Demand for different qualities of service for Internet access: a review of INDEX findings

Abstract

The Internet Demand Experiment (INDEX) is a market experiment to measure demand for Internet access as a function of Quality of Service (QoS), pricing scheme and application. INDEX subjects choose their desired network services from a menu of QoS-price o¬erings, which currently consists of di¬erent bandwidth{price choices, and they pay for their usage of the network services. The approximately 70 subjects currently in the experiment include faculty, sta¬ and students of the University of California, Berkeley. This paper describes the objectives and experimental design and summarizes the ­ ndings to date from the ­ rst four experiments conducted under the INDEX project. This paper also characterizes the INDEX subject pool using demographic data collected. Overall, the INDEX ­ ndings indicate that usage is responsive to price signals, although the degree of responsiveness varies widely across users. The INDEX ­ ndings also show that the INDEX subject pool is heterogeneous in many respects, including individual-speci­ c valuations of time and convenience. In addition, we conclude that users prefer a pricing scheme in which they pay a ®at-rate for basic service and have access to higher bandwidths that they can use on demand. We also ­ nd that when usage is free of marginal usage charges, users tend to transmit signi­ cantly greater volume than when usage is priced at the margin, which lends further support to the implementation of the suggested pricing scheme.