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Monday, January 4, 2016
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Will 2016 be a breakaway year for virtual reality technology?

Exhibitors at CES 2016 this week seem to think so. More than three dozen of them will be flogging their VR wares at the show, more than double the number from last year.

"2016 will be the year of VR," said Brian Blau, a research director at Gartner.

"That's pretty clear with all the hardware that's going to be coming on the market and the push by developers and content producers into VR," he told the E-Commerce Times. "It will be a real awakening year for VR."

Still a Niche

Other analysts are being cautious.

"It will remain a niche, but 2016 will set the stage for the future," said Cliff Raskind, a senior director at Strategy Analytics.

"It could be a breakout year, but it will by no means cross the chasm into the mainstream," he told the E-Commerce Times.

The jump to the mainstream is at least three years away, according to a Strategy Analytics report authored by Steven Waltzer and released in October.

"The virtual reality (VR) market is expected to remain niche among hard core gamers and tech enthusiasts for at least the next three years," he wrote, "but as technology allows for a higher quality user experience at a lower price point, it will eventually emerge as an exciting new mainstream content consumption medium."

Sixfold Jump

Whether VR is a niche or not, vendors should see demand for their products climb to heights they haven't seen before.

VR headset shipments will reach 1.2 million units in 2016 -- six times what they were last year, predicts the Consumer Technology Association, which sponsors CES.

IHS Technology pegs headset shipment numbers even higher than that: 7 million.

Those numbers include all forms of headsets, from the most expensive to the cardboard models Google peddles.

"High-end integrated display headsets coming to market in 2016, which include PlayStation VR, Oculus Rift and HTC Vive, will sell well within a relatively narrow audience of enthusiast gamers that are very keen to try out the latest technology at any price point," said Piers Harding-Rolls, a director at IHS.

"I'm not a VR skeptic," he told the E-Commerce Times. "I think the technology has significant potential, but I also think we have to be realistic about how strongly it will be adopted in the short term."

Cool but Clumsy

One barrier to mainstream adoption may be the clumsiness of VR hardware.

"It's a bit of a cumbersome experience," said Glenn Hower, an analyst with Parks Associates.

"It's cool and there's a novelty aspect to it, but right now it's a tough sell for the mainstream markets," he told the E-Commerce Times.

"There's still some work to do with user experience," Hower added. "2016 may see some more significant implementations, but I'm hesitant to say it will make the jump from novelty to mainstream."

More Muscle Needed

Another barrier to VR adoption may be a lack of horsepower in the existing base of personal computers.

Less than 1 percent of the 1.43 billion PCs in the world have the muscle to run VR, according to an Nvidia estimate.

For gamers, who are some of the most enthusiastic fans of VR, that means shelling out US$300 for a new graphics card -- in addition to $350 to $450 for the VR hardware.

"As such, I forecast only a minority of PC gamers will have access to the necessary source hardware to drive a successful VR experience when the headsets are launched in Q1 2016, which reduces the addressable market for PC-based headsets significantly," IHS' Harding-Roll noted.

At the same time Nvidia was appraising the ability of the installed base of PCs to run VR, it also was launching a marketing campaign -- called "VR Ready" -- to inform consumers about which of the company's graphics cards can handle VR.

"I think we're seeing a heavy marketing play here," Gartner's Blau observed.

John Mello is a freelance technology writer and contributor to Chief Security Officer magazine. You can connect with him on Google+.

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The U.S. Federal Trade Commission is engaged in an internal struggle over how it should assess the effect on consumers when businesses fail to provide proper e-commerce security.

The outcome of the debate will have a significant impact on the FTC's ability to initiate cybersecurity violation cases. Depending on the outcome, in fact, the legal issue could spill over to federal courts or even Congress for resolution.

The internal debate surfaced last month. FTC staff members issued a notice that they were challenging the dismissal of a commission complaint against a company for alleged cybersecurity failures. An FTC administrative law judge who was selected to rule on the complaint dismissed it.

The staff challenge will occur through an appeal of the ALJ's decision to the full commission.

