Broadband Can Save Consumers Almost $8K Annually

November 12, 2010

Consumers can achieve annual savings of more than $7,700 per year by having broadband internet access, according to new data from the Internet Innovation Alliance (IIA).

By achieving savings in 10 key areas, IIA analysis indicates the average US household earning $62,857 per year before taxes can save $7,707 annually through use of broadband internet (after factoring the average $490 yearly cost of broadband access). Following is a brief overview of each area.

Entertainment

iia-broadband-cost-savings-nov10.gifIIA conducted a search-based study on restaurant dining, sporting/concert tickets and leisure activities in several major US cities and determined the average consumer can save $2,747 per year, or 51.7% of total average entertainment expenses.

IIA applied a savings factor of 57.6% on dining outside of the home ($2,619) based on the Department of Labor annual study on consumer expenditures, and applied a savings factor of 46% on entertainment such as concerts, events and leisure activities to the entertainment budget ($2,693) based on the Department of Labor annual study on consumer expenditures.

Travel

Online-only deals can save a consumers who spends the average of $7,658 per year on travel up to 20% of that figure, or $1,532.

Housing

Broadband internet access can provide annual savings of $974 per year (7.7% of the average US total of $12,697 spent in rent annually) through online apartment postings which provide rent alternatives cheaper than going rental rates in major US housing markets.

Food

IIA created a standard basket of monthly groceries to establish a baseline retail cost and then conducted a series of online searches against the baseline to identify cost savings exclusive to the internet. Potential savings of $965 per year, or 25.7% of the $3,573 the average US household spends annually on food at home, isbased on cost reductions at the aggregate basket level.

Automotive

Online-only deals can save consumers an average of 1.5% on the typical $29,217 net outlay for a new American-made car in 2010, or $438.

Non-prescription Drugs

Looking at prices of standard OTC medications, IIA created a standard basket of the best-selling non-prescription drugs to establish a baseline retail cost and then conducted a series of online searches against the baseline to identify cost savings exclusive to the internet and determined the average consumer can save $76 per year, or 24.2% of the average $312.60 spent on non-prescription drugs.

Potential savings are based on cost reductions at the aggregate basket level. IIA applied 24.2% savings factor to the average annual expenditure on non-prescription drugs, which was derived as 10% of the average annual expenditure on healthcare ($3,126) from the Department of Labor annual study on consumer expenditures.

Gasoline

IIA researched average gas prices within a 10-mile radius of three zip codes for several major US cities, and found the lowest advertised prices in each, for a savings of 4.76% off the average gasoline expenditure ($1,986) based on the Department of Labor annual study on consumer expenditures.

Apparel

IIA conducted a search-based study on basic clothing combinations for men and women, and created a set of standard baskets of apparel for a man (khakis/jeans and shirts) and a woman (skirts/jeans and tops) to establish a baseline retail cost in each of five price categories.

IIA then conducted a series of online searches against the baseline to identify cost savings exclusive to the internet, and applied 37.12% savings factor to the average annual expenditure on apparel ($1,725) based on the Department of Labor annual study on consumer expenditures, determining yearly savings of $640 on apparel.

Newspapers

Reading free online newspapers can save the average consumer 100% of the typical yearly $193 spent on newspaper delivery subscriptions.

Bill Postage

Online bill payment can save consumers 100% of postage paid to mail bills, which averages $47 per year.

Retail E-commerce Spending Grows 4th Straight Quarter

Americans have been spending more on retail e-commerce for four straight quarters, according to recent comScore data. comScore estimates show US online retail spending reached $32.1 billion during Q3 2010, up 9% from $29.5 billion in Q3 2009. This growth rate represented the fourth consecutive quarter of positive year-over-year growth following a year of flat or negative growth rates.

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