Consumer Preferences for Internet Access and Online Activities Market Research Report

Commissioned by the Internet Innovation Alliance

June 27, 2018

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TABLE OF CONTENTS

I- Project Background and Methodology Overview II- Top Line Results and Key Demographic Cross-tabs

A- Internet Access Preference Question B- Mobile Activities Question: Part 1 C- Mobile Activities Question: Part 2 D- Reluctance in Switching to Mobile Plans Question

III- Conclusion

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I-PROJECTBACKGROUNDANDMETHODOLOGYOVERVIEW

IntroductionandProjectObjectives

CivicSciencewasenlistedbytheInternetInnovationAlliance(IIA)inMayof2018toconductanobjective,large scalestudyofU.S.consumersandtheironlinebehaviors,meansofInternetaccess,thearrayofactivitiesperformedontheirmobiledevice,andreasonsbehindtheirwillingnesstoswitch(ornot)tomobile onlywebaccess.CivicSciencedesignedaquestionnaireandsamplingapproachtoachieveahigh confidence,representativeviewoftheonlineU.S.adultpopulation,withsufficientsamplesizestoensurestatistically significantCross tabulationbykeydemographic,geographic,andpsychographicrespondentattributes.DatacontainedinthisreportreflectconsumerresponsesfortheperiodofMay15throughJune10,2018.SummaryFindings

AnincreasingnumberofAmericansarerelyingprimarilyontheirsmartphonesorotherdevicestoaccesstheInternetandusingweb enabledmobiledevicestoaccessabroadnumberandtypeofactivities,services,andoverallinformation.Assuch,theactivitiestheyareperformingonthosedevices,theirexpectationsforperformanceandaffordability,andtheirmotivationsformobileInternetusageareincreasinglysimilartothoseofwiredbroadbandInternetusage.WhiledifferentsegmentsofU.S.consumerspreferaccessingtheInternetindifferentways,1in5“don’tcare”howtheyaccesstheweb,solongastheirotherneedsandvalues(speed,reliability,etc.)aremet.TheblurringdistinctionbetweenmobileandwiredbroadbandInternetusageisparticularlyprevalentamongtheyoungerandfast growingsegmentsoftheU.S.population,aswellaslowerincomehouseholds.Forconsumersbelowtheageof55,lessthanhalfconsistentlyreportpreferringtoaccesstheInternetthroughwiredtechnologylikecable,fiber,orDSL.

Over30%ofGenZandMillennialsprefertoaccessthewebviamobilephone,asdo30%ofBlacksand39%ofHispanics.Thesedemographicsegmentsarealsoregularlyusingtheirmobilephonesforabroaderarrayofactivities,frommappingservicesandsocialmedia,tohomeworkassignmentsandjobsearching.Approximately6%ofconsumersreportthattheyhavealreadyswitchedtomobile onlyInternetaccess,orthattheyareconsideringswitching.Atthistime,themainreasonsconsumersreportnotswitchingtomobile onlyarethattheirhomeInternetserviceisbundledwithphoneandcableorthattheyhaveconcernsaboutthespeedofmobile onlyInternetaccess.Concernsaboutspeedprimarilyexplainwhyconsumersbetweentheagesof18and44havenot

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switchedtomobile onlyInternetaccess.AlthoughbundledInternetservicehelpsexplainwhymanyWhiteandBlackhouseholdshavenotswitchedtomobile onlyservice(31%and27%respectively),speedisthemainreasonHispanichouseholdscurrentlyavoidswitching,andisaclosesecondexplanationforBlackhouseholds(26%).AboutCivicScience

