To reach the Internet, a consumer needs service from two types of providers: (1) a communications company (i.e., a telephone, cable television, or wireless company) providing a transport service to physically transmit data to and from the consumer’s home and (2) an ISP (e.g., America Online or EarthLink) providing access to the Internet. Usually, consumers buy these services separately, but some providers (particularly cable companies) sell transport and ISP services as an integrated package. Some wireless providers also offer an integrated ISP as part of their Internet transport services. Different transport providers, depending on the physical makeup of their network, can supply different amounts of “bandwidth,” or data transmission capacity. A “narrowband” connection, such as that provided by a conventional telephone line, offers limited capacity resulting in relatively slow rates of data transmission. A “broadband” connection, such as that provided by cable modem service or by a telephone technology known as digital subscriber line (DSL), has greater capacity, giving the user faster data transmission rates and better access to sophisticated, “bandwidth-intensive” content. While many Internet users enjoy fast Internet transport at their place of work or school, no substantial commercial deployment of broadband connections to homes took place until the late 1990s. To date, the two most widely used broadband technologies in homes are cable modem service and DSL. Increased deployment of and subscription to competing broadband transport methods, such as satellite, terrestrial wireless, and optical fiber technologies, is expected in the future. An ISP is the consumer’s “on-ramp” to the Internet, and once connected to the ISP, the consumer actually becomes part of the Internet. ISPs have routers, switches, and other equipment necessary to transmit traffic to and from the long-haul networks—known as the Internet “backbone”—which connect the computers and communications networks that are part of the Internet. ISPs differ in the features and functions they offer to subscribers. While some only provide access to the Internet and an e-mail application, others offer a “home page” with direct links to specific content on the Internet, as well as proprietary content and additional applications available only to the ISP’s subscribers. Through section 706 of the Telecommunications Act of 1996, the Congress directed the FCC and the state commissions to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans….” In its most recent report on the deployment of advanced telecommunications capability (released in August 2000), FCC identified certain categories of Americans who may have difficulty obtaining access to advanced services. These categories include low-income consumers, those living in sparsely populated areas, minority consumers, Native Americans, persons with disabilities, and those living in U.S. territories. In particular, FCC concluded that several barriers might hinder the ability of low-income, inner-city residents to obtain advanced services. Such barriers include the poor quality of the telecommunications plant or of the inside wiring in multiple-tenant buildings, the relatively high price of advanced services, the lower rates of computer ownership among inner-city residents, and the lack of marketing by providers of advanced services to low-income populations. FCC also found that for the majority of Americans who live in rural areas, lowest- cost access to advanced services was not readily available, and that some rural areas still lacked basic access to the Internet through a local telephone call. Similarly, the Department of Commerce stated in a recent report that although a sharp upward trend in the number of Americans connecting to the Internet from their homes exists (a trend Commerce found to encompass every income category, education level, racial group, and family type and to include both urban and rural areas), some demographic groups are nevertheless still connecting to the Internet far less than others. However, Commerce pointed out that there was a higher expansion rate of Internet use among these “lower usage” groups. Over time, this suggests that the digital divide may narrow. Much attention has been directed recently to the question of whether a “digital divide” is occurring in our country—that is, whether Internet access is unevenly distributed across socioeconomic divisions within our society. Our survey results support the perception that access to and use of the Internet are influenced by a person’s race, education, and income level. Geographically, however, we did not find that Internet use—when both narrowband and broadband users were measured together—was related to a person’s residence in a small or large metropolitan area or rural area. One of the most important statistical findings of our survey was that Internet users tended to have a higher household income and more education than the general U.S. population. For example, Internet users were more likely than the general population to be in a household with an income of $35,000 or more per year (see fig. 2). Internet users over the age of 24 were also significantly more likely to be college graduates or to have a graduate degree than the general population. Additionally, our survey found that Internet users, compared with the general U.S. population, represented a higher percentage of whites and a lower percentage of African-Americans and Hispanics. Other demographic findings from our survey include the following: The proportion of men and women online mirrored that of the general population. Surveys from just a few years ago, however, showed women lagging behind men in Internet usage. Thus, our survey suggests that women have caught up in their use of Internet technology and are now just as likely to be online as men. Compared with the percentage of the general population in various age categories, users who accessed the Internet from home were more likely to be between 25 and 54 years old and less likely to be aged 55 and