CTAM, the marketing association for the cable industry, released a study this week that looked at different consumer segments (particularly ones that are influential in the spread of hi-tech), their technology adoption, the decision-making process, and content viewing behavior.

The study drilled in on two influential groups – future shapers and future makers, who collectively represent 30% of consumers. Most people these days have heard of early adopters, a term created by Geoffrey A. Moore in his book Crossing the Chasm, which discussed the gap that exists between those consumers who will adopt new tech products and services early in their lifecycle and the “early majority” users, who are pragmatists and will wait longer.

A Light Reading article on the study explains their significance:

…future shapers (10 percent) are the early adopters of technology who readily spread the word and whose opinions are sought out. Future makers (20 percent) are second stage adopters who will tout the benefits of new technologies. The largest group of consumers is classified as today consumers (40 percent) who wait until technologies are proven before adopting them.

(For more on the significance of influencers, see Malcolm Gladwell’s classic The Tipping Point.)

The CTAM study, Future Shapers and Makers: An Examination of Consumer Segments, conducted by TNS Media & Entertainment, found:

Almost half of today’s technology influencers are choosing television service provided by their cable company over a satellite or telephone company provider. Forty-six percent of technology’s earliest adopters choose cable, while 26 percent chose satellite and 2 percent chose to receive video services from their telephone service provider.

From the article in Multichannel News:

Doing their homework is what sets the future shapers and future makers apart. According to the survey, 67% of future shapers and 59% of future makers are likely to get information about TV services from the Internet, compared to 45% of today’s consumers. The two influencer groups are also more likely than others to obtain information from TV, newspapers, and magazines.

According to the survey, 89% of consumers are concerned primarily with the reliability of the provider, over price

In addition, the study examined the trend in watching video on alternative platforms, such as laptops, portable DVD players or devices like iPods or iPhones. The study found that 37% choose a desktop computer or laptop as their preferred method. You won’t be surprised to learn that younger consumers are most likely to watch programming online, coming in over 50% greater in their tendency to watch video on desktop computers or laptops.

UPDATE: Along these lines, it’s probably worth pointing out another study that came out this week.

In a study conducted by Canadian research firm Solutions Research Group, nearly 80 million Americans, or 43% of the online population, watched a TV show on the Internet, as of November, up from 25% a year ago.

You can read the press release on the Digital Life America study here.

This week, we’re taking a look at flaws in the OECD broadband study and the problems with relying on it to justify broadband policy changes.  One of the oft cited examples of countries doing broadband “right” is Japan.  Ironically, Japan usually resides just below, or just above, the U.S. in the OECD rankings (in the latest rankings, they’re just below us).  Yet Japan still commands outsized adoration.

However, a closer look reveals that the nirvana of Japanese broadband has been greatly exaggerated.

The Miracle of Japanese Broadband

If Japan has been held up as the shining example of low-cost, high-speed connections available to all, how could they slip behind the US?

The short answer is they never were the beacon of broadband they were held out to be.  While the maximum speed available to “some” in Japan is 100 Mbps, the fact is that, in most cases, that is a theoretical top speed.  The problem is these studies often use “advertised speeds” rather than actual speeds.  Advertised speeds sometimes do not meet the promise.  Most Japanese FTTH providers also include caveats that such a speed is not guaranteed and will, in fact, be lower during times of congestion.

In reality, roughly half of Japanese broadband connections are carried over DSL at speeds nowhere near 100 Mbps.

Surely, though, even with the speed being less than claimed, the fact that it’s so much cheaper makes it okay, right?  Well, not exactly.  The dirty little secret that goes unspoken in discussions of Japan’s low-cost ISPs is the fact that you have to subscribe to two different services to get an equivalent product to that offered in the US.  For example, not only would you subscribe for the network connection (essentially the equivalent of getting the physical line), but you also have to subscribe to an ISP (the network in Japan is divorced from the content).

For access to a 100 megabit connection and Yahoo! ISP service, you’ll be forking out between $55 and $60.  You may reach peak speeds at 2 a.m. when nobody is surfing, but the cost is not significantly different as a monthly outlay.  While some studies look at this calculation as the cost per 100,000 bits per second per month, it’s hard to actually quantify that if your speed is not guaranteed (or even static).

Looking at the OECD stats, we’ve already uncovered problems with the definition of subscription and the mathematical issues that result from their unit of measurement.  When other parties disseminate faulty and misleading information about cost and speed metrics, one realizes that most of the discussions about global broadband are largely anecdotal and not at all scientific.

As we have said throughout this series, there is a conversation to be had about ways to encourage broadband adoption.  That conversation, however, should be driven by facts, not anecdotal evidence and faulty math.