Exposure of Data Triggered Complaint

In the complaint, the FTC contended that cyberprotection deficiencies at LabMD had exposed personal consumer information. However, the ALJ dismissed the complaint in November, ruling that the FTC staff had failed to prove that the exposure and dispersion of the electronically processed records on company networks had caused any injury to consumers.

The ALJ's decision "confirms what our client, LabMD, has said all along, which is that the Federal Trade Commission's case is meritless," said Daniel Epstein, executive director of Cause of Action, which provided legal counsel to LabMD in contesting the FTC's charges.

The FTC "produced no evidence that even a single patient was harmed by LabMD's alleged inadequacies," he said. "Instead, it was the FTC that victimized LabMD and its employees, and more importantly, the doctors that it served."

LabMD's business involved performing diagnostic specimen tests for medical providers and managing related records for medical and insurance purposes.

The evidence in the case involved peer-to peer computer exchanges, expert testimony and physical printouts of data. The proceedings also involved issues regarding assertions of a relatively limited scope of exposure.

Injury Standard Questioned

Broadly speaking, the FTC staff contended that company's clients were injured because the mere exposure of the personal data put them at risk. However, the law judge questioned the applicability of such a broad standard for meeting the federal legal definition for injury or harm.

The FTC is empowered to initiate enforcement actions in the event it suspects a party has engaged in "unfair or deceptive" business practices. By law, the FTC must show that a business practice "causes or is likely to cause substantial injury to consumers," in order to be judged as unfair. The FTC claimed LabMD engaged in unfair business practices by putting clients at risk.

However, the ALJ rejected the staff's position, concluding that evidence of actual harm was lacking. Financial injury, inconvenience and even embarrassment are some of the types of harm considered in such cases. The FTC staff's failure to demonstrate any material, actual harm over a significant period also showed that the potential for future likely injury was virtually nonexistent, the ALJ contended.

"The absence of any evidence that any consumer has suffered harm" as a result of LabMD's "alleged unreasonable data security" after the passage of many years "undermined the persuasiveness" of the FTC staff that such harm likely would occur, FTC Chief Administrative Law Judge D. Michael Chappell said in his dismissal of the case.

In line with his emphasis on the need to provide evidence of actual harm, Chappell questioned the mere recitation of risk statistics related to cyber data exposure or breaches for fulfilling the legal definition of likely harm. He turned around the mathematical risk probabilities the FTC staff cited in noting that, given such statistics, it was curious that the FTC staff could not cite a single actual consumer victim.

Case Could Become a Benchmark

The evidence produced to support the charges may have been unique in that it was hotly contested and involved some convoluted and controversial elements regarding the validity of sources and the role of a third party. Still, the outcome of the case could have a broad impact on similar cases in that the decision raised the issue that the FTC will need to meet a stricter real-time standard for proving harm and injury in cyberprotection cases than it has in the past.

"Importantly, the ALJ opined that historically, liability for unfair conduct has only been found in instances where there is proof of actual consumer harm," said Patricia Wagner, chief privacy officer at Epstein Becker & Green, in a case analysis.

The ALJ held that the standard for what is likely to cause substantial injury "does not mean that something is merely possible. Instead, likely means that it is probable that something will occur," she noted, citing the decision.

"One of the striking things about the ALJ's opinion is his willingness and ability to parse through the evidence, understand what the studies presented demonstrated -- and failed to demonstrate -- and evaluate the circumstances in a well-reasoned manner. Rather than just assume that a breach automatically means that consumers would be harmed, he evaluated the facts and circumstances at issue in this case," Wagner told the E-Commerce Times.

"The recent LabMD decision serves to highlight that the commission's cybersecurity authority under the FTC Act is not without limits, and that the commission must prove that specific cybersecurity incidents actually meet the requirements for an unfair or deceptive practice under the statute," Chris Burris, a partner at King & Spalding, told the E-Commerce Times.

While the issues the LabMD case raised are significant in terms of cyberlaw -- especially related to the FTC's role -- a resolution of the injury issue could take awhile. First, the FTC staff's appeal of the ALJ decision means that the full commission could possibly overturn the ruling.

