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Household Demand for Broadband Internet Service

Author

Listed:
  • 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.

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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    File URL: http://www-siepr.stanford.edu/repec/sip/09-008.pdf
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    References listed on IDEAS

    as
    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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    More about this item

    Keywords

    broadband; choice experiment; experience; internet; willingness-to-pay;
    All these keywords.

    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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