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
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Slide1
Price Sensitivity of Broadband Non-Adopters
Tom Koutsky
February 7, 2013
Slide2If 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%
Slide33 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
Slide44 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
Slide55 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
Slide66= 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
Slide7Price 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
Slide8Late 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