In its appeal, the FTC staff continued to contend that just the exposure of data creates a risky situation for consumers and that in itself satisfies the legal threshold for harm or injury. The ALJ mistakenly neglected to assess the substantial risk of alleged deficiencies at LabMD involving passwords, firewalls and other protection measures, the staff noted in its appeal.

The law judge "failed to analyze LabMD's multiple, systemic, and serious security failures before issuing [the] ruling," the staff said. "This was a fatal flaw: whether LabMD's security practices caused or were likely to cause substantial consumer injury can be determined only through an analysis of the significant risks created by LabMD's security failures. The decision is wrong as a matter of law and fact."

The commission has set a deadline of Feb. 5 for LabMD to file an answering brief in the internal appeals process. The outcome of the internal FTC appeal could then be brought before a U.S. appeals court.

"We will take this to the U.S. Supreme Court if necessary," LabMD CEO Michael Daugherty told the E-Commerce Times.

LabMD ceased normal operations in 2014 as a result of the FTC action.

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

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Sunday, January 3, 2016
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General Motors has agreed to invest US$500 million in Lyft, and the companies will work together to develop an integrated network of autonomous vehicles, they said in a joint announcement on Monday.

As part of the agreement, GM will become a preferred provider of short-term vehicles to Lyft customers, and it will provide them with its OnStar vehicle location services.

GM will gain a seat on the Lyft board of directors.

The companies see the future of personal mobility as "connected, seamless and autonomous," and they believe they can reach that goal more rapidly by working together, said GM President Dan Ammann, pictured above (center) with Lyft cofounders John Zimmer (right) and Logan Green (left).

Self-Driving Space Revs Up

The investment is part of Lyft's overall $1 billion capital raising effort, the company said, which includes $100 million from Saudi-based Kingdom Holding and several new and existing investors, including Janus Capital Management, Rakuten, Didi Kuadi and Alibaba.

The Kingdom contribution brings the company's investment total to $250 million, Lyft said.

Lyft -- the second largest ride-sharing service in the U.S., behind Uber -- provides more than 7 million rides per month in 190 cities nationwide, according to company figures.

GM is the latest automaker to jump into the autonomous vehicle space, which is under development on a number of fronts, in a bid to compete with Google, which has taken the lead in promoting this promising new industry to consumers.

"This shows GM is paying attention to that and positioning itself for when that day comes," said Egil Juliussen, a principal analyst at IHS.

Toyota late last year announced a $1 billion plan to invest in robotics and artificial intelligence. Other automakers, including Tesla, have begun testing autonomous vehicles.

Google, which has led the industry in this space, last year hired industry veteran John Krafcik, the former chief of Hyundai's U.S. operations, to lead its autonomous vehicle unit.

"We've talked in this space to a number of companies," said Vijay Iyer, spokesperson for GM's Global Connected Customer Experience and Urban Mobility business.

"I think it complements what we do quite well," he told the E-Commerce Times.

GM Wades Into the Pool

GM last fall signaled plans to expand its development in the self-driving space, announcing that it would provide a fleet of autonomous 2017 Chevrolet Volts for use at it's Warren( Mich.) Technical Center campus.

The "supercruise" autonomous vehicle feature, which has been undergoing tests since 2012, will be available in its 2017 Cadillac CT6 vehicles, GM said.

GM joined with Google in 2014 to test a ride-sharing service that utilized Chevrolet Spark electric vehicles, and it announced a New York City program called "Let's Drive NYC." Residents of the Ritz Plaza, a 479-unit luxury residence in Times Square, were given access to Chevrolet Trax and Equinox vehicles and parking at 200 Icon Parking System garages around the city for up to three hours a month, with additional time priced at $10 an hour.

GM also worked with dealerships in Europe to launch a ride-sharing program called "CarUnity" with its Opel brand.

The company has been testing a ride-sharing program at Jiao Tong University in Shanghai, with a fleet of EN-V 2.0 electric concept vehicles.

