Broadband Demand: The Cost and Price Elasticity of Broadband Internet Service in Rural Pennsylvania

This year-long research project surveyed rural and urban Pennsylvanians about their willingness to pay for high-speed broadband service. It provides a unique first look into factors that continue to create substantial barriers to closing the digital divide. The researchers surveyed 1,446 Pennsylvania residents in May and June 2020. They used a hybrid telephone/SMS (short message service, or “text messaging”) survey that asked respondents about the type of internet technology available to them, broadband pricing, and willingness to pay for 25 Megabits per second (Mbps) broadband.

Key findings:

  1. There are differences in the types of internet service used by urban and rural respondents, with urban respondents reporting higher use of cable and fiber connectivity and rural respondents reporting higher use of dial-up, DSL, and satellite;
  2. An evaluation of pricing data alone masks important differences in speed tiers between urban and rural respondents;
  3. Within pricing tiers, rural respondents are more likely to have slower internet speeds and urban respondents are more likely to have faster speeds;
  4. Urban and rural respondents are receiving systematically inequitable service - not only in terms of broadband speed, but also in price for service;
  5. The demand for broadband service shows a “sweet spot” in terms of willingness to pay in the under $60/month range; and,
  6. When speed and price are held stable, rural respondents have a higher willingness to pay for broadband than urban residents.

Policy considerations:

  1. Change Pennsylvania’s current definition of “broadband” – currently defined as 1.544 Mbps download and 128 kilobits per second upload speed – to meet or exceed federal definitions for broadband.
  2. Establish government support mechanisms for broadband buildout that provide greater transparency and standardized public disclosure of broadband service characteristics, including speed, regular pricing, and service limitations.
  3. Commission a statewide study to assess and derive a broadband affordability formula and model for how much low-income households can afford to spend on broadband without having to sacrifice other necessities such as rent, food, medical care, etc.
  4. As suggested in earlier research on broadband availability and access, policymakers should maximize the options for broadband service provision by allowing other viable entities, such as community-based networks, municipalities, and cooperatives, to deploy broadband across rural Pennsylvania.

Broadband Demand: The Cost and Price Elasticity of Broadband Internet Service in Rural Pennsylvania