Showing posts sorted by date for query U.S. household internet. Sort by relevance Show all posts
Showing posts sorted by date for query U.S. household internet. Sort by relevance Show all posts

Friday, March 21, 2025

Good Outcomes Beat Good Intentions: How Dumb Are We?

Good intentions clearly are not enough when designing policies to improve home broadband availability in underserved areas. In fact, since 2021, more than three years after its passage, the U.S. Broadband Equity, Access, and Deployment (BEAD) program has yet to install a single new connection.  


It seems we were determined to make the perfect the enemy of the good, preventing construction until we mostly were certain our maps were accurate. A rival approach would have proceeded on the assumption that residents and service providers pretty much know where they have facilities and where they do not; where an upgrade can be conducted fast and easily, and where it cannot. 


And perhaps (despite the clear industry participant interests that always seem to influence our decisions) we should not have insisted on the “fastest speed” platforms. Maybe we’d have prioritized “good enough” connections that could be supplied really fast and enabled the outcomes we were looking for (getting the unconnected connected; getting the underserved facilities that do not impede their use of internet apps). 


This is not, to use the phrase, “rocket science.” We have known for many decades that “good enough” home broadband can be supplied fast, and affordably, if we use satellite (geostationary or low earth orbit, but particularly now LEO) or wireless to enable the connections. 


To those who say we need to supply fiber to the home, some of us might argue the evidence suggests relatively-lower speed (such as 100 Mbps downstream) connections supply all the measurable upside we seek, for homework, shopping, telework. The touted gigabit-per-second or multi-gigabit-per-second connections are fine, but there is very little evidence consumers can even use that much bandwidth. 


Study/Source

Key Findings

Distinguishing Bandwidth and Latency in Households' Willingness to Pay for Broadband Internet Speed (2017)

Consumers value increasing bandwidth from 10 to 25 Mbps at about $24 per month, but the additional value of increasing from 100 Mbps to 1 Gbps is only $19. This suggests diminishing returns for speeds beyond 100 Mbps.

Are you overpaying for internet speeds you don't need? (2025)

Research indicates that many Australians are overspending on high-speed internet connections they don't need. Most households can manage well with a 50 Mbps plan unless they engage in high-bandwidth tasks like 4K streaming or online gaming.

Simple broadband mistake costing 9.5 million households up to £113 extra a year (2024)

Millions of UK households are overpaying for broadband by purchasing higher speeds than necessary. Smaller households often need speeds up to 15 Mbps but pay for over 150 Mbps, wasting £113 annually.

ITIF (2023)

- US broadband speeds outpace everyday demands

- Only 9.1% of households choose to adopt 250/25 Mbps speeds when available

- Clear inflection point past 100 Mbps where consumers no longer see value in higher speeds

ITIF (2020)

- Average existing connections comfortably handle more than typical applications require

- A household with 5 people streaming 4K video simultaneously only needs 2/3 of current average tested speed

- Research shows reaching a critical threshold of basic broadband penetration is more important for economic growth than faster speeds

European Research (2020)

- Full fiber networks are not worth the costs

- Partial, not full end-to-end fiber-based broadband coverage entails the largest net benefits

US Broadband Data Analysis

- Compared to normal-speed broadband, faster broadband did not generate greater positive effects on employment

OpenVault Q3 2024 Report

- Average US household uses 564 Mbps downstream and 31 Mbps upstream

- Speeds around 500 Mbps sufficient for most families

FCC Guidelines

- 100-500 Mbps is enough for 1-2 people to run videoconferencing, streaming, and online gaming simultaneously

- 500-1000 Mbps suitable for 3 or more people with high bandwidth needs


We might all agree that, where it is feasible, fiber to home makes the most long-term sense. But we might also agree that where we want useful home broadband speeds, right now, everywhere, with performance that enables remote work, homework, online shopping and all other internet apps, then any platform delivering 100 Mbps (more for multi-user households, but likely not more than 500 Mbps even in the most-challenging use cases) will do the job, right now. 


Good intentions really are not enough. Good outcomes are what we seek. And that often means designing programs that we can implement fast, at lower cost, with wider impact, immediately or nearly so. “Better” platforms that cost more and are not built are hardly better.


