News

Broadband: Now a 'Necessity’

8/08/2009 2:00 AM Eastern

The clock is ticking. The Federal Communications Commission has until February 2010 to develop a National Broadband Strategy — as daunting a task as it is timely and important.

The United States is in the midst of a third major transformation in home computing. The first wave brought computers to most homes by 2000. The second was marked by the arrival of home Internet (predominantly via dial-up modem) for more than half of U.S. households.

The third wave — the transformation of home Internet from clunky, outdated dial-up service to high-speed broadband — is in full effect, household broadband subscriptions having risen more than sixfold since 2001.

The rest of the world is embracing this transformation more quickly than the U.S., and an effective National Broadband Strategy is needed to bring the productivity and consumer benefits that citizens expect and deserve.

I have just completed a major research study on broadband usage in U.S. homes with two colleagues, Robert Willig and Mark Dutz. Our conclusions demonstrate the importance of broadband to consumers and inform the policy debate.

A powerful and flexible tool for work, news, health care, entertainment, personal finances, social networking and interactions with government, broadband connectivity delivers approximately $32 billion in consumer benefits annually, up from $20 billion in 2005.

Why the increase over this period?

Broadband is increasingly seen by those who use it as a household necessity. One recent survey on “necessities” and “luxuries” found that 31% of Americans rank broadband ahead of “dishwasher” or “cable or satellite TV.”

The “necessity” aspect of broadband at home is best reflected by the behavior of the newly unemployed. They do not disconnect their broadband service; they view it as crucial in helping them find a new job.

Broadband also helps to improve the productivity of workers who use it to stay connected to their office, for systematic telecommuting or operating a home-based business. In 2008, almost a quarter of home broadband users regularly connected to their employer’s computer network, while one in seven used their broadband connection to run a home-based business.

Despite the importance of broadband, there are stark differences in adoption tied to education and ethnicity. Eighty-three percent of college graduates were connected to broadband at home in 2008, compared to 38% of households with less than high school diplomas. Similarly, while 82% of Asian households were connected to broadband, only 57% of African-American households had adopted it. However, our study shows that once a household is connected to broadband, African-Americans, Asians and Caucasians put similar value on the service.

The task before the FCC in developing a National Broadband Strategy must address the benefits waiting to be realized by the 30 percent of unserved households without home Internet, by making broadband more widely available and affordable.

The economic and social transformations to household and business life from faster broadband speeds and more ubiquitous connections are just beginning.

September