U.S. Broadband: Normal S Curve
Despite some criticism of the pace of broadband adoption in the U.S. market, it does not appear the facts support the notion that broadband adoption is lagging. In fact, broadband access seems to be following a normal adoption curve for popular consumer electronics innovations.
As recently as 2005, for example, half of U.S. households online still used dial-up connections, according to the Government Accounting Office.
By 2007, about 66 percent of Americans, and about half of households, had switched to broadband. Half might not sound like much. But consider the GAO and other findings that 30 percent—or more—of households do not have PCs in them, and that some households with PCs choose not to connect to the Internet.
Keep in mind that in 2005 34 percent of U.S. households reported not having a computer in the home for which a broadband connection might be useful. Another eight percent reported having access to a computer, but used no Internet connectivity.
That’s 42 percent of homes that either cannot benefit from a data-oriented broadband connection, or do not, for some reason, value the Internet enough to use it. We can assume that the number of people who really want to go through life without a PC and Internet access will continue to shrink, just as cable TV or satellite TV gradually became the “normal” or “typical” way people use television.
So it might not be surprising that the GAO also found that in 2005, about 30 million American households—or just 28 percent—subscribed to broadband, although households in rural areas were less likely to subscribe to broadband service than were households in urban and suburban areas.
Still, the urban-suburban-rural gaps are not as wide as many suppose. In 2005, a time when broadband access was far less prevalent, the gap between usage of the Internet by urban and rural adults was about eight percentage points. The gap in broadband usage was wider, about 14 percentage points.
That isn’t to say the gap has fully closed. In rural Minnesota the broadband adoption rate was 39.4 percent, compared to the metro rate of 57 percent in the state, according to the Pew Internet and American Life Project.
Still, there is a big difference between 2005 and 2007. A 2006 Minnesota Internet Study from the Center for Rural Policy and Development which found that 49 percent of all households in the state have broadband Internet at home, compared to 37 percent in 2005.
What is the nature of unmet demand for broadband in the United States? And, secondarily, is home broadband adoption proceeding more slowly in the United States relative to consumer technologies of the past?
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 February 2007 survey, 47 percent of American adults have broadband at home, nearly double the 24 percent penetration level of three years earlier.
With home broadband penetration clearly on track to break 50 percent by the end of 2007, it will have taken 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 percent 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.
The nature of unmet demand has several dimensions, according to researchers at the Pew Internet and American Life Project. There are two large segments of the population without broadband: those who are not Internet users, and those who have home Internet access, but use dial-up connections.
Some 29 percent of Americans do not use the Internet, and 15 percent have dial-up internet access from home, Pew researchers say. Again, the point is that perhaps 44 percent of end users do not want to buy the service yet.
Non-Internet users as a group are disproportionately old and poor. The median age of non-internet users is 59, and 25 percent report having household incomes under $20,000 per year.
It is not, however, simply a question of money or age. Non-internet users do not have very positive attitudes about information technology, Pew researchers note.
“So, if you are in your 50’s, have limited disposable income, find modern gadgetry hard to use and of questionable relevance, what is going to turn you into a home broadband subscriber?” John Horrigan, Pew director asks.
Two frequently suggested strategies—reducing prices and improving infrastructure availability—are likely to have limited impacts, he maintains. Most research on broadband adoption suggests price is not a large factor in the purchasing decision, he argues.
When asked in Pew Internet Project surveys why they made the switch to broadband, most users cite the desire for more speed; few (four percent) say the price had fallen to a level that made it affordable or that a discount offer prompted the switch.
Beyond that, popular consumer electronics innovations can take as much as 10 years to reach 50 percent penetration of homes. Broadcast television was among the fastest-adopted consumer technologies ever, shooting to 50 percent penetration in a bit more than five years.
Videocassette recorders did the same, shooting to 50 percent penetration in about five or six years, as did broadcast radios. Cable television took roughly 30 years to reach the 50-percent penetration level.
The point is that there is nothing about adoption rates for personal computers, Web usage or broadband that is out of line with historical adoption of other popular innovations. In fact, one could argue that the more recent innovations are being adopted at a faster rate than has happened in the past.
Two-thirds of all US homes have a broadband connection, making the country the world’s largest broadband market, say researchers at eMarketer. In fact, one might argue that broadband access simply is following the typical adoption “S” curve for new technology.
The technology adoption lifecycle originally was developed by Joe M. Bohlen and George M. Beal in 1957. Its purpose was to track the purchase patterns of hybrid seed corn by farmers. Approximately six years later Everett Rogers broadened the use of this model in his book, Diffusion of Innovations.
The technology adoption lifecycle model describes the adoption or acceptance of a new product or innovation, according to the demographic and psychological characteristics of defined adopter groups.
The process of adoption over time is typically illustrated as a classical normal distribution or “bell curve.” The model indicates that the first group of people to use a new product is called “innovators,” followed by “early adopters.” Next come the early and late majority, and the last group to eventually adopt a product are called “laggards.”
More recently, the concept has been freshened up by Geoffrey Moore and other technology forecasters, primarily as a matter of “Crossing the Chasm”, getting technology adopted by the lead edge of “regular” consumers rather than technology-sophisticated early adopters. FAT
