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Household Demand for Broadband Internet Service

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  • Gregory Rosston

    ()
    (Public Policy Program, Stanford University)

  • Scott Savage

    (University of Colorado)

  • Donald Waldman

    ()
    (University of Colorado)

Abstract

As part of the Federal Communications Commission (“FCC”) National Broadband Report to Congress, we have been asked to conduct a survey to help determine consumer valuations of different aspects of broadband Internet service. Our empirical results show that reliability and speed are important characteristics of Internet service. The representative household is willing to pay about $20 per month for more reliable service and $45-48 for an increase in speed. Willingness-to-pay for speed increases with education, income and online experience, and decreases with age. Rural households value connection speed by about $3 more per month than urban households. Households are also willing to pay an additional $4 for the ability to interact with health specialists online, about $3 for the ability to download full-length movies, and about $5 for the ability to place free phone calls over the Internet and see the person being called. Using these results, we calculate that a representative household would be willing to pay about $59 per month for a less reliable Internet service with fast speed, about $85 for a reliable Internet service with fast speed and the priority feature, and about $98 for a reliable Internet service with fast speed plus all other activities.

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File URL: http://www-siepr.stanford.edu/repec/sip/09-008.pdf
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Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 09-008.

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Date of creation: Jan 2010
Date of revision: Feb 2010
Handle: RePEc:sip:dpaper:09-008

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Related research

Keywords: broadband; choice experiment; experience; internet; willingness-to-pay;

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  1. Waldman, Donald M., 1985. "Computation in duration models with heterogeneity," Journal of Econometrics, Elsevier, vol. 28(1), pages 127-134, April.
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Cited by:
  1. Gabriel M. Ahfeldt & Pantelis Koutroumpis & Tommaso Valletti, 2014. "Speed 2.0. Evaluating Access to Universal Digital Highways," SERC Discussion Papers 0161, Spatial Economics Research Centre, LSE.
  2. Trevor Roycroft, 2013. "Empirical study of broadband adoption using data from the 2009 Residential Energy Consumption Survey," Journal of Regulatory Economics, Springer, vol. 43(2), pages 214-228, April.
  3. 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.

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