As Congress is exploring ways to increase the deployment of broadband networks, a new analysis has found that price-based policies do not increase adoption. In this analysis, Phoenix Center economists have found that subsidizing deployment to unserved areas is the most effective way to increase broadband adoption.
The study finds that a home newly-passed by a broadband network has a very high probability of adopting broadband – similar to the average adoption rate (about 85%) – while consumers have a weaker response to price reductions. A 10 percent drop in price will only increase adoption by five percent. These findings highlight the importance of using federal funds to expand broadband availability to unserved areas rather than focusing on pricing.
Read the full study here.