IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v48y2024i10s0308596124001708.html
   My bibliography  Save this article

Willingness to pay for broadband: A case study of Wisconsin

Author

Listed:
  • Boyce, Mckenzie

Abstract

As broadband expansion efforts in the U.S. continue with historic investments, consumer demand for residential broadband services is of first-order importance. Several past broadband willingness to pay studies estimate the value of broadband to be low, compared to the current national average cost of internet subscriptions being around $65 per month. Additional estimates of household's willingness to pay for broadband are needed to provide more insight into how much households value these services and what type of support would be most efficient in increasing broadband adoption to close the digital divide. These estimates are helpful for policymakers, internet service providers, and community leaders working on broadband subsidy programs, trying to bring ISPs to communities, and setting service prices. Using choice experiment data from a 2022 broadband survey in Wisconsin, I find households are willing to pay $45-$334 per month to go from not having internet at home to having speeds between 25 Mbps and 1,000 Mbps and are willing to pay $10-$38 for greater reliability, depending on household income level. While consumers are willing to pay more for speed than reliability, the value consumers place on speed is diminishing. Connection is valuable to people, but getting connected at a much faster speed is not seen as worth a lot more. These estimates suggest households place a high value on home internet and are willing to pay at least, if not more, than prices already available on the market in many places.

