For this project, we assemble a new dataset consisting of more than 25,000 residential and business broadband plans from all OECD countries from 2007 2009. We explore three issues: the relationship between plan components such as metering and consumer prices, price changes over time, and how broadband prices vary across countries.
This paper, part 1 of the project, discusses pricing for broadband plans and, specifically, the relationship between plan components and pricing. We find that residential broadband plans with data caps plans in which consumers pay a base price for a set amount of data cost less than plans with unlimited data, other things being equal, for consumers who do not exceed the cap. The estimates suggest that a residential standalone plan with a 10 gigabyte (GB) cap, for example, would cost about 27 percent less than an otherwise identical, but unlimited plan. A residential triple play plan would cost about 14 percent less than an otherwise identical but unlimited plan. In the case of standalone broadband, each gigabyte of the cap is associated with an additional $1.67 per year; for triple play the premium is $1.85. In plans that include video packages, each channel is, on average, associated with a $2 price increase over the course of a year.
Attachments
Scott Wallsten is President and Senior Fellow at the Technology Policy Institute, a Policy Fellow at the Stanford Institute for Economic Policy Research (SIEPR), and a senior fellow at the Georgetown Center for Business and Public Policy. He is an economist with expertise in industrial organization and public policy, and his research focuses on competition, regulation, telecommunications, the economics of digitization, and technology policy. He was the economics director for the FCC's National Broadband Plan and has been a lecturer in Stanford University's public policy program, director of communications policy studies and senior fellow at the Progress & Freedom Foundation, a senior fellow at the AEI–Brookings Joint Center for Regulatory Studies, a resident scholar at the American Enterprise Institute, an economist at the World Bank, and a staff economist at the U.S. President's Council of Economic Advisers. He holds a PhD in economics from Stanford University.
