The broadband adoption dilemma

CHICAGO--Internet service providers have built it, but many still have not come.

That's one of the biggest problems the U.S. policy makers and service providers face in their effort to bring broadband access to every American, according to several panelists speaking Wednesday at the Supercomm 2009 trade show here.

Panelists highlighted the low adoption rate as a major issue that must be addressed in the pending National Broadband Policy, which is currently being developed by the Federal Communications Commission. The National Broadband Policy, which will be presented to Congress in February, will outline how the government can reach the goal of universal broadband access.

Roughly 96 percent of American households have access to broadband service from at least one service provider, the FCC said in a status report issued last month. But of those people, about 33 percent do not subscribe to broadband. Why? John Horrigan, consumer research director for the FCC, who was on the panel Wednesday, said the FCC is currently conducting surveys to answer that question.

"We are trying to figure out why people who have access to broadband choose not to subscribe," Horrigan said. "There's a big group of users still on dial-up, and there are people who have never subscribed to an Internet service."

The FCC's status report suggests that adoption rates vary by age, income, education, and race. There is some speculation that price might be a factor, which means either the cost of services is too high or the cost of computers and equipment is too high.

"If cost is an issue, then we need to look at a subsidy program to target these consumers," Horrigan said. "Our focus will be to tailor solutions to all the barriers we encounter."

But cost may not be the only factor. Jim Cicconi, a senior executive vice president at AT&T, said that there are a mix of reasons why people who have access to broadband choose not to subscribe. And he argued that price may not play as big of a role as some people suspect. He said that after AT&T merged with BellSouth, the company introduced a $10-a-month broadband service to entice people to subscribe to broadband. While many customers signed up for this offer, there was still a significant number of people who didn't. In fact, some consumers continued to subscribe to dial-up service, even though that service was much slower and twice as expensive as broadband.

"There are a mix of factors when you look at adoption," he said. "But it's an important issue for us because we are spending money to get broadband to these people, and more than 30 percent aren't subscribing. We'd love to make them customers."

Age appears to be one factor in broadband adoption. Only 30 percent of people 65 or older use broadband compared with about 77 percent of people who are between the ages of 19 and 29 years old, according to a Pew Internet and American Life Project survey published in June.

Older people may not be as comfortable with technology and the equipment. If this is the case, the FCC may find it necessary to customize education programs to help people understand how broadband can be used in their lives and help teach them how to use the technology.

Even with a slew of new subsidy and education programs, there will likely still be some people who simply don't want broadband.

"We had this issue 20 years ago with telephony when we were talking about universal phone access," said Eric Rabe, a spokesman for Verizon Communications. "Telephone penetration was at around 93 percent. But there was a group of people who just didn't want a phone. Some were afraid of bill collectors. Some people didn't want to be bothered."

[bonesbautista]

My parents have access in rural SWW Washington through CenturyTel - $47 a month for 256k down/128 up. Service was often out or interrupted 2-7 days each month. It's been turned off. There is no reliable cellular service, no VZW, only USCC 1X and ATTWS GPRS-like data. Half of her town has turned off the service.

Here in PDX, Quest's running of single-pair, 1.5 down was the best I could do, and there was noise on the line; I dropped the service after the service was down for 10 days straight. No FIOS in my old neighborhood, Comcast wanted $70 per month since I have Dish.

I'm using Clear, and the service generally blows chunks - I'm about ready to ditch my M2M arrangement - the tech told me two days ago they'll fix my sector "in about a month". Seriously. They cash my check right on time, tho'.

FCC - customer service and their product generally is unreliable, and the prices are outrageous for what's available.

[aka_tripleB]

Why are we pushing broadband on people? How many people on dial-up who have access to broadband are complaining about their connection? And why is the government trying to spend money on a problem that doesn't exist? If the people who don't use the internet don't want the internet, you HAVE TO wonder what ulterior motive the government has to get everyone on the internet. I know I'm going to be mocked for that statement, but why start another program to teach people how to use the internet? Most places already have classes you can take for that. The ones that don't still have libraries that people can go to and use the internet if they really wanted to and learn using the book at the library. There is no reason to spend more money on this.

[SergeM256]

Perhaps, government should make broadband mandatory for every household and punish people who resist government's "efforts to bring broadband access to every American". Sounds strange but government wants you to have broadband, even if you don't want it. Why would government care if somebody doesn't want it?

[csnwbd2251]

Why is the government pushing mandated healthcare coverage on people? At least broadband won't drain our budget.

