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Household Demand for Broadband Internet Service


  • Gregory Rosston

    () (Public Policy Program, Stanford University)

  • Scott Savage

    (University of Colorado)

  • Donald Waldman

    () (University of Colorado)


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.

Suggested Citation

  • Gregory Rosston & Scott Savage & Donald Waldman, 2010. "Household Demand for Broadband Internet Service," Discussion Papers 09-008, Stanford Institute for Economic Policy Research, revised Feb 2010.
  • Handle: RePEc:sip:dpaper:09-008

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    References listed on IDEAS

    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. Ferdinand Pavel & Yann Girard & Arno Hantzsche & Anselm Mattes & Julius Pahlke & Katherina Peter, 2014. "Wachstumsfaktor Telekommunikation: zum Beitrag der Telekommunikationsbranche zur wirtschaftlichen Entwicklung in Deutschland; Endbericht," DIW Berlin: Politikberatung kompakt, DIW Berlin, German Institute for Economic Research, volume 78, number pbk78.
    2. Carare, Octavian & McGovern, Chris & Noriega, Raquel & Schwarz, Jay, 2015. "The willingness to pay for broadband of non-adopters in the U.S.: Estimates from a multi-state survey," Information Economics and Policy, Elsevier, vol. 30(C), pages 19-35.
    3. Arnold, René & Waldburger, Martin & Morasch, Bastian & Schmid, Frieder & Schneider, Anna, 2015. "The value of network neutrality to European consumers," 26th European Regional ITS Conference, Madrid 2015 127121, International Telecommunications Society (ITS).
    4. Grzybowski, Lukasz & Liang, Julienne, 2014. "Estimating demand for quadruple-play tariffs: The impact on consumer surplus," 25th European Regional ITS Conference, Brussels 2014 101375, International Telecommunications Society (ITS).
    5. Gabriel Ahlfeldt & Pantelis Koutroumpis & Tommaso Valletti, 2017. "Speed 2.0: Evaluating Access to Universal Digital Highways," Journal of the European Economic Association, European Economic Association, vol. 15(3), pages 586-625.
    6. repec:eee:iepoli:v:40:y:2017:i:c:p:13-20 is not listed on IDEAS
    7. Menegaki, Angeliki, N. & Olsen, Søren Bøye & Tsagarakis, Konstantinos P., 2016. "Towards a common standard – A reporting checklist for web-based stated preference valuation surveys and a critique for mode surveys," Journal of choice modelling, Elsevier, vol. 18(C), pages 18-50.
    8. Galperin, Hernán & Ruzzier, Christian A., 2013. "Price elasticity of demand for broadband: Evidence from Latin America and the Caribbean," Telecommunications Policy, Elsevier, vol. 37(6), pages 429-438.
    9. Dutz Mark A. & Orszag Jonathan M. & Willig Robert D., 2012. "The Liftoff of Consumer Benefits from the Broadband Revolution," Review of Network Economics, De Gruyter, vol. 11(4), pages 1-34, December.
    10. Sadowski, Bert M., 2017. "Advanced users and the adoption of high speed broadband: Results of a living lab study in the Netherlands," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 1-14.
    11. Kyle Wilson, 2016. "Does Public Competition Crowd Out Private Investment? Evidence from Municipal Provision of Internet Access," Working Papers 16-16, NET Institute.
    12. Orhan Dagli & Glenn P. Jenkins, 2015. "Consumer Preferences for Improvements in Mobile Telecommunication Services," Development Discussion Papers 2015-05, JDI Executive Programs.
    13. Andre Boik, 2015. "The Economics of Universal Service: an Analysis of Entry Subsidies for Rural Broadband," Working Papers 15-11, NET Institute.
    14. Chad Syverson, 2017. "Challenges to Mismeasurement Explanations for the US Productivity Slowdown," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 165-186, Spring.
    15. Greenstein Shane, 2012. "Concentration in Internet Access and Entrepreneurial Truncation of Innovation," Capitalism and Society, De Gruyter, vol. 7(1), pages 1-33, November.
    16. Hisham Jameel Bardesi, 2016. "Factors Affecting Demand For Internet Access In Saudi Arabia," Eurasian Journal of Business and Management, Eurasian Publications, vol. 4(3), pages 29-38.
    17. Prieger, James E., 2013. "The broadband digital divide and the economic benefits of mobile broadband for rural areas," Telecommunications Policy, Elsevier, vol. 37(6), pages 483-502.
    18. 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.
    19. 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.
    20. Gomes, Nicolas Dias & Cerqueira, Pedro André & Almeida, Luís Alçada, 2015. "A survey on software piracy empirical literature: Stylized facts and theory," Information Economics and Policy, Elsevier, vol. 32(C), pages 29-37.

    More about this item


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

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy


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