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A Nation Online:
Entering the Broadband Age
A Nation Online: Entering the Broadband Age is the sixth report released by the U.S. Department of Commerce examining the use of computers, the Internet, and other information technology tools by the American people. Based on the U.S. Census Bureau's Current Population Survey of 57,000 households containing 134,000 persons, this report provides broad-based and statistically reliable information on the ways that information technologies in general, and broadband more specifically, are transforming the way we live, work, and learn.
Excerpts of the NTIA 2002 report. The full text can be viewed or downloaded from the National Telecommunications and Information Administration site.
This year, we have chosen to focus on broadband technologies because now, more than ever before, high-speed connections promise to enhance our Nation's productivity and economic competitiveness, improve education, and expand health care for all Americans. High-speed networks provide the power to erase geographic, economic, and cultural gaps. With high-speed connections, American workers can find jobs; small businesses can have global markets; rural doctors can consult with specialists; and students can take classes that are taught from across the country.
Because of the significant promise of this technology, President Bush has set out a bold vision for broadband in America, establishing a national goal for "universal, affordable access for broadband technology by the year 2007."
Detailing the many benefits of the technology, the President noted that "[t]he spread of broadband will not only help industry, it [will] help the quality of life of our citizens." We hope that this report and its successors will contribute to the ongoing discussion surrounding this important goal by highlighting the growing use of high-speed access across the Nation.
As the Internet increasingly affects the daily lives of Americans and the U.S. economy, one of the greatest changes in recent years has been the rapid uptake of broadband technologies. Between the Census Bureau's Current Population Surveys conducted in September 2001 and October 2003, the number of households with Internet connections grew by 12.6 percent. The data reveal that a transition is underway from dial-up to high-speed Internet connections. The use of high-speed Internet connections grew significantly between 2001 and 2003 and more than offset the decline in dial-up users. For this reason, this report focuses on what Americans are doing with their high-speed connections.
The dramatic uptake of broadband technologies has fueled the Nation's rising use of the Internet.
In addition, broadband usage is lower in rural than urban areas.
A nation online: Entering The broadband age
With computers now almost as common in American homes as cable television service, the Internet continues to expand in importance as a communication, information, entertainment, and transaction tool. One sure sign of growing reliance on this medium is the dramatic jump in high-speed, or broadband, Internet connections. The number of households willing to pay a premium over the cost of a basic dial-up connection for broadband access more than doubled between September 2001 and October 2003, growing from 9.9 million to 22.4 million. Underlying this growth is an evolution in the way people are connecting to the Internet. One in five (19.9 percent) U.S. households and over one-third (36.5 percent) of Internet households now have a high-speed connection, while the number of U.S. households using dial-up service declined by almost 13 percent between 2001 and 2003. (See Data Note)
These high-speed connections are becoming ever more central to accessing and relaying information quickly. Because of broadband's increasing popularity, this report focuses on the growth of home broadband usage and the ways in which broadband users differ from dial-up users. The report finds that those with broadband at home are more intensive Internet users. Persons with broadband at home are more likely than other Internet users to use the Internet frequently and engage in a wider variety of online activities, such as entertainment and information gathering.
The report also examines the geographic differences in broadband adoption and the reasons why some Americans do not have high-speed service. The distribution of high-speed usage across economic and demographic categories, for the most part, follows the same patterns of variation that have been observed in the past in overall Internet use. One major difference, however, is in the pattern of geographic dispersion. Although the rate of Internet penetration among rural households (54.1 percent) is similar to that in urban areas (54.8 percent), the proportion of Internet users with home broadband connections remained much lower in rural areas than in urban areas.
Access and Use
By far the greatest growth in household connectivity in the last two years has been in the use of broadband technologies. Computer ownership and Internet connections in the home continued to increase between September 2001 and October 2003, albeit at slowing rates.
The proportion of U.S. households with computers reached 61.8 percent in 2003, and 87.6 percent of those households used their computers to access the Internet. As a result, 54.6 percent of U.S. households had Internet connections (54.1 percent in households with a personal computer or laptop, plus an additional 0.5 percent using a mobile telephone or some other home Internet access device). Household Internet connections increased only four percentage points in the 25 months between the two most recent surveys, compared to an almost nine percentage-point increase during the 13 months separating the previous two surveys (August 2000 and September 2001).