[Renegade Knight]

"We" are pushing access. That's different than forcing the use. The reason "We" are pushing access is that the internet has reached a level of importance that puts into the status of utility. That doesn't mean that you can't enjoy your cabin without power, phone, or internet but it does mean you have the option.

[ciobi2]

Why force people to send their children to school? Or what about the net-challenged kid whose parents won't get a computer or net access because they didn't have these when they were kids themselves and they grew up just fine.

[sanenazok]

People who don't have internet access at home don't want it. The government should not be able to force it down people's throats. What's next? Checking to make sure you're using the web connection enough? Since when does an INDUSTRY regulatory government body get to go around and tell people what they must buy at home. Thanks for the change!

@ciobi2: Actually, the point about school is important, since EVERY school has internet access and computers. Kids must go to school to be uhm literate, internet access is already available to them.

[cp256]

It's a telco/cableco agenda. The politicians are in their pockets. Check out some sites like teletruth.org sometime. How do telephone companies write off billions in equipment for they can neither produce the receipts or the actual equipment? How do they not get investigated for tax evasion while they rest of us are getting taxed to death at ever higher rates? Why is landline phone service twice as expensive as it was 10 or 15 years ago when they told us all that the mergers would lower our phone rates?

We're getting ripped off and the government is a willing accomplice.

[streak24]

Great...now the the government will spend millions figuring out that people over the age of 65 didn't grow up with the internet and therefore never developed a broadband habit. And they will probably also discover that cost is one of the major reasons younger people might not subscribe to broadband.

Remind me again why the government is spending a ton of money on trying to get broadband to that last 3% who don't already have access to broadband??

[BigGuns149]

I would agree that the reasons why people shun broadband are somewhat obvious, but I have to disagree with you that spending money on expanding broadband access. Expanding broadband access today I see akin to what getting everyone access to a telephone was in the first half of the 20th century. The definition of broadband one would have to use to say 96% of people had access to broadband is an utter joke. There are a lot of regions where true broadband connections are still unheard of and the "broadband" that does exist is only marginally faster than dialup at obscene prices.

[renGek]

Well its pretty simple if they ask and listen to us. Broadband is not cheap. For those of us who does a lot on the web we see $50 as worthwhile but the rest of the population mostly go to the web to do basic things. Add to that, ISP especially cable doesn't exactly have a stellar reputation. They pretty much bully us into whatever service can be cram down our throats. We don't have nearly the types of product option and services as some other countries like korea. They do a lot more with broadband than we do. And even for us, it takes considerable effort to find things that requires broadband, hulu being an exception. ISPs don't particularly want broadband content like tv programming to be via the web because it kills their cable business so they are doing a good job halting the progress there as well.

[Lerianis3]

It's not the last 3%, streak24....... there is about 25% of people who do not have access to 'reliable' and 'cheap' broadband in this country. Comcast is HELLISHLY expensive (60+ dollars a month) and so are most other services, especially out in the 'boonies'.

[john55440]

Pew Research has already looked into "Barriers to Broadband Adoption":

http://www.pewinternet.org/Reports/2009/10-Home-Broadband-Adoption-2009/5-Barriers-to-broadband-adoption.aspx?r=1

[JLGoz]

Lots of older people could care less about the Internet and or learning how to use a computer for that matter. And also lots of older Americans who only have Social Security as income can not afford broadband. All their money is taken from rent, utilities, food and medications, with none being left for broadband, even if they cared about it. The goernment should concentrate on taking better care finacially of those older folks who lived through the Great Depression, fought for our country, etc. , instead of wondering why they don't want to surf the net. If the government wants them on the Internet then let them buy these senior Americans a computer and pay for their broadband.

[BigGuns149]

I think that the stereotype about older people not using computers or the internet for that matter gets a little overstated. Sure there are plenty of older people who shun technology, but I know plenty of 20 somethings who are technophobes as well.

Furthermore, while there are millions who rely upon Social Security, most retirees don't rely solely upon Social Security. While there are millions of retirees scraping by on Social Security alone, as a demographic group, retirees despite all the sympathy they frequently receive are actually the the demographic group that is least likely to be struggling financially. As a group they are the most likely to own their homes outright.

While I don't think we should be throwing granny out on the street I think the US isn't focusing enough on the young. While there are some American seniors who struggle financially I think their struggles often pale to millions of younger Americans who can't find work and are nearly out of unemployment. To make matters worse the cost of education is skyrocketing faster than aid to make it affordable making it more difficult for people with limited skills to get a job or perhaps a better one than they currently have.

[Renegade Knight]

Lots of younger people could care less about much of anything, but they have access to everthing when they do. That's the goal for everone. Not just young punks.