Thursday, June 27, 2024

How Much Will ACP Demise Affect Home Broadband?

It is not unusual to see estimates of U.S. households that will “lose their home broadband service” because a particular subsidy program is out of funding at about six million homes, or roughly 25 percent of households that had used the ACP subsidy, as estimated by researchers at Maravedis, for example. 


According to the Federal Communications Commission, some 21 million ACP accounts were in service in December 2023. 


The issue then is how many of those households will find some other way to obtain home broadband, as was the case before the Affordable Connectivity Program was funded. In other words, users of ACP subsidies often had already been buying home broadband service, or had chosen to use their smartphones, before the ACP was available. 


So the end of the ACP subsidy does not automatically mean all or most of those who used the program will simply stop buying home broadband services. By way of reference, it has been estimated that “low-income households” with less than $30,000 a year in income had home broadband buy rates in the 70-percent range before the ACP was funded. 


source: Pew Research


Also, according to Pew Research estimates, about 15 percent of U.S. adults say they rely on their smartphones to access the internet, though such practices are about 27 percent of adults with incomes less than $30,000 annually  and about 19 percent of adults with incomes less than $50,000 but at least $30,000 annually. 


 

source: Pew Research


By implication, perhaps 46 percent of U.S. adults with incomes less than $50,000 annually rely on their smartphones for internet access instead of buying home broadband. 


Keep in mind, though, that home broadband is purchased “by the household” while “smartphone internet access” is purchased by the person. 


So 86 percent of U.S. adults with incomes of $30,000 or less are estimated to use internet access services by some means, while 91 percent of U.S. adults with incomes of $30,000 to $50,000 have internet access. 


In total, between 93 percent and 95 percent of U.S. homes purchase home broadband services, according to Pew Research estimates.  


If one assumes that it was primarily the adults with annual incomes of less than $30,000 annually that were the bulk of the ACP subsidy recipients, and if ACP accounts numbered about 23 million households, with an average household density of about 2.5 persons, that suggests as many as 57.5 million U.S. adults might have been using the ACP (some of the household members were younger than 18). 


The Federal Communications Commission survey of ACP recipients in December 2023 said ACP recipients numbered 21 million. The FCC survey found that mobile-only service was used by 25 percent of survey respondents; 30 percent had both mobile and home broadband access and 23 percent already had home broadband service. About 22 percent reported they had no internet access prior to the ACP. 


The FCC survey also found that 11 percent of the “had no internet access service” respondents also said they had no need to access the internet. And more than 80 percent of those reporting no pre-ACP internet access said they used access services in some other way (library, school, business or friend’s account). 


Using the FCC’s 21 million ACP account figure, and subtracting the 11 percent of respondents who said they had no need to use the internet, perhaps 2.5 million of the ACP accounts were homes that wanted to use the internet and did not have a home broadband service prior to the ACP.


On the other hand, more than 50 percent of respondents who already had mobile internet access before the ACP was available said they used the subsidy to reduce the cost of mobile service they already had, and did not add a home broadband service. But a significant percentage (about 38 percent) said they did add home broadband using the ACP benefit. 


About 84 percent to 85 percent of respondents who already had some form of internet access used the ACP to reduce the cost of their existing plans. 


None of that is to minimize the remaining portion of the U.S. adult population that does not buy internet access or home broadband. But consumer choices also play a role. 


The whole point of public, school and business access is to allow people to use the internet without buying a personal subscription. Some consumers make rational choices not to purchase home broadband, instead using their mobile connections or free access of some sort.


Not every statistical artifact is the result of invidious action or circumstances.


Sunday, May 26, 2024

AI Will Produce Winners and Losers

Though many executives and analysts are trying very hard to figure out which firms benefit most from generative artificial intelligence and AI in general, the prior experience of firms with the internet suggests there also will be losers.


And those losers could come from industries focused on digital and physical products such as “print” media, as our experience with the internet suggests. 


Study Title

Authors

Year

Focus

Key Findings

How the Internet Changed the Market for Print Media

NBER

2019

Impact on print media

Household adoption of broadband significantly reduced print readership and circulation, leading to revenue decline for newspapers.