older. Another concern embodied in the digital divide concept is that people living in rural areas might have less access to the Internet than their more urban counterparts. Our analysis considered Internet use in five types of geographic areas across the United States: nonmetropolitan areas (areas with populations of less than 50,000) and four categories of metropolitan statistical areas (MSA), the largest of which included populations of 2.5 million or more. We found the proportion of Internet users living in each type of geographic area to approximate the breakdown of the overall U.S. population across these areas. This implies that people living in less populated areas are just as likely to obtain some form of Internet access as those in more populated areas. This analysis, however, was based on whether users obtained any form of Internet access—narrowband or broadband. Special concerns surround the issue of whether deployment of broadband in rural areas will match that in urban areas. This issue is addressed in the section below. Our survey of Internet users found that 12 percent of the respondents had a broadband connection to the Internet. At the same time, over 52 percent of the survey respondents reported that broadband transport via DSL or cable modem was available to them. The reported availability of broadband, however, was uneven across local areas and was greatest in large metropolitan markets and in wealthy areas. Regardless of these geographic differences, narrowband and broadband subscribers shared many demographic characteristics. The reasoning behind their choice of an Internet transport provider often differed, however. We found that 12 percent of the respondents had a broadband method of transport to the Internet—9 percent used a cable modem and 3 percent used DSL. The conventional telephone line was still the most common method of transport to the Internet, with about 88 percent of respondents using narrowband telephone transport. Figure 3 presents the distribution of the means of physical transport to the Internet based on our survey results. Although the vast majority of Internet users still rely on narrowband transport, there has been substantial growth in broadband usage. This point is illustrated by reports from two financial services firms, showing that as recently as 1998 only about 2 percent of Internet users subscribed to a broadband service. Section 706 of the Telecommunications Act of 1996 directs FCC to initiate regular inquiries into the availability of advanced services (which include, but are not limited to, broadband Internet transport) to all Americans. In its most recent section 706 report, FCC gathered data from companies providing high-speed service lines and conducted case studies to examine the deployment and use of advanced services in different communities. FCC generally found significant investment in the facilities needed to provide advanced services, steadily rising subscription rates for advanced services, and a proliferation of providers in the marketplace. However, FCC stated that less than 20 percent of sparsely populated areas had high- speed subscribers and concluded that many rural Americans are “particularly vulnerable to untimely access to advanced services if left to market forces alone.” Likewise, the Commerce Department, which based its report on a survey of U.S. households, found the percentages of Internet users with a broadband transport method to be 12.2 percent in central cities and 11.8 percent in urban areas, but only 7.3 percent in rural areas. To further gauge the level of broadband deployment, we asked current Internet users about the availability of DSL and cable modem services where they live. Among all survey respondents, 52 percent reported that one or more broadband service was available to them: 17 percent reported that only cable modem service was offered, 10 percent reported that only DSL service was available, and 25 percent reported that they could choose from both cable modem and DSL services (see fig. 4). This slightly greater prevalence of cable modem services accords with the findings of FCC and the Commerce Department, both of which found cable to have a greater market share than DSL at this time. To determine whether the availability of broadband varies by community size, we examined the relationship between the population of the area where respondents live and whether they reported that DSL and cable modem services were obtainable. Similar to the other studies, our survey found the availability of broadband technology to be most prevalent in large metropolitan areas (see fig. 5). For example, more than 32 percent of the survey respondents in a metropolitan area with a population of 2.5 million or more reported having both DSL and cable modem service available where they lived. The corresponding figure for rural areas was less than 8 percent. While nationwide and metropolitan area-level data provide insights on broadband deployment, additional insights can be gained by analyzing data at a more localized level. To examine the characteristics of local areas with and without broadband availability, we used Census Bureau demographic data for areas designated by zip code. Within each zip code we looked at several variables including income, poverty rates, home values, and education levels. Using survey respondents’ answers to whether DSL and cable modem services were available where they lived, we examined whether these Census Bureau variables differed between zip codes where users reported the availability or unavailability of broadband transport services. The data in table 1 suggest that residents of local areas where survey respondents reported broadband service to be available were, on average, wealthier than residents of local areas where survey respondents said broadband service was unavailable. Specifically: Median household income was higher where broadband service was available than where it was unavailable. Local areas where both DSL and cable modem service were available had an average median household income