Although the growth of the percentage of overall home Internet connections slowed, dramatic changes occurred in the relative distribution of the various types of Internet connections. Between September 2001 and October 2003, the number of households with Internet connections grew by 6.9 million. However, the percentage of households with high-speed Internet or broadband connections more than doubled, increasing from 9.1 to 19.9 percent of all U.S. households (Figure 1), or by 12 million households. Dial-up connections actually declined by 12.7 percent, or 5.6 million households, during the period. These factors suggest that a transition is underway as Internet households move from dial-up service to faster broadband connections. As shown in Table 1, the increase in Internet totals was due to growth in both of the major high-speed connection technologies: DSL and cable.
Table 1: Home Internet Connections by Technology, 2001 and 2003
Further, it is worth noting that broadband's rate of diffusion is outpacing that of many popular technologies in the past, such as video cassette recorders (VCRs), the Internet, and personal computers (PCs)
Another significant change over the last two years has been in the selection of broadband technologies. Initially, cable modems were the leading broadband technology used to connect to the Internet. Competing technologies, most notably DSL, have gained significant acceptance. Between 2001 and 2003, the number of DSL users nearly tripled. This gain has eroded the substantial market share lead that cable modems enjoyed in 2001. Of the 18.2 percent of U.S. Internet households that had higher-speed Internet capability in 2001, almost two-thirds used cable modems. As shown in Figure 3, DSL's share has grown over time, although cable still retains a higher market share.
Figure 3: Preferences in Broadband Technologies, 2001 and 2003
These data measure the presence of computers and Internet connections in the home rather than focusing on the individuals in the home who actually use the Internet. Not everyone in a home with Internet access uses the Internet, however. Furthermore, people without home Internet access may use the Internet at another location, such as school, work, or a public library. Figure 4 shows that 14.2 percent of Internet users (or 8.4 percent of the U.S. population) lack home Internet access and use the Internet elsewhere.
Figure 4: Individual Internet Use by Type of Home Internet Connection,
Frequency of use and the number and type of online activities in which people engage vary substantially by whether they have Internet access at home and by the type of home Internet connection. For example, almost one-third (31.9 percent) of Americans access the Internet on a daily basis. Ninety percent of these frequent users have Internet access in their homes. As shown in Table 2, people without Internet access at home are not only much less likely to be Internet users in general, they are also much less likely to be frequent users.
The greater number of online activities in which individuals engage, the higher the likelihood they will have broadband at home. Even though the "frequency of use" variable refers to Internet use from any location, those individuals with broadband in the home are more likely to be daily Internet users (66.1 percent) than those with dial-up at home (51.2 percent).
Table 2: Frequency of Persons' Internet Use by
People with broadband in the home also engage to a greater degree in certain online activities. Figure 5 shows the percent of Internet users engaging in some common online activities in September 2001 and October 2003. These activities have been grouped into four broad categories: communications, entertainment, transactions, and information. Figure 6 shows activities by percent of Internet users in each of three home connection types (no Internet at home, home dial-up access, and home broadband access). As discussed below, individuals who go online for entertainment, banking, purchasing products or services, or obtaining information, are more likely to have broadband at home than those with dial-up service.
E-mail remains the most prevalent online activity, with 87.8 percent of Internet users sending and receiving e-mail or instant messaging. As shown in Figure 5, the percentage of Internet users who e-mail remained virtually unchanged between 2001 and 2003. Additionally, Figure 6 shows that those with dial-up and broadband service at home, as well as those without Internet access at home, are using the Internet for e-mail at substantial levels. The survey did not ask about Voice over Internet Protocol (VoIP), an emerging application, although future surveys will do so.
The use of the Internet for entertainment is substantially more likely among those with broadband. As shown in Figure 6, the proportion of Internet users with home dial-up connections who listen to the radio or view TV or movies on the Internet is almost one-half of those with broadband connectivity (17.3 percent versus 30.9 percent, respectively). In fact, dial-up users are more like those without the Internet at home in terms of the extent of their use of the Internet for entertainment.
