Consumers Willing to Upgrade, but Slow to Embrace Super-Fast Technology

WASHINGTON, October 5, 2010 – Consumers are willing to pay a large amount to upgrade their internet access speeds from slow to fast, but are more reluctant to upgrade from fast to super-fast, according to a research paper discussed at the Telecommunications Policy Research Conference last week.

Gregory Rosston of Stanford University discussed research addressing the value of consumers’ high speed internet access. Consumers are as greatly interested in reliability as they are in speed, he said. The research also found that experienced users are much more willing to pay for higher speeds while inexperienced users are willing to pay for basic access. Additionally, consumers are willing to pay for high-speed access but demand reliability over a super-fast speed.

A separate panel addressed issues surrounding network neutrality compared policies in the United States, Japan and the European Union. In the United States, there is limited competition with weak governmental authority in enforcing network neutrality principles, and there have been a number of infractions. Japan in contrast has a high level of competition at the service level and the government has put in place some non-binding principles.

Several corporate players in the media and communications industries have come together to agree on a set of rules governing net neutrality. it is important to note however that the nation’s largest internet service provider is the government-supported NTT. There have not yet been any network neutrality infractions. The European Union is unique in that it has strong competition amongst ISPs, a high level of government authority over the telecommunications sector and there have been infractions. The infractions however were privately resolved without the intervention of the government. The researchers concluded that competition prevents infractions but competition is unable to determine the necessary level of competition.

A broadband investment panel looked at how investment will proceed now that increasing capacity costs more than earlier investments. Broadband investment is a long and expensive process that appears to be declining. Verizon has announced that it will slow down its FIOS deployment. A paper by Bob Atkinson, Eli Noam, and Ivy Schultz from Columbia University shows that future investment will most likely be in wireless technologies due to their beneficial cost-to-coverage ratio.