Willingness to pay for broadband: A case study of Wisconsin

Abstract

As broadband expansion efforts in the U.S. continue with historic investments, consumer demand for residential broadband services is of first-order importance. Several past broadband willingness to pay studies estimate the value of broadband to be low, compared to the current national average cost of internet subscriptions being around $65 per month. Additional estimates of household's willingness to pay for broadband are needed to provide more insight into how much households value these services and what type of support would be most efficient in increasing broadband adoption to close the digital divide. These estimates are helpful for policymakers, internet service providers, and community leaders working on broadband subsidy programs, trying to bring ISPs to communities, and setting service prices. Using choice experiment data from a 2022 broadband survey in Wisconsin, I find households are willing to pay $45-$334 per month to go from not having internet at home to having speeds between 25 Mbps and 1,000 Mbps and are willing to pay $10-$38 for greater reliability, depending on household income level. While consumers are willing to pay more for speed than reliability, the value consumers place on speed is diminishing. Connection is valuable to people, but getting connected at a much faster speed is not seen as worth a lot more. These estimates suggest households place a high value on home internet and are willing to pay at least, if not more, than prices already available on the market in many places.