts 26%

British Columbia 12% 24%

Atlantic Canada 12% 23%

Quebec 10% 22%

Manitoba/Saskatchewan 8% 17%

Of those who have actually purchased online, banking services and software downloads top the list as the most popular e-commerce categories. Books are a close third.

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Methodology

Introduction Top 10 E-Commerce Categories of Online Purchasers

Internet Users in Canada, Q4 2000

Internet Households Banking services Internet Access Devices: PC, TV and Mobile Devices 42% Online Demographics 28% Usage

Special Targets Downloaded computer software Canada Online 42% Index of Charts 34%

Books 41% 46%

Music or music CDs 37% 35%

Mailed computer software 29% 20%

Sports/entertainment tickets 23% 32%

Clothing 23% 24%

Hotel stay 17% 35%

Air travel 16% 34%

Consumer electronics 13% 22%

Have ever bought anything Will consider buying online** online* Note: *among online purchasers (n=789); **among non-purchasers (n=780) Source: Ipsos-Reid, March 2001 035846 ©2002 eMarketer, Inc. www.eMarketer.com

Taylor Nelson Sofres’ Global e-Commerce Study reported that books were the most popular category among Canadian internet shoppers.

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Methodology

Introduction Top 10 Actual Online Purchases in the Last Month

Internet Users among Canadian Internet Users, June 2001 (as a % of

Internet Households internet users)

Internet Access Devices: PC, TV and Mobile Devices Books 24% Online Demographics

Usage Clothes 15%

Special Targets PC software 11% Canada Online

Index of Charts Music/CDs 10%

Electronic/electrical goods 6%

PC hardware 5%

Holidays/leisure travel 5%

Tickets to theater/cinema 5%

Videos 5%

Groceries 4%

Many Canadian internet users are still wary of sending credit card details over the internet. This was cited as the top reason why Canadian internet users who have never purchased before did not shop online.

Reasons for Not Purchasing Goods and Services Online among Canadian Internet Users, June 2001 (as a % of respondents who have never purchased online)

Don't want to give credit card details/security issues 30%

Easier/more fun to purchase goods in store 11%

Its more secure buying goods inside a store 10%

You don't know what you get 7%

It's too difficult/lack of knowledge 5%

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Methodology Recent 2001 holiday shopping ﬁgures released by Ipsos-Reid may blow the Introduction myth out of the water that Canadians are reluctant shoppers. In late Internet Users November, the research ﬁrm forecast that holiday online shoppers would Internet Households

Internet Access Devices: spend $CAD860 million, a 32 % increase from the previous year. What they PC, TV and Mobile Devices actually spent however was an estimated CAD$1.16 Billion. This was a 78% Online Demographics

Usage increase over the previous year.

Special Targets Canada Online “Canadians accepted online shopping with ease.” Index of Charts –Michael Zahra, General Manager, Yahoo Canada, January 2002

Forrester Research reports that 6.8 million Canadian households will go online for product research in 2002. In 2006, over 7 million households will spend CAD$24 billion online, representing 8.3% of total retail sales in Canada. Gartner Group also recently released some holiday shopping data for North America. It indicated that Canadians spent approximately US$1.19 billion in the fourth quarter of 2001. The recent data would point to the conclusion that while Canadians may have been reluctant online purchasers in the past - content with only window shopping - now they are more willing to go the next step, and spend online.

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Methodology G. Mobile Internet Users and Usage Introduction Internet Users Mobile internet users are a small but growing demographic in Canada. Internet Households eMarketer estimates that 5% to 7% of the 10 million cell phone subscribers Internet Access Devices: PC, TV and Mobile Devices in Canada are mobile internet users. And there are a growing number of Online Demographics two-way paging and handheld device users who are accessing the internet Usage and advanced messaging services. This equates to an audience that will Special Targets approach 1 million mobile internet users in 2002. Canada Online

Index of Charts A number of research ﬁrms predict a substantial mobile internet market in Canada by 2005. eTforecasts predicts 24 million subscribers (which seems high, considering this would be almost three quarters of the total population) while IDC estimates that 39% of projected cell phone subscribers at that date, or 12 million, will be mobile internet users.

Comparative Estimates: Mobile Internet Users in Canada, 2005 (in millions)

International Data Corporation (IDC) 12

eTForecasts 24

Compared to other advanced economies around the world, Canada has a relatively low penetration of mobile phone services. At the end of 2000, the International Telecommunication Union indicated there were only 22.6 mobile phone subscribers per 100 inhabitants. In contrast, the United States had 40/100 and Austria and Taiwan had 80/100. The vast expanse of the country, combined with the patchwork of technological standards, has severely affected both the coverage and adoption of mobile services in Canada. As a result of this slow adoption of mobile voice services and a mobile network requiring signiﬁcant upgrading to allow for advanced mobile data capabilities, mobile internet has only recently become available to sections of the population. Taylor Neslon Sofres released a report in June 2001 which showed that only 2% of mobile phone users either accessed e-mail or the internet from a cell phone, even though over 50% of respondents had a mobile phone.

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Methodology

Introduction Mobile Phone Usage in Canada, 2001 (as a % of

Internet Users internet users)

Internet Households I have used a mobile phone for speaking to people Internet Access Devices: PC, TV and Mobile Devices 51% Online Demographics I don’t have access to a mobile phone Usage

Special Targets 49%

Canada Online I have used a mobile phone for receiving text messages Index of Charts 5%

I have used a mobile phone for sending text messages 4%

I have used a mobile phone to e-mail people 2%

I have used a mobile phone to access the internet 1%

I have used a mobile phone to send faxes to people 1%

In September 2001, Industry Canada released a wireless web feasibility study, which, although too small to provide a complete understanding of the wireless internet sector in Canada, does provide some interesting anecdotal evidence and trends. Of their survey respondents, 40% indicated that they owned a web- enabled wireless handheld device. A further 23% of respondents who do not currently own one said they plan to own one in the next 12 months. The majority of respondents own or plan to own a cell phone as their web- enabled device (60%), while 29% said they own or plan to own a PDA. Right now, the most popular wireless internet application, at least among cell-phone users, is e-mail. According to the Canadian Wireless Telecommunications Association, 4% of all Canadian users check e-mail from their cell phones, receiving an average of 7 messages a week via their handsets. Among those who use wireless internet services, business use edges out personal use.

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Methodology

Introduction Use of Wireless Internet Services via Cellphone in

Internet Users Canada, 2000 (as a % of current Canadian cell phone

Internet Households owners)

Internet Access Devices: PC, TV and Mobile Devices Business purposes 37% Online Demographics

Usage Send/Receive e-mails 33%

Special Targets Personal use 28% Canada Online

Index of Charts Stock trading/updates 17%

Connecting to a corporate LAN/WAN 10%

Banking 5%

Research information 7%

Surf the web 0%

Unsure 4%

Future usage patterns may be different, however, even in the short term. Canadian cell phone owners who do not yet use wireless internet services, but who plan to within the next 12 months, show a somewhat broader set of expectations and desired uses.

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Methodology

Introduction Anticipated Use of Wireless Internet Service by

Internet Users Canadian Cellphone Owners, 2000

Internet Households Send/Receive e-mails Internet Access Devices: PC, TV and Mobile Devices 37% Online Demographics

Usage Business purposes

Special Targets 18%

Canada Online Stock trading/updates Index of Charts 13%

Banking 11%

Research 8%

Personal use 5%

Information 3%

Connecting to a corporate LAN/WAN 3%

Entertainment 3%

Travel arrangements 3%

Shopping 2%

eCommerce 2%

Other 12%

Unsure 18%

Note that almost 20% of respondents weren’t sure why they wanted wireless internet service, even though they planned on getting it. This, along with the subtle shift towards consumer services (when compared to current wireless internet users), may be one of the driving forces behind the recent slew of new wireless internet services that only recently became available in Canada.

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Methodology H. Summary of Findings Introduction Internet Users Despite the fact that Canada undoubtedly has one of the highest internet Internet Households penetrations in the world and one of the most net savvy populations, the Internet Access Devices: PC, TV and Mobile Devices preceding pages revealed a great deal of conflicting data between different Online Demographics research firms. eMarketer’s unique methodology of aggregating data from a Usage variety of sources and putting them up against each other allows it to make Special Targets the following analysis, in summary, of the key areas of conflict in the Canada Online

Index of Charts Canadian internet sector at the end of 2001:

Summary of Canadian Internet Sector, 2001 Household PC penetration 61% Internet Users (2001) 14.4 million Percent of Households Online (2001) 58% Ratio of Male/Female internet users 51/49 Total households online (2001) 6.8 million Broadband Households (2001) 2.6 million Dial-up Households (2001) 4.2 million Are Canadians spending more time Overall yes, although there seem online? to be two types of users: heavy and casual % of Internet users that purchase 20% online (2001) Source: eMarketer, 2002 035848 ©2002 eMarketer, Inc. www.eMarketer.com

