A new report from Pew Internet shows that broadband growth in the U.S. has slowed down to a crawl, a sign that U.S. broadband carriers would have to work hard to find ways to grow their overall businesses. Pew points out that 55 percent of adult Americans have home broadband connections.
According to some estimates there are over 64 million broadband connections in the U.S. Some additional interesting bits from Pew’s report:
The research group finds out that low income groups — households with annual incomes of less than $20,000 — have started to cut back on broadband spending. Their broadband adoption rate had dropped to 25 percent in 2008 from 28 percent in 2007. It isn’t much of a surprise, because the economic downturn is forcing people to control and cut back their spending.
Earlier this year, telecom operators like Qwest & AT&T, pointed out they were experiencing the impact of this penny pinching. Of course, what didn’t help was the fact that it was their geographic footprint that played host to the housing bubble. New home sales drove the demand for broadband connections and as foreclosures started, the broadband party also started to wind down. The net new additions for the second quarter 2008 will tell an interesting story.
My feeling is that this is hurting the DSL providers more than cable companies and they are scrambling to respond by offering higher speeds. The smaller providers like Embarq & Windstream could be impacted the worst by the slowdown.
There is some research that shows that speed bumps are not quite the panacea for these carriers, though they might provide some temporary relief.
Bruce Leichtman recently conducted a survey and found out that nearly 72 percent of cable broadband subscribers, and 62 percent of telco broadband subscribers are happy with their broadband connection’s quality and speed. Only 24 percent are interested in getting faster connection and a mere 11 percent of broadband subscribers would pay an “additional $10 per month to double their Internet speed.”
In comparison, Pew’s report shows that 35 percent of dial-up users want broadband prices to decline further — fat chance of that happening when most carriers are dreaming of tiered Internet plans. Overall 62 percent of dial-up users say they are happy to be Slowskys. (That should make AOL and United Online rather happy.)
11 trackbacks so far
12:24 AM PT
[...] page of information — like Wikipedia — matters far more. Broadband growth itself was in part tied to the housing bubble, with some people buying homes and faster internet connections at the [...]
9:05 AM PT
[...] State of U.S. Broadband: Demand Hits Speed Bumps - GigaOM [...]
12:26 PM PT
[...] (24 percent), but 19 percent said that nothing can convince them to get broadband. Which means broadband growth in the states may be nearing a plateau. “… Solving the supply problem where there are availability gaps is only going to go so [...]
2:48 PM PT
[...] 03.07.2008: Hatte die genauen Zahlen nicht mehr im Kopf, aber Dank Om Malik wurde ich auf den neusten PEW/Internet-Bereicht aufmerksam, vor allem auf dieses [...]
5:12 AM PT
[...] (24 percent), but 19 percent said that nothing can convince them to get broadband. Which means broadband growth in the states may be nearing a plateau. “… Solving the supply problem where there are availability gaps is only going to go so [...]
8:33 AM PT
[...] State of U.S. Broadband: Demand Hits Speed Bumps - GigaOM [...]
6:32 AM PT
[...] 2008 at 6:32 AM PT Comments (0) As earnings season continues, it’s clear that the U.S. is filling up on broadband. Within the past week AT&T and Verizon reported slowing broadband growth, and today Comcast saw [...]
6:32 AM PT
[...] 2008 at 6:32 AM PT Comments (0) As earnings season continues, it’s clear that the U.S. is filling up on broadband. Within the past week AT&T and Verizon reported slowing broadband growth, and today Comcast saw [...]
4:17 PM PT
[...] access to rural and low-income areas (meanwhile, as the economy has worsened, more people have been cutting back on this expense). This proposal sounds pretty good for libertarian-minded Silicon Valley, so far. [...]
10:03 AM PT
[...] Tuesday, September 2, 2008 at 10:03 AM PT Comments (0) Today the Wall Street Journal drills into another aspect of the maturing broadband market: price wars. But instead of being good for consumers, in the end these may actually end up hurting [...]
