Could US Financial Worries Be Good News for Broadband Penetration?

Much has been said about how much America is lagging behind in broadband penetration and how imperative the broadband stimulus is for the country. But did you know that even before a cent of the $7.2 billion has been spent, broadband adoption is already picking up - by over 14%?

What's more, while experts say that since America was lagging behind, and coupled with the demand of new applications -- like social networking, YouTube, etc. -- broadband penetration in America had to catch up sooner or later. But it appears that the recession has emerged as a big driver for that growth.

"In terms of quarterly broadband numbers, America seems to have forged ahead in the last two quarters. So in the worst of recession, broadband addition was nevertheless dong very well in America," says Phillippa Biggs, the Geneva-based analyst and economist at ITU, who has a keen eye for picking out interesting trends out of mundane numbers.

"People say it could be the media coverage or the stimulus. But it could also be that because of the recession, since many people had less money to go out and spend, many subscribed to broadband so that they could be entertained staying at home."

According to The Broadband Forum that released the global broadband subscription tally last month (based on research by Point-Topic, the London-based broadband bean-counter), the number of North American broadband lines reached almost 96 million (by adding 2.34 million subscribers) in the quarter ending June this year. This represents 14.86 percent growth over the previous quarter ending June 2009.

However while that number looks impressive, the growth in IPTV -- Internet Protocol TV -- has been massive. The report said that with over five million IPTV subscribers, which represent now nearly 20 percent of IPTV penetration worldwide, Americas IPTV adoption grew by 86% over the last 12 months.

This growth is not sudden. Although broadband subscriber additions looked shaky for the world at the start of 2009, "both the US and Canada managed to stand out posting strong increases in real numbers not seen since early 2007," said Point Topic. During that period North America added almost 3.5 million subscribers to touch 93.5 million broadband subscribers.

"Difficult economic situation forced by hard economic times has caused a greater appreciation of what broadband could provide in terms of returns on investments at the household level," said David St James, the spokesperson of FTTH Council North America, the Houston-based non-profit association that works on building industry consensus on key issues surrounding fiber to the home broadband connections. 

The Council too in its latest study found continued robust growth in the number of homes passed by FTTH networks, which rose to 17.2 million from 13.8 million a year ago. Five years after their deployment began in earnest, fiber to the home networks are now available to 15 percent of homes in North America, it noted.

But according to David, while the recession is indeed one of the primary drivers of the increasing broadband penetration in US, just asit has been in the rest of the world, its adoption by Americans was not entirely voluntary.

"The recession had forced many people to reassess what they were doing to make money," says David. "Whether they lost their jobs or they realized that their jobs did not have a good enough future so they needed to earn more, or simply because they wanted to do moonlighting, many had to fall back on broadband to beat the recession."

That should be good news for the Obama administration which is about to start doling out the billions through the $7.2 billion broadband stimulus plans.

But recession or not, some think that America would have had to catch up anyway. 

"Penetration wise the US is unarguably rather behind many developed as well as developing nations. So they have some catching up to do anyway," says Tim Johnson, Chief Analyst, Point Topic.

"I think the whole movement towards using IT for productivity is changing the channels; applications are maturing to a point where more people in the US thought that they had to have it. The productivity angle, that people are trying to do other things or more things besides their jobs, or employers encouraging people to work from home, is the other angle that may have aided increasing broadband adoption, but that is not the primary reason I think," Johnson said.

Nevertheless, despite this encouraging trend, the fact is that the broadband stimulus still has a lot of work to do. According to Communications Workers Association of America, the United States faces a significant digital divide. Families in rural areas for example are much less likely to subscribe to broadband. According to its survey, while 67 percent of urban and suburban households subscribe to broadband, only 46 percent of rural households do. Similarly, whereas 88 percent of Americans who earn over $100,000 a year have broadband, only 35 percent of households that earn less than $20,000 subscribe. These broadband gaps must be closed to ensure unlimited access information available on the Internet, says the CWA.

Photo by Wyatt Preul. CC Attribution-Noncommercial-Share Alike 2.0 Generic