Growth in wireless-only subscribers heralds changes for Internet access

An estimated 7 percent of U.S. consumers depend on smartphones for Internet access, and there's every reason to believe that number will grow.
Written by Mari Silbey, Contributor

A significant percentage of American consumers have no wired broadband connection at home, relying instead on smartphones to connect to the Internet. If the trend continues, it heralds a substantial near-term change in Internet access patterns.

John Horrigan, a vice president at the Joint Center for Political and Economic Studies, says an estimated 7 percent of U.S. consumers already are dependent on smartphones for Internet access.

That number may not sound high, but if the growth at all parallels the shift from landline voice service to cellphones across American households, the access market could be on the cusp of radical change.

A report published by the U.S. Department of Health and Human Services in December found that more than one-third of households were cellphone-only for voice service as of the first half of 2012, the latest period for which data are available.

There are plenty of reasons to expect a continued rise in wireless-only broadband consumers, too.

More people are buying smartphones. The analyst firm International Data Corporation (IDC) projects that vendors will ship 918.6 million smartphones in 2013, an amount that takes total smartphone shipments past those of feature phones for the first time.

And wired service is expensive. A report by the Federal Communications Commission notes that the average cost of a standalone broadband plan advertising speeds of between 5 and 15 megabits per second is $44 per month in the United States.

At the same time, telecommunications companies are prioritizing investments in wireless broadband service over wired. Verizon has virtually stopped its FiOS fiber-to-the-home deployments, and AT&T is in the process of phasing out its copper-based DSL business.

While paying for one broadband service as a consumer is cheaper than paying for both home and mobile Internet access, the wireless-only option has its disadvantages.

Horrigan, who contributed to the U.S. government's 2010 National Broadband Plan for improving Internet access across the U.S., says people do a narrower range of activities online when connecting from a phone. The smaller screen size and slower speeds factor into that reality but so, too, do mobile data caps. Limits on monthly mobile Internet usage are drastically more restrictive than the limits on usage for fixed broadband connections. Many mobile data plans cap users at two gigabytes per month, while in contrast, Comcast, the largest Internet service provider (ISP) in the United States, currently sets a ceiling of 300 gigabytes per month for home broadband subscribers.

Horrigan believes that if the wireless trend continues, it will inevitably lead to new broadband business models.

"My hunch going forward, aside from data caps, is people will -- whatever means they go online -- more than likely, people are going to want to have the opportunity to experience Internet on screens larger than smartphone screens today. And I think consumer preferences are going to drive service offerings in that directions, and I think ... we should probably be thinking in terms of the multiplicity of access devices people may have as opposed to just having one tablet, or a laptop, or ultimately a smartphone... Given the multiplicity of devices, it is going to have to be a fairly unconstrained way of providing service."

What Horrigan is suggesting is that providers will have to come up with a solution that affords wireless-only users the ability to do more online than their current mobile plans allow.

There's a tremendous upside to mobile broadband service, including the potential to make Internet access more broadly available to the public.

However, it's far from a technology panacea, and it could lead to a new type of digital divide; one where some users enjoy premium Internet service, and the rest make do with the limitations of a wireless connection.

Image credit: vernieman's Flickr photo stream

This post was originally published on Smartplanet.com

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