Lower income consumers subscribe less to broadband services than higher income consumers.
In a 2012 report by the Leichtman Research Group, Inc.
(LRG) three distinct household income groups were surveyed about broadband adoption: Under $30,000, $30,000-$50,000 and over $50,000.
The result of this study reflected that in the lowest income households, only 41% own a computer and less than 50% have broadband access in their home.
This compared to the higher income families (over $50,000) where 97% own computers and 91% have broadband at home.
In the past computer ownership was considered a major hurdle to driving long-term adoption for Internet users.
However, the advent of the Smartphone has changed the technology landscape and now consumers from all walks of life are accessing the web, tweeting, playing games and emailing all with their phones.
When dividing Smartphone owners by income, a Pew study founds that 40% of Smartphone owners with a household income less than $30,000 a year mostly access the internet via their phone, more than four times the 17% of Smartphone owners with household income more than $50,000.
Additionally, Smartphones were reported as the primary internet device for 29% of owners earning $30,000 to $49,999 in household income, making those earning less than $30,000 about one-third more likely to mostly use their phone for web browsing.
Clearly Smartphones are allowing consumers to access the worldwide web at a faster pace.
And while this is good, it would appear that this situation is driven not so much by trend or desire, but by necessity - i.
e.
Lower income consumers cannot afford a computer or do not have affordable broadband access.
This does not mean they do not want or need broadband.
There is a market demand but a technology gap.
So the question remains, how can we create affordable broadband solutions for young adults just starting their careers, the lower middle class families working hard to create better lives for their children and the seniors that are now deferring retirement and reentering the workforce at a greater rate? A couple of good things are in progress.
First, the Federal Communications Commission (FCC) has taken notice.
The National Broadband plan has been developed in an effort to advance broadband penetration specifically to the underserved markets.
Additionally the Universal Service Fund (USF) was overhauled to promote the advancement of digital communications.
The Connect America Fund was launched in 2011.
The goal is to help subsidize additional capital investments which will deliver high-speed Internet solutions to at least 90% of the United States by 2020.
Additionally, policy makers are putting pressure on the telecommunication carriers and cable operators to deliver affordable broadband services.
Comcast recently launched Internet Essentials, a new initiative offering discounted Internet access and home computers to families that meet low income requirements.
As part of the program, families will receive literacy training and Internet service for $9.
95 a month.
The product offering will be available wherever Comcast offers broadband (39 current states).
It is worth noting that while the impact is positive, the program was mandated as a requirement of Comcast's acquisition of NBC Universal.
AT&T has also taken recent action launching Naked DSL in an attempt to create a more affordable solution.
This too was a required offering as a condition of its merger with BellSouth.
The big players continue to advance communications but it will be difficult to reach the FCC goal of 90% coverage across the US in the next 7 years.
Therefore, two additional steps are needed.
First and foremost, we need to identify creative technology solutions to bridge the "last mile" gap.
Wireless expansion into rural markets is one opportunity.
There are however other examples of creative thinking for the hard to reach, low income segment.
"Only Fastnet" is a relatively new ISP based in Florida and a great example of innovation at work.
Their approach is simple.
Harness open source technologies and fiber and then add equipment to distribute secure network access to targeted communities.
The communities served (primarily low income apartment complexes) currently have no access to broadband.
Only Fastnet is not competing with incumbents, but creating a new service offering to those in need.
The consumer adoption rate is enviable.
In 1 year, Only Fastnet has achieved a 60% penetration rate in each building/location.
The price point is heavily reduced from retail offerings.
Effectively consumers have high speed Internet access for $20 a month with upload/download speeds 20x faster than dial-up connections.
Lastly, it is important to educate consumers that they have a choice - both in providers and features.
The "bundle" has become the standard offering of most communication providers.
In many cases, a stripped down, basic service offering would be suffice and often preferred by the end user.
Creating targeted education campaigns to promote basic Internet access will clearly help drive greater adoption.
As we rebuild our economy and recapture jobs in America, we need a workforce that can stay the course.
Technology adoption and basic computing are critical skills needed to play on the world's stage.
Therefore, creating affordable solutions to the underserved, low income market is a critical step for building the workforce of the future.