The potential market for autonomous vehicles is massive, IHS' Juliussen told the E-Commerce Times, as about 1.1 billion of the world population of almost 7 billion are licensed drivers.

There is a massive market of potential customers who cannot drive their own vehicles, he pointed out, ranging from those who cannot afford to own their own cars, to members of two-income households who may not need two full-time cars, as well as senior citizens and disabled individuals who cannot drive their own vehicles.

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

11:03 AM

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Microsoft on Monday announced that its Windows 10 operating system is now active on more than 200 million devices.

Windows 10 adoption accelerated at the end of 2015, with more than 40 percent of new devices activated since Black Friday, said Yusuf Mehdi, senior vice president of the online audience business group at Microsoft.

Windows 10 is on the fastest growth trajectory of any of version of the Windows OS, and the newest edition is outpacing Windows 7 by nearly 140 percent and Windows 8 by nearly 400 percent, he said.

However, it trails behind the more than decade-old Windows XP and even Windows 8.1 in terms of overall Web traffic, NetMarketShare reported.

Windows 10 had 9.96 percent of all Web traffic generated on desktop operating systems in December, compared to 10.9 percent and 10.3 percent, respectively, for Windows XP and Windows 8.1, according to its latest report, released last week.

In With the New

"With 200 million installs already, Windows 10 is an undeniable success for Microsoft already," said Josh Crandall, principal analyst at Netpop Research.

It has built on the success that was Windows 7, said Scott Steinberg, principal analyst at TechSavvy Global.

"Microsoft was wise to listen to customer feedback and took the suggestions to heart," Steinberg told the E-Commerce Times. "It is also preinstalled on all new devices, so anyone who bought a new computer already adopted Windows 10."

Reaching Its Goals

Even with the surge, Microsoft has quite a way to go to reach its target of 1 billion installs within the first year of release, Crandall told the E-Commerce Times.

"Windows 10 will continue to build momentum in the market, but it's just going to take more time to educate the market than previous operating system releases," he noted.

"Microsoft is still suffering the Windows 8 debacle, and for consumers on Windows 7, they have heard the horror stories of Windows 8 and are reluctant to change anything in their computing environment," Crandall added.

Out With the Old?

"Getting users of older Wintel systems [to upgrade] is always problematic, especially those with awful memories of trying to upgrade to Vista," said Charles King, principal analyst at Pund-IT.

In this case, Microsoft is a victim of its own success, he told the E-Commerce Times.

"Windows 7 was a terrific OS, and its satisfied users are this decade's version of the XP users who forcefully resisted upgrading to more contemporary versions of Windows," King said.

"In addition, Microsoft did an excellent job of correcting problematic issues in Windows 8 with the 8.1 upgrade," he noted. "In both of these cases, users simply don't feel any compelling need to upgrade, and that's likely to remain the case until they purchase new systems."

Today's productivity applications don't require the hardware upgrades of decades past -- and that means older software typically will do the job.

"For consumers on Windows 8, most had purchased new computers, and their processing power is sufficient for their needs," said Netpop Research's Crandall.

"They don't need a new computer to surf the Web or run the latest Office software," he added. "So, the consumer adoption curve of Windows 10 is not nearly as steep as it had been for previous Windows operating systems."

Business as Usual

Businesses are slower to adopt a new OS for many of the same reasons. Current software and applications already run on Windows 7/8.1 machines, so there is little incentive to upgrade.

As a result, "corporations have yet to adopt Windows 10 in full force," said Crandall. "We'll start to see increased adoption in the corporate world in 2016."

The final consideration may be a changing business model.

"Windows 10 licensing is a paradigm shift from previous versions," noted Crandall.

"It's a subscription-based model rather than purchase, i.e., purchasing a license to use," he added.

"While free today, it's unclear how Microsoft will charge for the operating system in the future," said Crandall.

"Consumers understand what it means to purchase a license and own the media for their use, however they need," he said. "With a subscription-based model, there is less clarity around what they can do with the media, whether they can reinstall it if their computer crashes or upgrade their hardware."