approximately 28 percent higher than areas where neither service was available. Poverty rates were lower in local areas where both DSL and cable modem service were available compared with local areas where neither was available. The average median home value was over 63 percent higher in local areas where both DSL and cable modem services were available than where neither was available. Another notable characteristic of local areas where broadband service was reported to be available was the educational level of the residents. As shown in table 2, a larger percentage of the population had attained some amount of postsecondary education in local areas where respondents said broadband service was available. For example, 27 percent of people (aged 25 and older) in local areas where both DSL and cable modem service were said to be available had a college or advanced degree, compared with 19 percent in areas where neither service was reported to be available. Little difference existed in the demographic characteristics of survey respondents subscribing to narrowband service compared with those subscribing to broadband service. We found no differences in marital status, household size, race, Hispanic origin, education, or employment, between narrowband and broadband subscribers. However, we did find a statistically significant difference with respect to income: 40 percent of broadband subscribers had an annual household income of $75,000 or more, compared with only 20 percent of narrowband users. While narrowband and broadband subscribers shared many demographic attributes, they differed in their reasons for selecting their method of transport to the Internet. Among narrowband users, the most commonly reported reason for selecting narrowband service—cited by 38 percent of respondents—was its relatively low price. Survey respondents using narrowband transport reported spending less for both one-time initial fees and recurring monthly fees. For example, only 18 percent of narrowband subscribers reported spending over $100 for one-time initial fees, whereas 39 percent of broadband subscribers reported spending this much for initial installation and setup. The same pattern emerges for monthly fees (see fig. 6). Among narrowband subscribers, less than 18 percent reported spending more than $30 per month to access the Internet while the corresponding figure for broadband subscribers was 74 percent. These pricing patterns held consistent across geographic areas: the monthly fees consumers encountered in rural areas, small metropolitan markets, and large metropolitan markets were similar. Although most narrowband users based their selection of transport provider on price, many others were narrowband users by default—that is, almost 29 percent of narrowband subscribers reported the lack of a broadband alternative as their most important reason for choosing a narrowband transport provider. In fact, 19 percent of narrowband Internet users had made some attempt to obtain broadband service but were unsuccessful, often because companies were unable to or had elected not to provide broadband service in their area at that time. Additionally, 12 percent of narrowband respondents reported that they were unaware of any choices other than a narrowband connection. Seven percent of narrowband respondents stated that they chose a narrowband connection so they would be able to choose their ISP; 6 percent said they chose narrowband because it was the easiest type of connection to use. Among broadband users, the most commonly reported reason for selecting their transport mode—cited by 40 percent of these respondents—was that the speed was appropriate for the services and applications they used most frequently. An additional 18 percent of broadband respondents said that they chose this kind of connection in order to free up their telephone line, which is in use during a dial-up Internet session unless the consumer purchases a second telephone line. Finally, 10 percent of broadband users said they chose this type of connection because it was the most user- friendly. Just as Internet users often based their selection of transport provider on price, they often based their selection of ISP on price. Broadband users, however, were more likely to consider other factors, such as whether the ISP offered the various content and applications that were important to them. Once online, all users rated the importance of various Internet features and applications roughly the same. Narrowband and broadband users spent a similar amount of time accessing their ISP’s content compared with surfing the Internet. However, we found that infrequent users and new users tended to rely more on the content provided to them by their ISP. As the Internet industry continues to evolve, so does the role of the ISP. In our prior report on Internet competition, we noted that many ISPs now serve as “content aggregators”—that is, they provide subscribers with applications, proprietary content, and direct links to content on the Internet. Concerns have been raised about how ISPs choose the content they offer subscribers—in particular, whether ISPs might favor material from affiliated content providers or discriminate against unaffiliated content providers. Consumer choice among ISPs is thus seen as important to enhancing consumers’ access to varied content. In our survey, we examined how Internet users selected their ISP and how they used the services provided by their ISP. In the case of narrowband users, the most common reason given for their choice of ISP—cited by almost 35 percent of respondents—was price, while only 13 percent of broadband users identified price as the most important reason why they chose their particular ISP (see fig. 7). Among broadband users, the most common answer to this question—cited by 23 percent of respondents—was that they selected their ISP because it was the company that provided the features and applications of most interest to them. Nearly 13 percent of broadband users reported that the most important reason they chose their ISP was that they