Price Sensitivity of Broadband Non-Adopters Tom Koutsky February 7, 2013

1. Price Sensitivity of Broadband Non-Adopters Tom Koutsky February 7, 2013

2. How much does price matter? 53% of non-adopters report not being price sensitive Price incentive strategies alone will not resolve the demand gap across America • If home broadband service was offered at a price you considered acceptable? I would not subscribe(not price sensitive) 53% I don’t know8%

3. Price sensitive Non-adopters

4. Barriers to Broadband Adoption

5. Marginal Impact of Demographic Factors on Non-Adopters’ Price Sensitivity – Binary logistic MODEL = significant at 95% confidence

6. Marginal Impact of Demographic Factorson Non-Adopters’ Price Sensitivity – EXPANDED MODEL = significant at 95% confidence

7. observations • Price sensitivity is significantly different across various “vulnerable” demographics on the wrong side of the digital divide • Price-incentive broadband adoption programs will have different results across these demographic groups • Policy makers or marketing strategists should complement price incentive strategies with programs addressing other barriers to entry such asawareness campaigns, digital literacy training, or free/reduced hardware • If we rely on price subsidies alone, we will not close the digital divide

8. For more INFORMATION… • Late to the Party: How New Broadband Subscribers Compare to Early Adopters, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1995130 • Let’s Make a Deal: Price Sensitivity and Willingness to Pay in the American Broadband Market, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2033415 • Connected Nation Research releases, including state-specific data reports: http://www.connectednation.org/research • Connected Nation Policy Briefs: http://www.connectednation.org/data-center-policy Tom Koutsky tkoutsky@connectednation.org (202) 674-8409