Broadband prices and take-up both on the rise

Broadband use in the United States has risen sharply despite increasing prices and the recession. However, one in six people say they aren’t interested in getting high-speed internet.

The headline statistic from the Pew Research Center report is that the number of homes with broadband was 63 per cent in April this year, up from 55 per cent in May 2008. It appears to be a recent trend as during the calendar year 2008 the Center found little variation in broadband use.

The growth appears to be mainly driven by groups which aren’t traditionally heavy users of broadband making the switch. There were significant increases in the proportion of elderly people, those on low incomes and people in rural areas who have broadband. Meanwhile demographic groups such as high earners and college graduates only saw minor increases, suggesting broadband may have reached saturation point among such people.

The average monthly broadband bill rose from $34.50 to $39 from May 2008 to April 2009, an increase roughly five times the rate of inflation. As the Pew-produced graph (below) shows, this reverses a recent trend for falling prices. The study also showed the effects of competition: the average price in areas with only one supplier was $44.70 compared with $32.10 where at least four suppliers are available.

The apparent disparity between rising broadband use and rising prices may be explained by people dropping cable TV spending in favor of more time online. Only nine per cent of people questioned said they’d cut back or canceled internet services during the year compared with 22 per cent who’d done so with cable TV.

The study also suggests that there’s a limit to how much further broadband use can increase. Among people who either have dial-up connections or no internet access, just over a third say broadband is either too expensive or not available in their area. The remaining 63 per cent (which make up 16 per cent of all adults) gave a variety of reasons which amount to being unlikely to pay for broadband under any circumstances.

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