FCC: Cost a major barrier to broadband adoption

About a third of the 93 million Americans who do not subscribe to broadband Internet service likely aren't doing so because it's too expensive, recent FCC survey finds.

Affordability is one of the main reasons why 93 million Americans do not have broadband at home, a recent Federal Communications Commission survey found.

FCC Chairman Julius Genachowski plans to discuss the findings during a speech at the Brookings Institute on Tuesday.

Nearly one-third of the U.S. population, or about 93 million Americans, do not have broadband Internet access at home. In an effort to get these Americans connected to the Net, Congress has called on the FCC to develop a national broadband plan that will detail a strategy for getting them connected to affordable, high-speed broadband. The FCC will deliver its plan to Congress on March 17 .

In order to understand what is keeping many Americans from subscribing to broadband, the FCC conducted a consumer survey of over 5,000 American adults in late 2009.

The survey identified three main barriers to adoption: affordability, digital literacy, and relevance. About 36 percent of the 28 million adults who said they don't subscribe to broadband at home said that the monthly fee for broadband was is too expensive, they can't afford a computer, or the installation fee is too high.

About 22 percent, or 17 million adults, indicated that they do not subscribe to broadband at home because they lack the digital skills or are afraid of the potential hazards of being online. And 19 percent, or 15 million people, said they don't have broadband Internet at home because they simply don't see a need for it.

The FCC's task force developing the broadband plan suspected a few months ago before results of the survey had been completed that cost and lack of digital skills were crucial factors in broadband adoption. The recent findings bolster those earlier assumptions.

The cost of broadband service is likely to be a major barrier for low-income families. And it is likely to explain why a disproportionate number of people in lower income families have access to broadband at home. According to the survey, 40 percent of people who live in households where income is $20,000 per year or less have broadband at home, while 91 percent of people living in households where the income is more than $75,000 per year have broadband at home.

Chairman Genachowski said that getting these individuals connected to the Net is crucial to the future of the country.

"We need to tackle the challenge of connecting 93 million Americans to our broadband future," he said in a statement. "In the 21st century, a digital divide is an opportunity divide. To bolster American competitiveness abroad and create the jobs of the future here at home, we need to make sure that all Americans have the skills and means to fully participate in the digital economy."

But getting people connected won't be easy even once the barriers have been identified. In terms of cost, it's not clear how low prices would have to go to spur significant adoption. On average, Americans pay about $40 a month for broadband service. In some areas of the country, the cost is higher and in some places it is lower. Price also varies depending on the speed of the connection and whether that connection is bundled with other services.

The FCC said many people who cited price as a barrier were reluctant to answer follow-up questions about how much they were willing to pay for service. Of the people who did answer, the survey found that responses varied from $10 to $20 to $25 a month for service.

But when experts analyzed the data about how many people would actually likely sign up for service if prices were dropped to $10 or $20 a month, adoption rates only picked up slightly. If prices dropped to $20, experts said that would likely only change adoption by 6 percentage points. And a $10 price tag would only change it by about 8 percentage points.

What this means is that cutting prices alone will probably not have a major effect on broadband adoption. But lowering prices on service, coupled with adding programs that teach people the digital skills they need to access the Net while also educating them on how the Internet can enhance their lives, could have a substantial effect.

 

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