Urban Markets Are Ripe

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Consumers in the country's urban markets are ideal targets for cable's digital and Internet services, but they've been underserved by the major telecommunications companies, according to a new report on the future of media and telecommunications in urban America.

Increased rollouts of such digital-cable offerings as cable-modem service and interactive television in urban markets won't just provide an economic boost to new media companies-they'll also help bridge the digital information gap currently afflicting minority groups, said executives from the Rainbow Coalition civil-rights organization, which commissioned the survey.

The survey, conducted by Surveys Ltd., a division of Horowitz Associates Inc., was developed in part to dispel a perception that urban markets comprise mostly poor consumers of a particular minority group that either wouldn't be interested in or couldn't afford advanced telecommunications services.

The survey's findings indicate that major U.S. urban markets are not only increasing in size, but are more culturally diverse and financially viable than ever before, according to Rainbow's Citizens Education Fund Media and Telecommunications Project director Dahlia Hayles.

About 40 percent of the more than 90 million Americans who live in urban markets-defined as cities with more than 50,000 residents-are minorities. The findings mirror the latest U.S. Census Bureau figures, which show a healthy increase in the multicultural population base in many urban cities.

The urban markets also have significant buying power. Minority consumers' buying power alone is estimated at some $1 trillion, according to Hayles.

"The survey proves that urban markets are not a subset of a particular ethnic market, but more like typical America, and there are huge opportunities for business to offer new media products," she said. "We want [new-media companies] to rethink their approach and thinking toward urban markets. It's a vibrant market with tremendous buying power."

Indeed, the survey points out that nearly a quarter of urban households would be very interested in paying for digital cable. Further, one of three African-American and Hispanic respondents reported the highest interest in digital-cable service.

"TV and cable penetration is definitely high in urban households," Surveys Unlimited president Alisse Waterston said. "You already have a marketplace that's interested in new technology, so it's just a matter of rolling that technology out to the consumer."

Yet urban market consumers-particularly African Americans and Hispanics-don't have the same access to cable modems and digital services as their white, suburban counterparts.

The digital divide-between those with access to new-media technology and those without-crosses both racial and socioeconomic boundaries, according to CEF. Asian Americans and whites are currently the most connected to computers, the Internet, new media electronic devices, cable modems or digital subscriber lines, according to the survey.

Hispanics and African Americans lag 12 percentage points behind Asians and whites in ownership of personal computers and 14 percentage behind in terms of Internet access at home through a PC.

Most middle- and lower-income minorities, in particular, don't own personal computers or subscribe to Internet-service providers, Hayles said.

But minorities are heavy television users and are receptive to accessing information through new "broadband-to-TV" technology such as cable modems. In fact, 26 percent of African-American homes and 28 percent of Hispanic households reported a high interest in getting Internet access through the TV.

Also, one of five urban households would be very interested in paying for interactive television services.

"The industry's most-valued customers are in these markets," said Horowitz Associates president Howard Horowitz.

For systems that operate within major urban markets, the report verifies their own business experiences.

"It just shows that we've been on the right track," AT&T Broadband Greater Chicago market vice president of communications Pat Keenan said. She said the MSO has successfully and aggressively rolled out digital services to consumers within the area, but she would not provide specific digital-penetration figures.

"It's our goal to get [digital] penetration in these areas where we know a [business] opportunity exists," added Keenan, who is also president of NAMIC (formerly the National Association of Minorities In Communications).

The opportunity for operators to build upon existing cable services is especially prevalent in minority homes, where cable is already well entrenched. African-American homes are the most television-oriented of all households, reporting a high number of TVs in the home and more sets hooked up to cable, according to the survey. Indeed, 67 percent of African Americans subscribe to cable and watch 66 hours of television per week, according to Black Entertainment Television.

In addition, African Americans have the highest rate of premium-service penetration compared to other racial or ethnic groups. They spend about $45 million on cable TV subscriptions.

While CEF is not planning any major protest actions against particular new-media companies, Hayles said the report should function as a wake-up call about the major business opportunities available within urban markets.

"We're calling on corporate America to focus their attention more closely toward targeting a marketplace that they don't particularly target and have a better understanding of the dynamics of the urban market," Hayles said. "Now that we recognize the need for new technology and the potential business opportunities, corporations should be guided by that and act accordingly."

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