I’ve posted before about broadband penetration, competition and build out,  especially with respect to rural areas.   There are two issues that remain significant that I have not addressed – broadband access and use by minority Americans and the demand for broadband.

 

I am a big believer in the promise of broadband, in what it can do and has done for our economy, for our educational systems and for innovation.  I have referenced many of these issues in these posts here, here and here.

 

And we have made lots of progress in encouraging competition and build out of broadband networks.   The Consumer Electronics Association said it best recently in an excellent new report on broadband deployment and penetration in America:

 

“The prevalence of broadband in the home has grown significantly. For the first time, there are more households with broadband than without. Above and beyond broadband at home, access outside the home is also playing a vital role in the broadband story. Taken together, 72 percent of all adults either have broadband at home or regularly access a broadband connection outside the home.”

 

What they point out is the broadband story is about use and access in a range of settings where Americans, work, play and study.   CEA found, for example, that 42.6 million adults - 43 percent of all adults without broadband at home - regularly access a broadband connection outside the home.  So even though these Americans do not have broadband connections at home, they do access broadband on a regular basis at work, in libraries, in coffee shops and at school or university.

 

But this picture – while encouraging – makes the broadband market a more complex environment.   While a majority of American homes have broadband connections today, the fact that broadband is so widely available in other settings that Americans frequent makes the marketing challenge of getting broadband connections into more American homes more daunting.  It is not simply a “build it and they will come” scenario but one that demands good research, a good understanding of the market and consumer demand, and the emergence of attractive content and applications.   The CEA report shows that interest in multimedia services is a key driver of interest in broadband connections.  I have also attended company focus groups that consisted of those with broadband connections and those who have dial up or no Internet connection.   A key driver in those focus groups was clearly children in the home.  More than one participant who did not have a broadband connection said they would get one as soon as their kids were in school or moved into higher grades.

 

With respect to the rate of home broadband adoption, a lot has been accomplished in a relatively short time. According to the Pew Internet Project’s July, 2007 survey, 47% of American adults have broadband at home, nearly double the 24% penetration level of three years earlier. Broadband penetration has this year already surpassed 50% of all homes in the country according to CEA and it will have taken just nine years from the time the service became widely available for home high-speed to reach half the population. To put this in context, it took 10 years for the compact disc player to reach 50% of consumers, 15 years for cell phones, and 18 years for color TV. Each of those technologies, like broadband, represented an upgrade from a good or service with which most consumers had experience.

 

But we have work to do when it comes to minority Americans and their use of broadband services.    The attractiveness and utility of broadband connections is a key issue when it comes to the question of how many minorities have broadband.  There is progress on this front and the story is encouraging.  For example, the July Pew Trust survey showed that since 2005, the percentage of African American adults with a home broadband connection has nearly tripled, from 14% in early 2005 to 40% in early 2007.  As the survey suggests, while this figure is lower than the home high-speed penetration rate for whites, it represents a 186% increase since early 2005.

 

While there is encouraging news with respect to African Americans, Hispanics continue to lag in terms of broadband uptake.  While a majority of Hispanics go online from a wide variety of locations (i.e., work, public libraries, school), the same July Pew Trust survey found only 29% of Hispanic adults have a home broadband connection, compared with 40% for African-Americans and more than half of the households in total. 

 

Heavy concentrations of African Americans and Hispanics live in urban and ex-urban settings so the lower levels of broadband penetration among these population groups is almost certainly not due to the lack of deployment as might be the case in rural communities.  Instead, a host of challenges appear to come into play including language issues (for Hispanics households), lack of familiarity with computer technology, lack of PC ownership and cost.  

 

However, I suspect that the cost issue does not relate, in many cases, to how expensive broadband connections are on their own.   After all, Verizon offers a $14.95 entry level DSL service and below $20 broadband service is available in many parts of the country.  This is far cheaper than most other communications services such as cable TV.   In the focus groups I referenced earlier, people did mention cost when it came to the question of why they had no broadband connection but when probed further, it appears that the cost issue relates to the fact that they already have cable or satellite TV, cellular service and landline phone service.  If all of this is totaled up, the added cost of broadband may well appear to be too much to bear.

 

I believe that there is another dimension of this too that I will probe in a future post – the role of wireless connections and cell phones in accessing Internet services.  I think this is an often ignored component of how people access the Internet, particularly when it comes to African Americans.

 

I also think literacy can be a challenge for some population segments.   Studies consistently demonstrate that despite the introduction of ever more popular video segments and clips on the Internet, it continues to be a very text driven media.   Getting the most out of the Internet does require fairly high levels of literacy and an ability to understand fairly complex sentences and passages.  Poor literacy levels is not limited to any one race or ethnic group but includes Americans who have learning disabilities or live in poor settings where educational resources have been limited.

 

I think all of this points to several conclusions.  First, we have made good progress in getting broadband more widely deployed and in increasing penetration in virtually all segments of society. 

 

Second, while we have made lots of progress, increasing penetration of broadband into segments of society who today do not have it is a complex challenge that will require good market research and marketing strategies, programs to help with challenges to Internet use such as low PC ownership and low levels of literacy, and efforts to develop more applications and services that various segments of society find to be “must haves.”  Education appears to be a key driver of broadband usage and tying home broadband use to school activities and curricula appears to be a major area of opportunity.

 

I will comment in future posts on some of these issues, particularly the role of cell phones in providing access to the Internet and online services and the importance of effective marketing, a much belittled discipline that is central to expanding broadband penetration.