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Methodology

I Introduction

II Internet Users

III Internet Households

IV Internet Access Devices: PC, TV and Mobile Devices

V Online Demographics

VI Usage

VII Special Trends

VIII Canada Online Index of Charts 237

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Index of Charts Key Findings: North American Online Demographics, September 2000 & January 2002 13 Key Findings: North American Online Demographics, September 2000 & January 2002 14 Internet Penetration in the US within Demographic Segment, August 2000 & September 2001 15 Internet Penetration in the US within Demographic Segment, August 2000 & September 2001 16 Four Levels of Internet Usage 18 Internet Users in the US, by Four Levels of Internet Usage, 2001 (in millions) 18 Internet Users in the US, by Access Frequency, December 2001 ( in millions) 19 Household and Internet Use in the US, December 1998, August 2000 & September 2001 19 Internet Users Worldwide, by Region, 2000-2004 (in millions) 20 Internet Users Worldwide, by Region, 2000-2004 (as a % of total internet users worldwide) 21 Internet Users Worldwide, by Region, 2001 21 Internet Users Worldwide, by Region, 2000-2004 (as a % of each region’s total population) 22 Internet Users in the US, 2000-2004 (in millions) 23 Internet Users in G-7 Countries, 2000-2004 (in millions) 23 Internet Users in G-7 Countries, 2000-2004 (as a % of each country’s total population) 24 Comparative Estimates: Americans with Access to the Internet, 2001 (in millions) 24 Comparative Estimates: Americans Who Have “Ever Used” or “Currently Use” the Internet, 2001 (in millions) 25 Comparative Estimates: Americans Who Have Access the Internet in the Past 30 Days, 2001 (in millions) 25 Internet Users in the US - Weekly, Monthly & Those with Internet Access, December 2001 (in millions) 26 Internet Users in the US, by Four Levels of Internet Usage, 2001 (in millions) 26 Comparative Estimates: Internet Users in the US, 1999-2005 (in millions) 27 Barriers to Internet Usage Worldwide, 2001 (as a % of respondents) 29 Reasons Why Americans* Do Not Use the Internet, 2001 (as a % of respondents) 30 Reasons Why US Households with PCs Do Not Have Internet Access, 2002 (as a % of households with annual income of less than $25,000) 31 Reasons Why US Households with PCs Do Not Have Internet Access, 2002 (as a % of households with annual income of more than $75,000) 31 Reasons Why US Internet Users “Stopped” Using the Internet, 2001 (as a % of respondents) 32 Likelihood that US Non-Users Will Become Users in 2002, 2001 (as a % of respondents who are not online) 32 Internet Households in the US, 2000-2004 (in millions) 36

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Index of Charts Internet Household Penetration in the US, 2000-2004 (as a % of total households) 37 Internet Households in the US, 1998*, 2000, 2002 & 2004 (in millions) 37 Comparative Estimates: US Households Online, 2000 (in millions) 39 Online Households in the US, by Internet Access Technology, 2000, 2002 & 2004 (in millions) 41 Online Households in the US, by Dial-Up and Broadband, 2000-2004 (in millions) 42 Online Households in the US, by Dial-Up and Broadband, 2000-2005 (in millions) 43 Online Households in the US, by Dial-Up and Broadband, 2000, 2002 & 2004 (as a % of total online households) 44 US Online Households, by Access Technology, September 2001 (% of online households) 45 Online Households in the US, by Internet Access Technology, 2000-2004 (in millions) 45 Households in the US, by Internet Access Technology, 2000-2004 (in millions of households) 46 Online Households in the US, by Internet Access Technology, 2000-2004 (as a % of total online households) 46 US Internet Access, by Access Type, 2000 & 2001 (as a % of respondents) 47 Dial-Up Households in the US, 2000-2004 (in millions) 48 Comparative Estimates: Dial-Up Households in the US, 2000-2004 (in millions) 48 US Internet Service Providers, by Number of Subscribers*, Q3 2001 (in millions and as a % of market share**) 49 US Internet Service Providers, by Number of Subscribers*, Q3 2001 (in millions and as a % of market share**) 50 US Households Online, by Access Technology, Q2 2001 51 Broadband Households in the US, 2000-2004 (in millions) 52 Comparative Estimates: Broadband Households in the US, 2000-2004 (in millions) 52 Broadband Households in the US, by Access Technology, 2000-2004 (in millions) 53 Broadband Households in the US, by Access Technology, 2000 & 2004 (as a % of all broadband households) 54 Broadband Penetration in G-7 Countries, 2000-2004 (as a % of total households) 54 Top Ten Countries Ranked by Broadband Penetration, End of 2001 (as a % of all households) 55 Broadband Users in the US, November 2000 & November 2001 (in millions) 56 Cable Modem Broadband Households in the US, 2000-2004 (in millions) 56 Comparative Estimates: Cable Modem Households in the US, 2000-2004 (in millions) 57 DSL Broadband Households in the US, 2000-2004 (in millions) 58 Comparative Estimates: DSL Households in the US, 2000-2004 (in millions) 59

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Index of Charts Alternative Broadband Households in the US, 2000-2004 (in millions) 60 Comparative Estimates: Alternative Broadband* Households in the US, 2000- 2004 (in millions) 60 Comparative Estimates: Satellite Internet Households in the US, 2000-2005 (in millions) 61 Comparative Estimates: Broadband Fixed Wireless Internet Households in the US, 2000-2005 (in millions) 62 Number and Percent of US Households Containing an Internet Access Device Other Than a Computer, September 2001 (in millions and % of total households) 64 Percent of US Households with Home Internet Access without a Computer, September 2001 64 US Interactive Platform Penetration, 2000 & 2005 (as a % of total population) 65 PCs per 100 Inhabitants in North America, 2000 66 Comparative Estimates: PC Penetration in the US, 2001 66 Percent of US Households with a Computer,August 2000 & September 2001 (% of total households) 66 Percent of North American Households Owning One or More Desktop PCs, 1998-2002 (as a % of the population) 67 North American Household PC Penetration, 2001 (as a % of total households) 67 PC Penetration among US Households, by Education Level, 2000 (in millions and as a % of population) 68 PC Penetration among US Households, by Race, 2000 (in millions and as a % of population) 68 PC Penetration among US Households, by Family Income, 2000 (in millions and as a % of population) 69 US Households with a Computer at Home, by Income and Race/Ethnic Origin, 2000 69 Hispanics* Who Do Not Own a Computer but Plan to Buy One in the Next Two Years, by Age Group, 2001 (as a % of respondents) 70 PC Unit Average Selling Price in the US, 1997-2002 70 Percent of US Internet-enabled TV Households with a Computer, September 2001 71 US Digital Cable and Satellite Penetration, 2001-2006 (in millions) 72 Installed Base of Major Gaming Consoles in US Homes, 1998-2004 (in millions) 72 Mobile and Total Internet Users in the US, 2000-2004 (in millions) 73 Internet Users and Wireless Internet Users in the US, 2000, 2002 & 2005 (in millions and as a % of total internet users) 74 Comparative Estimates: Mobile Internet Users in the US, 2000-2005 (in millions) 74 US Wireless Internet Users, 2000-2005 (in millions) 75 Mobile Internet Subscribers in the US, by Device, 2000-2004 (in millions) 75 Wireless Data Subscribers in the US, by Device, 1999-2001 (in millions) 76 Projected US Wireless Web Users, by Device, 2005 (in millions of users) 76 Total Population and Internet Users in the US, 2000 & 2001 (in millions) 78

