Campus News

Professors to determine how much consumers would pay for Internet use

Researchers from UGA and the U.S. Department of Justice have been awarded $530,000 over three years by the National Science Foundation and CableLabs to study demand for residential Internet service.

John Turner and Jonathan Williams, both faculty in the economics department at UGA’s Terry College of Business, and Aviv Nevo of Northwestern University, who currently is serving as the chief economist at the DOJ, will use the grants to collect and analyze data from more than 1 million Internet users. In studying how Americans make choices online when facing overage prices and network congestion, their work promises to shed light on the future of residential broadband.

At the heart of the project are the unique data secured from a group of North American Internet Service Providers. The data include plan characteristics such as prices-per-gigabyte of usage above an allowance, as well as hourly levels of household usage and network congestion. With these data, the researchers precisely can estimate willingness-to-pay for Internet usage.

“Think about it like a cellular plan,” Williams said. “If you’ve ever run up against your usage allowance, you get text or email messages that say ‘You’re at 90 percent of your data’ or ‘You’re at 95 percent of your data allowance’ and because of that you might change your behavior. Now we get to see that same data for residential broadband service. We can literally see you weigh what you’re doing against an overage cost and determine demand.”

The researchers’ models are designed to generate hypothetical predictions about how usage-based pricing affects usage and welfare. They plan to use these predictions to inform public policy, where Internet usage already has become a political issue.