effectively had no choice—the ISP came bundled with their transport provider. Among survey respondents in areas where broadband service was thought to be available, this response was the most frequent, cited by 24 percent of broadband users. Because of concerns that ISPs might influence or restrict consumers’ content choices, we asked users how much time they spent accessing content available on their ISP’s Web site (or available through a direct link from the ISP’s Web site) compared with the time they spent accessing content that they searched for on the Internet. Overall, users reported spending more time surfing the Internet for content or accessing sites already familiar to them than accessing ISP-provided content. We found that, on average, respondents spent 35 percent of their time online using applications or content available from their ISP’s site. Narrowband users spent slightly more time on their ISP’s site or accessing ISP-provided content than broadband users—36 percent versus 29 percent—although the difference was not statistically significant. The amount of time users spent online was a more important determinant of how long they spent on their ISP’s site. Users whose households were online less than 10 hours per week (this included 18 percent of total respondents) spent an average of almost 43 percent of their time accessing their ISP’s content or linked content. However, for households with usage of 40 hours or more per week (this included 13 percent of total respondents), time spent on their ISP’s content dropped to 26 percent. For respondents from areas where broadband service was thought to be available, the number of years a respondent had been accessing the Internet was another factor associated with the time spent on their ISP’s site. For example, new users (those online for less than 2 years, which constituted 18 percent of respondents) spent nearly 41 percent of their time on their ISP’s site while long-term users (those online for 5 or more years, which constituted 39 percent of respondents in this group) spent only 30 percent of their time accessing content and applications on their ISP’s site. Respondents to our survey said the biggest advantage to using ISP-provided content was that it was readily available and, thus, easier to use than content that required searching on the Internet. Both narrowband and broadband Internet users rated e-mail and Web surfing as the most important applications available to them online, with 89 percent of users rating e-mail as “extremely important” or “very important,” and 78 percent of users placing Web surfing in those categories (see fig. 8). Almost 80 percent of users said chat rooms were “not that important” or “not at all important,” and almost 70 percent said the same about posting and maintaining a personal Web page. The results for e-commerce (such as online shopping), an Internet application that receives considerable attention, were mixed. Among all survey respondents, 22 percent said that e-commerce was “extremely important” or “very important.” However, 39 percent of respondents said that e-commerce was “not that important” or “not at all important.” The general absence of appreciable differences in how broadband users and narrowband users rated the features and applications available to them online may illustrate that, at this time, both narrowband and broadband subscribers are using the Internet in the same fashion, mostly for e-mail and Web surfing. This is likely due to the fact that little broadband-specific content is currently available. As more bandwidth-intensive content and applications are introduced in the market, consumers may begin to perceive narrowband and broadband Internet transport as distinct products with different capabilities. In turn, broadband users may begin to use the Internet in new and different ways. We provided a draft of this report to FCC and to the Department of Commerce’s National Telecommunications and Information Administration (NTIA) and Economics and Statistics Administration (ESA) for their review and comment. NTIA and ESA provided written comments that are included in appendix IV. Also, FCC, NTIA, and ESA officials provided technical comments that were incorporated as appropriate. As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 14 days after the date of this letter. At that time we will provide copies to interested congressional committees; the Honorable Michael K. Powell, Chairman, Federal Communications Commission; the Honorable John F. Sopko, Acting Assistant Secretary for Communications and Information, Department of Commerce; James Lee Price, Acting Under Secretary for Economic Affairs, Department of Commerce; and other interested parties. We will also make copies available to others on request. If you or your staff have any questions about this report, please contact me at (202) 512-7631. Key contributors to this report are listed in appendix V. We conducted various statistical tests on the data from our survey of Internet users (conducted in April and May 2000) and reviewed relevant reports from the Federal Communications Commission (FCC) and the Department of Commerce. In our survey, we asked questions about what method of Internet transport consumers used, why consumers selected their method of Internet transport, why they selected their Internet service provider (ISP), what applications consumers believed were important, how consumers used the Internet, what costs consumers incurred for Internet services, and to what extent consumers found broadband Internet access available and easy to purchase. Participants were notified about the survey and responded to the survey over the Internet. We selected this approach, rather than a traditional mail or telephone survey, because we sought information only from current users of Internet services. To provide the sample frame, draw the sample, and manage the survey operations, we contracted with NPD Group, Inc. (NPD), a market research firm. NPD maintains a panel of approximately 400,000 Internet users that is intended to be representative