Suggested Citation

  • Boyce, Mckenzie, 2024. "Willingness to pay for broadband: A case study of Wisconsin," Telecommunications Policy, Elsevier, vol. 48(10).
    • Handle: RePEc:eee:telpol:v:48:y:2024:i:10:s0308596124001708
    DOI: 10.1016/j.telpol.2024.102873
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596124001708
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.telpol.2024.102873?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Liu, Yu-Hsin & Prince, Jeffrey & Wallsten, Scott, 2018. "Distinguishing bandwidth and latency in households’ willingness-to-pay for broadband internet speed," Information Economics and Policy, Elsevier, vol. 45(C), pages 1-15.
    2. Caldarulo, Mattia & Mossberger, Karen & Howell, Anthony, 2023. "Community-wide broadband adoption and student academic achievement," Telecommunications Policy, Elsevier, vol. 47(1).
    3. 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.
    4. Savage, Scott J. & Waldman, Donald, 2005. "Broadband Internet access, awareness, and use: Analysis of United States household data," Telecommunications Policy, Elsevier, vol. 29(8), pages 615-633, September.
    5. John Lai & Nicole O. Widmar & Courtney Bir, 2020. "Eliciting Consumer Willingness to Pay for Home Internet Service: Closing the Digital Divide in the State of Indiana," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(2), pages 263-282, June.
    6. Elizabeth A. Mack & Scott Loveridge & Thomas Keene & John Mann, 2024. "A Review of the Literature About Broadband Internet Connections and Rural Development (1995-2022)," International Regional Science Review, , vol. 47(3), pages 231-292, May.
    7. Carvalho, Mckenzie & Hagerman, Amy D. & Whitacre, Brian, 2022. "Telework and COVID-19 Resiliency in the Southeastern United States," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 52(01), April.
    8. 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.
    9. Worden, David & Hambly, Helen, 2022. "Willingness to pay and pricing for broadband across the rural/urban divide in Canada," Telecommunications Policy, Elsevier, vol. 46(2).
    10. Savage Scott J. & Waldman Donald M., 2004. "United States Demand for Internet Access," Review of Network Economics, De Gruyter, vol. 3(3), pages 1-20, September.
    11. 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.
    12. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, January.
    13. Aviv Nevo & John L. Turner & Jonathan W. Williams, 2016. "Usage‐Based Pricing and Demand for Residential Broadband," Econometrica, Econometric Society, vol. 84, pages 411-443, March.
    14. Steven Deller & Brian Whitacre & Tessa Conroy, 2022. "Rural broadband speeds and business startup rates," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 999-1025, May.
    15. Brian Whitacre, 2024. "The fibre broadband housing premium across three US States," Regional Studies, Regional Science, Taylor & Francis Journals, vol. 11(1), pages 38-62, December.
    16. Kelsey L. Conley & Brian E. Whitacre, 2020. "Home Is Where the Internet Is? High-speed Internet’s Impact on Rural Housing Values," International Regional Science Review, , vol. 43(5), pages 501-530, September.
    17. Horrigan, John B. & Whitacre, Brian E. & Galperin, Hernan, 2024. "Understanding uptake in demand-side broadband subsidy programs: The affordable connectivity program case," Telecommunications Policy, Elsevier, vol. 48(8).
    18. Steven Deller & Brian Whitacre, 2019. "Broadband's relationship to rural housing values," Papers in Regional Science, Wiley Blackwell, vol. 98(5), pages 2135-2156, October.
    19. Ros, Agustin J., 2023. "Determinants of fixed and mobile broadband demand in Mexico using discrete choice exercises and logit and conditional logit models," Information Economics and Policy, Elsevier, vol. 64(C).
    20. Rosston Gregory L. & Savage Scott J & Waldman Donald M, 2010. "Household Demand for Broadband Internet in 2010," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-45, September.
    21. 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.
    22. Jonas Schmidt & Tammo H. A. Bijmolt, 2020. "Accurately measuring willingness to pay for consumer goods: a meta-analysis of the hypothetical bias," Journal of the Academy of Marketing Science, Springer, vol. 48(3), pages 499-518, May.
    23. Tessa Conroy & Sarah A. Low, 2022. "Entrepreneurship, Broadband, and Gender: Evidence from Establishment Births in Rural America," International Regional Science Review, , vol. 45(1), pages 3-35, January.
    24. Lee, Hyun Ji & Whitacre, Brian, 2017. "Estimating willingness-to-pay for broadband attributes among low-income consumers: Results from two FCC lifeline pilot projects," Telecommunications Policy, Elsevier, vol. 41(9), pages 769-780.
    25. Savage, Scott James & Waldman, Donald M., 2009. "Ability, location and household demand for Internet bandwidth," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 166-174, March.
    26. Brian E. Whitacre & Bradford F. Mills, 2007. "Infrastructure and the Rural—urban Divide in High-speed Residential Internet Access," International Regional Science Review, , vol. 30(3), pages 249-273, July.
    27. Urama, Nathaniel E. & Ogbu, Osita, 2018. "Evaluating consumer perception and willingness to pay for broadband in Nigeria," Telecommunications Policy, Elsevier, vol. 42(6), pages 421-432.
    28. Brian Whitacre & Lara Brooks, 2014. "Do broadband adoption rates impact a community's health?," Behaviour and Information Technology, Taylor & Francis Journals, vol. 33(7), pages 767-779, July.
    29. Isley, Catherine & Low, Sarah A., 2022. "Broadband adoption and availability: Impacts on rural employment during COVID-19," Telecommunications Policy, Elsevier, vol. 46(7).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Briglauer, Wolfgang & Krämer, Jan & Palan, Nicole, 2024. "Socioeconomic benefits of high-speed broadband availability and service adoption: A survey," Telecommunications Policy, Elsevier, vol. 48(7).
    2. Liu, Yu-Hsin & Prince, Jeffrey & Wallsten, Scott, 2018. "Distinguishing bandwidth and latency in households’ willingness-to-pay for broadband internet speed," Information Economics and Policy, Elsevier, vol. 45(C), pages 1-15.
    3. Sinclair, Andrew, 2023. "Assessing the benefits of high-speed broadband: Lessons from Australia's National Broadband Network (NBN)," Information Economics and Policy, Elsevier, vol. 65(C).
    4. Ros, Agustin J., 2023. "Determinants of fixed and mobile broadband demand in Mexico using discrete choice exercises and logit and conditional logit models," Information Economics and Policy, Elsevier, vol. 64(C).
    5. 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.
    6. repec:ags:aaea22:335602 is not listed on IDEAS
    7. Kim, Yongwon & Kim, Yongkyu, 2020. "The Value of Wi-Fi as Entertainment: An Application to Free Wi-Fi in City Buses of Korea," ITS Conference, Online Event 2020 224863, International Telecommunications Society (ITS).
    8. Grzybowski, Lukasz & Hasbi, Maude & Liang, Julienne, 2018. "Transition from copper to fiber broadband: The role of connection speed and switching costs," Information Economics and Policy, Elsevier, vol. 42(C), pages 1-10.
    9. Gary A. Wagner & Hyun Ji Lee, 2024. "Does broadband affect local economic outcomes less than we thought? Micro evidence from Louisiana," Contemporary Economic Policy, Western Economic Association International, vol. 42(1), pages 68-93, January.
    10. Worden, David & Hambly, Helen, 2022. "Willingness to pay and pricing for broadband across the rural/urban divide in Canada," Telecommunications Policy, Elsevier, vol. 46(2).
    11. Biedny, Christina & Whitacre, Brian E. & Van Leuven, Andrew J., 2024. "Do Gigabits Mean Business? “Ultra-Fast” broadband availability's effect on business births," Information Economics and Policy, Elsevier, vol. 68(C).
    12. Paulo Chahuara, 2018. "Preferencias y Valorizacion por Atributos del Servicio de Internet Fijo en el Peru: un primer acercamiento via experimento de eleccion discreta," Documentos de Trabajo 39, OSIPTEL.
    13. Petulowa, Marc & Liang, Julienne, 2016. "Mobile-only consumers arise from heterogeneous valuation of fixed services," 27th European Regional ITS Conference, Cambridge (UK) 2016 148699, International Telecommunications Society (ITS).
    14. Liang, Julienne & Petulowa, Marc, 2018. "Mobile-only consumers arise from heterogeneous valuation of fixed services," Telecommunications Policy, Elsevier, vol. 42(2), pages 145-153.
    15. 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).
    16. Anil Rupasingha & John Pender & Ryan Williams & Joshua Goldstein & Devika Nair, 2023. "Place‐based subsidies and employment growth in rural America: Evidence from the broadband initiatives programme," Papers in Regional Science, Wiley Blackwell, vol. 102(4), pages 677-708, August.
    17. Boik, Andre, 2017. "The economics of universal service: An analysis of entry subsidies for high speed broadband," Information Economics and Policy, Elsevier, vol. 40(C), pages 13-20.
    18. 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.
    19. 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.
    20. Andre Boik & Shane Greenstein & Jeffrey Prince, 2016. "The Empirical Economics of Online Attention," Working Papers id:11100, eSocialSciences.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:telpol:v:48:y:2024:i:10:s0308596124001708. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.