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Application-Based Quality Assessment of Internet Access Service

  • Daeho Lee

    ()

    (The School of Information Sciences, University of Pittshurgh)

  • Jungwoo Shin

    ()

    (College of Engineering, Seoul National University)

  • Junseok Hwang

    ()

    (College of Engineering, Seoul National University)

Registered author(s):

    As Internet applications become more sensitive to latency, the needs for network management increase. To maximize consumer surplus and profit of Internet service provider at the same time, it is necessary to investigate the consumer’s willingness to pay for a given quality of service (QoS) level. This study investigates consumer preferences for Internet access services that provide different levels of QoS for different applications. Conjoint method and mixed logit model are used to estimate consumer preference. As a result, consumers react most sensitively to changes in the quality of the web browsing service and have the highest marginal willingness to pay (MWTP) for improvements in the quality of this service. On the other hand, MWTPs are relatively low for voice over IP (VoIP) and IP television (IPTV), which are sensitive to latency. However, it is shown that the MWTPs of VoIP and IPTV increase when VoIP (IPTV) users are separated from VoIP (IPTV) non-users or when it is assumed that there is no substitute for VoIP (IPTV). It implies that Internet service providers can profit by providing high QoS to VoIP and IPTV as the markets for VoIP and IPTV services mature and user numbers increase.

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    File URL: ftp://147.46.237.98/DP-83.pdf
    File Function: First version, 2011
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    Paper provided by Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) in its series TEMEP Discussion Papers with number 201183.

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    Length: 24 pages
    Date of creation: Nov 2011
    Date of revision: Nov 2011
    Handle: RePEc:snv:dp2009:201183
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    1. Joel Huber & Kenneth Train, 2001. "On the Similarity of Classical and Bayesian Estimates of Individual Mean Partworths," Econometrics 0012003, EconWPA.
    2. M. Weeks, 2003. "Discrete choice methods with simulation, Kenneth E. Train, Cambridge University Press, 2003, ISBN: 0-521-81696-3, pp. 334," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(3), pages 379-383.
    3. Layton, David F., 2000. "Random Coefficient Models for Stated Preference Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 21-36, July.
    4. Lee, Jongsu & Kim, Yeonbae & Lee, Jeong-Dong & Park, Yuri, 2006. "Estimating the extent of potential competition in the Korean mobile telecommunications market: Switching costs and number portability," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 107-124, January.
    5. Yeonbae Kim & Jeong-Dong Lee & Daeyoung Koh, 2005. "Effects of consumer preferences on the convergence of mobile telecommunications devices," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 817-826.
    6. Green, Paul E & Srinivasan, V, 1978. " Conjoint Analysis in Consumer Research: Issues and Outlook," Journal of Consumer Research, University of Chicago Press, vol. 5(2), pages 103-23, Se.
    7. Allenby, Greg M. & Rossi, Peter E., 1998. "Marketing models of consumer heterogeneity," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 57-78, November.
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