1. Broadband Internet access, awareness and use: Analysis of U.S. household data Scott J. Savage, Donald Waldman Telecommunications Policy 29:8 (Sep 2005) Prepared for ECON 439/539 John Miaso April 25, 2007

2. Introduction Analysis of broadband market penetration with digital subscriber line (DSL) and cable modem services Awareness of service Valuation of service characteristics Research question: “Which service attributes are preferred by customers?”

3. Introduction Typical cost of internet access  Marginal cost of transport  Monthly subscription As of Dec. 2001, average subscription rate was $39.40 for DSL, $51.67 for cable  Initial costs Modem: $100-200 Installation: $50-100 Account activation: $0-50

4. Introduction 41% of respondents who use dial-up also have a second phone line, paying an average of $45/month total 90% of these respondents are aware of broadband availability in their area, so a lack of access does not explain reluctance to switch Key question for policy and marketing

5. Methods Nationwide mail survey of US residents, random sampling Average respondent: White, 50 years of age, some college, in a household with 1.7 other members, employed in the previous month with average income of $65,000/year

6. Survey Results Internet access positively associated with income, education, and household size Negatively associated with age No correlation found with race or employment status

7. Survey Results

8. Individual utility increases when:  Not always-on  Always-on  Access speed increases  Price decreases  Reliability increases

9. Survey Results

10. Conclusions Preference for broadband most apparent among those with higher income, college education, multiple PCs, and several years of online experience Survey respondents mostly aware that broadband was available to them, but reluctance to upgrade not explained

11. Conclusions WTP calculation indicates which aspects of service are most valuable to customers Implications for service provider executives and policy makers Lack of a “killer app” may be suppressing broadband adoption rates

12. Conclusions ‘‘What would need to change for you to use the Internet to view entertainment video such as a full-length movie or TV show?’’