Saturday, October 25, 2014

A "No Good" Product Purchased by 79% of All Homes

It is not hard to find critics of U.S. high speed access prices and speeds, which are said to be inferior to services in many other countries. But it is a funny sort of unloved product that 80 percent of households buy.

About 79 percent of U.S. households get a fixed network broadband Internet service at home, according to Leichtman Research Group. If that seems unremarkable, consider that a decade ago, just 20 percent of U.S. homes bought high speed access service.

One comment likely is worth making: if U.S. consumers were fundamentally unhappy with high speed access, they would not buy it. Similarly, as much as people tend to complain about high cable TV prices in surveys, purchase rates are higher for linear video entertainment than for high speed access.

About 84 percent of surveyed U.S. homes buy a linear video entertainment subscription, Leichtman Research says.

That does not mean consumers are equally happy with all providers of those services, or necessarily “highly satisfied” with the services in general. But such high buy rates indicate that the vast majority of U.S. homes see high speed Internet and video entertainment as highly important services “good enough” to buy right now.

Ask a consumer if a product they presently buy could be made improved, and might cost less, and most likely will say the products could be better and could be cheaper.

But one good rule for market research is to follow the money, and watch what people do, not what they say they do, or might do.

And behavior can change, when a much-better product alternative is made available. That is true for Apple iPhones or Google Fiber.

Since broadband access now accounts for 95 percent of all households with Internet service at home, there are an additional five percent of Internet-using homes apparently purchasing dial-up access. That might represent perhaps three percent of U.S. homes.

The high speed access adoption rate is an increase from 94 percent in 2013,  89 percent in 2009, and 33 percent a decade ago.

Also, about 63 percent of surveyed adults access the Internet on a smartphone, up from 44 percent in 2012.

For the most part, people buy both mobile and fixed Internet access. Some 59 percent of respondents say they get Internet service at home and on a smartphone.

But there is a mobile Internet equivalent of fixed telephone line cord cutting. About 24 percent of all “not online at home” respondents report they access the Internet on a smartphone, up from 19 percent in 2013 and 12 percent in 2012. So the percentage of “mobile-only” Internet access users doubled over the last two years.

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