New TechNet Study: On Two-Year Anniversary of National Broadband Plan, U.S. Adoption Rates Level Off

Study Asserts Better Coordination Needed Among Public and Private Stakeholders to Raise Broadband Adoption in U.S.

WASHINGTON, March 20, 2012 /PRNewswire-USNewswire/ -- TechNet, the bipartisan policy and political network of technology CEOs that promotes the growth of the innovation economy, today marked the two-year anniversary of the delivery of the National Broadband Plan (NBP) by releasing a new study showing that the home broadband adoption rate in the United States remains approximately the same as what it was in 2009 even though smartphone use has risen dramatically. 

The study by TechNet and Dr. John Horrigan, the organization's Vice President of Policy Research, also concludes that while the government and private sector have worked together to buttress an emerging policy infrastructure to support broadband adoption, so far these efforts suffer from insufficient coordination and a lack of clear strategy for assessing outcomes.  Specifically, 65% of Americans had broadband at home in 2009 according to a Federal Communications Commission survey.  In the fall of 2011, the National Telecommunications & Information Administration report pegged home broadband adoption at 68%, demonstrating that this rate has not changed very much since the plan went into effect.

"First class broadband is absolutely fundamental to America's economic growth," said Rey Ramsey, President and CEO of TechNet.  "And while on the whole the National Broadband Plan has created a framework for improving America's broadband environment, more work needs to be done.  Unless policymakers and private sector stakeholders take action to improve our understanding of the important broadband adoption initiatives under the NBP and the stimulus bill, we're risking second class status for the U.S. broadband ecosystem."

"This report shows that we need more coordination when it comes to broadband adoption across America," said Dr. John Horrigan, Vice President of Policy Research for TechNet.  "Neglect of coordination and assessment is a problem for two reasons.  First, it means stakeholders are flying blind when it comes to understanding best practices to improve broadband adoption.  Second, to the extent that poor policy coordination hampers efforts to increase broadband adoption, we run the risk of having a less inclusive society, a smaller domestic market for technology goods and services and a less innovative economy."

When the Federal Communications Commission (FCC) released the National Broadband Plan (NBP) two years ago, one of the plan's goals was to create the conditions that would get more Americans using broadband. At the time, two-thirds of Americans were broadband users at home, meaning that nearly 100 million Americans did not have access at home to a technology the NBP called a "foundation for a better way of life."

Since that time, there has been a great deal of dynamism in the world of information and communications technology (ICT). A recent survey by the Pew Research Center's Internet & American Life Project found that nearly half (46%) of adult Americans by February 2012 had smartphones (up from 17% in late 2009 and 35% in April 2011).   This adoption rate is stunning. It took roughly 9 years for 50% of Americans to subscribe to broadband at home. If we date the beginning of the smartphone era to the release of the iPhone in mid-2007, smartphones will hit the halfway mark in only 5 years. To take another point of comparison, home broadband adoption grew from 37% to 47% in two years' time (2005 to 2007), while smartphones have traveled that path in just 10 months.

Apps usage, which was non-existent a few years ago, grew markedly from mid-2010 to the end of 2011. During this period, smartphone users more than doubled the time they spent using apps -- from 43 minutes to 94 minutes per day. The number of monthly app downloads (for both Android and Apple's iOS) grew from nearly 400,000 at the start of 2010 to 2.1 billion by August 2011.  More than 100 million Americans routinely email, tweet, text, and much more – all on the go. The explosion in demand for mobile devices and apps shape the job market as a recent TechNet report showed that the U.S. was home to approximately 466,000 app developer jobs at the end of 2011.

Reasons for Slowdown in Adoption
Several reasons are behind this plateau in broadband adoption. First, the last third of the population without broadband has all the characteristics associated with not adopting information technology. This group is older, less educated, and poorer.  As the NTIA's 2011 survey shows, just 43% of low-income (households with annual incomes below $25,000) Americans have broadband at home and 46% of those without a high school degree have broadband, compared with the 68% national average.

Second, the economic recession has contributed to the stalling of broadband adoption. A 2009 Pew survey found that 9% of Internet users said the recession had led them to cut back or cancel Internet access service during the previous 12 months – a figure that rose to 16% for low-income Americans (those whose household incomes are $30,000 or less).  There are also historical examples of bad economic times putting the breaks on tech adoption. During the Great Depression, the upward path of telephone adoption actually reversed, falling from 42% in 1929 to 31% in 1934. Electricity use at home leveled off at about 67% during the Great Depression before resuming its climb.

All this means that the cost of digital exclusion - a problem identified in the NBP two years ago - is becoming more of a problem. The NBP's seminal example of the cost of digital exclusion was the observation that many (or most) jobs accept applications only via online submission. Someone who doesn't have broadband access will be excluded from the job market. Broadband access for senior citizens (just 45% of whom have subscribed) may be a choice for many unsophisticated older tech users, but the day will soon be on us when seniors' health care providers need them to have broadband access for better service delivery. 

The full study can be found here.

Recommendations:
Implement the Broadband Clearinghouse: A broadband adoption program in Cleveland may offer lessons to one just getting started in South Texas. Unfortunately, disparate programs often exist without means for coordination or information sharing. A clearinghouse for best practices that assembles program information curated by experts in the field does not exist and is a recommendation from the National Broadband Plan that has not yet been implemented. The clearinghouse would help local authorities understand broadband opportunities better. States would also benefit from greater coordination and understanding of what other states are doing. The stimulus bill created 50 state broadband authorities to manage data collection for the national broadband map and spearhead broadband policy in the states. However, there is wide variability in states' capacities in broadband. Greater coordination among states would help.

Greater Policy Coordination: Enhanced policy coordination at the federal level would also help. The FCC is in the process of reforming the Lifeline/Link-up program, the $1.2 billion program that subsidizes telephone access for qualified low-income people. The current FCC reform proposal suggests pilot programs be undertaken with carriers to explore effective approaches to delivering a broadband benefit to consumers. At the same time, NTIA has been funding programs that undoubtedly would yield insight to the FCC as it considers Lifeline/Link-up reform and how to support Connect-to-Compete C2C. Yet there is not much evidence that the two agencies are actively trying to draw lessons from one another or thinking creatively in considering, for example, how Lifeline/Link-up funding might support NTIA's broadband promotion efforts or C2C's emerging models.

Better Assessment: The past two years has seen the growth of a broadband adoption infrastructure funded by the $500 million Sustainable Broadband Adoption and Public Computing Center initiatives within the Commerce Department's Broadband Technology Opportunities Program (BTOP). The FCC's recent announcement of C2C promises to build on these efforts. Assessing these initiatives is important to give stakeholders in the public and private sector a clear understanding of what works – and what doesn't. This in turn allows communities to sow the seeds for innovation by having data on how best to target limited resources for social and community development.

Develop "Big Social Data" for Underserved: We have opportunities for innovation in product and service delivery based on analysis of large datasets that help facilitate understanding of user behavior in specific contexts. Developing "Big Social Data" for underserved communities in connection with assessing program outcomes can facilitate social innovation that meets the needs of these communities.

About TechNet:
TechNet is the national, bipartisan network of CEOs that promotes the growth of technology industries and the economy by building long-term relationships between technology leaders and policymakers and by advocating a targeted policy agenda. TechNet's members represent more than one million employees in the fields of information technology, biotechnology, e-commerce and finance. TechNet has offices in Washington, D.C., Palo Alto, Sacramento, Seattle, Boston and Austin. Web address: www.technet.org. You can also follow us on Facebook and Twitter at @technetupdate.

SOURCE TechNet

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