Broadband Penetration: How Big?

Joseph Laszlo | December 28, 2004, 11:20 AM

Nielsen/Netratings is making news again with its broadband penetration study, this time claiming that we've crossed the 50% threshold, and 53% of US online users from home connect via broadband [myway news]. While broadband's growing, I don't believe that, and here's why.

JupiterResearch's estimate for US broadband households as of Q3 2004 is 29.9m, with total US broadband lines (including business DSL) at 31.9m. This is constructed from the bottom up, adding up reported line counts for all the major cable, DSL, satellite, and wireless services, and including an estimated "other" factor for the small independent providers in the market.

But don't just take our word for it. I've found two other estimates that corroborate this population count:

Leichtman gives 30.95 million for Q3--they don't estimate small provider numbers, but neither do they control for business DSL lines, so let's say that those two factors cancel out.

The Point Topic folks just came out with their Q3 numbers, too, they say 31.7m US broadband lines (presumably they're including business DSL, too).

So, 30m is a fair, reasonable, bottoms-up estimate, from 3 sources, for how many US broadband households there are. If you accept that, though, and Nielsen/Netratings is correct that 53% of all US residential users have broadband, that means there can only be 56.6m online households, total in the US. Which is way too low. We peg total online households at 75m; even if it's 70m or 65m, it's still way off from the implication based on Nielsen's finding.

This leaves two options: either (1) somewhere there is a huge source of broadband in the US that none of us who watch the industry is counting, or (2) Nielsen is oversampling broadband users in its methodology.

If JupiterResearch were the only ones pegging the broadband population at around 30m hhs, I'd wonder. But I really, strongly think (2) is the simplest answer.

On the other hand, JR's own numbers suggest broadband penetration stands at about 40%--which isn't as exciting as 50%, but whichever percentage you like, they both indicate that broadband is definitely very mainstream at this point.