[TheOtherSmyth]

An interesting article. I'd like to see the penetration and adoption rates broken down by the type of broadband (DSL, cable, etc). I am technically within the 96% mentioned in the article, as I could get broadband through satellite services such as WildBlue or HughesNet. However, the price of these services ($200-300 in equipment, plus $50-80 per month for a subscription) is simply too high for the services they provide. Home plans max out at 1.5 Mb/s down (from what I have read, most people never get anywhere close to that number), the signal can be affected by precipitation, and to top it all off, the lag caused by the distance between the receiver and the satellite makes the connection useless for any real-time applications.

If my local telco, Fairpoint Communications, could improve their DSL service (as I live in rural Vermont, there is no chance of cable ever getting to my house), I would gladly subscribe; the savings on phone bills from my dial-up use alone would pay for their 3 Mb/s plan (hear that, Fairpoint?). For now, however, I am stuck with the choice of dial-up (which drives me insane with its glacial performance) or satellite (which I cannot afford).

As for others' lack of adoption, though I have not heard of as many failures in my own area as bonesbautista described, Fairpoint still does not have a good reputation here. From others' accounts of broadband use (as I can supply none of my own) I agree that most providers need to work at improving their service.

I would probably be more tolerant than most subscribers to failures, as I have little other place to go for any service at all. I expect, however, that many of the older non-subscribers are less desperate than me to make use of the Internet's resources. Because of this, they probably do not mind doing without high-speed connections if bad service drives them to cancel.

[martin_c_e]

Comcast charges $57.95 for standalone broadband plus modem fees and taxes for a $72.00 a month bill. AT&T refuses to bring dsl to my neighborhood after almost 10 years. AT&T already has acknowledged that it will never bring broadband to about 30% of their customers - many are in the close-in suburbs like me. I am not poor; I am middle class and can afford a reasonable fee such as $40.00 a month total.

The satellite providers start at $60 a month for 256k or 512k plus as much as a $300 upfront installation fee. Not a good deal.

I will stay on dial-up at $9.95 a month for what I need it for: email, getting statements and paying bills, along with reading text pages such as CNET.

The FCC is just wasting taxpayer money trying to figure out that some people already have all the internet that they want. Does the FCC want us to become addicted to You-Tube and Hulu? Comcast certainly does not want their video customers to dump them. (Long live ota-dtv!)

[Renegade Knight]

The FCC is trying to arrange broadband access for all. Not just the ones lucky enough to live where there are more than one option. They are specificly trying to work around the tendancy of companies to shun "30%" (or whatever the number is) of their customers because they so rudly lived in rural areas.

[MagiMamoru]

How about trust of local carriers? Com&^%$ and Wind(&^%. Both would would know customer service if it bit them on the ankle.

[Lerianis3]

Uh, I trust Windows just fine. Have been using it since Windows 3.11, and have NEVER had any complaints about Windows. Sure, I've had data losses and other things.... but those were all linked to dying hard drives.

[poultryfish]

Wind in this case would be one of the local carriers he was just talking about.

[gertruded]

only the providers say it isn't cost.

It is obviously cost and poor service.

[solitare_pax]

Darn those Amish and Luddites!

[jrzshor]

because it is too EXPENSIVE. DUH!!!

[ecotopian--2008]

96% is hogwash. My office is 500 ft from the road, on the fringes of a major metropolitan area, and the only internet I could get is satellite. It is Dog Slow and costs $80 per month. The service is so bad, I plan to cancel it the day my contract expires, even if I can't get anything better, because I refuse to give Wild Blue any more money. Comcast wanted $17,000 to connect a cable from the pole. So there are the 2 reasons, Ms. Reardon. Lousy service and high prices. I'd sign up for reasonably priced real broadband in a heartbeat, but nobody is offering it. Your article mentions nothing about this.

[tenec]

It is strictly price. Special low priced offers are only temporary and the price jumps up later. Common practice among cable and phone providers. People do not want this.

[jonathan0766]

This is just a replay of the old liberal socialist Internet access gap / have's and have nots from the late 1990's that Al Gore & Co were big proponents of. They've just dressed the welfare issue up in broadband clothes.

[Renegade Knight]

Naaa, it's enough of an issue to be it's own conspiracy and not an older one rehashed.

[jonathan0766]

And it's worth noting for people that think normal broadband costs are too high or unfair.

$50 / month in 1996 dollars is about $20 these days. Dial-up speeds in 1996, at a cost of about $20 back then, were around 5kb per second, with AOL dial-up being the dominant player.

At a dollar value adjusted equal price today, you're getting common broadband speeds that are an increase of 50 to 100 times faster.

