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Connect Minnesota Releases Broadband Service and Pricing Report

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Report examines the impact of cost on broadband adoption

ST. PAUL, MN. (November 18, 2011) – Connect Minnesota released today a new report on broadband service and prices in Minnesota.

The report, Worth the Cost: Broadband Prices in Minnesota, was part of discussions during the 2011 Broadband Conference hosted jointly by the Blandin Foundation and Connect Minnesota in Duluth. This year’s conference, focused on the ARRA broadband funding efforts that have been underway in Minnesota. Through discussions with national and local policy leaders, community leaders had the opportunity to develop a better understanding of how policy impacts them and how they link to the big picture. Through the sharing of tools and accomplishment of ARRA projects, attendees celebrated progress and planned for the future.

“Providers, governments and other stakeholders including Connect Minnesota are working to improve adoption rates statewide,” said William Hoffman, Connect Minnesota Program Manager.  “Our 2011 Residential Survey data will help inform efforts to ensure more Minnesotans adopt broadband and benefit from technology both economically and socially.”

The cost of home broadband service is a growing factor in encouraging more Minnesotans to get connected. Just a few years ago, most people did not even know what broadband was, let alone how it could benefit their lives. Now, though, a growing number of Minnesotans realize what a home broadband connection can mean for them, but many cite cost as a reason for not subscribing to the service.

Recent efforts by providers as well as governmental and non-profit agencies are attempting to address the cost issue. For example, the Federal Communications Commission’s Connect to Compete initiative recently brought together government officials, for-profit companies, and non-profit organizations to provide affordable broadband service to targeted populations and help them learn how to use a host of online tools.

As part of the 2011 Residential Technology Assessment, Connect Minnesota examined the prices that Minnesotans pay for their broadband service, how changes in price affected their decisions to subscribe, and how cost impacts some consumers’ decision to adopt broadband.

Among the findings from this survey:
·      On average, Minnesota broadband subscribers spend 49.46 a month on home broadband service. About 810,000 Minnesota adults (28% of broadband subscribers) report spending $50 or more on their broadband subscription.
·      When asked to rate their satisfaction with the price, 15% of broadband-connected Minnesotans (representing about 432,000 adults) gave a rating of “5 out of 5.”
·      More than one out of five subscribers (21%, representing 607,000 adult residents) say that price was a factor in their decision to subscribe, either because the price went down, or they realized that the cost was worth the extra price per month.
·      Approximately 1.1 million adult Minnesotans do not subscribe to broadband service. Cost is the main barrier to adoption for 26% of them (approximately 297,000). This includes those who say that the monthly cost of broadband service is too high (17.5%), the cost of a computer is too expensive (5.5%), and the activation and installation fees are too expensive (3.3%).
·      The cost of home broadband service is cited as a barrier by many at-risk groups, including low-income households and minorities; across Minnesota, approximately 37,000 minority households do not subscribe to broadband primarily due to the cost barrier.

On average, Minnesota broadband subscribers who know their monthly price say they pay $49.46 per month for their home broadband service.  By comparison, home broadband subscribers across all of the states surveyed by Connected Nation pay $45.73.

Average Price Paid by Home Broadband Subscribers

It should be noted that Minnesota broadband subscribers who know their advertised download speed subscribe to service that is significantly faster than other states surveyed by Connected Nation; Minnesota broadband subscribers who know their advertised download speed report an average speed of 6.0 Mbps downstream, compared to the Connected Nation average of 4.8 Mbps. As such, one would expect a higher average price in Minnesota.

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