of the Internet population. The panel consists of Internet users who have volunteered to respond to surveys NPD conducts for its clients over the Internet. Factors influencing the degree to which the panel is deemed representative include demographic information and usage patterns. We did not evaluate whether NPD’s panel is representative of the Internet population. We used information from existing documentary evidence and preliminary interviews from our earlier report to develop the survey instrument. We conducted two rounds of pretests. First, we conducted pretests in person to assess whether the survey instrument was understandable and unbiased. Second, the survey instrument was pretested by 34 randomly selected members of NPD’s panel using NPD’s Internet-based application. This allowed us to assess whether the performance of the online survey instrument was acceptable and to further identify any unclear portions of the survey and any potentially biased questions. To detect any differences between users residing in areas where broadband Internet access may be available and the general U.S. Internet population, we asked NPD to draw two samples from its panel of Internet users. The first sample frame was intended to be representative of the U.S. Internet population, 18 years or older. The second sample frame was intended to be representative of the U.S. Internet population, 18 years or older, who reside in areas where broadband Internet access was likely to be available. NPD developed this second sample frame using zip code information that we had developed. We used a three-step process to identify zip codes where broadband Internet access was likely to be available. First, we consulted an industry publication to get a preliminary list of geographic areas where cable modem service was deployed. Second, we developed a list of zip codes that corresponded to these geographic areas. We gathered the zip code information from the U.S. Postal Service’s Web site and one additional commercial Web site. Third, we checked the Web sites of cable companies identified by the industry publication to confirm the geographic locations where they provide cable modem service. We excluded all geographic locations that we could not confirm as having cable modem service available; we also added geographic locations to the list if the cable company reported providing cable modem service in those areas. Because broadband service is generally available on a neighborhood-by- neighborhood basis in a given geographic area, we probably included zip codes where broadband service was not available to all consumers. However, our approach did identify areas where broadband service was available or was available in the immediate geographic area. NPD used the final list to develop the second sample frame. The survey was available to participants over an 18-day period (Apr. 21, 2000, through May 8, 2000) on NPD’s secure Web site. Participants were notified by e-mail that a survey was available to be completed; they could complete it any time during the period. At our request, NPD sent a follow- up e-mail to increase the response rate for both samples. For the first sample, a total of 1,225 people were notified. A total of 604 people responded to the survey (a 49.3-percent response rate). Of the respondents, 97 were excluded because they did not make the household’s primary decisions about Internet access and therefore did not complete the entire survey. Additionally, 11 observations were removed because the respondent provided inconsistent answers to questions 2 and 4 (see app. II for the questions in the survey). This left 496 complete responses (40.5 percent of the sample). For the second sample, 2,525 people were notified of the survey. A total of 1,209 people responded to the survey (a 47.9- percent response rate). We excluded 409 responses (16.2 percent of the sample) as recommended by NPD to ensure that the sample was representative of the target population. Of the remaining respondents, 140 were excluded because they did not make the primary decisions about Internet access and therefore did not complete the entire survey. Additionally, 21 observations were removed because the respondent provided inconsistent answers to questions 2 and 4 (see app. III for the questions in the survey) or because the respondent was under 18 years old. This left 639 complete responses (25.3 percent of the sample). The sample frame determines the population to which we can generalize the survey results. For the first sample, the sample frame was intended to be representative of the U.S. Internet user population 18 years or older. The second sample frame was intended to be representative of the U.S. Internet user population, 18 years or older, who reside in areas where broadband access was likely to be available. While demographic and usage patterns for survey participants were intended to be representative of the U.S. Internet user population, some biases might be present because participants were volunteers. Because we used a sample to develop the estimates of Internet characteristics presented throughout this report, each estimate has a measurable precision, or sampling error, that may be expressed as a plus or minus figure. A sampling error indicates how closely we can reproduce from a sample the results that we would obtain if we were to take a complete count of the population we are analyzing using the same measurement methods. By adding the sampling error to and subtracting it from the estimate, we can develop upper and lower bounds for each estimate. This range is called a confidence interval. Sampling errors and confidence intervals are stated at a certain confidence level—in this case, 95 percent. For example, a confidence interval at the 95-percent confidence level means that in 95 out of 100 instances, the sampling procedure used would produce a confidence interval containing the universe value we are estimating. To assess the demographic characteristics of Internet users and of local areas where broadband service was expected to be