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Index of Charts Total Households and Online Households in the US, 2000 & 2001 (in millions) 78 Demographic Proﬁle of US Internet User, September 2001 79 Demographic Proﬁle of US Internet User, September 2001 80 US Adult Internet Users, by Age, Gender and Income, 1997-2001 80 Fastest Growing Segments of the Online Population in the US, 1998-2001 (as % growth over three year period) 81 US Online Population by Gender, 2001 (in millions and as a % of total population) 82 US Internet Users (Age 3+), by Gender, 1998 & 2000 (in millions) 83 Internet Users in the US, by Gender, September 2001 (in millions and penetration) 83 Comparative Estimates: US Internet Users, by Gender, 2000 84 Comparative Estimates: US Internet Users in the US, by Gender, 2001 (as a % of online population) 85 US Internet Users, by Gender,August 2001 85 US Home Internet Users, by Gender, July 2001 (as a % of total population) 86 US Adult Internet Users, by Gender, 2001 (as a % of total population) 86 US Adult Internet Users, by Gender, 2001 (as a % of total population) 86 US Adult Internet Users, by Gender, 1997-2001 (as a % of online population) 87 US Internet Users, by Age and Gender, 2001 (as a % of respondents) 88 Growth of US Home Internet Users, by Gender, December 2000 & December 2001 (in millions and % growth) 89 Online Shoppers Who Have Purchased Online, by Gender, 2000 & 2001 (as a % of online shoppers) 89 US Population, by Age Group, 2000 (in millions and as a % of total population) 90 US Internet Users, by Age Group, 2000-2004 (in millions) 91 US Internet Users, by Age Segment and Penetration, 2001 (in millions) 91 US Internet Penetration, by Age Group, 2001 (as a % of total population) 91 Internet Users in the US, by Age Group, September 2001 92 US Internet Penetration, by Age Group, 2001 92 US Internet Users, by Age Category, 2000-2004 (as a % of total internet users) 93 Comparative Estimates: Internet Users, by Age Group, 2001 (as a % of total internet users) 93 Distribution of US Adult Internet Users, by Age Group, 1997-2001 (as a % of adults online) 94 Online Adults in the US, by Age Group, November 2001 (as a % of the population 18+) 95 US Household Internet Penetration, by Income and Race/Ethnic Origin, 2000 97 Median Household Income in the US, by Race/Ethnic Origin, 2000 98 US Household Internet Penetration, by Income, 1998 & 2000 99 Internet Users in the US, by Family Income, September 2001 (in millions and penetration) 99

241 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. North America Online

Index of Charts Growth of US Internet Users, by Income, February 2000 vs. February 2001 (in millions and % growth) 100 US Internet Penetration, by Income, 2000 100 US Internet Penetration, by Income, 2001 (as a % of each income bracket) 101 Comparative Estimates: Online Population in the US, by Income, 2001 101 US Adults with Home internet Access, by Income, 2001 (as a % of adult population) 102 US Internet Users, by Income, August 2001 102 Distribution of Households Online in the US, by Income, 2001 103 US Population Age 15+, by Educational Attainment, 2000 (as a % of total population) 104 US Households Internet Penetration, by Education of Householder, 1998 & 2000 105 Internet Users in the US, by Educational Attainment, September 2001 (in millions and penetration) 105 Comparative Estimates: Online Population in the US, by Education, 2001 (as a % of total population) 106 US Internet Penetration, by Educational Attainment, 2001 (as a % of each segment) 107 US Internet Users, by Education Level, 2000 & 2001 (as a % of respondents) 107 Population with College Degrees in the US, by Race, 2000 (in % of population group) 108 US Population, by Race, 2000 (in millions and as a % of total population) 109 Adult and Total Population in the US, by Race/Ethnic Origin, 2001 (in millions) 109 Internet Users in the US, by Race/Ethnic Origin, 2001 (in millions) 110 Internet Penetration in the US, by Race/Ethnic Origin, 2001 (as a % of adult and total population) 110 US Internet Penetration, by Race/Ethnic Origin, 2001 (as a % of each race/ethnic segment) 111 Percent of Households Online in the US, by Race/Ethnic Origin, 2000 & 2005 111 Comparative Estimates: Internet Users in the US, by Race/Ethnic Origin, 2001 (in millions) 112 Distribution of US Online Population, by Race/Ethnic Origin, 2001 (as a % of total population) 112 Distribution of Total Internet Users in the US, by Race/Ethnic Origin, 2001 113 Households Online in the US, by Race/Ethnic Origin, 2001 (in millions and household penetration) 113 Internet Households in the US by Race/Ethnic Origin, 2001 & 2004 (in millions) 114 Comparative Estimates: Households Online in the US, by Race/Ethnic Origin, 2001 (in millions) 114 US Households Online, by Race/Ethnic Origin, 2000 & 2004 (as a % of housholds within racial/ethnic group) 115 US Households Online, by Race/Ethnic Origin, 2000 (as a % of households) 115

