Tuesday, November 18, 2008

Broadband Now Demand Constrained

Most of the time, we seem to be more concerned with the supply side of broadband: what penetration rates are, what speeds are, what prices are.

But consumer broadband arguably is demand constrained, not supply constrained. In Kentucky, for example, 65 percent of adults have broadband access.

Household broadband penetration tops 44 percent and another 21 percent of Kentuckians have dial-up service (keep in mind that most U.S. households have more than one adult in them).

Logically, the 21 percent of dial-up users are the primary customer segment to be targeted for an upgrade to broadband. About 70 percent of Kentucky households have at least one PC.

But that leaves 30 percent or so of homes that do not report having a PC. That is a demand problem, not an access supply problem.

1 comment:

mitchipd said...

Gary,

Good points about the demand constraints. But I'd argue that these survey-based metrics reflect a blend of "I don't need it," "I'm unfamiliar/uncomfortable with it" and "I can't really afford it."

Data supporting this notion can be found on pg. 6 of this report I recently co-authored.
http://www.pti.org/index.php/ptiee1/more/406

Here's the relevant excerpt:

The issue of broadband affordability is also reflected in data from the U.S. Census Bureau’s 2007 Population Survey. As the graph shows, the percentage of households with broadband varies sharply by income. While 82 percent of households with incomes of $75,000 or more are broadband subscribers, this figure is cut by more than half to 40 percent for those with incomes of $25,000-$34,999. And it falls further to 28 percent for those in the $15,000-$24,999 income range, and to just 19 percent for households that make less than $15,000 a year.

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