Two of the activities with the greatest growth between 2001 and 2003 were online purchases of goods and services (e-commerce) and online banking. As Figure 5 demonstrates, the proportion of Americans engaging in e-commerce has grown substantially - 8.0 percentage points - over the 2001-2003 period. Online banking grew by 10.4 percentage points, more than any other activity considered. Both e-commerce and online banking are also areas where substantial differences exist between usage levels of home dial-up and broadband users.
A large majority of Internet users go online for information. They most often search for product or service information, frequently as a precursor to online or conventional commerce. In general, usage rates for dial-up and broadband users are similar in this area. A significant portion of home dial-up Internet users (40.0 percent) and nearly a majority of broadband Internet users (47.9 percent) use the Internet to research health services and related issues. News, weather, and sports is the only information category where a difference of over 10 percentage points exists between dial-up and broadband users: 64.4 and 76.2 percent, respectively. The number of information searches about government services or agencies also grew between 2001 and 2003, with substantial differences existing in this e-government activity between those with broadband Internet at home and those without.
Internet users with broadband at home are more likely than those with dial-up or no home Internet connection to engage in each of the specific activities discussed above. Additionally, they are more likely to engage in the highest number of online activities. As shown in Figure 7, 15.0 percent of Internet users with no Internet at home engage in only one of the 12 activities considered. The proportion of Internet users with Internet in the home that engage in only one activity is much smaller - 8.3 percent of those with home dial-up service and 4.5 percent of those with broadband. At the other end of the distribution, 22.1 percent of Internet users with broadband at home engage in eight or more activities. The comparable figures are 10.6 percent for those with dial-up at home and 8.2 percent for users without Internet at home.
Effect of Geography
The proportion of Internet users in the population grew in every state between 2001 and 2003, although the levels and rates of change have not been uniform. As shown in Figure 8, the number of states where less than half of the population uses the Internet declined from four to one, while the number of states where over 70 percent of the population uses the Internet grew from one to six.
Reasons for Non-Use
When asked, the reasons given for why some Americans choose not to use the Internet or broadband technologies extend beyond issues of geography. Many Americans - 41.3 percent of the total U.S. population - still do not use the Internet from any location. But, only 32.4 percent of U.S. households do not contain at least one person who uses the Internet. The key reasons given by those households that have never connected to the Internet at home suggest problems of cost/value and availability, including: "Don't Need/Not Interested" (41.6 percent), "Too Expensive" (22.9 percent), and "No or Inadequate Computer Available" (22.5 percent). Affordability and computer availability are even more important for those who had Internet service but discontinued it. Major reasons for discontinuing home Internet use include "No or Inadequate Computer Available" (27.5 percent), "Too Expensive" (27.2 percent), and "Don't Need/Not Interested" (18.4 percent).
Many of those who do not use the Internet employ other communications devices and entertainment media although their usage rates trail those of Internet users. For example, 48.3 percent of households that do not have Internet have cable TV versus 59.9 percent of Internet households. And 31.1 percent of households that do not have Internet have cell phones versus 67.7 percent of Internet households.
Indeed, a certain percentage of Americans remain non-users even when there is already someone in their household using the Internet at home. Figure 12 shows that almost one-quarter (24.7 percent) of non-Internet users live in a household that has an Internet connection. Additionally, only seven percent of the non-Internet users live in a household with broadband access Therefore, it appears that regardless of availability or affordability, a certain percentage of Americans likely will remain non-users, just as five to six percent of households have consistently declined home telephone service since the early 1990s.
Figure 12: Non-Internet Users by Availability of Internet in the Home,
The Internet facilitates an ever-growing range of activities and applications such as educating children; accessing information from across the globe; connecting with people, governments, and organizations; obtaining information about health care; conducting price comparisons; bidding on contracts; and widening entertainment choices. As the volume and complexity of the Internet's content has grown, so has the need for high-speed access technologies. In light of this trend, it will become increasingly important for Americans to have affordable access to broadband service.
The report demonstrates that broadband use is growing swiftly, and that broadband technologies are expanding the range and frequency of Internet use. Yet, not all geographic locations in the United States are using high-speed services to the same degree. Future surveys will enable us to track our progress in ensuring that all Americans have access to this important information technology.
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