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Index of Charts Black Households with Internet Access in the US, April 2000 & April 2001 116 Percent of US Internet Users, by Ethnicity and Online Experience, 2001 116 US Households Online, by Region, 2000 (as a % of total households within each region) 117 US Households with Internet Access by Region, Dec. 1998-Aug. 2000 117 Internet Users in the US, by Region, September 2001 (in millions and penetration) 118 Comparative Estimates: Top 20 Online Cities in the US, 2001 (as a % of households) 118 Change in US Internet Usage in the Last Six Months, July 2001 (as a % of respondents) 120 Average Time Spent Online for US Internet Users, 2000 & 2001 (in hours and minutes) 120 Comparative Estimates: Average Time Spent Online per Week for US Internet Users, 2001 (in hours) 121 Monthly Home vs. Work Internet Use in the US, October 2000 vs. November 2001 121 Weekly* Internet Usage in the US, January 2001 & January 2002 122 Time Spent on the Internet in the US, by Access Type, 2001 (in hours per week) 122 Top Five Reasons for Using the Internet More in the Last Six Months in the US, July 2001 (as a % of respondents) 123 Top Eight Reasons for Using the Internet Less in the Last Six Months in the US, July 2001 (as a % of respondents) 123 Time Spent on the Internet in the US, by Income Level, 2000 & 2001 (average hours per week) 124 Average Monthly Internet Usage in the US, by Income, August 2001 (in minutes) 125 Time Spent on the Internet in the US, by Years of Internet Experience, 2001 (in hours per week and as a % of respondents) 125 Average Monthly Internet Usage in the US, by Age, 2001 (in minutes) 125 Average Monthly Internet Usage in the US, by Gender and Age, August 2001 (in minutes) 126 At-Home vs. At-Work Internet Users in North America, July 2001 (as a % of total survey respondents) 127 US Internet Use, by Location, 1998 & 2001 (% of total population) 127 US Internet Access*, by Access Location, 2001 (as a % of all internet users) 128 US Internet Access, 2000 & 2001 (as a % of the population) 128 US Adults Online from Home, Work or Other Location, 1995-2001 (as a % of all adults) 129 US Internet Access, 2000 & 2001 (as a % of the population) 129 US Internet Access, by Access Location, 2001 (in hours per week) 130 Comparative Estimates: US At-Work Internet Population, 2000-2002 (in millions) 130 Monthly Home vs. Work Internet Use in the US, November 2001 131

243 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. North America Online

Index of Charts US Media Consumption by At-Work and Non-Work Users, by Media Type, 2001 (as a % of at-work and non-work users*) 131 US At-Work and Non-Work Internet Users, by Gender,Age and Education, 2001 132 Popular Websites for US At-Work vs. US Non-Work Internet Users, 2001 (as a % of respondents) 132 Popular Websites for US At-Work vs. US Non-Work Internet Users, 2001 (as a % of respondents) 133 Average Amount Spent Online Monthly in the US, by Access Location, 2001 (per buyer) 134 US Public Schools with Internet Access, 1994-2000 134 Percent of US Public Schools Allowing Students Internet Access after Regular School Hours , 2001 (% of all public schools) 135 Primary Reasons Why US Internet Users Began Using the Internet, 2001 (as a % of respondents) 136 Most Popular Internet Activities among US Internet Users, 2001 137 Top 20 Internet Activities of US Internet Users, 2001 (as a % of internet users) 137 Top 20 Internet Activities of US Internet Users, 2001 (as a % of internet users) 138 Top 25 Websites at Home, by Property,August 13-19, 2001 139 US Home Users of Instant Messenger and Chat Applications, September 2000 & September 2001 (in millions) 140 US Work Users of Instant Messenger and Chat Applications, September 2000 & September 2001 (in millions) 141 Comparative Estimates: US Online Banking Consumers, 2000-2005 (in millions) 142 US Internet Users’ Attitudes towards the Internet as a Source of Entertainment, 2000 & 2001 (as a % of respondents) 142 US Internet Users’ Attitudes towards the Internet as a Source of Information, 2000 & 2001 (as a % of respondents) 143 US Internet Pornography Users and Total Internet Users, December 1999 & February 2001 (in millions and as a % of total users) 144 Online Game Preferences in the US, by Gender, 2000 145 Online Gambling Market in the US, 2001 145 US Internet Users who Bought Online in the Last 12 Months, 2001 146 Percent of Internet Users Purchasing Online, by Category, 2001 147 US Consumer Online Buying and Shopping Grid, 2000-2004 (in millions and % penetration) 148 US Home Computer and Internet Users 3 to 17 Years of Age, September 2001 (in millions and % of population segment ) 151 Monthly Internet Usage by US Internet Users Ages 2-17, August 2001 (in hours and minutes) 152 Kids and Teens Online in the US, 1998 & 2002 (in millions and % increase) 152 Online Activities of Young People in the US, September-October 2001 (as a % of internet users between the ages of 15 and 24) 152 Internet Activities of US Teenage Girls, 2000 153