Peter Suciu is a freelance writer who has covered consumer electronics, technology, electronic entertainment and fitness-related trends for more than a decade. His work has appeared in more than three dozen publications, and he is the co-author of Careers in the Computer Game Industry (Career in the New Economy series), a career guide aimed at high school students from Rosen Publishing. You can connect with Peter on Google+.

9:40 AM

Microsoft on Monday announced that its Windows 10 operating system is now active on more than 200 million devices. Windows 10 adopt...

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Microsoft on Monday announced that its Windows 10 operating system is now active on more than 200 million devices.

Windows 10 adoption accelerated at the end of 2015, with more than 40 percent of new devices activated since Black Friday, said Yusuf Mehdi, senior vice president of the online audience business group at Microsoft.

Windows 10 is on the fastest growth trajectory of any of version of the Windows OS, and the newest edition is outpacing Windows 7 by nearly 140 percent and Windows 8 by nearly 400 percent, he said.

However, it trails behind the more than decade-old Windows XP and even Windows 8.1 in terms of overall Web traffic, NetMarketShare reported.

Windows 10 had 9.96 percent of all Web traffic generated on desktop operating systems in December, compared to 10.9 percent and 10.3 percent, respectively, for Windows XP and Windows 8.1, according to its latest report, released last week.

In With the New

"With 200 million installs already, Windows 10 is an undeniable success for Microsoft already," said Josh Crandall, principal analyst at Netpop Research.

It has built on the success that was Windows 7, said Scott Steinberg, principal analyst at TechSavvy Global.

"Microsoft was wise to listen to customer feedback and took the suggestions to heart," Steinberg told the E-Commerce Times. "It is also preinstalled on all new devices, so anyone who bought a new computer already adopted Windows 10."

Reaching Its Goals

Even with the surge, Microsoft has quite a way to go to reach its target of 1 billion installs within the first year of release, Crandall told the E-Commerce Times.

"Windows 10 will continue to build momentum in the market, but it's just going to take more time to educate the market than previous operating system releases," he noted.

"Microsoft is still suffering the Windows 8 debacle, and for consumers on Windows 7, they have heard the horror stories of Windows 8 and are reluctant to change anything in their computing environment," Crandall added.

Out With the Old?

"Getting users of older Wintel systems [to upgrade] is always problematic, especially those with awful memories of trying to upgrade to Vista," said Charles King, principal analyst at Pund-IT.

In this case, Microsoft is a victim of its own success, he told the E-Commerce Times.

"Windows 7 was a terrific OS, and its satisfied users are this decade's version of the XP users who forcefully resisted upgrading to more contemporary versions of Windows," King said.

"In addition, Microsoft did an excellent job of correcting problematic issues in Windows 8 with the 8.1 upgrade," he noted. "In both of these cases, users simply don't feel any compelling need to upgrade, and that's likely to remain the case until they purchase new systems."

Today's productivity applications don't require the hardware upgrades of decades past -- and that means older software typically will do the job.

"For consumers on Windows 8, most had purchased new computers, and their processing power is sufficient for their needs," said Netpop Research's Crandall.

"They don't need a new computer to surf the Web or run the latest Office software," he added. "So, the consumer adoption curve of Windows 10 is not nearly as steep as it had been for previous Windows operating systems."

Business as Usual

Businesses are slower to adopt a new OS for many of the same reasons. Current software and applications already run on Windows 7/8.1 machines, so there is little incentive to upgrade.

As a result, "corporations have yet to adopt Windows 10 in full force," said Crandall. "We'll start to see increased adoption in the corporate world in 2016."

The final consideration may be a changing business model.

"Windows 10 licensing is a paradigm shift from previous versions," noted Crandall.

"It's a subscription-based model rather than purchase, i.e., purchasing a license to use," he added.

"While free today, it's unclear how Microsoft will charge for the operating system in the future," said Crandall.

"Consumers understand what it means to purchase a license and own the media for their use, however they need," he said. "With a subscription-based model, there is less clarity around what they can do with the media, whether they can reinstall it if their computer crashes or upgrade their hardware."

