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

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  • Coynea, Bryan
  • Lyonsa, 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

  • Coynea, Bryan & Lyonsa, Sean, 2015. "The price of broadband quality: tracking the changing valuation of service characteristics," 26th European Regional ITS Conference, Madrid 2015 127159, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itse15:127159
    as

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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. 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.
    3. 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..
    4. 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.
    5. 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.
    6. 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.
    Full references (including those not matched with items on IDEAS)

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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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