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Estimating the Market for Internet Service Provider-Based Cyber Security Solutions

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  1. Estimating the Market for Internet Service Provider-Based Cyber Security Solutions Brent Rowe – RTI International Doug Reeves – NC State University Dallas Wood – RTI International Fern Braun – RTI International November 4, 2010

  2. Study Motivation • Home Internet users are particularly ill-prepared to secure their computers • Economic theory: Incomplete information

  3. Study Motivation • Home Internet users are particularly ill-preparedto secure their computers • Economic theory: Incomplete information • Home Internet users’ insecurity affectsall other Internet users • Economic theory: Cost externalities

  4. Study Motivation • Home Internet users are particularly ill-preparedto secure their computers • Economic theory: Incomplete information • Home Internet users’ insecurity affectsall other Internet users • Economic theory: Cost externalities

  5. Study Motivation • KEY QUESTION: How can home internet users become more secure? • Incentive home internet users to spend more time / money on security • Government regulations / subsidies to increase the security of products and services • We decided to investigate a case study that would help inform both potential actions

  6. Case Study: ISP-based Cyber Security • ISPs are in optimal location to identifymalicious incoming & outgoing Internet traffic • ISPs haveknowledge and capabilities to react • As such, ISPs can help reduce the social cost of cyber security activities significantly • Economic theory: Economies of scale

  7. Study Goals • Estimate supply of ISP-based cyber security solutions • What are ISPs doing for their customers’ security? • What aren’t they doing that could help customers’ security? • How much are they charging for security services? • Estimate demand for ISP-based cyber security solutions • What are ISP customers willing to pay for security? • What ISP security service components most impact demand? • What educational / marketing messages can impact demand?

  8. I. ISP Supply Assessment • Identified 84 plans sold by the Top 22 ISPs • 77% of plans examined were DSL or cable broadband • 97% offer some type security service • 49% of those offering security services charge a fee, the rest include in monthly price

  9. I. ISP Supply Assessment • Average Price of Plan w/ Security = $52.65 • Average Price of Plan w/o Security = $47.47 • NET: Amount ISPs Charging Customers for “Included” Security Features = $4.18 • Average Price of Security Add-on = $4.34

  10. I. ISP Supply Assessment Security features offered vary by plan as follows:  • 100% of security plans include antivirus and anti-spyware software • 86% of plans include firewalls • 79% of plans include anti-spam • 73% of plans include anti-phishing

  11. I. ISP Supply Assessment Security features offered vary by plan as follows:  • 100% of security plans include antivirus and anti-spyware software • 86% of plans include firewalls • 79% of plans include anti-spam • 73% of plans include anti-phishing • ? % of plans include traffic analysis, filtering & remediation (higher cost)

  12. I. ISP Supply Assessment Security features offered vary by plan as follows:  • 100% of security plans include antivirus and anti-spyware software • 86% of plans include firewalls • 79% of plans include anti-spam • 73% of plans include anti-phishing • ? % of plans include traffic analysis, filtering & remediation (higher cost) Comcast does

  13. I. ISP Supply Assessment Why aren’t ISPs doing more? • Legal implications • Desire not to impede internet activities • Perception that consumers are not willing to pay enough for security products / services

  14. I. ISP Supply Assessment Why aren’t ISPs doing more? • Legal implications • Desire not to impede internet activities • Perception that consumers are not willing to pay enough for security products / services

  15. II. Consumer Demand Assessment Establish Baseline: • Quantify home internet users’ willingness to pay for ISP-based cyber security solutions • Quantify home internet users’ willingness to spend time on ISP-based cyber security solutions

  16. II. Consumer Demand Assessment Assess Impact of Marketing / Educational Messages: • Evaluate the differences in impact of fear and trustmessaging on demand measures • Identify any impact on behavior based on survey language

  17. II. Consumer Demand Assessment • Developed survey of home Internet users to determine willingness to pay for security and accept certain tradeoffs • Utilized stated preference questions to assess demand • Fielding through ComScore to 2,400 broadband home internet users • Pilot survey conducted with 365 participants

  18. Conjoint Question: Example

  19. Pilot Survey Results • On average, respondents indicated they would be willing to pay (per month)... • $3.87 to AVOID ever having their internet access restricted • $3.55 to REDUCE THE RISK of identify theft to them • $2.83 to REDUCE THE RISK of their computer crashing • $1.96 to REDUCE THE RISK of others being impacted • $0.71 to AVOID one hour of training

  20. Implications • Average cost of $4.25 for current ISP security packages (focus on low cost options like AV) • Pilot data suggests that consumers are willing to pay over $8 per month to reduce risks to them and others, however… • They do not want their internet access limited • They do not want to spend time on security

  21. Future Survey Analysis • 8 Versions of the Survey Fielded • No text added • “Trust” , “Fear” and combined messages added prior to conjoint questions • Are survey participants willing to pay more when they know more about threats and actions they can take? • Analysis of Post-survey Actions • Do survey participants search for security? • Do survey participants install security programs?

  22. Next Steps • Field survey to full sample of 2,400 individuals through Comscore • Assess impact of educational / marketing messages • Determine if any actions are taken post survey • Compile results into final report to be delivered in late 2010 / early 2011

  23. Additional Information • If you would like additional information about this study, please contact: Brent Rowe broweat rti.org