Abstract
Using 2009 data from the U.S. Energy Information Administration, a study of factors that influence broadband adoption is conducted. The data set includes previously studied demographic factors, as well as records associated with the household’s use of computers, television, pay television services, and broadband. Analysis of the data indicate that, when controlling for a number of demographic factors, the purchase of television services is positively correlated with broadband adoption, with consumers who purchase either cable or satellite television service adopting broadband at a higher rate than those who utilize over-the-air television services. The results suggest that consumers who prefer over-the-air television services may face a more substantial hurdle in broadband adoption, one that might be lowered through the availability of affordable stand-alone broadband services.
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Notes
RECS provides state-level identifiers for individuals in the following states: Massachusetts, New York, New Jersey, Pennsylvania, Illinois, Michigan, Wisconsin, Missouri, Virginia, Georgia, Florida, Tennessee, Texas, Colorado, Arizona, and California. These states are included in the study. In addition, because state-level broadband prices from Ookla were the same for Kansas and Nebraska, observations associated with this state grouping from the RECS were also included in the study.
This shortcoming was noted by by Flamm and Chaudhuri 2007: “The major US government agencies charged with gathering information on the very high profile subject of Internet service demand have done a poor job of gathering data on what to any economist would be the first variable to come to mind when considering determinants of demand. The NTIA sponsored-surveys of computer and Internet use collected data on Internet service prices in 1998 and 2000, but then discontinued collecting the data after 2000 (this price data was never analyzed in any of the NTIA reports), for reasons that are unclear. Despite its continuing interest in broadband and high speed information services, the FCC has apparently never attempted to collect sustained data on pricing of these Internet services. The Bureau of Labor Statistics has no separate price index for these services, and appears to have made no effort to induce the Census to continue collecting this data after 2000, despite the fact that the survey used to collect this information was a special supplement to it joint CPS program with Census. Indeed, the only government agency that has made any serious attempt to analyze Internet service price data is the GAO (and its 2000 study demonstrates that such data could be collected quite easily and cheaply, simply by using private market research firms as contractors).” Unfortunately, the situation has not improved.
The RECS data do not contain information on whether the respondent is foreign born, or whether the householder has a disability, variables that are included in the NTIA study.
The broadband connection variable used in the study takes a value of one if the household reports having any broadband connection (cable, telephone company, or satellite.) Reproducing the Probit study including households that have only cable or telephone-company broadband does not result in any change in the sign or significance level of the coefficients, except for the single-family home variable, which retains a positive sign, but is not significant at 5 %. (About 2 % of households in the RECS data report having satellite broadband service.)
As noted by Greene (2003), p. 683, a precise interpretation of values of the McFadden statistic between its limits of zero and one is not possible.
See Green (2003), p. 684 for further description.
“DISH Network has agreements with Embarq, Windstream, TDS, Frontier, and ViaSat to bundle their individual DSL and telephony services with DISH Network’s video service.” DirecTV Form 10-K for the year ending December 31, 2012, p. 9. http://www.sec.gov/Archives/edgar/data/1465112/000104746912001379/a2207454z10-k.htm
As this research and other research shows, Hispanics are less likely to adopt terrestrial broadband (NTIA 2011; Prieger and Hu 2008). It has also been documented that Hispanics are less likely to maintain wireline telephone service, preferring to use wireless-only voice telephony (Blumberg and Luke 2012). This preference may eliminate the primary gateway product to telephone company broadband service—a wireline voice line (telephone companies have various policies regarding the availability of stand-alone DSL service, potentially reducing the ability of cord-cutters to adopt DSL). It is notable that Hispanics are observed to adopt wireless broadband at rates higher than non-Hispanics (Smith 2012), which likely reflects the gateway to wireless broadband provided by wireless voice service.
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Acknowledgments
The author would like to thank the editor and two anonymous referees for their helpful comments. Research for this paper began in the spring of 2012 while the author was the Scripps Visiting Professional at Ohio University’s J. Warren McClure School of Information and Telecommunication Systems. All errors that remain are the author’s responsibility.
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Roycroft, T.R. Empirical study of broadband adoption using data from the 2009 Residential Energy Consumption Survey. J Regul Econ 43, 214–228 (2013). https://doi.org/10.1007/s11149-012-9207-2
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DOI: https://doi.org/10.1007/s11149-012-9207-2