The Impacts of the Lifeline Subsidy on High-Speed Internet Access

62 Pages Posted: 2 Dec 2019 Last revised: 27 Jan 2021

See all articles by Samara Mendez

Samara Mendez

The Humane League Labs

Gabor Molnar

University of Colorado at Boulder

Scott Savage

University of Colorado at Boulder - Department of Economics

Date Written: January 27, 2021

Abstract

The impacts of the Lifeline subsidy on high-speed Internet prices, demand and welfare are evaluated. Results show that low-income households would require large price reductions to subscribe to basic broadband. Simulations of competition between cable and telephone firms show that the $9.25 subsidy lowers the prices for low-quality plans and incentivized about six percent of low-income households to take up high-speed Internet. When firms price discriminate by charging different prices to low- and high-income households choosing the same plan, about 25 percent of low-income households enter the market and consume high-speed Internet. When the social planner sets prices and price discriminates, 68 percent of low-income households enter the market and more higher speed plans are consumed.

Keywords: Internet, price discrimination, subsidy, uniform pricing

JEL Classification: H24, H25, L13, L96

Suggested Citation

Mendez, Samara and Molnar, Gabor and Savage, Scott, The Impacts of the Lifeline Subsidy on High-Speed Internet Access (January 27, 2021). TPRC48: The 48th Research Conference on Communication, Information and Internet Policy, Available at SSRN: https://ssrn.com/abstract=3488481 or http://dx.doi.org/10.2139/ssrn.3488481

Samara Mendez

The Humane League Labs ( email )

PO Box 10476
Rockville, MD 20849
United States
(202) 643-8326‬ (Phone)

HOME PAGE: http://https://thehumaneleague.org/labs

Gabor Molnar

University of Colorado at Boulder ( email )

University of Colorado Boulder
Boulder, CO 80309-0530
United States

Scott Savage (Contact Author)

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/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
119
Abstract Views
675
rank
314,811
PlumX Metrics