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The broadband adoption dilemma

About a third of Americans who have access to broadband choose not to subscribe. And the FCC is trying to figure out why.

CHICAGO--Internet service providers have built it, but many still have not come.

That's one of the biggest problems the U.S. policy makers and service providers face in their effort to bring broadband access to every American, according to several panelists speaking Wednesday at the Supercomm 2009 trade show here.

Panelists highlighted the low adoption rate as a major issue that must be addressed in the pending National Broadband Policy, which is currently being developed by the Federal Communications Commission. The National Broadband Policy, which will be presented to Congress in February, will outline how the government can reach the goal of universal broadband access.

Roughly 96 percent of American households have access to broadband service from at least one service provider, the FCC said in a status report issued last month. But of those people, about 33 percent do not subscribe to broadband. Why? John Horrigan, consumer research director for the FCC, who was on the panel Wednesday, said the FCC is currently conducting surveys to answer that question.

"We are trying to figure out why people who have access to broadband choose not to subscribe," Horrigan said. "There's a big group of users still on dial-up, and there are people who have never subscribed to an Internet service."

The FCC's status report suggests that adoption rates vary by age, income, education, and race. There is some speculation that price might be a factor, which means either the cost of services is too high or the cost of computers and equipment is too high.

"If cost is an issue, then we need to look at a subsidy program to target these consumers," Horrigan said. "Our focus will be to tailor solutions to all the barriers we encounter."

But cost may not be the only factor. Jim Cicconi, a senior executive vice president at AT&T, said that there are a mix of reasons why people who have access to broadband choose not to subscribe. And he argued that price may not play as big of a role as some people suspect. He said that after AT&T merged with BellSouth, the company introduced a $10-a-month broadband service to entice people to subscribe to broadband. While many customers signed up for this offer, there was still a significant number of people who didn't. In fact, some consumers continued to subscribe to dial-up service, even though that service was much slower and twice as expensive as broadband.

"There are a mix of factors when you look at adoption," he said. "But it's an important issue for us because we are spending money to get broadband to these people, and more than 30 percent aren't subscribing. We'd love to make them customers."

Age appears to be one factor in broadband adoption. Only 30 percent of people 65 or older use broadband compared with about 77 percent of people who are between the ages of 19 and 29 years old, according to a Pew Internet and American Life Project survey published in June.

Older people may not be as comfortable with technology and the equipment. If this is the case, the FCC may find it necessary to customize education programs to help people understand how broadband can be used in their lives and help teach them how to use the technology.

Even with a slew of new subsidy and education programs, there will likely still be some people who simply don't want broadband.

"We had this issue 20 years ago with telephony when we were talking about universal phone access," said Eric Rabe, a spokesman for Verizon Communications. "Telephone penetration was at around 93 percent. But there was a group of people who just didn't want a phone. Some were afraid of bill collectors. Some people didn't want to be bothered."