Willingness to pay and pricing for broadband across the rural/urban divide in Canada

Abstract

Efforts to close the rural/urban digital divide in Canada have reached new heights in the wake of the ongoing COVID-19 pandemic and “stay-at-home” policies. Yet the extent to which the rural/urban digital divide extends to pricing and demand for broadband services is not well understood. Using a dataset of more than 4700 residential survey responses from southern Ontario, Canada, we assess the disparity in pricing and willingness to pay for broadband across rural and urban households. Our results suggest that rural users face higher installation and monthly fees while receiving a significantly inferior quality of service than their urban counterparts. Demand among rural users for improved broadband access is also higher than for urban users. These results may strengthen the business case for expanding broadband services into rural areas and/or supporting justification for public subsidization. Our analysis also suggests higher economic net benefits from prioritizing majority access at current federal service objectives rather than investing in a small number of users to receive higher quality broadband.