Household Demand for Broadband Internet Service

47 Pages Posted: 19 Jan 2012  

Gregory L. Rosston

Stanford Institute for Economic Policy Research

Scott Savage

University of Colorado at Boulder - Department of Economics

Donald M. Waldman

University of Colorado at Boulder - Department of Economics

Date Written: August 15, 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, experience, Internet, willingness-to-pay

JEL Classification: C24, C25, D12

Suggested Citation

Rosston, Gregory L. and Savage, Scott and Waldman, Donald M., Household Demand for Broadband Internet Service (August 15, 2010). TPRC 2010. Available at SSRN: https://ssrn.com/abstract=1988327

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

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)

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