Broadband Internet Adoption Stalls, Regresses for Poor, Says Pew Report

WASHINGTON, July 2 – Broadband growth in the United States has effectively stalled over the past five months, a possible victim of the economic slowdown, according to a report released Wednesday by the Pew Internet & American Life Project.

Some 55 percent of all adult Americans now have a high-speed internet connection, or a broadband connection, in their home, according to the report, “Home Broadband Adoption 2008.”

That number compares with 47 percent of adult Americans with broadband in early 2007, and 54 percent in December 2007. Hence broadband growth over the previous 12 or 13 months has dramatically tapered off.

The growth rate in broadband adoption from 2007 to 2008 was 17 percent. That compares favorably to the 12 percent growth recorded in the 2006 to 2007 timeframe, according to Pew’s annual studies in 2007 and 2008.

Yet for poor Americans, as well as African Americans, broadband adoption was slow or negative.

Among adults living in households with annual incomes of less than $20,000 annually, broadband adoption has actually regressed: the percentage dropped from 28 percent in March 2007 to 25 percent in April/May 2008, said the report.

Among African Americans, home broadband adoption stood at 43 percent in May 2008, versus 40 percent the previous year.

“The flat growth in home high-speed adoption for low-income Americans suggests that tightening household budges may be affecting people’s choice of connection speed at home,” said John Horrigan, associate director of research at the Pew Internet & American Life Project and author of the report.

“Broadband is more costly on a monthly basis than dial-up, and some lower income Americans may be unwilling to take on another expense,” said Horrigan.

Pew’s annual report has become the respected benchmark for understanding broadband adoption within the United States.

Looking over the past year, three groups did experience relatively strong growth in broadband adoption from 2007 to 2008:

Older Americans: Those aged 50 and above experienced a 26 percent growth rate in broadband from 2007 to 2008.
Lower-middle income Americans: Those with household incomes between $20,000 and $40,000 annually saw broadband penetration grow by 24 percent over the same period.
Rural Americans: Among those who live in rural areas, 38 percent have broadband at home now, versus 31 percent a year ago, or a growth rate of 23 percent over the same period.

The Pew report identifies a number of other trends: including the fact that broadband prices have only dropped four percent over the past two-and-a-half years, that affordability (or the lack thereof) is having an impact on broadband adoption, and that wireless technologies may be poised to play a larger role in making broadband more widely available in the home.

Broadband users reported paying $34.50 a month for high-speed internet services in April 2008, versus $36 a month in December 2005 — a four percent decline. Cable modem users reported paying an average of $37 a month (versus $41 in 2005), while Digital Subscriber Line (DSL) users reported paying $31.50 a month (versus $32 in 2005).

Dial-up users, who now constitute just 10 percent of American adults who go online, now cite price as the key reason for why they do not subscribe to broadband.

Asked, “What would it take to get you to switch to broadband?”, dial-up users said:

35% The prices has to come down/be more affordable/cheaper
19% Nothing will convince me to get broadband
16% Don’t know
11% Other
10% It would have to become available where I live
4% When my cable/telephone company offers it where I live
4% Refused
2% Someone else will pay for it
2% If it was free
0% When my children get older

Note: Total may exceed 100% due to multiple responses.

Source: Q23 in the Spring Tracking Survey 2008 (conducted April 8-May 11, 2008), Princeton Survey Research Associates International) for Pew Internet & American Life Project.

The Pew report also found that fixed wireless services have increased their role in the home broadband marketplace, from next to nothing in 2002 to about 12 percent of home broadband connections. DSL maintains an edge in the marketplace, with 46 percent of broadband users subscribing, versus 39 percent for cable modem service. And the number of fiber optic users finally nudged above negligible, with 2 percent of home users subscribing.