Broadband Adoption at Home:
Trends & Prospects
John B. Horrigan
February 10, 2005
PURC Annual Conference:
Emerging Technologies and
Trends
Presentation Overview
Big picture on internet access
 Latest in home broadband adoption
 The adoption environment
 The migration to broadband

Portraits of Access: end of 2002
Not Online
41%
Neither
3%
Work only
5%
Dial-up
37%
High-Speed
14%
Portraits of Access: end of 2004
Dial-up
26%
Not Online
40%
Neither
3%
Work only
4%
High-Speed
27%
Dec-04
Sep-04
Jun-04
Mar-04
Dec-03
Sep-03
Jun-03
Mar-03
Dec-02
Sep-02
Jun-02
Mar-02
Dec-01
Sep-01
Jun-01
Mar-01
Dec-00
Sep-00
Jun-00
Millions of Americans
Broadband at home, 2000-2004
60
50
40
30
20
10
0
Broadband at home – segments
(April ’03 & Nov-Dec ’04 surveys)
0.7
67%
0.6
47%
0.5
0.4
42%
Cable
28%
DSL
Wireless
0.3
T-1
0.2
0.1
3% 1%
5%
1%
0
2003
2004
Types of Home
High-Speed Connections (end of ’04)
60%
50%
53%
48%
41%
40%
35%
Rural
30%
Rest of Nation
20%
9%
10%
5%
1% 1%
0%
Cable
DSL
Wireless
T-1/Fiber
Broadband at home – subgroups
(% of all in group, end of 2004)
70%
59%
60%
53%
48%
50%
40%
27%
30%
20%
10%
0%
College Grad -age 35 and
younger
Household
income over
$75K
College Grads
All
Broadband at home – regions
(% with broadband of all in group, end of 2004)
29%
30%
30%
25%
20%
15%
Rural
15%
Urban
Suburb
10%
5%
0%
Percent
Broadband gaps over time (I)
(% with broadband of all in group)
30
30
29
27
25
20
17
15
15
15
13
10
6
5
0
Urban
Suburban
Rural
National avg
2002
2004
Broadband gaps over time (II)
(% with broadband of all in group)
2004 data through June ’04
60
55
50
42
38
40
32
30
25
18
20
10
14
11
10
5
23
17
12
12
8
4
0
<$10k
$20$30K
$40$50K
$75K$100K
2002
2004
Availability

77% of Americans say broadband is available
where they live
–
–

Rural gaps
–
–

8% say it’s unavailable
15% don’t know
27% of rural dial-up users say it’s not available
11% of non-rural dial-up users say it’s unavailable
Overall, 14% of dial-up users say broadband is
unavailable where they live
–
All data on this slide from October 2002 survey
Adoption environment:
price, service providers

Among those with broadband or who know it’s available where
they live:
–
–
–

Price (I)
–
–

61% say they have more than one service provider
17% say they have a single service provider
22% don’t know
$38.50 for those with > 1 service provider
$42.80 for those with a single service provider
Price (II) – average monthly broadband price=$39
–
$38 for DSL users
$41 for cable modem users

Data on this slide from February 2004 survey
–
Adoption environment: who wants it?

Of dial-up users, in Feb ‘04:
–
–

In Oct ’02, of dial-up users:
–
–

40% say they want broadband
58% say they don’t want it
38% say they want broadband
57% say they don’t want it
Home broadband growth from 10/02 to 2/04:
–
24%  42%
Adoption environment:
changing user preferences?

Puzzle
–

What gives?
–

Size of dial-up pie shrinks, but share of dial-up who want
broadband stays about the same.
Probably because some dial-up users who in ’02 said they
didn’t want broadband do say this in ’04  approx 10%15% do.
Why?
–
–
People do more things & spend more time online the longer
they’ve been internet users.
This changes the online time preferences of dial-up users.
Evidence: online experience and
intensity of use



Average number of years online for dial-up
users who want broadband:
– 6.2 years
Average number of years online for dial-up
users who do not want broadband:
– 5.3 years
Average number of years online …
–
–
Broadband users = 7.0
Dial-up users = 5.7
What drives intensity of internet use?

Measures of intensity of internet use:
•
•
•

Largest independent predictor:
•
•

Probability of logging on, given day
Amount of time online, typical day
Number of online activities, given day
Having a home broadband connection
Number of years online
Between 1-2 years of online tenure will boost time
online/number of activities just as much as a highspeed connection at home
Time online per day -by type of connection & online experience
(June 2003 data)
107
110
94
100
90
83
80
70
60
Minutes Online, average day
Novice Dialup
Veteran Dialup
Broadband (all)
Reasons for switching to
broadband at home (Feb ’04 data)
Connection too slow
Want to download files faster
Job-related tasks
36%
21
10
Want “always on”
Want to use phone/net same time
Higher quality connection
7
7
5
Easier access to entertainment
Responded to promotion
Price fell to affordable level
4
3
3
What does this mean?

People’s online time preferences change with
experience.
–
–

Dial-up becomes a hassle as people do more things online This
changes the value proposition of being online
The bits per buck calculation:
 200 bpm/$20 = 400bpm/$40
Upshots:
Broadband is a good deal for experienced dial-up
users when they reach a certain point in the
evolution of their online behavior.
 Price points may not be not a big part of the
calculation

What does this mean for future
adoption?



Uptake has been very fast, notwithstanding the
#11 world ranking for the U.S.
Work to be done to close availability gaps
Is it possible to change users’ online time
preference?
–
–
–
Yes, online content becomes more compelling
So far, though, evidence shows a single application
doesn’t drive switch to broadband
High-speed users do more of everything, not more
of one thing
Notes



Except where noted, data used here is from
the Pew Internet Project’s national random
digit dial telephone survey in Nov-Dec 2004
of 3,114 Americans.
The Pew Internet & American Life Project is a
project of the Pew Research Center
Contact me at: [email protected]