September 2004 U.S.DEPARTMENTOFCOMMERCEEconomicsandStatisticsAdministrationNational Telecommunications and InformationAdministration A Nation Online.ENTERING THE BROADBAND AGE September 2004 U.S.DEPARTMENTOFCOMMERCE Economics and Statistics AdministrationNational Telecommunications and Information Administration FOREWORD Kathleen B. CooperUnder Secrerary for Economic AffairsEcomomicsdndStatisticsAdmimistnttion Michael D. GallagherAssistantSecretaryandAdministratorNationalTelerommuniattionsandInformationAdministrttion Nation Onkiwe: Entering the Broadbdnd Age is the sixth report rekeased by the U.S.Deparimenr ofCommerce examining the use of computers, the Intenet, and other information technology tools by theAmerican people, Based on the U.S. Census Bureau's Current Popularion Survey of 57,o0o householdsconraining 134,o0o persons, this report provides broad-based and statistically reliable information on the waysthar information technologies in general, and broadband more specifically, are transforming the way we live,work, and learn. This year, we have chosen to focus on broadband technologies because now, more than ever before, high-speedconnections promise to enhance our Narion's productivity and economic competitiveness, improve education.and expand health care for all Americans. High-speed nerworks provide the power to erase geographic,economic, and culrural gaps, With high-speed connections, American workers can find jobs; small businessescan have global markers; rural docrors can consulr with specialists; and srudents can take classes that are raughtfrom across the country. Because of the significant promise of this technology, Presidenr Bush has ser our a bold vision for broadbandin America, establishing a national goal for “universal, affordable access for broadband rechnology by the jear2o07. Derailing the many benefirs of the rechnology, the President noted that “[tjhe spread of broadbandwill not only help industry, it [will] help the qualiry of life of our citizens. We bope thar this report and itssuxcessors will contribute to the ongoing discussion surrounding this important goal by highlighting thegrowing use of high-speed access across the Narion. A Nation Online: ENTERING THE BROADBAND AGE Economicsand StatisticsAdministration National TelecommunicationsandInformationAdministration Kathlecn B. CooperUnder SerretaryforEronomicAffairs Michacl D. GallagherAssistant SecretaryforCommnicationsandInformation JOINTPROJECTTEAM ESA NTIA Patricia Buckley, Senior Pblicy AdvisorSabrina Montes, EconomistGeorge McKittrick, Economist JosephWatson,Jr,AssociateAdministratorfor Policy Analysis and DevelopmentJames MeConnatighey, Senior EconomistWendy Lader, Senior Rolicy AnalystB, Keith Fulton, Senior Rolicy AnalystSandraRyan,Telecommunications PolicyAnalyst U.S.BUREAUOFTHE CENSUS Demographic Statistical Methods DivisionThomas F. MooreAlfred MeierJan Sheperd Demographic Surveys Division Maria E. ReedBonnie S. TarsiaTim J. MarshallRobert E.RothhaasKaren G.Wms.WoodsLaura D. FloresLorelei T. Daxquel Technologies ManagememtofficeAndrew Stevenson Population Divislon Jennifer C. DayAlexander L. JanusHyon B. Shin ACKNOWLEDGMENTS NTIA and ESA would lilke to thank Meredith Attwell, Clyde F Ensslin, John M. R. Kneuer, Maureen Lewis,Kathy Smith, and Josephine Scarlett of NTIA, and Keith Hall, Elizabeth (E.R.) Anderson, Jeffrey Mayer, JaneMolloy, Daniel Bachman, and David Beede of E.SA for their contributions to this report. Questions orcomments canbe emailed to: NationOnline@doc.gor TABLE OF CONTENTS EXECUTIVESUMMARYA Nation Oaliner Entering The Broadband Age3Introduction3Access and UseOnline BehaviorCommunicationsEntertainment10Transactions.10Infomation..10Effecr of Geogtaphy.11Reasons for Non-Use.15Conclusion.15Methodology.17Appendix Table 1: Interner Use from Any Location by Individuals Age 3 and Okder,Seprember 2001 and October 2003 and Living in a Home with Interner BroadbandAge3andOlder,Ocrober2003.A-1Appendix Table 2: Non-Internet Use from Any Location by Individuals Age 3 andOlder,September2001 and October2003.JA-4Appendix Table 3: Internet Use by Percent of State Population, Age 3 ard Olkder,October 2003.. A-7Appendix Table 4: Households Internet Connection Type, October 2003.A-9 EXECUTIVE SUMMARY As the Interret increasingly affeets the daily lives ofAmericans and the U.S. economy, one of thegreatest changes in recent jears has been the rapiduptake of broadband technokogies. Berween theCensus Bureau's Current Ropulation Surveysconducted in September 2001 and October 2003, thenumber of househokis with Internet connections grewby 12.6 percent. The data rewal that a transition isunderway from dial-up to high-speed Internetconnections.The use of high-speed Internetconnections grew significantly berween 2001 and2003 and more than offset the deeline in dial-up users.For this reason, this report focuses on what Americansare doing with their high-speed connections. Meanwhile, the pro