244 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. North America Online

Index of Charts Most Recent Online Purchase for US Internet Users Ages 8-24, by Gender, December 2001 154 US Home Computer and Internet Users 18 to 24 Years of Age, 2001 (in millions and as a % of population segment) 155 Comparative Estimates: Seniors (65+) Online in the US, 2001 (as a % of population 65+) 156 Internet Penetration among US Seniors (50+), by Age Group, 2001 (as a % of population within each group) 156 Demographics of US Seniors, by Online Status, 2000 157 US African American At-Home Internet Users, August 2000 & August 2001 (in millions and year-over-year % growth) 158 Top Five Websites* Visited by US African American At-Home Internet Users, August 2001 (in thousands of unique visitors) 159 Wired African Americans and Hispanics Purchasing Products Online, 2000 (as a % of both groups and their years of online experience) 159 US Online Product Researchers and Purchasers, by Race, January 2001 (as a % of internet users in each category) 160 Ethnic Groups Purchasing Online, 2001 160 Hispanic Households with a Computer, Q1 2000 vs. Q4 2000 (as a % of respondents) 161 US Hispanic Internet Usage, March 2001 (as a % of Hispanic internet users) 161 Hispanic and General Internet Population Demographics, 2001 162 Time US Hispanic Internet Users Spend Online Using English and Spanish, March 2001 (as a % of Hispanic internet users) 163 Characteristics of a Broadband User in the US, 2000 164 Households with Broadband Access in the US, by Income, 2000 164 US Broadband Penetration Rates, by Race/Ethnic Origin, 2000 165 Afﬂuent Households in the US, 2000—2004 (in millions) 165 Top 20 Online (via Broadband) Cities in the US, 2001 (as a % of households) 166 Growth of Streaming Media Users in the US, by Access Speed, November 2000 & November 2001 (in millions of users) 167 US Broadband Households, by Geographic Region, 2000 & 2001 (% of online households) 167 Online Activities of Broadband vs. Dial-Up Internet Users, 2001 168 Proﬁle of Americans Who Are and Aren’t Interested in Wireless Data, 2000 169 General Uses for Wireless Internet among Wireless Internet Device Owners in the US, 2001 (as a % of owners) 169 Top 10 Wireless Internet Activities for Wireless Internet Device Owners in the US, 2001 (as a % of owners) 170 US Wireless Internet Users, 2000-2005 (in millions) 170 Wireless Data Applications Desired by Young Adults in the US, 2001 171 Internet Users in Canada, 2000-2004 (in millions) 174 Internet Users in G-7 Countries, 2000-2004 (in millions) 175 Internet Users in Canada, 2000-2004 (as a % total population) 175

245 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. North America Online

Index of Charts Internet Users in G-7 Countries, 2000-2004 (as a % of each country’s total population) 176 Comparative Estimates: Internet Users in Canada, 1999-2004 (in millions) 176 Canadians with Home Internet Access and Active Internet Users, December 2001 (in millions) 177 Internet Users in Canada, 2000-2005 (in millions and penetration rate) 177 Comparative Estimates: Internet Access in Canada, 2001 (as a % of population) 178 Canadian’s Accessing the Internet, 1996-2000 (as a % of total population) 178 Internet Users in Canada, 2001 (as a % of the population) 179 Percent of Population that Accessed the Internet in the Last 30 Days in Canada, 1999 & 2000 (as a % of total population) 179 Internet Use of Canadian Adults, 1999 & 2000 179 Canadian Households with an Internet User, 1999 & 2000 (in millions) 180 Canadian Households with an Internet User, 1998-2000 (as a % of total households) 180 Canadian Households with an Internet User, by Type of User, 1999 & 2000 (in millions) 182 Dial-Up and Broadband Households in Canada, 2000-2002 (in millions) 183 Canadian Households Online, 2000-2002 (as a % of total households) 183 Broadband* Households in Canada, 2000-2004 (in millions) 184 Comparative Estimates: Broadband Households in Canada, 2000-2002 (in millions) 185 Broadband Penetration in Canada and the US, 2000-2004 (as a % of total households) 186 Broadband Household Penetration in G-7 Countries, 2000-2004 186 Top Ten Countries Ranked by Broadband Penetration, End of 2001 (as a % of all households) 187 Broadband Households in Canada, by Access Technology, 2000-2004 (in millions) 188 Canadian Cable TV Subscribers, by Provider, 2001 (in thousands) 189 Cable Modem Broadband Households in Canada, 2000-2004 (in millions) 189 DSL Broadband Households in Canada, 2000-2004 (in millions) 190 Subscribers to Broadband by Alternative Technologies in Canada, 2000-2004 (in millions) 191 Home Computer and Modem Penetration in Canada, 1998-2000 (% of households) 192 PCs per 100 Inhabitants in North America, 2000 192 Computer Access in Canada, Q3 2000 (as a % of the population) 193 Canadians with Home Computers, by Province, Q3 2000 (as a % of the population) 193 Percent of Canadian Households Who Own a PC, 1999 & 2000 (as a % of total households) 193 Population in Canada, by Gender, 2001 (in millions) 194