In our next installment, we’ll look at the challenges the U.S. faces getting people online.

This week, we’re taking a close look at the issues with the OECD broadband rankings that are often cited when the state of broadband availability in the U.S. is discussed.  We started with a look at the problems and inconsistencies with what OECD does and does not consider a subscription – a flaw that excludes millions of US citizens from being counted.

Today, we’re looking at a the basic unit of measurement in their study – subscriptions per 100 inhabitants.  To understand this issue, you have to begin with a simple question.

What happens when everyone reaches 100%?

All metrics should be equal.  No matter how you count it, when every nation reaches 100% broadband adoption, we’re all tied for first, right?  Actually, no.  This is an odd little side effect of the OECD’s reliance on “subscriptions per 100 inhabitants”.

If every country achieved 100% broadband access, there would still be clear winners and losers.  The OECD rankings would still produce disparate rankings because of the impact of calculating results this way.  In fact, a Phoenix Center study examined this specific problem.  By applying the ranking methodology to what it calls “Broadband Nirvana”, the study found that the United States would actually rank 20th – 5 places lower than where we are today – if every household and every business in every country had a connection.

By measuring total (primarily household) subscriptions per units of 100 inhabitants, the OECD fails to account for disparities in average household sizes throughout the world.  Those countries with fewer average residents per household (many of the northern European countries at the top of the OECD listing) will rank higher in the OECD statistics, yet the irony is that there are fewer residents in each of these homes who are able to take advantage of the HSI service.

Think of it this way.  If average household size is Denmark is 2.1 people, and you measure subscriptions per 100 inhabitants, you would have 48 subscriptions per 100 inhabitants.  One hundred subscriptions would cover 210 people.  In the US average household size is roughly 2.6 persons per household.  100 subscriptions cover 260 people.  However, based on the OECD methodology, you have only 38 subscriptions per 100 people.  The US ranking is much lower despite having roughly 20% more people with access. 

Because of that skew, the US, with more people accessing broadband through the same number of subscriptions, actually fares worse in the OECD outcome.  It’s a serious flaw.

That’s not to say that a serious discussion about ways to increase broadband adoption shouldn’t take place.  Tomorrow, we’ll take a look at Japanese broadband. Our final installment in this series will focus on some of the reasons people don’t adopt broadband and efforts to change that.

It seems hardly a week goes by without somebody sounding the alarm bell on the “crisis” in US broadband deployment. While we all share the common goal of bringing affordable broadband service to all Americans, it’s unfortunate that the most frequently cited source of broadband deployment – the semi-annual Organization for Economic Cooperation and Development (OECD) numbers – contains a variety of inaccuracies.

So, to help set the record straight, this week we thought we would take a look at the OECD broadband study and the real state of broadband today.  In our first two installments, we’ll examine flaws in several units of measurement utilized in the OECD study.  We’ll then move on to fact check the “miracle” of Japanese Broadband and finish by analyzing why consumers aren’t connecting to services that are already available.  

It depends on what your definition of a subscription is.

The most significant flaw in OECD’s methodology is their measurement unit of subscriptions per 100 inhabitants.  Average household size plays havoc with the “inhabitants” calculation, creating some serious unintended consequences.  We’ll cover that in tomorrow’s post.

Equally problematic, however, is what they do and do not consider to be a subscription.  In OECD’s definition of what constitutes a “broadband subscription,” there is no distinction drawn between business DSL or cable lines and residential DSL or cable lines, but there is a specific exclusion of direct fiber and T1 lines for businesses.  As a result, some businesses are counted and others are not.

OECD’s data fails to capture the tens of millions of U.S. workers that access the Internet via these special access connections.

The OECD measure also fails to count the approximately 16 million college students in the U.S., most of whom have access to both wired and wireless High-Speed Internet (HSI) service.   Also uncounted are the HSI users that access WiFi connections, and the growing number of mobile wireless and “Hot Spot” customers.

Undercounting these populations negatively impacts the US ranking, but counting them would be problematic as well.  Because so many people have broadband access at home, at work, via their mobile device, at college, or through some other connection, the risk of double or triple counting becomes fairly great.

Some have suggested that a better metric would be to simply measure the number of residential households that are subscribed.  The distinction is really very stark.  For instance, in the US, roughly 57 million households subscribe to cable, DSL, fiber, satellite, or fixed wireless service.  Using a measurement of how many “residences” have access would more accurately reflect the real state of residential broadband consumption, and would vault the U.S. ahead of 9 European countries which were ranked higher in terms of household penetration in the OECD rankings of December 2006.  (Note: Household data is not available for Korea, Canada, and Australia, so it’s unclear where they would rank).