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Saturday, September 9 • 2:33pm - 3:05pm
Distinguishing Bandwidth and Latency in Household’s Willingness-To-Pay for Broadband Internet Speed

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We measure households’ willingness-to-pay for increases in home broadband Internet connection speed using data from a nationally administered discrete choice survey. We characterize Internet speed along two dimensions – bandwidth and latency. We administered two different surveys; both have variation in price, data caps, and download and upload bandwidth, but only one describes, and has variation in, latency. These surveys allow us to measure tradeoffs between bandwidth and other connectivity features such as price and data caps, and perhaps most notably, provide the only empirical evidence to date of tradeoffs between bandwidth and latency. The presence/absence of latency in the two survey versions also allows us to assess if and how valuation of bandwidth changes when latency is considered. The information this research generates is necessary for making informed broadband policy decisions. For example, in designing its reverse auction for subsidizing broadband coverage, the Federal Communications Commission should know how much consumers value incremental improvements in bandwidth, latency, and usage allowance, as well as tradeoffs among the three.

To estimate consumer valuation of these connectivity characteristics, we conduct discrete choice experiments within our survey. Specifically, we give intuitive and detailed explanations of connectivity features and ask respondents to choose among alternative home Internet connection options. Respondents also compare alternatives we construct with their current home connection. The choices we generate employ an efficient survey design that elicits realistic responses and follows established practice in the literature. As of this writing, we have a finalized survey design based on market research and meetings with several focus groups assembled by a professional focus-group establishment in Indianapolis. We are coding the survey for online dissemination by a nationally recognized online survey firm (ResearchNow), and expect to distribute the survey within the next month. The results and initial draft will be assembled no later than June, 2017.

Moderators
Presenter
YL

Yu-Hsin Liu

Kelley School of Business, Indiana University

Author
JP

Jeffrey Prince

Indiana University
SW

Scott Wallsten

Technology Policy Institute

Saturday September 9, 2017 2:33pm - 3:05pm
ASLS Hazel - Room 120

Attendees (20)