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The price of broadband quality: tracking the changing valuation of service characteristics

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  • Coyne, Bryan
  • Lyons, Sean

Abstract

This paper investigates how retail broadband prices, choice and quality are changing over time. Using a dataset containing daily observations of plans offered in Ireland from 2007 to 2013, this paper applies hedonic modelling techniques to observe the changing pricing of service characteristics. We augment our results by restricting the analysis to large operators and also by weighting by operator market share for a subset of our data (2010-2013). Although we find that average nominal prices remain static throughout our sample period, quality of service has risen dramatically over time, particularly with respect to download speed. Some characteristics of broadband plans exhibit broadly stable valuations over time, but the elasticity of price with respect to advertised download speed and the premium on bundled plans declined during the sample period. In addition, the retail price premium enjoyed by the incumbent operator fell significantly since 2007.

Suggested Citation

  • Coyne, Bryan & Lyons, Sean, 2015. "The price of broadband quality: tracking the changing valuation of service characteristics," MPRA Paper 65375, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:65375
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    References listed on IDEAS

    as
    1. Calzada, Joan & Martínez-Santos, Fernando, 2014. "Broadband prices in the European Union: Competition and commercial strategies," Information Economics and Policy, Elsevier, vol. 27(C), pages 24-38.
    2. Correa, Lisa & Crocioni, Pietro, 2012. "Can evidence of pricing power help market power assessment? Broadband Internet in Ireland and the Netherlands," Telecommunications Policy, Elsevier, vol. 36(5), pages 419-433.
    3. T. Stengos & E. Zacharias, 2006. "Intertemporal pricing and price discrimination: a semiparametric hedonic analysis of the personal computer market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(3), pages 371-386, April.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    5. Seán Lyons & Michael Savage, 2013. "Choice, price and service characteristics in the Irish broadband market," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, vol. 3(1), pages 1-21.
    6. Wallsten Scott J. & Riso James, 2014. "How do Attributes of Broadband Plans Affect Price?," Review of Network Economics, De Gruyter, vol. 13(1), pages 95-119, March.
    7. Greenstein, Shane & McDevitt, Ryan, 2011. "Evidence of a modest price decline in US broadband services," Information Economics and Policy, Elsevier, vol. 23(2), pages 200-211, June.
    8. Tim Burnett, 2014. "The Impact of Service Bundling on Consumer Switching Behaviour: Evidence from UK Communication Markets," The Centre for Market and Public Organisation 14/321, The Centre for Market and Public Organisation, University of Bristol, UK.
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    Cited by:

    1. Coyne, Brian & McCoy, Selina, 2016. "The Student Perspective on In-school Personal Electronic Devices and Online Safety: A Qualitative Study," Papers WP547, Economic and Social Research Institute (ESRI).
    2. McCoy,Selina & Lyons,Seán & Coyne,Bryan & Darmody,Merike, 2017. "Teaching and Learning in Second- Level Schools at the Advent of High-Speed Broadband," Research Series, Economic and Social Research Institute (ESRI), number RS51, August.
    3. Ambre Nicolle & Lukasz Grzybowski & Christine Zulehner, 2018. "Impact Of Competition, Investment, And Regulation On Prices Of Mobile Services: Evidence From France," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1322-1345, April.
    4. Rajib L. Saha & Sumanta Singha & Subodha Kumar, 2021. "Does Congestion Always Hurt? Managing Discount Under Congestion in a Game-Theoretic Setting," Information Systems Research, INFORMS, vol. 32(4), pages 1347-1367, December.
    5. Grzybowski, Lukasz & Nicolle, Ambre & Zulehner, Christine, 2017. "Impact of competition and regulation on prices of mobile services: Evidence from France," 28th European Regional ITS Conference, Passau 2017 169465, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    broadband services; market analysis; Ireland;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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