Growth in faster Internet surprises

The Baltimore Sun

With a miserable economy - and a gut feeling that nearly everyone who really wants high-speed Internet access and can afford it probably has it by now - I would have predicted slow growth or none at all this year in that market.

Not so. Some 55 percent of Americans had broadband service at home in April this year, compared with 47 percent the year before and less than 35 percent in 2005. Only 10 percent of Americans still use dial-up Internet service at home.

The figures are to be reported today by the Pew Internet & American Life Project.

They show that high-speed Internet service is rapidly becoming just another utility - maybe not as necessary as electricity, natural gas or a land phone line, but certainly in the same category as cable TV or a cell phone.

The millions already using the Internet to watch videos, listen to music and make phone calls are undoubtedly helping convince stragglers that it is time to switch to broadband.

The 2008 broadband subscriber numbers represent an overall growth rate of 17 percent, compared with 12 percent the year before, which is pretty good performance in a bummed-out economic climate. However, John Horrigan, the Pew project's associate director for research, noted that almost all that growth occurred before December 2007, before consumer confidence tanked completely.

Since turndowns affect the spending habits of the poor first, broadband adoption among low-income Americans (those making less than $20,000 a year) declined slightly to 25 percent in April. That is still higher than I would have thought, considering the average cost of broadband is close to $400 a year - at least 2 percent of a low-income household budget.

But among those with slightly higher incomes ($20,000 to $40,000) the growth rate for home broadband continued to be spectacular this year - almost 25 percent.

One reason may be that the price of broadband is declining (although not in all places). Respondents told Pew they paid an average of $31.50 a month for DSL (down 50 cents from last year), while average cable Internet charges fell almost 12 percent to $37.50.

No secret here. Cable companies are under increasing pressure from low-end phone company digital subscriber line on one hand, and from high-end fiber-optic service on the other.

The pollsters said average prices might have fallen even more were it not for an increasing number of broadband users (29 percent) who pay an average of $5 a month extra for higher speed, premium service. That's a higher proportion than I would have thought, too.

Overall, DSL subscribers outnumber cable customers, 46 percent to 39 percent. Fiber is still in its infancy - less than 2 percent nationwide. But it is growing quickly now and accounts for 4 percent of suburban subscribers.

Dial-up customers reported paying an average of $19.70 per month, 9 percent more than last year, but that news is already out-of-date thanks to America Online, which just announced an increase of 20 percent in its lowest-priced service, from $9.99 per month to $11.99.

Demographically, the past year saw little change in the long-standing digital divide. Broadband penetration among African-Americans ticked upward by three points to 43 percent, but pollsters noted that the size of the increase was within the survey's margin of error. By way of contrast, broadband adoption in white households increased by nine points to 57 percent.

Age still makes a big difference in broadband adoption, with roughly 70 percent of respondents younger than 50 hooked up, compared with half of those from 50 to 64 and less than 20 percent in the Social Security set. But the oldest Americans had the greatest rate of increase, which I would bet is the result of an ever-graying group of previous adopters who moved into the next demographic bracket.

How does your online behavior stack up? No, I'm not talking about naughty or nice here. Visiting porn sites was not one of the categories, although I'll recommend they add that to the next survey.

Among less controversial activities, 94 percent of broadband users reported using a search engine, while 84 percent checked the weather and 80 percent got news online. More than 70 percent visited a government Web site, 62 percent looked for election information, 60 percent watched a video on YouTube or similar sites, and 50 percent looked up information about a job. On the low end, only 17 percent downloaded a file using BitTorrent or some other peer-to-peer service, while just 22 percent downloaded a Podcast.

All things considered, it is an interesting snapshot of the Internet in 2008 and probably the most accurate research you will find on current Web activity. For the entire report, visit www.pewinternet.org.

Nickel-and-dime department: When AT&T; announced pricing plans for the new iPhone 3G, which goes on sale next week, it boosted the cost of a standard 450-minute plan with unlimited data from $60 to $70 a month. That was expected, and for the extra money, customers will get access to AT&T;'s third-generation, high-speed network - which is far faster than the older Edge network that first-generation iPhone users have put up with.

But the real kicker was at the bottom of the pricing announcement. The previous iPhone plan included 200 free text messages. Users will now have to pay an extra $5 a month for those. Cute little hidden charge of $60 a year, right?

Actually, most cellular carriers are raising the price of a text message. A few years go they were 10 cents each; now they are 20 cents (cheaper by the bundle, of course).

This for a service that costs the carriers almost nothing. I guess that's what the market will bear. But at these prices, the carriers had better keep the spam out of our text mailboxes.

mike.himowitz@baltsun.com

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