Friday, May 8, 2009

Why a "No, thanks!" to broadband?!

Last week, we were at a bar in downtown, sipping a Martini, and gazing at the red flames in the fire place, when a question popped up: “why people choose not to subscribe for broadband access?” We deeply and truly love Internet! Why are there people in our city who do not appreciate this greatest invention of mankind?! I knew that only 51% of households in the US have broadband subscription, while 91.5% of the zip codes have three or more ways of accessing broadband; of course that night I only remembered some estimates but close enough to heat up the discussion. (These stats are based on the National Telecommunication and Information Administration (NTIA) survey in Oct 2007.) I was claiming that reasons preventing some to avoid Internet got to be ease of use and cost. Firstly, it is not easy enough to use the Internet. People still associate Internet with computers. If one could easily navigate through Amazon on his or her TV, Amazon market size would have increased beyond expectations. My mom still prefers to use the old familiar phone instead of Skype. Secondly, the cost is still too high for substantial number of families. The $20-$30 per month may seem to be worth it, considering the great value Internet add to our life. But $300-$400 per year is significant when the annual household income is $50,000. Based on IRS reports, the $50,000-$75,000 is the income bracket with the most number of people in the United States. Therefore, losing a percentage of customers in this income bracket means more customers will be lost in an absolute sense. Following that night discussion, I researched more about the subject to back up my arguments with statistics. In general, it is extremely hard to study the effect of cost and ease of use separately. The lower income group have probably less education and are less comfortable with using computers. However, I found a report published by NTIA in January 2008 that shows broadband subscription has a high correlation with both income and education. The data has been collected from 117,840 householders all across the United States. Figure (1) shows the percentage of householders with broadband connection at home vs. the household income. If you exclude the bin for households with an income of less than $5,000, the data shows clearly that the chance that a householder has access to broadband at home increases with the household income. Figure (2) shows that the people in the age group of 35-44 years old subscribe to broadband more than the other age groups. It is possible to explain this graph with my theory of cost and ease of use. The 35-44 years old age group has more money comparing to the younger age groups. At the same time they are more comfortable working with a computer comparing to the older age groups. Figure (3) demonstrate very strong correlation between education and broadband usage at home. 74% of the householders with a bachelor degree or higher have access to broadband Internet at home. This is 23% more than the national average! Our discussion that night in the bar didn’t end about the causes of relatively low penetration of broadband. We also discussed solutions for increasing usage of broadband in the society. If you are interested to know "How we can make broadband free" or "How we can remove the barrier of computer interface", stay tuned for my future posts.
edited by Behnam Analui



    Some more data for the broadband adoption debate.

  2. very interesting data! specially the growth rate of %18 in broadband penetration from April 2007 to March 2008.

    They also had a new survey that %74 of Internet users, i.e. %55 of adult population, used Internet to get information in 2008 election.

    I think census2010 should take advantage of Internet for collecting data.