Household Demand for Broadband Internet in 2010

The B.E. Journal of Economic Analysis & Policy, Vol. 10, No. 1, 2010

Posted: 7 Oct 2010

See all articles by Scott Savage

Scott Savage

University of Colorado at Boulder - Department of Economics

Donald M. Waldman

University of Colorado at Boulder - Department of Economics

Gregory L. Rosston

Stanford Institute for Economic Policy Research

Date Written: August 1, 2010

Abstract

This paper uses data from a nationwide survey administered during late 2009 and early 2010 to estimate a random utility model of household preferences for broadband Internet service. Reliability and speed are important service characteristics: the representative household is willing to pay $20 per month for more reliable service; $45 for an improvement in speed from slow to fast; and $48 for an improvement in speed from slow to very fast. A representative household would be willing to pay $79 per month for a fast, reliable Internet service. Internet valuations increase with experience, and there has been an estimated two- to three-fold increase in consumer surplus per household between 2003 and 2010. If experience causes increased valuation, targeted programs that educate households about the benefits from broadband, expose households to the broadband experience and/or directly support the initial take-up of broadband have potential to increase overall penetration in the United States.

Keywords: broadband, choice experiment, consumer surplus, experience, internet, willingness-to-pay

JEL Classification: L51, L86, L96, C2

Suggested Citation

Savage, Scott and Waldman, Donald M. and Rosston, Gregory L., Household Demand for Broadband Internet in 2010 (August 1, 2010). The B.E. Journal of Economic Analysis & Policy, Vol. 10, No. 1, 2010. Available at SSRN: https://ssrn.com/abstract=1688027

Scott Savage

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States
303-735-1165 (Phone)
303-492-1112 (Fax)

HOME PAGE: http://holiday.colorado.edu/savages/

Donald M. Waldman

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309-0256
United States
303-492-6781 (Phone)
303-492-8960 (Fax)

Gregory L. Rosston (Contact Author)

Stanford Institute for Economic Policy Research ( email )

Landau Economics Building
579 Serra Mall at Galvez St.
Stanford, CA 94305-6015
United States

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