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24 November 2004

Broadband adoption - US - 1.1

Whereas the large majority of US households have adopted the PC - they were 87.6% to have done so in October 2003 - they are about one in two to have an Internet connection (55%) and about one in five to have a Broadband one (19.9%). And if Broadband adoption is on the rise, overall Internet adoption seems to have reached a point of equilibrium. This means that a little less than one American household in two doesn't have an Internet connection, and that many American households are content with a Dial-up connection (60%).

From adoption data, the picture that emerges is one of a multilayered American Information Society. If on the one hand, the PC has confirmed its place in the American household, Internet has integrated only about half of them, and Broadband Internet a fifth of them. This article synthesizes research on Broadband Internet adoption: adoption rates, demographics, geography, motivations and evolving behaviours.

Sources
The latest report A Nation Online: Entering the Broadband age from the US Department of Commerce, Economics and Statistics Administration, National Telecommunications and Information Administration, dated September 2004 was made public recently. Based on surveys carried out about a year ago, in October 2003, as part of the US Census Bureau's Current Population Survey of 57.000 households, the report focuses on Internet adoption and use. Together with the Pew Internet Project Data Memo Broadband 2004, published April 2004, and a Nielsen//Netratings report on Broadband adoption published in September 2004, these reports lead to a good understanding of the extent, distribution and motivations behind Broadband adoption in the US.  Unfortunately, I haven't yet come across qualitative research to push this level of understanding further.

Internet Households
Looking at Households, first, PC adoption rate has stabilized at 87.6%, with 61.8% of these PC households connected to the Internet. In the past 25 months, Internet adoption rate has been feeble at 4%. By comparison, it had increased 9% between August 2000 and September 2001. The percentage of Internet Households has stabilised at around 55%, corresponding to a figure of 62 M households, a figure lower than the estimation of about 70 M I made in the US Broadband Adoption 1.0 post. The percentage of Broadband households is slightly lower, at 19.9%, equivalent to approximately 22 M households, compared to my estimation of between 25 to 30 M households.

Internet Users Population
Looking at individuals, US Internet users correspond to 58.7% of the total population, approx. 170 M people. They access the Internet from different locations:

  • At home, using a Dial-up connection, 51.8% (corresponding to about 88 M)
  • At home, using a Broadband connection, 33.9% (about 56 M, about halfway in the 48 - 65 range I estimated)
  • Elsewhere, they have no Internet at home, 14.2% (about 26 M)

What about the 41.3% who do not use the Internet?
Whereas the majority of non-Internet users doesn't have Internet at home (75.3%), some (24.7%) have an Internet connection at home and people around them using it. In most cases, the connection is Dial-up (17.7%), but there is also a sizeable number of Broadband connections (7.0%). These people just seem not to be interested in Internet.

Demographics
Who's most likely to have Broadband at home?
It is more likely that the household be:

  • Asian American & Pacific Islands (34.2%) or White (25.7%)
  • with a family income of 75.000$ and above (45.4%) or between 50.000$ and 75.000$ (27.9%)
  • with education beyond Bachelor's Degree (38%), Bachelor's Degree (34.9%) or some College (23.7%).

This demographics corresponds well to that described by the Pew Internet Project which found that more than half college educated people aged 35 and younger have a Broadband connection at home (52%); almost half of Households with income of 75.000$ or above (47%) and of College graduates (40%). Also people who have been online for 10 years or more are more likely to have a Broadband home connection (56%).

Geography
Where is Broadband adoption rate higher?
In terms of geographical distribution, Broadband adoption rates are higher in the West (23.8%) and Northeast (23.1%) than in the South (17.3%) and Midwest (17.8%) of the US. Nielsen//Netratings gives further support to this finding. Among the Top 10 Local Markets in terms of Internet users who connect via Broadband are:

  • San Diego (N° 1, 69.6%)
  • New York (N° 4, 66.8%)
  • Seattle (N° 7, 63.0%)
  • San Francisco (N° 8, 63.0%)
  • Los Angeles (N°9 61.6%)
  • Boston (N°10, 61.4%).

Incidentally, four of these cities are also among the ten cities with the highest Creativity Rank, according to Richard Florida's Creative Class analyses. 

Where is Broadband adoption rate lower?
People living in rural areas are less likely to have home Broadband. Broadband adoption is lower in rural areas (24.7%) than in urban areas (40.4%). The Pew Internet Project data are even more dramatic: only 10% of rural Americans access the Internet using high-speed connections, about one-third the rate for non-rural Americans. The Project observes that, apart from the availability of such an access, rural Americans have demographics characteristics that make it less likely for them to have Broadband connections even when available: they are older, less educated and less affluent.