Peter Suciu is a freelance writer who has covered consumer electronics, technology, electronic entertainment and fitness-related trends for more than a decade. His work has appeared in more than three dozen publications, and he is the co-author of Careers in the Computer Game Industry (Career in the New Economy series), a career guide aimed at high school students from Rosen Publishing. You can connect with Peter on Google+.

9:38 AM

Microsoft on Monday announced that its Windows 10 operating system is now active on more than 200 million devices. Windows 10 adopt...

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Microsoft on Monday announced that its Windows 10 operating system is now active on more than 200 million devices.

Windows 10 adoption accelerated at the end of 2015, with more than 40 percent of new devices activated since Black Friday, said Yusuf Mehdi, senior vice president of the online audience business group at Microsoft.

Windows 10 is on the fastest growth trajectory of any of version of the Windows OS, and the newest edition is outpacing Windows 7 by nearly 140 percent and Windows 8 by nearly 400 percent, he said.

However, it trails behind the more than decade-old Windows XP and even Windows 8.1 in terms of overall Web traffic, NetMarketShare reported.

Windows 10 had 9.96 percent of all Web traffic generated on desktop operating systems in December, compared to 10.9 percent and 10.3 percent, respectively, for Windows XP and Windows 8.1, according to its latest report, released last week.

In With the New

"With 200 million installs already, Windows 10 is an undeniable success for Microsoft already," said Josh Crandall, principal analyst at Netpop Research.

It has built on the success that was Windows 7, said Scott Steinberg, principal analyst at TechSavvy Global.

"Microsoft was wise to listen to customer feedback and took the suggestions to heart," Steinberg told the E-Commerce Times. "It is also preinstalled on all new devices, so anyone who bought a new computer already adopted Windows 10."

Reaching Its Goals

Even with the surge, Microsoft has quite a way to go to reach its target of 1 billion installs within the first year of release, Crandall told the E-Commerce Times.

"Windows 10 will continue to build momentum in the market, but it's just going to take more time to educate the market than previous operating system releases," he noted.

"Microsoft is still suffering the Windows 8 debacle, and for consumers on Windows 7, they have heard the horror stories of Windows 8 and are reluctant to change anything in their computing environment," Crandall added.

Out With the Old?

"Getting users of older Wintel systems [to upgrade] is always problematic, especially those with awful memories of trying to upgrade to Vista," said Charles King, principal analyst at Pund-IT.

In this case, Microsoft is a victim of its own success, he told the E-Commerce Times.

"Windows 7 was a terrific OS, and its satisfied users are this decade's version of the XP users who forcefully resisted upgrading to more contemporary versions of Windows," King said.

"In addition, Microsoft did an excellent job of correcting problematic issues in Windows 8 with the 8.1 upgrade," he noted. "In both of these cases, users simply don't feel any compelling need to upgrade, and that's likely to remain the case until they purchase new systems."

Today's productivity applications don't require the hardware upgrades of decades past -- and that means older software typically will do the job.

"For consumers on Windows 8, most had purchased new computers, and their processing power is sufficient for their needs," said Netpop Research's Crandall.

"They don't need a new computer to surf the Web or run the latest Office software," he added. "So, the consumer adoption curve of Windows 10 is not nearly as steep as it had been for previous Windows operating systems."

Business as Usual

Businesses are slower to adopt a new OS for many of the same reasons. Current software and applications already run on Windows 7/8.1 machines, so there is little incentive to upgrade.

As a result, "corporations have yet to adopt Windows 10 in full force," said Crandall. "We'll start to see increased adoption in the corporate world in 2016."

The final consideration may be a changing business model.

"Windows 10 licensing is a paradigm shift from previous versions," noted Crandall.

"It's a subscription-based model rather than purchase, i.e., purchasing a license to use," he added.

"While free today, it's unclear how Microsoft will charge for the operating system in the future," said Crandall.

"Consumers understand what it means to purchase a license and own the media for their use, however they need," he said. "With a subscription-based model, there is less clarity around what they can do with the media, whether they can reinstall it if their computer crashes or upgrade their hardware."