5:47 AM PT
[...] sells network management equipment to both AT&T and PlusNet, says this is to be expected in a mature market, especially in light of the FCC’s efforts to ensure transparency when it comes to delivering [...]
10 comments so far
8:23 PM PT
Speaking of which Om, what type of connection/ISP do you have at your home? I’m lucky enough to have a fiber (non-FiOS) connection.
9:31 PM PT
I am a lucky one. I am on the $10 a month Bellsouth 780 broadband until 2010. Reading this article makes me thing someone is a bit ambitious. I would be willing to bet that twice as many people out there would be willing to have a 25% increase for $5 a month. For the brains out there, that would be 75% less increase for 1/2 the price. That would be a better deal for the providers and more people would do it.
Think about it, times are hard.
1:01 AM PT
Grand central hooks into gizmo5 for absolutely free calls spain 2 usa.
gtalk hooks into talkster but theres a human habit prooblem. with grandcentral I initiate the call but on talkster my friend MUST CALL ME BACK..which kills the fun of calling.
5:12 AM PT
Hi OPM,
How have you been? This is your friend from your younger days in India. BB has to take a hit in recession, people under monetary pressure look at it as a frivolous luxury and its usually the first one to be downgraded in average homes. The worse news on BB front is throttling off the bandwidth, kind of makes advertised high speed a gimmick.
regards
Arup
5:48 AM PT
i’ll eat less before i will cut back broadband
one thing these big players could do, fatten the pipes, speed it up
7:00 AM PT
This is a bad event for smaller broadband service providers. It’s a pity how these establishments got affected with the winding down of the US’ economy.
7:24 AM PT
I am guessing the rural providers serving farming communities (eg. in Iowa) are not feeling the pinch as much with the run up in commodity prices. There are always pockets of opportunities despite any macro trend / stat.
10:14 AM PT
Really ridiculous that a nation that boast of inventing the internet is now lagging behind!! This means steps has to be taken by the coming administration to ensure that something is done to alleviate the situation as this article pointed out: US Is in Danger of Losing Internet Leadership(http://www.internetevolution.com/author.asp?section_id=576&doc_id=145812&F_src=flftwo)
3:20 PM PT
I looked at the report and still don’t understand how the numbers are supposed to add up.
55% have broadband at home, 10% have dialup, 27% have no connection.
Where is the other 8%?
7:22 AM PT
In comparison, Pew’s report shows that 35 percent of dial-up users want broadband prices to decline further — fat chance of that happening when most carriers are dreaming of tiered Internet plans.
Again, let’s please try to keep the words “tiered” and “metered” separate.
“Tiered” - “pay an additional $X per month to increase speed.” This is a common offering with almost all broadband providers.
“Metered” - “instead of unlimited, pay per minute/hour/GB/whatever, perhaps after a certain point.” This is still very uncommon in broadband, outside of a few examples (such as Cornell’s on-campus network, which charges for transfers from outside Cornell past the first few GB per month.)
Yes, in some cases there could be tiers for how much is “included” per month with metered broadband, like with wireless minutes. But the significant change is the metering, not the tiering.
Anyway, these numbers are something that I’ve been pointing out for a long time whenever Om or others talk about the “state of US broadband.” The problem is that most people really don’t want to pay more for their Internet connection, and most people tend to be happy with what they have currently. Dial-up users are happy with dial-up. Broadband users don’t want to pay any more per month for a faster connection.
What these numbers show is that the state of US broadband is not about availability. Most of those dial-up users could get broadband, even $10-$20/month 768kb broadband, but they don’t. Most of those broadband users could right now pay $10 more per month for double the speed, but they don’t. It just shows the disconnect between Om, me, and other people who post here– we don’t really consider 768kb/s to be broadband, but a huge slice of people are perfectly happy with it and don’t want to change if it costs any money.
That’s not a recipe for increased broadband investment. It’s not necessarily a call to have the next administration invest in broadband either, unless you’re absolutely sure that a bunch of people don’t know that they’d really like faster broadband, and are wrong about their preferences. (Or, alternatively, you just know that you want faster broadband and you want those other people who don’t care to help pay for it.)
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