About a third of U.S. households still do not have have Internet access. Among households with Internet access, about 7% have only dial-up Internet access.[1] Many households apparently do not appreciate the wealth of information and services that good Internet access offers.
Only about 5% of U.S. households, in contrast, do not have telephone service.[2] Text messaging volumes are growing, while voice minutes are falling. Good Internet access can provide text messaging, voice communication, and many other services as well. Nonetheless, telephone service is much more prevalent than Internet access.
Telephone service is still associated with a large amount of customer revenue. U.S. residential telephone customers paid about $14 billion in 2008 for “toll” calls.[3] That’s a decade after AT&T Wireless introduced its Digital One Rate Plan that obliterated the distinction between local and national calls. The cost difference between a local and national call is widely thought to be minimal. But that distinction is still associated with a huge amount of customer revenue.
Internet adoption is accelerating in the U.S. From Oct. 2003 to Oct. 2007, the share of households with Internet access rose from 54.6% to 61.7%. In Oct. 2009, the share had risen to 68.7%. [4] Put differently, across four years from 2003, the share increased about seven percentage points. The share increased the same amount subsequently in half the time.
The transition from telephone service to Internet service is inevitable, but it’s happening slowly and with great challenges to communications businesses.
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Notes:
[1] FCC, Trends in Telephone Service (Sept. 2010), Chart 2.5 and Table 2.9.
[2] Id. Table 16.1.
[3] Id. Table 9.3.
[4] Id. Chart 2.5.