How do Attributes of Broadband Plans Affect Price?

Wallsten Scott J. () and Riso James
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Wallsten Scott J.: Technology Policy Institute and Georgetown Center for Business and Public Policy, 1099 New York Ave., Suite 520, Washington, DC 20001, USA
Riso James: Cornerstone Research, 599 Lexington Avenue, 43rd Floor, New York, NY 10022-7642, USA

Review of Network Economics, 2014, vol. 13, issue 1, 95-119

Abstract: Broadband has become ubiquitous across OECD countries, yet because it is typically sold as part of a bundle of services, each with its own set of options, little research has explored how it is priced. In this paper we assemble a new dataset of more than 25,000 residential and business broadband plans from all OECD countries from 2007 to 2009 to explore how data metering, service contracts, and bundling voice, video, and data affect the prices consumers pay. We find that faster speeds are correlated with higher prices, although prices increase at a decreasing rate as speeds increase. Additionally, bundles including voice and video are more expensive than standalone service, and plans with more channels included in video bundles are more expensive than plans with fewer channels. Finally, the analysis shows tradeoffs consumers and suppliers make: plans with data caps are less expensive than those without caps and plans with contracts are less expensive than month-to-month plans.

Keywords: broadband; data caps; prices; usage based pricing (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1515/rne-2012-0006

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