TMCnews Featured Article

March 04, 2010

Is There a Broadband Gap?

By Gary Kim, Contributing Editor

A Federal Communications Commission fall 2009 survey finds that 65 percent of American adults use fixed high-speed Internet connections from home. That figure suggests there is a broadband 'problem,' considering that 78 percent of adult Americans use the Internet.

So is there a problem? The answer is more complicated than might appear to be the case.

The same report finds fully 30 percent of American adults also use mobile broadband access, including 39 percent of African-descended Americans and 39 percent of Hispanic Americans.

Also, 15 percent of Americans use mobile broadband access services for broadband connections to their PCs.

Keep in mind that the FCC (News - Alert) study also says that 92 percent of these mobile broadband users also have fixed broadband connections at home. So that means possibly eight percent are wireless-only. Adding the eight percent of wireless-only broadband users to the 65 percent of homes with fixed connections means possibly 73 percent of homes have broadband.

The study says 78 percent of adults use the Internet. So in one sense perhaps five percent of all Internet users do not have broadband access at home. And the study also says six percent of Internet users use dial-up.

So it is possible to argue that virtually every adult American who wants to use the Internet has access at home. Some prefer to buy dial-up services. Some might use libraries or public Wi-Fi. The point is that, considering both wireless and wired connections, there is not much of a broadband gap.

The report indicates that about 78 percent of adults are Internet users and 74 percent have access from home. There's a gap, but not much of a gap, considering that 67 percent of home users are on broadband connections and six percent use dial-up services. Some people prefer to buy dial-up services, for whatever reason.

About six percent of Internet users do not use it while at home.

To the extent that broadband use is highly correlated with income and educational level, efforts to improve broadband usage will have to deal with non-uses who mostly do not see the value in using broadband, do not own computing devices, prefer to use mobile access or who cannot afford it. Access turns out to be a relatively minor barrier at this point.

About 46 percent of adults whose highest level of education is a high school degree are broadband users at home, but 82 percent of adults who have attended or graduated from college are broadband users at home. Since we are unlikely to quickly change college graduation rates, spurring adoption will have to deal with increasing the perceived value of broadband accesss at home.

Nor are we likely to quickly change household incomes, which likewise are highly correlated with at-home broadband usage. Where 52 percent of Americans in households with annual incomes of $50,000 or below have broadband at home, 87 percent of those in households with incomes above that level have broadband service at home.

Among low-income Americans—those whose annual household incomes fall below $20,000—broadband adoption stands at 40 percent.

On average, Americans pay nearly $41 per month for broadband service, but half of those who receive their broadband in a bundle with other services cannot identify the Internet portion of their bill. The FCC survey indicates about 70 percent of broadband users buy their access as part of a bundle, and respondents who knew the specific retail price of broadband said, on average, that they paid it $37.70 a month.

Broadband users who subscribe to a stand-alone high-speed service at home say the average monthly price is $46.25.

The report suggests that 35 percent of Americans do not use broadband at home. About 22 percent of adults are not Internet users.

About four percent of Americans, extrapolating from survey results, cannot buy broadband because it is not available. Excluding the self-reported 'no access available' homes, his means that 31 percent of all Americans can get service but do not buy it.

There are three primary reasons why the 35 percent of non-adopting Americans do not have broadband: cost, lack of digital literacy or lack of interest.

Some 36 percent of non-adopters cite cost as the main reason they do not have high-speed Internet at home.

About 15 percent say the price of the monthly bill is too much for them. About 10 percent say the cost of a computer is too much. About nine percent say they do not want a long-term service contract or cannot afford the installation fee. Another two percent cite a combination of these reasons.

Some 22 percent of non-adopters say they are not comfortable with computers or are “worried about all the bad things that can happen if I use the Internet.” 

About 19 percent of non-adopters do not have broadband because they question its relevance to their lives.  Specifically, these non-adopters say the Internet is a “waste of time” or are content with dial-up access.

It may seem a bit like heresy to point out that broadband access is a product like anything else. There are some barriers to adoption, but most Americans seem to find their way to buying products and services that they see as really useful.

The FCC survey shows that 86 percent of Americans use mobile phones, 86 percent buy multi-channel video services and 79 percent own a computer at home. 

As noted, there also do not seem to be many people who use the Internet that do not use broadband access. Some may choose not to buy it at their home location. Some just use dial-up, others might use public access locations.

The point is that, as important as most of us believe broadband to be, not every consumer thinks so. It is a product they don't feel convinced they must buy. There are some locations not yet reached by fixed connections. But there also are fixed wireless and satellite providers.

To the extent there is a broadband problem, it is not as big a problem as many think.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Patrick Barnard