CivicScienceisapollingandmarketresearchcompany,foundedin2007andbasedinPittsburgh,Pennsylvania.Thecompanycombinesaprovenweb basedsurveytechniquetoachievelarge,representativesamplesoftheU.S.population,withaproprietarydatabasetechnologytoperformsophisticatedcomputationsandinsightdiscoverywithinthecompany’slargerespondentdataset.CivicScienceprovidessyndicatedandcustomdata,software,andrelatedservicestoanarrayofprivatesectorandnon profitcustomers,acrossnumerousindustriesandfieldsofscience.CivicScienceisexpresslynon partisanandotherwiseunaffiliatedwithanyorganizationsorpoliticalentitieswhichwouldinfluenceresearchdesign,analysis,orrecommendations.AbouttheMethodology

CivicScienceadministersadailysyndicatedandcustom‘omnibus’trackingsurvey,deliveredtorespondentsinsmallincrementsoveralargeanddiversenetworkof1st partyand3rd partywebandmobileapplications.Individualsessionsarebrief,convenient,andengagingfortherespondents–ascomparedtotraditional,long formtelephoneandonlinepanelsurveys.Asaresult,CivicScienceovercomesdecliningresponserates,whichhaveplaguedtraditionalsurveymethodologiesinrecentyears,particularlyamongnotoriously hard to reachsubpopulationslikeMillennialsandminorities.CivicSciencerespondentsparticipatevoluntarily,inordertoseeresultsand/ortovoicetheiropinion,withnofinancialorotherextrinsicreward.Thisvoluntary,non compensatedparticipationsignificantlyreducesknownrespondentbiasesassociatedwithreward basedpanelsorpaidsurveymodes.Althoughrespondentsonlyanswerasmallnumberofrandomizedquestionsinagivensession,CivicScienceattachessubsequentresponsestoaunique,anonymousdigitalidentifiertotrackrespondentslongitudinally,buildrespondentprofiles,andenableCross tabulation.Allrespondentattributes,includingdemographics,aredirectlyreportedviasurveyresponses,withtheexceptionofgeo location,whichisascertainedviaInternetProtocol(IP)Addresslook up.

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(AmoredetailedexplanationofCivicScience’smethodology,includinglinkstorelatedwhitepapers,independentassessment,andscientificreferencescanbeaccessedhere).AboutThisStudy

Toachievetheprojectobjectives,CivicSciencedesignedafour question(*)surveydeliveredinone questionincrementstoarandomquota basedsampleofaminimumof10,000onlineU.S.adultrespondentsaged18andolder.QuotaswereestablishedtobuildarespondentpopulationmatchedpreciselytothefullU.S.populationbasedon2010U.S.Censusstatisticsforage,gender,andU.S.region.Forthekeydemographicsubpopulations(**/***)analyzedinthisreport,CivicScienceperformedbasicandminimalreweightingtoensureprecisealignmentwithCensusnorms.Allquestionsandsamplesproducedamarginoferroroflessthan+/ 1%.

Note1*:MobileActivitiesQuestionThesecondandthirdquestioninthisreportfocusonvariousactivitiesAmericansperformontheirmobilephones.Giventhatpotentialmobileactivitiesarevirtuallylimitless,wenarrowedtheansweroptionstoadiverseandencompassinglistofcommonactivities;however,theyarebynomeansfullyexhaustive.Evenwiththisnarrowerselection,wewereleftwith8possiblechoices,andtwoopt-outselections.Inourexperience,questionswithanunwieldynumberofansweroptions(8ormore)yieldlowerresponse(orhigherdrop-out)rates,potentiallycreatinglatentbiasesintheremainingsample.Toguardagainstthisrisk,weoptedtobreakthequestionintotwoseparatecheck-boxquestions,eachwith6possibleoptions.Note2**:Cross-tabulationSampleSizesDuetothenatureoftheCivicSciencecollectionmethodology,notallattributesareknownabouteveryrespondentinoursampleatanygiventime.Forexample,somerespondentsmayhaveencounteredourInternetActivitiesquestionpriortohavingansweredprofilequestionsabouttheirresidentialarea.Forthepurposesofthisstudy,Cross-tabulationtablesonlyincludedrespondentswhohadansweredthosekeydemographicquestionsANDtheprojectresearchquestions,withinthestudytimeframe.Assuch,Cross-tabsamplesizesfortheResidentialAreaquestionaresmallerthanourtop-linesamples,butstillstatistically-significantinscaleandrepresentativeness.Note3***:Cross-tabulationsAnalyzedCivicSciencemaintainsextensivedemographicandpsychographicprofilesoftherespondentswhohaveansweredoursurveyquestionsovertime.Forthepurposesofthisreport,wefocusedonsubpopulationswherevariabilityinmobileInternetusage,meansofaccess,andmotivationswerenotable–namelyrespondentAge,Race,ResidentialArea,andParentalStatus.WedonotdiscussGender,forinstance,wherewefoundlittlerelevantvariability;however,thosedataareavailableuponrequest.

