An Empirical Analysis of Internet Service Providers' Pricing of Television and Internet Services

点击翻译按钮获取中文摘要

This research focuses on internet service providers' (ISP) joint pricing of television and internet services. With the recent rise of streaming video services like Netflix and Hulu, ISPs may have an incentive to use their prices to influence consumers' choices across TV and streaming video options. Important considerations for these pricing choices include: the cost differences in delivering TV and internet content, the willingness of consumers to substitute across entertainment options, and how ISPs and other firms benefit differently from different sorts of content. The investigators develop a model that take them into account. The estimated model can shed light on ISPs' pricing decisions, and can be also useful for evaluating antitrust issues in the telecommunications industry. This research estimates a model of demand and supply for television and internet services. The investigators have access to highly detailed data on households' choices over TV and internet subscriptions and usage, and use these data to estimate consumers' preferences across a wide variety of entertainment options, including services sold directly by ISPs (e.g. TV and internet access) and by third-party streaming services. On the supply side, this research estimates the objective functions of ISPs and content providers while accounting for potentially complex relationships among firms and differences in their cost structures, which vary with their roles in content delivery to consumers. Using the estimated model, the investigators simulate how prices will change (and how consumers and firms would be affected) under several different scenarios. For example, the introduction of source-specific discriminatory pricing (e.g. special ISP surcharges to consumers for using various streaming services) may affect consumers' demand for the full range of video options available in the market, and many prices are likely to change if ISPs can price discriminate in this way. The estimated model can be also used to study how firms' incentives to integrate or introduce new streaming services vary when firms can use sophisticated prices to curtail consumers' access to or usage of competing firms' services.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.