available, we relied on a number of Census Bureau data sets. We compared the proportion of Internet users in various categories of each demographic variable with the proportion of the general population in the same categories using the most recent Census Bureau data available. This permitted us to assess whether Internet users were more or less prevalent in certain categories of demographic variables than the general population. To assess the demographic characteristics of local areas where broadband service was reported to be available, we relied on Census Bureau zip code data. For each respondent, NPD provided a corresponding zip code for the area where the respondent lived. We gathered demographic data for each zip code from the Census of Population and Housing, 1990: Summary Tape File 3B, Tables P57, P80A, P117, and H61A (the most recent data available). On the basis of respondents’ answers about the availability of broadband service, we made inferences about the demographic characteristics of local areas with and without broadband service as indicated by Census Bureau data at the zip code level. The following tables show the questions included in our survey of Internet users and the responses, by percentage of respondents. For this sample, we randomly surveyed 1,225 Internet users and received 604 responses (a 49.3-percent response rate). Question 1—which asked whether the respondent was the primary decisionmaker for Internet purchases in the household—was asked of all survey participants. Only those participants who responded “Yes” to this question (507 participants) continued with the remainder of the survey. Additionally, 11 observations were removed because the respondent provided inconsistent answers to questions 2 and 4. This left 496 responses for questions 2 through 18. For this sample, the sample frame—that is, the entire panel of potential survey respondents—consisted of 389,593 individuals. This is the population to which the survey results can be generalized. With a 49.3- percent response rate, our survey results can thus be interpreted as estimates for the 192,096 potential individuals that we estimate would have responded to our survey if we had contacted all individuals in the panel. For questions 2 though 18, the relevant population estimate was 157,748 because observations from respondents who did not make the household’s primary decisions about Internet purchases were excluded. Unless otherwise noted in footnotes to the questions, there were no missing observations. Question 1: Are you the primary decisionmaker for your household regarding what form of Internet access to purchase for your home? (Select one) Question 2: Which of the following do you most frequently use to access the Internet from your home? (Select one) Conventional dial-up telephone service provided by a telephone company (this includes ISDN service) High-speed “digital subscriber line” (or “DSL”) telephone service High-speed cable modem service (this includes using the cable modem as the downlink and a telephone line for the return path or uplink) Wireless service (for example, satellite service such as DirecPC, fixed wireless service such as Winstar or Teligent, or other wireless service) Question 3A: What is the most important reason you use conventional dial-up telephone service for your Internet access from home? No choice; only method of Internet access available to me Not aware of other choices of Internet access Company’s service quality reputation and/or experience Most appropriate for the applications/services I use most frequently Ability to select the Internet service provider I wanted Other (Please specify) Information based on respondents who indicated that they use conventional dial-up telephone service in question 2. Among “Other,” 0.9% of respondents reported free as the most important reason for selecting conventional dial-up telephone service. Question 3B: What is the most important reason you use (high- speed DSL service, high-speed cable modem service, or wireless service) for your Internet access from your home? (Select one) Company’s service quality reputation and/or experience Ability to select the Internet service provider I wanted Speed appropriate for the applications/services I use most frequently Speed equivalent to the access I have at work or at other locations where I have Internet access To free up my regular telephone line for voice call Other (Please specify) Question 4: In addition to conventional dial-up telephone Internet access, is any other form of Internet access available in the area where you live? (Select one for each row) Wireless service (e.g., satellite, fixed wireless, other wireless) Question 5: For those methods of Internet access that are not available in your area, or not available to you, do either of the following reasons describe why such methods are not available? (Select one in each row) Question 6: Which of the following is the most important reason you selected your current Internet service provider (e.g., AOL, Excite@Home, MindSpring, etc.)? (Select one) Previous experience/was familiar with my ISP prior to subscribing Provided the best access to the content/applications that I use and/or want most Did research on my ISP prior to subscribing Recommended to me by family, friends, co-workers, etc. Part of a promotion with the purchase of my computer (e.g., a cash rebate, a free trial, etc.) Offered as part of a package of services by a telecommunications company My Internet service provider came bundled with my Internet access Other (Please specify) Missing observation = 0.2%. Is (are) _____ available to you through your Internet service provider (you don’t necessarily have to be using the application)? (Select one for each row) Question 8: Thinking about a typical Internet session, what percentage of your time is spent on your ISP’s home page accessing content or service applications, such as e-mail, as opposed to the percentage of time spent surfing the Internet for content and applications? (Please enter appropriate percentage) Percentage of time spent on ISP’s home page content 5.5 (Continued From Previous Page) Question 9: What are the advantages to using applications or accessing content that appear on your ISP’s home page? (Select all that apply) Question 10A: How interested would you be in purchasing a package of communications services from a single company (for example, telephone, cable television, Internet access, etc.)