Peter Suciu is a freelance writer who has covered consumer electronics, technology, electronic entertainment and fitness-related trends for more than a decade. His work has appeared in more than three dozen publications, and he is the co-author of Careers in the Computer Game Industry (Career in the New Economy series), a career guide aimed at high school students from Rosen Publishing. You can connect with Peter on Google+.

8:43 AM

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Home Broadband Use Falls as Consumers Go Mobile

A recent Pew Research Center study found that adoption of traditional high-speed Internet in the U.S. has fallen to 67 percent, the lowest level since 2012.

More consumers were using mobile phones, the study found. Thirteen percent of respondents said they were smartphone-only customers, compared with 8 percent in 2013.

The reduction in home broadband use accelerated among certain communities, including the poor, African Americans and rural communities, Pew said.

Fifteen percent of respondents said they have cut the cord on paid cable and satellite TV, largely because of the increased amount of streaming content available through other channels.

Advanced Internet access has changed little since 2013, with about 80 percent of adults having either a smartphone or a home broadband connection in 2015, compared with 78 percent two years ago.

However, many more Americans considered having home broadband important, with 69 percent saying not having this service is a major disadvantage in finding a job or accessing health information, Pew said.

A third of those without broadband cited cost as the primary reason, while 10 percent said the cost of owning a computer was their main reason for not using the service.

Expanding Access to Poor, Rural Towns

"Broadband is more and more critical to people's lives," said Chris Lewis, vice president of government affairs at Public Knowledge. "More and more people see it as essential."

In 2010, when the federal government came out with a national broadband plan to make sure small communities and low-income areas would have high-speed Internet, many people who lacked the service didn't think it was relevant to their lives, he told the E-Commerce Times.

Now the biggest concern is cost, because people realize they can't complete important tasks without such access, Lewis said.

Customers in rural areas continue to have problems getting affordable broadband connections, as many areas lack competition, and industry lobbyists have blocked smaller communities from building out their own cost-effective systems, said Chris Mitchell, director of community broadband networks at the Institute for Local Self-Reliance.

"I think certainly all the big companies are limiting choice," he told the E-Commerce Times.

Smaller communities are finding some success in creating their own networks to counter this, Mitchell said.

Earlier this year, RS Fiber Cooperative broke ground on a high-speed connection in Sibley County, Minnesota. The company is working with Hiawatha Broadband Communications to build out a network that will offer service to about 1,600 homes and businesses.

"The people we talk to are blown away by how good it is to have this high-speed service," Mitchell said. "Nobody wants to move into a house where they can't stream high-quality video that's available to them."

Young Adults Move to Mobile

Many young people are deciding to drop home broadband and go with wireless because high-speed data is more affordable on wireless phones than it was in the past, and home broadband is becoming more expensive for those who exceed the monthly bandwidth cap, analyst Jeff Kagan said.

"Typically when you surf a Web page, you will see it loaded with ads," he told the E-Commerce Times. "Many of those ads use enormous amounts of data, like the video ads, which users didn't want in the first place."

Customers should not be penalized for advertising they never asked for, Kagan said. If the trend persists, young people will continue to move away from home broadband to only using smartphones for high-speed Internet.

Time Warner Cable continues to see strong growth in new subscribers.

"In terms of overall broadband trends within TWC, we've seen consistent and substantial growth in our Internet product -- in fact having some of the best growth quarters this year in recent company history," spokesperson Judy Barbao said.

During the third quarter, the company reported 232,000 net additions of residential high-speed data, the best third quarter since 2006, it said. It had a net increase of 172,000 during the second quarter, the best second quarter since 2008, and a net increase of 315,000 during the first quarter, the best since 2007.

TWC is aware of the increasing trend toward mobile, and it offers customers access to 400 hotspots around the country, Barbao told the E-Commerce Times. The company also offers a low-cost Internet product for US$14.99 a month that provides 2 Mbps upstream and 1 Mbps downstream and is available without income restrictions.

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

3:42 AM

A recent Pew Research Center study found that adoption of traditional high-speed Internet in the U.S. has fallen to 67 percent, th...

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