Estimating the Penetration of Broadband into central Indiana Households
March 27, 2001
Tom Zeller

National figures

As a first approximation, we can use the percent of penetration nationally and apply it to the 2000 census information for central Indiana:

The New York Times reports (http://www.nytimes.com/2001/03/19/technology/19BAND.html) that at the beginning of this year 7.3% of U.S. households had broadband.  Jupiter Research published a slightly higher number of 8.6% (http://www.internetnews.com/isp-news/article/0,,8_570571,00.html).  Cable Data News estimates that about 60% of households nationally have access to purchase broadband services (http://www.cabledatacomnews.com/cmic/cmic16.html).

Applying the above percentage range (7.3 – 8.6%) against the central Indiana numbers yields ballpark figure for the number of households using broadband:

Population  80,243 - 94,649
Households   31,128 – 36,671

Some Local Numbers

As a “reality check” on those numbers we can look at Comcast.  In August 2000 they reported 118,000 cable customers in Marion County.  Nationally 6.4% of their cable customers are also broadband customers.  If this average held for Marion County, they would have 7,375 broadband customers.  Marion County is about 72% of the population of the area.  Extrapolating to the population of the entire area, which clearly overstates the broadband use, an upper limit of Comcast’s broadband users would be just over 10,000. 

In February 2000, Ameritech announced that it would have DSL service available to 400,000 of its Indianapolis customers by the end of 2000, and to all of its customers in the area by the end of 2001 (http://www.ci.indianapolis.in.us/cable/press/race_is_on_for_faster_internet_a.htm).  Later reports have indicated that Ameritech did not achieve these goals.  I found no published information about the number of DSL subscribers.  If Ameritech achieved the same percentage of customers buying broadband as Comcast, those numbers would translate into 25,600 broadband users in the first wave.

Growth Rate

In considering market penetration, we must consider the context: we are at the beginning of what is likely to be an accelerating growth period for broadband access.  Nationally, the number of broadband-connected households doubled last year, and it is expected to double again this year.  The North American Market for Standards-Based Cable Modem Products estimates that the number of cable modems will quadruple by the end of 2004.  Cable modems currently represent about two-thirds of broadband connections, while DSL has one-third the market.  Quadrupling the estimate from the census figure would result in an estimate of approximately 320,000 persons in 120,000 households using broadband by 2005.

Conclusion

It is clear that central Indiana lags behind the national average in market penetration.  However the rollout of these services is in an early stage, and one would expect that as the market surges in the next two years the area will become closer in line with the national average. 

While the area may have on the order of 20,000 to 30,000 people with broadband access at the moment, in two years that number should be substantially higher.  If the national average doubles next year, then increases by 50% the following year, central Indiana should have 240,000 broadband users in 90,000 households by 2003 if it were to catch up to the national trend.  Of course, if the U.S. economy slips into a full-blown recession and consumers slow discretionary spending, this rate of growth could slow dramatically.

To make a more precise estimate of current conditions would require a more formal process of Indiana University requesting information from each of the major service providers in the area.