Broadband Adoption in America: Where We Stand in 2008

The numbers tell a story of remarkable progress — and persistent gaps. According to the FCC's latest data, roughly 55 percent of American households now have a broadband internet connection, up from just 4 percent in 2000. But behind that headline figure lies a divided picture that should concern anyone who believes internet access is essential infrastructure.

The State of Broadband in 2008

Broadband has come a long way in a short time. Eight years ago, most Americans who were online at all were using dial-up. Today, broadband is the dominant form of internet access, and the vast majority of new internet subscribers are choosing high-speed connections.

The Pew Internet Project's latest survey puts home broadband adoption at about 55 percent of all American adults. That's up from 47 percent just a year ago — a pace of growth that has been remarkably consistent since 2004.

The two main broadband technologies continue to be DSL and cable:

• Cable internet accounts for roughly 55 percent of broadband connections
• DSL accounts for roughly 33 percent
• Fiber, wireless, and satellite make up the remaining 12 percent

Average connection speeds have been climbing as well. The typical broadband user in the United States now has a download speed between 3 and 8 Mbps, depending on their service tier and technology type.

The Digital Divide Persists

While overall adoption is growing, the gaps between different groups of Americans remain troubling:

Urban vs. rural. Broadband is available to roughly 90 percent of urban households but only about 60 percent of rural households. Even where service is technically available in rural areas, it's often slower and more expensive than what urban customers can get. Many rural Americans who "have" broadband are on slow DSL connections that barely meet the FCC's minimum definition.

Income. Among households earning more than $75,000 per year, broadband adoption exceeds 80 percent. Among those earning less than $30,000, it's below 30 percent. Cost remains the number one reason cited by non-subscribers for not having broadband.

Age. Adults under 30 have broadband adoption rates around 70 percent. Among those over 65, the rate is below 20 percent.

Education. College graduates adopt broadband at roughly twice the rate of those with only a high school diploma.

Race. White and Asian American households have higher broadband adoption rates than Black and Hispanic households, though the gap has been narrowing.

The Rural Broadband Problem

The most stubborn part of the digital divide is geographic. Rural America simply doesn't have the same broadband options as urban and suburban areas, and the economics of building out infrastructure to sparsely populated regions make it unlikely that market forces alone will close the gap.

The challenge is straightforward: it costs roughly the same amount to run a fiber or cable line past a rural farmhouse as it does to run one past an urban apartment building. But the apartment building serves dozens of potential customers, while the farmhouse serves one. The return on investment just isn't there for most private companies.

DSL has been the primary broadband technology in rural areas because it uses existing telephone infrastructure. But DSL's distance limitations mean that many rural homes — even those with phone service — are too far from the central office to get a usable connection.

Satellite internet is available anywhere with a clear southern sky, but it comes with higher prices, lower speeds, data caps, and latency that makes real-time applications like online gaming and video calling impractical.

What's Being Done?

The broadband gap has become a political issue in 2008. Both presidential candidates have discussed broadband policy, and there's growing bipartisan recognition that internet access is becoming as essential as electricity and telephone service.

Several policy initiatives are on the table:

Universal Service Fund reform. The FCC's Universal Service Fund, which subsidizes phone service in rural areas, is being discussed as a potential funding mechanism for broadband expansion. The fund collects roughly $7 billion per year, but most of it still goes to voice telephone service.

Rural broadband grants and loans. The USDA's Rural Utilities Service administers loan and grant programs for rural broadband deployment. The program has distributed several billion dollars since 2002, but critics argue it's been poorly targeted, with some grants going to areas that already had broadband options.

State-level initiatives. Several states, including Kentucky, Vermont, and West Virginia, have created their own broadband development authorities. Some are building publicly owned networks; others are offering incentives for private providers to expand into underserved areas.

Municipal broadband. A growing number of cities and towns are exploring building their own broadband networks, though these efforts have been controversial. The telecommunications industry has lobbied against municipal broadband in several state legislatures, arguing it represents unfair government competition.

How Does the U.S. Compare Globally?

It's worth stepping back to see where America stands internationally. The results aren't flattering. According to the OECD, the United States ranks roughly 15th among developed nations in broadband penetration per capita. Countries like South Korea, the Netherlands, Denmark, and Japan all have significantly higher adoption rates and faster average speeds.

South Korea, in particular, stands out. The country has near-universal broadband adoption, with most connections running at 50 to 100 Mbps — speeds that are effectively unavailable to American consumers outside of a handful of fiber-optic service areas. The South Korean government invested heavily in broadband infrastructure in the late 1990s and early 2000s, a decision that has paid dividends in economic growth and innovation.

The comparison raises an uncomfortable question: is the United States falling behind in critical infrastructure?

What Comes Next?

As we head into 2009, several developments could accelerate broadband adoption:

Economic stimulus. With the economy in recession, there's growing talk of a federal economic stimulus package that could include broadband infrastructure spending. Investing in broadband deployment could create jobs while also expanding access — a two-for-one benefit that's appealing to policymakers on both sides of the aisle.

Technology improvements. ADSL2+ is beginning to roll out, offering speeds up to 24 Mbps for users close to the central office. DOCSIS 3.0 will allow cable companies to offer speeds of 50 Mbps and beyond. And fiber-optic networks like Verizon FiOS continue their steady, if slow, expansion.

Wireless broadband. The emergence of 3G mobile broadband and the upcoming deployment of WiMAX could provide new broadband options in areas where wireline service is uneconomical.

The trajectory is clear: broadband adoption will continue to grow. The question is whether we can close the gaps fast enough to ensure that all Americans — regardless of where they live, what they earn, or how old they are — have access to the internet that is becoming essential to modern life.