246 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. North America Online

Index of Charts Population in Canada, by Age Group, 2001 (as a % of total population) 194 Household Income in Canada, by Household Type, 1998 (in CAD $) 195 Percent of Canadian Households Who Cite Cost as the Major Barrier to Internet Use, by Income <$30k, 2001 (% of respondents) 195 Canadians with Internet Access, by Length of Access, Q3 2000 196 Canadians That Have Had Internet Access for Three or More Years, by Region, Q3 2000 196 Canadians That Have Had Internet Access for Less Than One Year, by Region, Q3 2000 197 Canadian Households with At Least One Regular Internet User, by Access Location, 1998-2000 (as a % of households) 197 Internet Users in Canada, by Access Location, 2001 (as a % of adult population) 198 Internet Penetration in Canada, by Province, 2001 (as a % of each province’s population) 198 Internet Access in Canada, by Province, 2000 199 Canadian Households with At Least One Regular Home Internet User, by Province, 1998-2000 (as a % of households in each province) 199 Canadian Households with At Least One Regular Internet User, by Metropolitan Area, 1998-2000 (as a % of households in each area) 200 Canadian Households with At Least One Regular Work Internet User, by Province, 1998-2000 (as a % of households in each province) 201 Canadian Households with At Least One Regular School Internet User, by Province, 1998-2000 (as a % of households in each province) 201 Canadian Households with At Least One Regular Public Library Internet User, by Province, 1998-2000 (as a % of households in each province) 202 Distribution of Adult Internet Users in Canada, by Province, 2001 202 Comparative Estimates: Internet Users in Canada, by Gender, 2001 203 Internet Penetration in Canada, by Gender, 2001 203 At-Home Internet Users in Canada, by Gender and Language, 2000 (as a % of total users) 204 Internet Users in Canada, by Age, 2000 204 Distribution of Internet Users in Canada, by Age Group, 2001 205 Internet Penetration in Canada, by Age, 2001 205 Internet Penetration in Canada, by Age Group, 2001 205 Percent of Canadian Teens and Seniors Who Have Used the Internet, 2000 (as a % of respondents) 206 Canadian Teens Online, 2000 (in millions) 206 Monthly Internet Use among Canadian Teens, 2000 (in minutes) 207 Internet Access at Home among Young People in Canada, Feb.-March 2001 (as a % of young people in each age group) 207 Online Activities among Young People in Canada Who Have Used the Internet, Feb.-March 2001 (as a % of secondary school students and elementary school students*) 208 Canadians Seniors* Who Have Used the Internet, by Gender, 2000 (as a % of respondents) 209 Internet Activities among Internet Users Ages 60+ in Canada, 2000 (as a % who have used the internet in the previous month) 210

247 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. North America Online

Index of Charts Internet Users in Canada, by Income, 2000 211 Internet Users in Canada, by Household Income, 2000 211 Household Internet Penetration in Canada, by Household Income, 1997-2000 (as a % of total households) 212 Distribution of Adult Internet Users in Canada, by Income, 2001 212 Penetration of Adult Internet Users in Canada, by Income, 2001 (in CAD$) 212 Educational Attainment in Canada, 1996 (as a % of population 15+ years old) 213 Internet Users in Canada, by Education, 2000 (highest level ﬁnished) 213 Household Internet Penetration in Canada, by Education of Household Head, 1997-2000 (as a % of total households) 214 Distribution of Adult Internet Users in Canada, by Educational Attainment, 2001 214 Household Internet Penetration in Canada, by Family Type, 1997-2000 (as a % of total households) 215 Distribution of Adult Internet Users in Canada, by Marital Status, 2001 215 Comparative Estimates: Average Time Spent Online At-Home per Week per User in Canada, 2001 (in hours and minutes) 216 Time Spent Online At-Home Weekly per User in Canada and the US, 1999 & 2000 (hours) 216 Time Spent Online Weekly by Home Internet Users in Canada, May 2000 vs. September 2001 217 Average Minutes Spent Online Monthly per User in Canada, May 2000 & April 2001 (in minutes and % growth) 217 Top Five Countries Worldwide, by Average Minutes per User per Month Online, April 2001 (in minutes) 217 Canadian Internet Usage, June 2000 vs. June 2001 218 Canadian Internet Usage (French Language Audience), June 2000 vs. June 2001 218 Top Five Internet Activities among Canadian Home Internet Users, 2000 (as a % of internet users) 219 Canadian Online Activities, Q3 2000 (as a % of Canadians with internet access) 220 Top Five Online Activities in Alberta, Q3 2000 (as a % of Canadians with internet access) 221 Top Five Online Activities in Atlantic Canada, Q3 2000 (as a % of Canadians with internet access) 221 Top Five Online Activities in Manitoba/Saskatchewan, Q3 2000 (as a % of Canadians with internet access) 221 Top Five Online Activities in Ontario, Q3 2000 (as a % of Canadians with internet access) 221 Top Five Online Activities in Quebec, Q3 2000 (as a % of Canadians with internet access) 222 Top Six Growth Areas in Online Activities in Canada, Q3 2000 (as a % of Canadians with internet access) 222 Internet Activities of US and Canadian Active Internet Users, 2001 223 Comparative Estimates: Percent of Canadian Internet Users Who Purchase Online, 2001 224

