Residential demand for access to the Internet

The focus in this paper is on the residential demand for access to the Internet, and represents an extension of earlier work on Internet access demand by Rappoport, Taylor, Kridel, and Serad (1998), Kridel, Rappoport, and Taylor (1999), Kridel, Rappoport, and Taylor (2000), and Duffy-Deno (2000). The analysis of broadband demand has been studied by Eisner and Waldon (1999), Madden, Savage, and Coble-Neal (1999) and Madden and Simpspn (1997). With the aggressive marketing of cable modems and ADSL service, a growing number of residential households in the U.S. now have a choice regarding how they access the Internet. The choice set available, however, is not uniform. In some areas, the only form of access is through dial-up modem, while in other areas various forms of high-speed access (cable modems or ADSL) are available as well. This paper reports the results from a set of models of Internet access where the models are differentiated by the availability of Internet access options. The models are based on the analysis of surveys submitted by over 20,000 households during the period January – March, 2000. Among other things, we are able to report broadband penetration rates and compare those to Internet access estimates presented in the NTIA Report, Falling Through the Net: Toward Digital Inclusion. In addition, we present a more complete set of estimated price elasticities for both basic and high-speed access to the Internet.

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