So in 13 years, consumers have commonly gained a 50 to 100 times faster service, and zero cost increase. That faster service at the same adjusted cost basis has delivered a radically increased value proposition from the Internet of today versus 1996 as well (making possible a zillion services that can't function at 56kbps).

[Lerianis3]

Bull. It's the other way around. 50 dollars a month in 1996 dollars is about 200 today, adjusting for inflation.

[Renegade Knight]

It's also worth noting that wages haven't doubled since then so I'm not sure what you are getting at.

[dave-lucas]

??? You wrote "Roughly 96 percent of American households have access to broadband service from at least one service provider, the FCC said in a status report issued last month. But of those people, about 33 percent do not subscribe to broadband. Why? John Horrigan, consumer research director for the FCC, who was on the panel Wednesday, said the FCC is currently conducting surveys to answer that question."
SURVEYS??? D'OH!!! It's the PRICE - consumers are either forced to buy "bundled service" with other stuff they DON'T want - o r - pay $39 or more for service that has more outages than the electric company in the Philippines!!!! People are SO dumb!

[bandwidthhog]

I am one of the 33%, I run a computer store, I have no Internet service at my home .
To answer the issue of people not connecting.
1) they did connect and the company did not live up to its savings promise and charged full price.
2) Service was horrid and they went back to dial up.
3) some people just do not want to own a computer let alone hight speed internet - they have a life.
4) horrid customer service

Stop trying to cloud the issue with more research, In 2003 Vermont was told high speed internet would be available by 2007, then all over new england a new dead line of 2010 came out , now its 2011.

A plan for community owned and run fiberoptic to the home network has been proven to work. Not a government run network but local community owned network.
It can work, It can put the money it makes back into the network once turning a profit can give some money back to the taxpayers, It is working through out the USA
But your comcasts / wireless companies pay big $ to shut everyone up!
see

http://www.dslreports.com/r0/download/1472717~38109c7d9cfa7ddfd5381d448779f454/lobbyists.gif

[weegg]

In Japan you get 8x the throughput than here for only $20/month. Until we can match that, I think the answer is obvious.

[sommer182]

I've also seen #'s for Korea that are closer to 20x faster, all at pennies on our dollar for cost. Many countries in Europe are also way ahead of us. We have a major problem in relying on private companies to make sure everyone has access. They are concerned about rural areas not generating enough subsriber fees to warrant providing the service, so they either charge astronomical rates or don't bother at all. Conversly, in areas they do provide service, what do we end up seeing? BANDWIDTH LIMITS! I am fortunate enough to live in a Midcontinent service area, and enjoy our cable broadband. This is one area that I would not mind seeing my tax dollars fund--along with cheap and efficient cross-country mass trans, cheap and efficient power and heat, and a complete health care overhaul.

[falldownlaughter]

There are people getting broadband that may not be included in the FCC statistics:

library
free wifi at some coffee shops or retailers
paid monthly wifi plans at hotspots
3G networks to cellphone (iPhone/Blackberry/tethering)
internet at work, school
Using internet at the home of a friend or family member
Neighbor's unsecured wifi
dishonest cable installers taking bribes to provide internet for free

If people are able to take advantage of these methods, they will see little value in paying for their own broadband access at home.

[sommer182]

A co-worker of mine lives in an apartment building and lives with his neighbors unsecured cable wi-fi. Another co-worker lives off of her Blackberry as an all in one device (email, internet, txt) so there are certainly those who won't sign up for broadband in the traditional sense.

[delfuego1]

um, i'm confused. i thought the ceo of verizon was complaining about net neutrality because their infrastructure can't handle the growth w/o metering broadband access ... and now the isp's/fcc are saying they can't get enough broadband customers implying they have plenty of bandwidth to spare? those who don't want broadband leave more bandwidth for those who do, so why bother? ah, they'll make more money if they can claim saturation as justification for metering.

[Renegade Knight]

Nice catch. In rural areas there probably isn't enough customers to pay for the roll out of broadband. That's why they would have to subsadize infastructure by a surcharge on us all similar to the roll out of power and phone back in the day. That's worth doing if broadband has reached utility status. I think it has.

The alternate is hot spots like NYC that have it all, and vast areas of digital void.

[bjnovack]

There's plenty of broadband. The metering is so that they can limit folks like us watching streaming video on hulu or similar, yet they'll offer PPV on their own network with no metering. It's a way for them to boost their bottom line in an anti-competitive way. The metering is an alternative to the controlled pipes they were hoping to get with the Stevens Tubes Legislation when Bush was still pres.