Thursday, July 3, 2008

Broadband: A somewhat broader view

CNN reports on a recent Pew study on broadband penetration. The thrust of the article, headlined "Broadband Internet? No thanks," is that surprisingly many dial-up users don't want broadband. The body of the article, however, suggests that it's not that people don't want broadband, but that it costs too much. Or, slicing it a bit finer, they don't see enough added value for the added price.

If you look at the numbers in the study, you get yet another somewhat different picture. The great majority of people who have had dial-up have now switched to broadband, and evidently a fair number have skipped dial-up entirely and gone straight to broadband. If broadband is stalling at all, it isn't stalling for lack of interest or even because of price, but because the low-hanging fruit has already been picked.

The CNN article is focusing on the minority who still have dial-up or who don't have any internet connectivity at all. The article makes sense in that context, but it's a pretty narrow context. The headline writer still loses either way: Of the reasons given for not switching, "nothing would convince me" ranks a distant second to "the price would have to fall."

The Pew study's headline reflects the luxury of not having to write for a mass market on a tight deadline: "Adoption Stalls For Low-Income Americans Even As Many Broadband Users Opt For Premium Services". Not quite as snappy as "Broadband Internet? No thanks," but it does seem more in line with Pew's numbers.

Right at the top of the Pew report is a graph showing
  • Broadband penetration rising from near-zero in June 2000 to 55% now.
  • Dialup penetration rising from 35% in June 2000 to 40% in April 2001, then falling to 10% now.
  • Total internet penetration rising from 35% in June 2000 to 65% now.
  • Broadband adoption rising faster from March 2007 to March 2008 than it did from March 2006 to March 2007.
On the last point, note that the time axis of the graph is not to scale, and that there seems to have been some leveling off since December 2007.

As the CNN article and the Pew headline suggest, in the cases where people don't have broadband, price is a factor when availability isn't. It would be interesting to know for what portion of people who can't afford an internet connection is it because they can't afford a computer to hook up to it.

There's one more point I'd like to pull out here. While broadband still costs more, broadband has been getting cheaper over the past few years while dial-up has been getting more expensive. This doesn't seem surprising. Dial-up, which converts digital data to an analog signal for transmission over infrastructure that's now mainly digital, is inherently less efficient, and at this point the economies of scale are no longer on its side.

No comments: