Two studies, both announced on Thursday, hint at the reason why broadband penetration in the U.S. is relatively low, but neither says so explicitly because it's too touchy a subject: broadband in the U.S. is too expensive.
The Pew Internet & American Life Project published a study called "Home Broadband Adoption 2007" that notes that broadband adoption wheezed down to its slowest rate in the last five years.
Historically, Pew notes, high-speed internet adoption has been concentrated among the young, educated and relatively well-off. The good news for service providers is that even among the youngest, most educated, and richest segments, penetration rates vary from 63 percent to 76 percent, so there's still some room for growth.
The flip side of that coin, Pew's statistics show, is that usage among blacks lags usage of whites, usage in rural areas lags usage in both urban and suburban areas, and the less money a person makes, the less likely he or she is to have broadband.
Source: Pew Internet Project
Meanwhile, Research and Markets, in its new report "Impact Analysis - Satellite Transmission Standards" comes at that same issue from a different angle, saying the satellite broadband services industry has enormous growth potential, considering the large number of consumers in rural areas that still lack access to wireline broadband services.
Broadband hasn't been available to people in rural areas because it's too costly to run wires to them, which is just a delicate way of saying that people in those areas can't pay enough to make it worth any service provider's while to run a wire out. Couple that with urban/suburban areas getting closer to saturation, and you get greater the growth potential for satellite based broadband.
Both research organizations approach the issue with delicacy, because nobody wants to say that when it comes to broadband penetration, wealth makes a difference. Because then you'd have to acknowledge that wealth is unevenly distributed through race and class, and race and class are two taboo subjects in American discourse. Wealth makes a difference, and Pew statistics show that to be fact.
Broader access to broadband might be the one thing Al Gore and George Bush have agreed on. It's sort of like motherhood and applie pie; nobody's really against it. But then again, nobody's really for it either, otherwise they would've done something about it. But no politician is going to do anything about it.
What politician is going to tell cable operators that $45/month for 6 Mbps cable modem service is far too expensive for most of those who still don't have broadband? Cable operators have shown no inclination toward lowering their rates for anything, let alone for increasing penetration. What politician is going to suggest they lower their rates?
But say that $45 for 6 Mbps is fair. Then find a politician willing to say that if you're paying a little less than half the money for DSL, you should be getting a little less than half the throughput, when in fact, for $20/month, you usually get 768 kbps - which shouldn't even be considered broadband.
Competition isn't going to force prices down, because competition remains weak, and will continue to be weak except in the very few areas where cable operators are up against either FiOS or an ambitious overbuilder.
The upshot is that broadband penetration is unlike to accelerate much any time in the foreseeable future, because large increases in penetration, outside of satellite broadband in rural areas, can only be bought with decreased pricing, and no one is going to decrease their prices anytime soon.
|Brian Santo, IP Capsule Editor & CED Magazine Editor
KT goes live with IPTV
Korea Telecom (KT) launched its fiber-to-the-home (FTTH) based service yesterday (July 4), offering voice, data, and IPTV services.
KT is delivering IPTV through high-definition set-top boxes from Humax and Samsung, both of which are KT's consortium partners for the country's IPTV service. Both vendors' boxes are based on STMicroelectronics' STi710x family of HDTV AVC decoder chips.
LG-Nortel, another consortium partner for the service, is also developing its set-top boxes based on the STi710x, according to STMicrolectronics.
The service provides over 1,200 on-demand titles, and 27 interactive services, ranging from education to finance to instant messaging. An electronic program guide and user-created content are also available. Other KT IPTV services include: digital photos and personalized stock; plus weather and sports information.
Iridium begins process of replacing its satellite fleet
With an aging set of satellites that will have to be replaced in 10 years or so, Iridium Satellite has released a request for information (RFI) to potential partners interested in participating in the design, development and deployment of a new constellation of satellites the company is calling "Iridium Next."
The company's current network provides a mobile satellite communications service that covers the entire earth, supplying voice and data communications. With the RFI, Iridium is taking its first action on its previously announced plan to design, develop, construct, deploy and operate its next-generation system. The RFI process will lead to supplier partner selections in 2008 and 2009, the company said.
AT&T offers free Wi-Fi service to subs
AT&T Inc.'s nationwide Wi-Fi network is now available, for free, to AT&T's high-speed Internet subscribers. The network comprises nearly 10,000 hot spots in locations such as airports, coffee shops, McDonald's restaurants, and Barnes & Noble bookstores.
Ambient stays alive with debt payments
Ambient Corp., which since 1998 has been trying to find a market for its broadband over power lines (BPL) products, announced it has made a payment on its debt, a step that will keep the company viable for at least a few more months.
In March the company reported it recorded $2.3 million in revenue in 2006, a 900 percent increase over 2005. The company managed to attract $4 million in capital in June, some of which was undoubtedly used to make its July 2007 payment on its 8% senior secured convertible debentures in cash, as well as an additional $1,952,700 pre-pay on those debentures. The company said the two payments, totaling about $2.4 million, will make it easier to attract future funding.
San Jose, Calif.
CEO: Pasquale Romano
Claim to Fame: The company provides residential gateways, broadband multimedia set-top boxes, remote management systems, and call center customer support.
Recent News of Note: 2wire recently shipped its 11 millionth HomePortal residential gateway.