? (Select one) Question 11: In addition to your home, from which other locations do you access the Internet? (Select all that apply) A remote location using my laptop (for example, a hotel, an airport, etc.) A remote location using my mobile wireless device (for example, Palm Pilot) Other (Please specify) Question 12: On average, how many hours per week do you and all members of your household spend on the Internet from your home using any and all applications (for example, e-mail, Web surfing, working, shopping, etc.)? (Select one) Question 13: Including your work experience, how long have you been accessing the Internet? (Select one) Question 14A: About how much did you initially pay to obtain Internet access from your home? Please include in your amount such items as the purchase of an external modem, any initial fee for your Internet service provider, and any installation charge for a second phone line if you purchased one to be used primarily for your Internet use. Do not include in your amount the purchase of a computer. (Select one) Question 14B: About how much do you pay per month to access the Internet from your home? Please include in your amount such items as access (via telephone, cable, etc.), the monthly charge for a second phone line if you purchased one to be use primarily for your Internet use, the monthly charge for your Internet service provider, and any equipment leasing.(Select one) Question 15: About how much more would you be willing to pay over and above what you are currently paying per month for high- speed Internet access (for example, high-speed DSL service, high- speed cable modem service, or wireless service)? (Select one) Question 16: About how much more per month would you be willing to pay over and above what you are currently paying per month for your high-speed Internet access before you would either discontinue the service and/or change to a conventional dial-up telephone line for Internet access? (Select one) Question 17: Overall, how easy or difficult was the process of purchasing high-speed Internet access from your home (for example, the amount of time, the number of calls made to the Internet access provider, the number of visits made to your home by the provider’s technician, etc.)? (Select one) Question 18: Have you ever tried to get high-speed Internet access (high-speed DSL service, high-speed cable modem service, or wireless service) but been unable to? (Select one) The following tables show the questions included in our survey of Internet users and the responses by percentage of respondents. For this sample, we surveyed 2,525 Internet users who lived in areas of the country that we had determined were very likely to have at least one broadband choice available to them. We received 1,209 responses (a 47.9-percent response rate). Question 1—which asked whether the respondent was the primary decisionmaker for Internet purchases in the household—was asked of all survey participants. Only those participants who responded “Yes” to this question (1,069 participants) continued with the remainder of the survey. We also excluded 409 responses (16.2 percent of the sample) as recommended by NPD to ensure that the sample was representative of the target population. Additionally, 21 observations were removed because the respondent provided inconsistent answers to questions 2 and 4 or because the respondent was under 18 years old. This left 639 responses for questions 2 through 18. For this sample, the sample frame consisted of 72,600 individuals; this is the population to which the survey results can be generalized. For questions 2 through 18, the relevant population estimate was 57,989 because of the excluded observations mentioned above. Unless otherwise noted in footnotes to the questions, there were no missing observations. Question 1: Are you the primary decisionmaker for your household regarding what form of Internet access to purchase for your home? (Select one) Question 2: Which of the following do you most frequently use to access the Internet from your home? (Select one) Conventional dial-up telephone service provided by a telephone company (this includes ISDN service) High-speed “digital subscriber line” (or “DSL”) telephone service High-speed cable modem service (this includes using the cable modem as the downlink and a telephone line for the return path or uplink) Wireless service (for example, satellite service such as DirecPC, fixed wireless service such as Winstar or Teligent, or other wireless service) Question 3A: What is the most important reason you use conventional dial-up telephone service for your Internet access from home? (Select one) No choice; only method of Internet access available to me Not aware of other choices of Internet access Company’s service quality reputation and/or experience Most appropriate for the applications/services I use most frequently Ability to select the Internet service provider I wanted Other (Please specify) Question 3B: What is the most important reason you use (high- speed DSL service, high-speed cable modem service, or wireless service) for your Internet access from your home? (Select one) Company’s service quality reputation and/or experience Ability to select the Internet service provider I wanted Speed appropriate for the applications/services I use most frequently Speed equivalent to the access I have at work or at other locations where I have Internet access To free up my regular telephone line for voice call Other (Please specify) Question 4: In addition to conventional dial-up telephone Internet access, is any other form of Internet access available in the area where you live? (Select one for each row) Wireless service (e.g., satellite, fixed wireless, other wireless) Question 5: For those methods of Internet access that are not available in your area, or not available to you, do either of the following reasons describe why such methods are not available? (Select one in each row) Question 6: Which of the following is the most important reason you selected your current Internet service provider (e.g., AOL, Excite@Home, MindSpring, etc.)