November 8, 2010
High-speed Internet can save consumers nearly $8,000 a year
Broadband offers significant potential savings on housing, food and clothing
WASHINGTON, D.C. – November 9, 2010 – American consumers can save $7,707 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,” by Nicholas J. Delgado, certified financial planner and principal of Chicago-based wealth management firm Dignitas.
“As the economy continues to struggle toward a recovery and unemployment hovers near an all-time high, millions of Americans are desperate to make ends meet,” said Delgado. “A critical step in shutting down debt and developing smart financial habits is getting online.”
According to “The Real Cost of the Digital Divide,” after factoring in the average annual cost of a home broadband connection – $490[1] – the typical American family could save more than $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 $62,857[2].
Top Ten
Potential Annual Savings Garnered by Broadband Connectivity
* Percentage based on average spent annually, according to the Department of Labor Consumer Expenditure Survey[3]
1. Entertainment – Savings: $2,747 or 51.72%
2. Travel – Savings: $1,532 or 20%
3. Housing – Savings: $974 or 7.67%
4. Food – Savings: $965 or 25.70%
5. Apparel – Savings: $640 or 37.12%
6. Automotive – Savings: $438 or 1.5%
7. Newspapers – Savings: $193 or 100%
8. Gasoline – Savings: $95 or 4.76%
9. Non-Prescription Drugs – Savings: $76 or 24.20%
10. Bill Pay – Savings: $47 or 100%
* Average spent annually, according to the Department of Labor Consumer Expenditure Survey
** 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. While the digital divide may be shrinking – 56 percent of African Americans and 66 percent of English-speaking Hispanics had broadband at home in 2010 according to the Pew Internet & American Life Project – it still exists.
“For years the digital divide was about computers in the classroom; today it’s about money in your pocket,” said David Sutphen, IIA co-chairman. “This study is a clear wake-up call to the Administration and the Federal Communications Commission (FCC) that implementing the National Broadband Plan and closing the digital divide should be priority number one, as opposed to the Title II and net neutrality debates that have dominated the agenda in recent months – millions of Americans can’t afford anything less.”
The National Broadband Plan, unveiled by the FCC in March, supports digital literacy campaigns to close the digital divide, promotes cross-platform competition to drive down costs, and tackles Universal Service Reform (USF) reform and expanded spectrum to reach the remaining disconnected population.
“Beyond the dollars that can be saved with an Internet connection, being online brings unquantifiable advantages like access to education, job opportunities, social networking and on-demand information,” said Bruce Mehlman, IIA co-chairman. “Congress and the FCC should focus their efforts on policies that encourage investment in more robust networks and policies that expand digital literacy to those offline, rather than aggressive regulatory detours that discourage investment.”