Low demand despite broad supply: Is high-speed Internet an infrastructure of general interest?

Abstract

Although the recent years have witnessed a stark increase in the availability of high-speed Internet, adoption rates remain low. One potential explanation is that for most users high-speed Internet does not increase their utility. Using a mixed logit discrete choice model, this paper analyzes whether high-speed and basic Internet are substitutes. I find that they are not. Users who do not need higher speeds, choose basic speeds regardless of high-speed availability. Therefore, high-speed Internet is not an infrastructure of general interest. Consequently, policy-makers cannot increase usage of high-speed Internet by solely fostering its rollout.