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Application-Based Quality Assessment of Internet Access Service

Author

Listed:
  • Daeho Lee

    (The School of Information Sciences, University of Pittshurgh)

  • Jungwoo Shin

    (College of Engineering, Seoul National University)

  • Junseok Hwang

    (College of Engineering, Seoul National University)

Abstract
As Internet applications become more sensitive to latency, the needs for network management increase. To maximize consumer surplus and profit of Internet service provider at the same time, it is necessary to investigate the consumer’s willingness to pay for a given quality of service (QoS) level. This study investigates consumer preferences for Internet access services that provide different levels of QoS for different applications. Conjoint method and mixed logit model are used to estimate consumer preference. As a result, consumers react most sensitively to changes in the quality of the web browsing service and have the highest marginal willingness to pay (MWTP) for improvements in the quality of this service. On the other hand, MWTPs are relatively low for voice over IP (VoIP) and IP television (IPTV), which are sensitive to latency. However, it is shown that the MWTPs of VoIP and IPTV increase when VoIP (IPTV) users are separated from VoIP (IPTV) non-users or when it is assumed that there is no substitute for VoIP (IPTV). It implies that Internet service providers can profit by providing high QoS to VoIP and IPTV as the markets for VoIP and IPTV services mature and user numbers increase.

Suggested Citation

  • Daeho Lee & Jungwoo Shin & Junseok Hwang, 2011. "Application-Based Quality Assessment of Internet Access Service," TEMEP Discussion Papers 201183, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2011.
    • Handle: RePEc:snv:dp2009:201183
    as

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    File URL: http://temep-repec.my-groups.de/DP-83.pdf
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    References listed on IDEAS

    as
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    3. Layton, David F., 2000. "Random Coefficient Models for Stated Preference Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 21-36, July.
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    6. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, September.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lee, Daeho & Kim, Yong-Hwa, 2014. "Empirical evidence of network neutrality – The incentives for discrimination," Information Economics and Policy, Elsevier, vol. 29(C), pages 1-9.

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    More about this item

    Keywords

    Quality of experience; quality of service; conjoint survey; mixed logit; Bayesian estimation; Internet.;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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