Looking at awareness of available Broadband infrastructure, the "A Nation Online" report finds that respondents say that:

  • They live in an area in which Broadband is available (77%)
  • They do not live in an area where Broadband is available (8%), this was the case for a higher percentage of rural people (27%)
  • They don't know (15%), this was the case for a higher percentage of rural people (35%).

Online behaviour differences between Broadband and Dial-up Internet users
Daily Internet use is more frequent among those who have a Broadband connection at home (66.1%) than among those with Dial-up service (51.1%). This finding is confirmed by the Pew Internet Project: Broadband users are more likely to go online on the typical day (69%) than Dial-up users (51%).

Broadband users tend to engage in more online activities:

  • Purchase products or service, + 15% (49.2 among Dial-up users - 64.3 among Broadband users)
  • Bank online, + 14.9% (23.8 among Dial-up users - 38.7 among Broadband users)
  • Listen to radio, watches TV and Movies, +13.6% (17.3 among Dial-up users - 30.9 among Broadband users)
  • Get news, weather, sport, +11.8% (64.4 among Dial-up users - 76.2 among Broadband users)
  • Search for info on Health services and practices, +8.5% (33.4 among Dial-up users - 41.9 among Broadband users)
  • Search for product or service, +7.6% (75.7 among Dial-up users - 83.3 among Broadband users)
  • Playing games, +6% (among Dial-up users 37.1 - 43.1 among Broadband users)

On the other hand, Communication activities are very intense and vary little, + 4.1% (among Dial-up users 88.9 - 93.0 among Broadband users).

To assess behavioural differences, the Pew Internet Project uses a different criterion; the activities tried and carried out in a typical day, from a reference list of 18 activities, and also find a relative increase in intensity and frequency of Internet use:

  • Dial-up users on average have tried 7 of these activities and on a typical day have engaged in 3 of them
  • Broadband users on average have tried 9 of these activities and do 4 of them on a typical day.

Overall, more people engaged in these online activities in 2003 than in 2001:

  • Bank online, + 10.4% (from 17.4 to 27.8)
  • Purchase products or service, + 8% (from 44.1 to 52.1)
  • Search info about Government services or agencies, + 5.6% (from 30.1 to 35.7)
  • Search for info on Health services and practices, + 5.5% (from 34.1 to 41.6)

Motivations
Why do people subscribe a home Broadband connection?
The Pew Internet Project argues that people adopt Broadband if they value the time they spend online. They want to make the best of it, feel efficient and enjoy this time. It is then not surprising then that as they have a Broadband connection, they are more active online and spend more time.

The most frequent reasons to be given to explain the choice of Broadband are:

  • Connection too slow or frustrating: 36%
  • Download files faster: 21%
  • Job-related tasks: 10%
  • "Always on" connection: 7%
  • Use phone and Internet at the same time: 7%

Why don't people upgrade from a Dial-up to a Broadband home connection?
A majority of Dial-up Internet users are content with this connection (60%), whereas 40% would like to upgrade. For the former, the main reasons are lack of interest and cost:

  • They don't need nor are interested: 44.1%
  • Too expensive: 38.9%
  • Not available is cited by one Dial-up user in ten (9.8%) on average, but by more than one in five (22.1%) Dial-up users in rural areas.

Why do people choose not to connect at all to the Internet?
Lack of interest is the most frequent reason given to explain non-adoption of Internet, followed by cost and equipment issues.

  • Don't need/not Interested (41.6%)
  • Too Expensive (22.9)
  • No or Inadequate Computer available (22.5)

The Digital Future Report 2004 also adresses this issue. The reasons given for not being online are:

  • either no computer at all or inadequate computer, (40% on the increase with respect to 2002 and 2003)
  • lack of interest (24%, stable)
  • lack of Internet basic knowledge (18%, slight increase)
  • concern about costs (10%, stable)
  • too time consuming (8% on the increase)

When asked about the likelyhood they will go online the following year, the majority considers that they will not do so (61.2%). 

Why did people discontinue Internet service?
Cost and equipment issues are given as reasons for interrupting Internet service.

  • No or inadequate computer available: 27.5%
  • Too expensive: 27.2%
  • Don't need/not interested: 18.4%

The Digital Future Report 2004 finds similar motivations in a slighlty different order: no computer is the most cited (and growing), no interest is the second (but descreasing) and concern with costs the third. Some respondents indicate also time consumption and insufficient use as further reasons for stopping to go online.

 

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