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Price Sensitivity of Broadband Non-Adopters Price Sensitivity of Broadband Non-Adopters

Price Sensitivity of Broadband Non-Adopters - PowerPoint Presentation

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Price Sensitivity of Broadband Non-Adopters - PPT Presentation

Tom Koutsky February 7 2013 If home broadband service was offered at a price you considered acceptable 53 of nonadopters report not being price sensitive Price incentive strategies alone ID: 781342

000 price broadband ref price 000 ref broadband adopters 0001 sensitive sensitivity internet computer papers 999 digital http service

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Slide1

Price Sensitivity of Broadband Non-Adopters

Tom Koutsky

February 7, 2013

Slide2

If home broadband service was offered at a price you considered acceptable?53% of non-adopters report not being price sensitivePrice incentive strategies alone will not resolve the demand gap across America2How much does price matter?

I would not subscribe

(not price sensitive) 53%

I

don’t know

8%

Slide3

3 AllNon-Adopters

Price-Sensitive

Not

Price-Sensitive

Own a home computer

53%

67%

41%

Subscribe to dial-up service

25%

32%

19%Use the Internet outside of the home35%39%24%Children living at home31%45%21%Employed44%57%35%Hispanic24%31%20%Average annual household income (self-reported)$35,800$37,800 $33,400 Average age504156

Price sensitive Non-adopters

Slide4

4 Top Reported Barrier to AdoptionAllNon-Adopters

Price-Sensitive

Not

Price-Sensitive

The m

onthly cost of service is too expensive

18%

27%

13%

T

here is nothing on the Internet that I want to see or use

18%7%26% The cost of a computer is too expensive7%9%6% Broadband isn't available in my area7%14%3% The Internet is too complicated6%3%8% I don't feel comfortable using a computer5%2%7% I can get access somewhere else5%6%5% Concerns about fraud or identity theft4%4%

5%

Activation

and installation fees are too expensive4%5%3% I don't know anything about broadband4%3%3% I don't go online very often from home3%2%3% Available service is not fast enough1%1%1% Other barrier9%10%8% Don’t know/refused6%4%7%

Barriers

to

Broadband Adoption

Slide5

5 Demographics B

S.E.

Wald

Df

Sig.

Odds Ratio

Computer

ownership (

ref: no computer at home)

.635

.069

85.6941.0001.887Internet use someplace other than home (ref: no use outside of home).581.06970.0021.0001.787Use the Internet via cell phone (ref: No Internet use via cell phone).402.07032.4751.0001.494Main barrier to broadband adoption (ref: Cost)  516.6944.000  Digital literacy-1.040.089

137.744

1

.000.353 Relevance-1.618.091314.8291.000.198 Availability.491.10920.3681.0001.633 Other-.938.092103.4761.000.392Race/Ethnicity (ref: White, non-Hispanic) 

 

17.463

4

.002

  African American.366.10013.3451.0001.442 Asian-.174.286.3711.543.840 Hispanic.216.1044.3441.0371.241 Other.271.1652.6981.1001.311Age(ref:18-34)  83.9203.000  35-54-.199.0964.2741.039.820 55-69-.399.11013.2721.000.671 70 or older-1.179.14071.1521.000.308

= significant at 95% confidence

Marginal Impact of Demographic

Factors

on

Non-Adopters’ Price

Sensitivity – Binary logistic MODEL

Slide6

6= significant at 95% confidenceMarginal Impact of Demographic Factorson Non-Adopters’ Price Sensitivity – EXPANDED MODEL Demographics

B

S.E.

Wald

Df

Sig.

Odds Ratio

Educational attainment(ref: Advanced degree)

 

 

9.198

4.056  Less than high school-.315.1554.1241.042.730 High school graduate-.334.1326.4561.011.716 Some college-.159.1321.4501.228.853 College graduate-.198.138

2.070

1

.150.820Presence of children (ref: no children at home).295.08113.1721.0001.343Employment (ref: employed full-time or part-time)  24.2074.000  Retired-.187.0943.9641.046.829 Disabled, not working outside the home

.417

.122

11.649

1

.0011.517 Unemployed-.085.123.4731.492.919 Other not employed.178.1421.5721.2101.195Annual Household Income (ref: $75,000 or more)  9.2715.099  Less than $15,000.177.1251.9821.1591.193 $15,000 to $24,999.027.120.0521.8191.028 $25,000 to $34,999.069.117.3461.5561.072 $35,000 to $49,999.255.1125.2171.0221.290 $50,000 to $74,999.009.112.0061

.938

1.009

Rural

status (

ref

: Non-rural

)

.151

.065

5.314

1

.021

1.163

Constant

.043

.085

.255

1

.613

1.044

Slide7

Price sensitivity is significantly different across various “vulnerable” demographics on the wrong side of the digital dividePrice-incentive broadband adoption programs will have different results across these demographic groupsPolicy makers or marketing strategists should complement price incentive strategies with programs addressing other barriers to entry such as awareness campaigns, digital literacy training, or free/reduced hardwareIf we rely on price subsidies alone, we will not close the digital divide7observations

Slide8

Late to the Party: How New Broadband Subscribers Compare to Early Adopters, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1995130Let’s Make a Deal: Price Sensitivity and Willingness to Pay in the American Broadband Market, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2033415Connected Nation Research releases, including state-specific data reports: http://www.connectednation.org/researchConnected Nation Policy Briefs: http://www.connectednation.org/data-center-policy8For more INFORMATION…

Tom

Koutsky

tkoutsky@connectednation.org

(202) 674-8409