248 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. North America Online

Index of Charts Canadians Who Have Purchased Online, Q3 2000 (as a % of Canadians with internet access) 224 Canadian Households that Made an Internet Purchase, 1999 & 2000 (as a % of households) 225 Canadians Who Have Purchased Online, Q3 2000 (as a % of Canadians with internet access) 225 Online Shopping Behavior among Canadian Internet Users, 2001 (as a % of internet users and total population) 226 Online Shopping in Canada, by Region, Q3 2000 (as a % of Candians with internet access) 227 Canadian Online Purchasers, by Region, Q3 2000 (as a % of Canadians with internet access) 228 Top 10 E-Commerce Categories of Online Purchasers in Canada, Q4 2000 229 Top 10 Actual Online Purchases in the Last Month among Canadian Internet Users, June 2001 (as a % of internet users) 230 Reasons for Not Purchasing Goods and Services Online among Canadian Internet Users, June 2001 (as a % of respondents who have never purchased online) 230 Comparative Estimates: Mobile Internet Users in Canada, 2005 (in millions) 232 Mobile Phone Usage in Canada, 2001 (as a % of internet users) 233 Use of Wireless Internet Services via Cell Phone in Canada, 2000 (as a % of current Canadian cell phone owners) 234 Anticipated Use of Wireless Internet Service by Canadian Cell Phone Owners, 2000 235 Summary of Canadian Internet Sector, 2001 236

249 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information. North America Online

Also Available from eMarketer Asia Online: Demographics, Infrastructure, Usage Patterns and eCommerce Trends Economy & infrastructure Internet users & demographics eCommerce, E-Finance & E-Advertising Country profiles ASPs Market size & growth Industry leaders Usage patterns Customer satisfaction Brazil Online: Demographics, Usage Patterns and E-Commerce Trends Economy & infrastructure Internet users & demographics E-Commerce, E-Finance & E-Advertising Broadband Users by access method (dial-up, fiber, DSL, cable, satellite, wireless) Residential and business usage Access revenues User demographics Country profiles CRM Market size & growth Leading vendors Budgeting & implementation eBanking Online banking around the world (US, Europe, Asia) Mobile banking Electronic bill presentment and payment eCanada Economy & infrastructure Internet users & demographics E-Commerce, E-Finance & E-Advertising eCommerce: B2B E-Commerce: B2B revenues around the world, country by country E-Commerce: B2B by industry Internet penetration among businesses Online marketplaces, auctions and exchanges eCommerce: B2C E-Commerce: B2C revenues worldwide Top B2C categories Online shoppers, buying frequency and size of transactions E-Consumer attitudes and behaviors

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eDemographics User demographics worldwide Age, gender and race Income, education and occupation Usage patterns eGlobal Internet infrastructure, by region Users and usage, by region E-Demographics, by region E-Commerce, by region eHealth Consumer demographics and attitudes Healthcare personnel, demographics and usage B2C spending B2B spending eInvesting Online brokerages Online mutual funds Online asset management Online investment advice eMail Marketing E-Mail marketing revenues worldwide E-Mail users and user demographics Permission, opt-in and opt-out E-Mail marketing techniques and strategies ePoland Economy & infrastructure Internet users & demographics E-Commerce, E-Finance & E-Advertising ePrivacy & Security Consumer attitudes & behavior toward online privacy Online fraud Credit card security Corporate security (hacking and denial-of-service attacks) Virus attacks Europe Online Economy & infrastructure Internet users & demographics E-Commerce, E-Finance & E-Advertising Country proﬁles eWireless Mobile internet use around the world, country by country M-Commerce M-Finance M-Advertising

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Interactive Television User forecast Revenue forecast Business attitudes & behavior User attitudes & behavior Japan Online: Demographics, Usage Patterns and E-Commerce Trends Economy & infrastructure Internet users & demographics E-Commerce, E-Finance & E-Advertising Latin America Online: Demographics, Infrastructure, Usage Patterns and E-Commerce Trends Economy & infrastructure Internet users & demographics E-Commerce, E-Finance & E-Advertising Country profiles Marketing Online to Kids & Teens Demographics Advertising & marketing E-Commerce Special considerations Online Advertising: Statistics, Strategies, Tools and Trends eAdvertising revenues worldwide Spending by ad format (banner ads, sponsorships, e-mail, etc.) Spending by industry category Measurements and standards (click-through rates, CPMs, ROI) Online Marketing Viral marketing Direct marketing vs. Branding Search engine optimization Affiliate programs Classifieds Coupons For more information, or to order a copy, contact eMarketer at: Phone: 212.677.6300 Fax: 212.777.1172 eMail: [email protected] Web: www.emarketer.com For media inquiries: Terry Chabrowe, [email protected] For inquiries about this report or other eMarketer reports: Nick Fainelli, New Business Development, [email protected]

252 ©2002 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission. Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.