Consumers can Save Nearly $8,000 Annually with Broadband Internet

IIA announces 2011 list of Top 10 Ways Broadband Saves You Money

Greater potential savings in housing, food, gasoline categories this year compared to last despite lower consumer spending

WASHINGTON, D.C. – October 11, 2011 – American consumers can save nearly $8,000 ($7,694.56) a year by having access to and using high-speed broadband Internet, the Internet Innovation Alliance (IIA) announced today. The cost savings are detailed in a financial analysis titled, “The Real Cost of the Digital Divide in 2011,” by Nicholas J. Delgado, certified financial planner and principal of Chicago-based wealth management firm Dignitas.

“Consumers are able to save online due to price comparison, access to deeper markets and the power of group-buying,” said Delgado. “The popularity of websites like Groupon and LivingSocial has skyrocketed with users able to cut their spending in half in areas like dining out, entertainment and salon services.”

The analysis, based on the 2010 Consumer Expenditure Survey released on September 27, 2011 by the U.S. Department of Labor, is the second in the IIA’s Cost Campaign series. Although the average annual expenditures per consumer unit fell 2.0 percent in 2010, the amount saved remained nearly the same compared to a year ago ($7,707), and the percentage of savings rose in the following four categories:

Category 2009 % Savings 2010 % Savings
Housing 7.67% 9.80%
Food 25.70% 26.00%
Gasoline 4.76% 6.19%
Non-Prescription Drugs 24.20% 30.00%

Factoring in the average annual cost of a home broadband connection – $490 – the typical American family could save $7,200 per year on essentials like housing, food, clothing and basics like entertainment and travel through discounts and sales only available to online consumers. The following savings are based on the average U.S. household income before taxes of $62,481.

Top 10: Potential Annual Savings Garnered by Broadband Connectivity

Category Average Spent
(Annually)*
Average Saved Due to
Broadband (Annually)
% Savings
Entertainment $5,009.00 $2,444.39 48.80%
Travel $7,677.00 $1,535.40 20.00%
Housing $12,963.00 $1,270.37 9.80%
Food $3,624.00 $942.24 26.00%
Apparel $1,700.00 $572.70 33.69%
Automotive $29,217.00*** $438.26**** 1.50%
Newspapers $218.87** $195.19 89.18%
Gasoline $2,132.96 $132.03 6.19%
Non-Prescription Drugs $390.90** $117.27 30.00%
Bill Pay $46.68** $46.68 100.00%


* Average spent annually, according to the Department of Labor Consumer Expenditure Survey
** Average spent annually, according to IIA calculations
*** One-time spending
**** One-time savings

The Digital Divide

Millions of Americans without a broadband connection – a disproportionate percentage of whom are minorities, seniors, lower income or live in rural areas – miss out on these cost savings every day. According to the Pew Internet & American Life Project, just two-thirds (66%) of American adults have a broadband Internet connection at home, and the Department of Commerce reported in February 2011 that only 60 percent of households in Rural America use broadband Internet service.

“Broadband service is like a treadmill; you have to use it to reap the benefits,” said Bruce Mehlman, IIA Co-Chair. “Extending broadband access to all Americans is the best way to empower them to better manage their spending in a challenging economic environment.”

Proposals put forth by the public and private sectors will help bridge the Digital Divide. The Federal Communications Commission has planned to redirect Universal Service Fund subsidies from local telephone to broadband service. Additionally, IIA member company AT&T has proposed to purchase T-Mobile and, with the merger, extend next-generation mobile broadband coverage to more than 97 percent of Americans.

“Smart spending online can add up to a lot more money in your pocket,” said IIA Co-Chair Jamal Simmons. “For financial management, education, health care and jobs, high-speed Internet is an equalizer, a tool that stretches across socioeconomic status and provides opportunities otherwise unavailable.”

For more information on the study’s sources, methodology and top 10 broadband savings chart, visit
http://internetinnovation.org/library/special-reports/access-to-broadband-internet-top-ten-areas-of-saving-2011/.

To see the IIA’s first Cost Campaign analysis, go to

http://www.internetinnovation.org/library/special-reports/access-to-broadband-interent-top-ten-areas-of-saving/.

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