Consumer Usage of Broadband Internet Services - Adoption, Usage, and Global Impact of Broadband Technologies - page 200

does one know whether economic development
results from broadband adoption, leads to broad-
band adoption, or both? The accepted wisdom is
that broadband is both a cause and an effect of
economic development.
In order to understand the benefits of broadband
both for individual consumers and for achieve-
ment of social goals, it is critical to understand
consumers' usage of broadband. This includes the
degree to which consumers make choices based
on technology preferences, and consumers' usage
patterns and intensity. In other words, determin-
ing consumers' broadband applications and the
amount of time spent using broadband enables
policymakers to adopt the most appropriate
methods of achieving social and economic goals.
Demand studies for broadband generally
have found that demand is positively correlated
with income, education, and greater use of other
information technologies. For example, Crandall
et al . (2002), Kridel et al . (2001), Garcia-Murillo
(2005), and Prieger and Hu (2008) find that lower-
income groups are less likely to subscribe to
broadband than higher-income groups. Goldfarb
and Prince (2008) concur in this finding and add
that more highly educated consumers are more
likely than less-educated consumers to purchase
broadband.
With respect to race and ethnicity, Fairlie
(2004) uses US Current Population Survey data
to show that blacks and Hispanics are less likely
to have a computer in the home than are members
of other racial or ethnic groups; this of course
means these households do not have broadband
access in their homes. Other studies address race
and ethnicity more directly. Prieger (2003) and Hu
and Prieger (2008) find that race has no impact
on suppliers' willingness to deploy DSL, once
variations in income and other economic factors
are considered. Leigh (2003) finds similar results.
However, Flamm and Chaudhuri (2007), GAO
(2006), and Prieger and Hu (2008) find that race
impacts broadband adoption, perhaps because of
differences in computer skills (Krueger, 2003) or

network effects (Goolsbee and Klenow, 2002).
These race impacts may result from factors that
are correlated with race, but that are unobserved
in the researchers' data or not fully captured in the
statistical analysis even if the data are there. For
example, Prieger and Hu (2008) discuss whether
some blacks and Hispanics lack spare time to be
online or find online content less valuable than
do other racial groups.
In contrast to other studies, Goldfarb and
Prince (2008) survey 18,439 Americans and find
that, conditional on adoption, low-income, less-
educated consumers spend more time online than
their higher income, more educated counterparts,
a result that is best explained by differences in
the opportunity cost of leisure time according to
the study. 2
With respect to the impact of broadband,
Holt and Jamison (2008) provide an overview of
various studies, but such studies of broadband's
effects suffer from the problem of endogeneity
(i.e., information that comes from the model can-
not be used to explain the model). For example,
if it is observed that economic development and
broadband adoption are positively correlated, it is
impossible to know whether economic develop-
ment results from broadband adoption, leads to
broadband adoption, or both. The accepted wisdom
is that broadband is both a cause and an effect
of economic development. Clearly research has
proven that advanced communications technolo-
gies have a significant economic impact across
countries and increasingly so, as such advanced
technologies are more rapidly deployed. Unfortu-
nately, rarely does this research include usage or
adoption patterns, and deployment clearly is an
imperfect proxy for actual broadband use. For this
reason, we focus on consumer usage patterns and
intensity of broadband use in an effort to expand
the existing literature to include choices based on
broadband access technology.