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The Impact of Price on Broadband Adoption in South Carolina

By CSC Staff

By Hongqiang Sun, Research Analyst

Connect South Carolina’s new report, Cost as a Barrier to Broadband Adoption: Structuring Subsidy Programs That Work, finds that 37% of South Carolina’s households that don’t currently have broadband service would be willing to subscribe if cost were not a barrier, suggesting that approximately 570,000 South Carolina households would subscribe to broadband if they could get it at a price they consider acceptable.

The report goes on to analyze what that “acceptable” price would be for price-sensitive non-adopters in South Carolina.  Among broadband non-adopters who would be willing to subscribe to broadband at an acceptable price, the optimal price point (based on a Van Westendorp Price Sensitivity analysis) for non-adopters across the state is $22.  By comparison, the average South Carolina broadband subscriber currently pays over $48 per month for home broadband service.  This means that if a subsidy program like the FCC’s Broadband Lifeline Pilot Program, Comcast’s Internet Essentials, or CenturyLink’s Internet Basics were attempted in South Carolina, a monthly subsidy of $26 per month would attract the greatest number of price-sensitive non-adopters while not wasting money trying to attract current non-adopters who won’t be convinced by any price incentives.

Across South Carolina, affordability continues to be a key barrier to the adoption of home broadband service. Although many non-adopters face issues other than cost that would need to be addressed to close the Digital Divide, Connect South Carolina’s 2011 Residential Technology Assessment found that affordability is the top barrier cited by South Carolina adults who do not subscribe to home broadband service. Indeed, nearly one-third of South Carolina’s non-adopters (32%) reported that they did not subscribe to home broadband service because of cost and affordability issues, including 18% who cite the monthly cost of broadband, 10% who cite the cost of buying a computer, and 4% who cite activation and installation fees.

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