More Up-to-date Info on Broadband Use (and an Explanation of Why We Lag)

This previous post indicated that it wasn’t clear whether broadband use in the US is peaking.

I’d say this report puts that debate to rest–growth is strong and sustained, and that is good news:

Growth of broadband is good news to many

Publishers, advertisers and retailers should be pleased to know that since January, more than 17 million Americans have signed up for broadband Internet access, bringing the total number of subscribers to 120.8 million, analysts said.
Nielsen/NetRatings issued a report this week indicating that broadband users make up 42 percent of the population, up from 36 percent in January. Since August 2004 the number of broadband subscribers has increased by 34 percent, while dialup use fell by 10 percent.
“There’s not anyone that doesn’t benefit from this,” said Charles Buchwalter, vice president of analytics at Nielsen/NetRatings.
Buchwalter said online publishers appreciate the growth of broadband use because it allows them to appeal to a more engaged audience.
“(W)hen there’s more engaged users, more advertisers want to be in front of them,” Buchwalter explained. “You can add more bells and whistles to appeal to users on broadband than people with more limited connections.” Most DSL service ranges from 8 to 20 mpbs, while cable Internet can reach speeds up to 30 mbps. Standard dialup services operate at 56 kbps.
Buchwalter said broadband users spend more time — and money — on the Internet. Forrester Research, a technology research company, said in a July report that broadband users spend 31 percent more time online than dialup users.

But there is reason for caution:

“The battle is far from over in terms of how broadband is going to unfold over the next decade,” Buchwald said.
But until then, Internet service providers will have to think of creative ways to persuade the 54 million Americans connecting via dialup to switch to the faster — and costlier — broadband services. Though the price of broadband continued to fall, cost still remains a factor preventing more Americans from connecting at high speeds. Forrester found that the mean household income of U.S. broadband users is $75,926, vs. $58,668 for dialup households. DSL service usually starts at $30 per month, and high-speed cable starts at $45 per month. Dialup costs about $10 per month.
Henson said Verizon just introduced a $14.95 per month DSL plan. At 768 kbps, it’s slower than standard DSL service, but it is also half price. SBC/Yahoo! offers a similar service, charging users $14.95 to connect at speeds up to 1.5 mbps.

I’m guessing that as more content becomes Flash- and video-based, the low-end DSL users (who according to the previous post weren’t considered full-fledged DSL users) will be demanding faster speed shortly, and that the telcos will have to come through for them without raising rates much. When that happens, the cable companies will either have to make their service even faster, or come down in price to compete.

Finally, none of this changes the fact that we are lagging other countries, especially Korea and Japan.
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UPDATE: Regarding the US lag in broadband adoption, I just caught up with my online Wall Street Journal reading and came across this October 1 piece (requires subscription) by an experienced telecom executive and entrepreneur, who has a sobering analysis of what has happened so far and hopes that clearing the regulatory underbrush will enable us to catch up to the rest of the world:

What’s a Polite Word For ‘Shakedown’?

That depressing question reverberates among everyone contemplating the future of telecommunications in the United States, where the level of broadband penetration has now dropped to 13th place in the world.

As someone who has spent the past 25 years building and bundling cable, data and phone systems, the barriers to broadband are frustrating. Critics sometimes suggest that our broadband problems are a result of a lack of imagination or innovation in the industry. But to anyone who has actually tried to build a competitive system, it is painfully obvious that local regulators have become the bottleneck in the system.

These regulators have emerged as neighborhood tyrants, protecting existing local and regional monopolies and effectively holding competitive broadband hostage. By creating unreasonable demands on any new entrant to the market, local regulators have slowed the advancement of broadband at the very moment when the telecom industry might finally be ready to enter the next age of innovation.

….. before long, building a new telecom system meant navigating through a maze of hundreds of local councils, each with its own list of demands. Little wonder that today the vast majority of American homes do not have an alternative broadband provider.

We have a second chance to get broadband right. The former Bell companies like Verizon and SBC, admittedly late to the game, are now eager to invest billions of dollars to create high-speed networks that deliver bundled voice, data, and video service. Even the FCC has agreed that customers should enjoy what they call “net neutrality” — the right to choose among competing network, content, and service providers. But the only logical way new competitors will enter these markets is if local authorities are restricted to focusing on the condition of their streets, not negotiating contracts with service providers.

This month Texas passed a law allowing broadband competitors to by-pass local regulators when introducing new service to local markets. This event has become a catalyst for renewed federal involvement. A bill has already been introduced in Congress by Sen. John Ensign that would free broadband providers from having to win special permission from local authorities.

Local regulators will undoubtedly fight it. But it is time residential customers were told that “linkage” doesn’t bring better telecom service.

Indeed, according to GAO statistics, the absence of cable competition in U.S. markets has raised monthly rates, which average more than $40 a month, by 15%-41%. Even using the low end of the GAO estimate, a community with 500,000 households would stand to save its residents $36 million a year — far more valuable than the concessions the municipalities demand in the name of the public interest.

There is much more at stake here than cable rates. Today the Internet is still very much like electricity a decade after Edison invented the light bulb. The huge tide of applications has not even begun to appear. But as Asia and parts of northern Europe have started to discover, there is much more to broadband than sending email, sharing digital photos, and downloading music.

The next generation of Internet entrepreneurs will discover how broadband will play a pivotal role in health care, education, energy, and personal security. Ideally, consumers should exploit all these opportunities through a national policy of “net neutrality,” giving them whatever applications and information they want from the Internet without the interference of regulators or industry bandwidth gatekeepers.

This is a rich opportunity for consumers and business visionaries. But as long as the United States is still battling municipalities about how to permit a broadband competitor from entering the local market, those opportunities will be pursued elsewhere.