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II-TOPLINERESULTSANDKEYDEMOGRAPHICCROSS-TABSQuestion1(InternetAccessPreference)–ToplineResults

Question1(InternetAccessPreference)–ToplineResultsSummary

ThelargestsegmentofU.S.adultspreferstoaccesstheInternetbywayofacablemodem,withthesecondlargestgrouppreferringtouseamobileplanviatheirsmartphoneortablet.Oneinfiverespondentssaidthey“don’tcare”howtheyaccesstheInternet.SatelliteandDial uparestillpreferredbysmallgroupsofU.S.consumers.

26%23%

20%

14%

7%

4% 3% 3%

How do you prefer to access the Internet?

Cable modemSmartphone / tablet (mobile plan)I don't care how I access the InternetFiber optic serviceDSLOtherSatelliteDial-up

May 15 - June 10 2018 +/- 1% n = 10 048

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Question1(InternetActivities1)–RaceCross-tabResults

Question1(InternetAccessPreference)–RaceCross-tabSummary

PreferenceforSmartphone/TabletaccessissignificantlyhighestamongHispanicandBlackrespondents,withCableModemaccesshighestamongWhitesandOtherraces.CableModemandFiberOpticaccessislowestamongHispanics.TheremainingcategoriesarerelativelyconsistentacrossRacegroups,varyingbyonlyacouplepercentagepoints.

May 15 - June 10 2018 n = 8 993

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Question4(ReluctancetoSwitchtoMobilePlans)–ToplineResults

Question4(ReluctancetoSwitchtoMobilePlans)–ToplineResultsSummary

U.SconsumerslistanumberofreasonsforchoosingnottoswitchtheirprimaryInternetservicetoamobile onlyplan.ThemostcommonreasonisthatmanyrespondentshavetheirhomeInternetservicebundledwiththeirphoneandcablebill.Otherwise,thedeterrentsarespreadsomewhatevenlywithfearsofslowerInternetspeedandreliabilityofservicerankinghighly.

24%

20% 20%16%

15%13%

11%

28%

6%

If you currently subscribe to a home internet service provider, which of the following explains why you haven’t switched to ONLY using a mobile plan (such as

using the internet from your cell phone provider, AT&T, Verizon, T-Mobile etc.)? (Select all that

SpeedAffordabilityReliabilityOtherEase / comfortAvailabilitySecurityMy home internet service is connected to my phone and cable billI already switched and only use a mobile plan / I’m considering switching

May 15 - June 10 2018 +/- 1% n = 10 087

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III-CONCLUSIONThedatacollectedforthisprojectrepresentastraight forwardandunsurprisingviewofAmericans’mobilehabitsandattitudes.Whilemobileusageoverallandthebreadthofactivitiesonmobilehaveincreased,thosenumbersarelikelytocontinuesurging,giventherelianceonmobiledevicesamongyoungerandhigh growthdemographicgroups.Asconsumersdevelopmoreconfidencewiththespeed,reliability,andotheraspectsofmobileInternetaccess,thedistinctionbetweenwiredandmobileInternetaccesswillfurtherdissolve.CONTACT: JohnDick,CEO,CivicScience jdick@civicscience.com (P)412 559 9032 6101PennAve Pittsburgh,PA15206