U.S. broadband growth off to a slow start this year

July 3, 2008 | Eric Eldon

Broadband adoption isn’t what it used to be in the U.S, as poorer users stay with less expensive internet connections. Around 55 percent of the country now has broadband, up from 54 percent last December and 47 percent earlier in 2007, according to a recent Pew Internet & American Life Project report. While year-over-year growth was 17 percent, the growth stalled in the last five months, probably due to the economic slowdown.

While some demographic groups are still growing, the number of broadband subscribers who make less than $20,000 dollars fell from 28 percent in March of 2007 to 25 percent in May.

For Internet companies, this means services that need fast connections, like online movies or complex games, won’t see overall demand grow as fast as it did earlier this decade. Maybe this is a worsening of the so-called “digital divide” between those who have access to many communications technologies and those who have access to few. I’d argue that while fast Internet connections are much more pleasant, the act of being able to access a simple page of information — like Wikipedia — matters far more.

Broadband growth itself was in part tied to the housing bubble, with some people buying homes and faster Internet connections at the same time. Also, the report says, prices have dropped only four percent over the past 2.5 years — another reason not to get broadband if you’re already not making much.

From the report:

Broadband users reported paying $34.50 a month for high-speed internet services in April 2008, versus $36 a month in December 2005 — a four percent decline. Cable modem users reported paying an average of $37 a month (versus $41 in 2005), while Digital Subscriber Line (DSL) users reported paying $31.50 a month (versus $32 in 2005). Dial-up users, who now constitute just 10 percent of American adults who go online, now cite price as the key reason for why they do not subscribe to broadband.

Elderly people, rural residents and those who made between $20,000 and $40,000 saw relatively higher broadband growth rates.

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About the Author, Eric Eldon

Eric currently covers digital media technology and business, especially what's happening on social networks and their platforms. He writes and edits stories about lots of other stuff, too. He started at VentureBeat in the spring of 2007, half a year or so after Matt Marshall left his reporting job at the San Jose Mercury News to found the site. Eric previously cofounded a now-failed startup called Writewith, that was building editorial software for newspapers and other groups of writers.

  • This is not good news for new startups whose products rely on high-speed Internet connections to deliver their cutting edge products to the end user. I think someone needs to make this happen, as the US is falling farther and farther behind their global counterparts in broadband penetration and download speeds. Any thoughts on how best to make high-speed in the US fast and affordabe anyone?
  • Please help spread the word that the FCC has new definitions of the speed at which data is delivered.
    Broadband was/is a totally meaningless term and tech blogs should be leading the way to get the word out.
    * Digital Subscriber Line (DSL)
    * Cable Modem
    * Fiber
    * Wireless
    * Satellite
    * Broadband over Powerlines (BPL)
    http://www.fcc.gov/cgb/broadband.html