The Georgetown Center for Business and Public Policy

December 2008 -

The Georgetown Center is please to announce a new paper on “The Impact of Regulation On Broadband Adoption by Lower-Income Households” co-authored by the Georgetown Center’s Senior Policy Fellow Robert Shapiro and Dr. Kevin Hassett. In the paper, the co-authors address a critically important issue regarding the role of policy in fostering the adoption of broadband by lower-income households in the United States. Specifically, the authors draw upon existing econometric evidence on the economic determinants of broadband subscription and cost estimates for broadband investment expenditures to simulate the effects of two frequently discussed pricing models for broadband.

The simulation indicates that strict adherence to the current model of flat-fee access pricing to retail Internet customers is likely to retard adoption growth rates for broadband among low income households as the impact of flat-rate pricing will be felt disproportionately by lower-income households. In contrast, pricing strategies that distribute the role of revenue generation to content providers, who together with their customers drive Internet expansion needs, is found to lead to significantly higher broadband adoption rates among lower and moderate income households.

The Georgetown Center’s Executive Direct John Mayo commented that “It is especially critical that the economic lift enabled by broadband be affordable to all segments of society. The Shapiro-Hassett study should prove to be a valuable guidepost for policymakers as they consider the implications of Internet policy on broadband adoption.”

 

The full study is available here.