The Impact of the Internet on Media Industries: An Economic Perspective

Oxford University Press

2008

Economic impact on media

The internet weakens intellectual property protection, making it easier to distribute content illegally and reducing potential revenue.


Similar losses can be noted in retailing as well, with a shift from place-based and physical retail to online retail. 


Study Title

Authors

Publication Year

Key Findings

The Impact of E-Commerce on Retail Employment

Autor, D., Dorn, D., Hanson, G.

2017

Found that increased e-commerce adoption led to job losses in retail sectors most susceptible to online substitution (e.g., electronics).

Omnichannel Retailing and Customer Engagement: A Review of the Literature

S. Verhoef, M. Kannan, P. Bharadwaj

2009

Highlights the importance of omnichannel strategies for retailers to enhance customer engagement and satisfaction in today's digital age.

The Impact of Online Shopping on Brick-and-Mortar Stores

T. Van den Poel, R. Verhoef

2003

One of the earlier studies exploring the potential negative impacts of e-commerce on traditional brick-and-mortar retailers.


Advertising has seen some of the greatest shifts from the internet, though.

Source: Gemini


Put simply, digital now claims up to 82 percent of all U.S. ad placements and revenue. Print has declined from 42 percent to less than three percent. Linear video dropped from 38 percent to 16 percent. Radio dipped from 10 percent to half a percent. 


Channel

1996 (Billions)

1996 (%)

2023 (Billions)

2023 (%)

Print (Newspapers, Magazines)

80.0

42.1%

10.0

2.7%

Linear Video (TV Broadcast, Cable)

72.0

37.9%

60.0

16.2%

Network Radio

10.0

5.3%

2.0

0.5%

Other (Radio Spots, Out-of-Home)

28.0

14.7%

18.0

4.9%

Digital Ads (Search, Social Media, Display)

-

-

300.0

81.7%

It might be reasonable to expect the content industries, advertising and retailing will again be among the industries to see early AI disruptions. 


Financial services might also be included on the list of industries that saw early internet disruption, and might see further challenges from AI. More recently, various forms of “sharing” (transportation and lodging, for example) also have emerged, and might see further changes from AI. 


But manufacturing and pharmaceuticals seem poised for AI disruption as well. On the other hand, construction might see relatively low amounts of disruption. 


Industry

Potential AI Impact

Drivers

Manufacturing

High

Robots can handle repetitive tasks, improve precision, and optimize production processes. AI can also be used for predictive maintenance and quality control.

Transportation

High

Self-driving vehicles, logistics optimization, and automated traffic management are all powered by AI.

Customer Service

High

Chatbots and virtual assistants can handle routine inquiries, freeing human agents for complex issues.

Finance

High

Algorithmic trading, fraud detection, and risk assessment can be significantly enhanced with AI.

Healthcare

High

AI can assist in medical diagnosis, drug development, and personalized medicine.

Retail

Medium

AI can personalize recommendations, optimize inventory management, and automate tasks like pricing and promotions. However, the human element in customer service and product selection might remain crucial.

Legal

Medium

AI can analyze legal documents, predict case outcomes, and streamline research tasks, but human judgment will likely remain essential for legal proceedings.

Education

Medium

AI-powered tutors can personalize learning experiences, but human teachers will likely remain central for guidance and social interaction.

Media & Entertainment

Medium

AI can personalize content recommendations and automate content creation tasks.

Construction

Low

Manual labor and on-site decision-making are still crucial aspects of construction, making widespread AI adoption less likely. However, AI can be used for design optimization and project management.

Hospitality

Low

The human touch remains essential in hospitality, but AI can automate tasks like booking and guest communication.

Arts and Culture

Low

Human creativity and emotional connection are central to the arts, making AI unlikely to replace artists entirely. However, AI can be used for artistic exploration and content creation tools.


Right now, attention is logically focused on industries and functions that are susceptible to AI automation. But equally big changes could come if AI allows competitors to enter markets in new ways. Think ridesharing and peer-to-peer lodging. 


And there always is the possibility that new industries are born. Think search and social media.


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