? (Select one) Previous experience/was familiar with my ISP prior to subscribing Provided the best access to the content/applications that I use and/or want most Did research on my ISP prior to subscribing Recommended to me by family, friends, co-workers, etc. Part of a promotion with the purchase of my computer (e.g., a cash rebate, a free trial, etc.) Offered as part of a package of services by a telecommunications company My Internet service provider came bundled with my Internet access Other (Please specify) Is (are) _____ available to you through your Internet service provider (you don’t necessarily have to be using the application)? (Select one for each row) Question 8: Thinking about a typical Internet session, what percentage of your time is spent on your ISP’s home page accessing content or service applications, such as e-mail, as opposed to the percentage of time spent surfing the Internet for content and applications? (Please enter appropriate percentage) Percentage of time spent on ISP’s home page content 0.2 (Continued From Previous Page) Question 9: What are the advantages to using applications or accessing content that appear on your ISP’s home page?(Select all that apply) Question 10A: How interested would you be in purchasing a package of communications services from a single company (for example, telephone, cable television, Internet access, etc.)? (Select one) Question 10B: Which best describes why you would be interested in purchasing a package of communications services? (Select one) Question 11: In addition to your home, from which other locations do you access the Internet?(Select all that apply) A remote location using my laptop (for example, a hotel, an airport, etc.) A remote location using my mobile wireless device (for example, Palm Pilot) Other (Please specify) Question 12: On average, how many hours per week do you and all members of your household spend on the Internet from your home using any and all applications (for example, e-mail, Web surfing, working, shopping, etc.)? (Select one) Question 13: Including your work experience, how long have you been accessing the Internet? (Select one) Question 14A: About how much did you initially pay to obtain Internet access from your home? Please include in your amount such items as the purchase of an external modem, any initial fee for your Internet service provider, and any installation charge for a second phone line if you purchased one to be used primarily for your Internet use. Do not include in your amount the purchase of a computer. (Select one) Question 14B: About how much do you pay per month to access the Internet from your home? Please include in your amount such items as access (via telephone, cable, etc.), the monthly charge for a second phone line if you purchased one to be use primarily for your Internet use, the monthly charge for your Internet service provider, and any equipment leasing. (Select one) Question 15: About how much more would you be willing to pay over and above what you are currently paying per month for high- speed Internet access (for example, high-speed DSL service, high- speed cable modem service, or wireless service)? (Select one) Question 16: About how much more per month would you be willing to pay over and above what you are currently paying per month for your high-speed internet access before you would either discontinue the service and/or change to a conventional dial-up telephone line for Internet access? (Select one) Question 17: Overall, how easy or difficult was the process of purchasing high-speed Internet access from your home (for example, the amount of time, the number of calls made to the Internet access provider, the number of visits made to your home by the provider’s technician, etc.)? (Select one) Question 18: Have you ever tried to get high-speed Internet access (high-speed DSL service, high-speed cable modem service, or wireless service) but been unable to? (Select one) In addition to those named above, Michael Clements, Faye Morrison, and Luann Moy made key contributions to this report. The first copy of each GAO report is free. Additional copies of reports are $2 each. A check or money order should be made out to the Superintendent of Documents. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. Orders by mail: U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Orders by visiting: Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders by phone: (202) 512-6000 fax: (202) 512-6061 TDD (202) 512-2537 Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. Web site: http://www.gao.gov/fraudnet/fraudnet.htm e-mail: fraudnet@gao.gov 1-800-424-5454 (automated answering system)

Summary: Americans' use of the Internet has grown dramatically during the last few years. Nationally, more than half of all households have a computer and more than 80 percent of those households have access to the Internet. Yet, during the last few years, even as Internet usage has continued to expand, concerns have arisen about whether access to the Internet and other advanced telecommunications services is limited for Americans in lower socioeconomic classes or who live in rural areas. GAO found that Internet users are more likely to be white and well-educated and have higher-than-average household incomes. There is no noticeable difference between the genders when it comes to Internet usage. GAO also found that the availability of some services is limited by location. Some of this information points to the existence of the "digital divide," but the evidence is not clear. It is important, however, to ensure that the differences in Internet availability do not adversely affect existing societal divisions.