Saturday, May 4, 2013

Statistical Differences are Not Always Evidence of Market Failure

One has to be careful about interpreting Internet or broadband usage trends. Statistical “differences” are not always evidence of “market failure,” for example. Sometimes differences are the result of consumer choice.

Consider the choices people make about how they prefer to use the Internet. About 17 percent of mobile phone owners do most of their online browsing on their phone, rather than a computer or other device, the Pew Center Internet & American Life Project reports.

Young adults and non-whites are especially likely to use their mobile phones for the majority of their online activity, the researchers say. And that could affect demand for some products, such as fixed network broadband.

Nearly half of all 18 to 29 year olds (45 percent) who use the Internet on their mobile phones do most of their online browsing on their mobile device, the study found.

Half (51 percent) of African-American mobile Internet users do most of their online browsing on their phone, double the proportion for whites (24 percent). Two in five Latino cell internet users (42 percent) also fall into the “cell-mostly” category.

That isn’t to say user income is irrelevant. All other things being equal, higher-income households buy more fixed broadband than lower-income households.

Users with annual household income of less than $50,000 per year and those who have not graduated college are more likely than those with higher levels of income and education to use their phones for most of their online browsing, Pew researchers say.

The Pew data suggests mobile broadband has been particularly important to populations that in the past have “under-indexed” for use of fixed network broadband. The same argument can be made for Internet access in most emerging nations, where it is expected that mobile devices and networks will be the way most people get access to the Internet.

Aside from buyer preferences being at play, fixed network broadband purchases increasingly are not suitable measures of “broadband adoption.”

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